The coronavirus crisis has prompted a lot of businesses to rethink the way they operate. And that extends to restaurants. In fact, a number of fast food chains have already altered their designs, or are making plans to do so, in the wake of the pandemic. McDonald's, for example, is investing in more efficient drive-thru lanes, recognizing that the demand for those orders has increased. Meanwhile, Chipotle has launched a digital-only restaurant that does not include a dining area. Rather, it's strictly a carry-out-and-go sort of place.
Now, P.F. Chang's is adopting a similar approach in the hopes of capitalizing on the takeout boom. Here's what real estate investors need to know.
Smaller stores, access to more markets
P.F. Chang's, like other chains before it, has opened a few smaller locations (dubbed P.F. Chang's To Go) in Texas and Florida. And the company's plan is to open more than 50 new To Go locations by the end of 2022 across a range of markets, including New York, Arizona, and Colorado.
P.F. Chang's To Go concept will feature smaller restaurants that focus on takeout orders, catering, and delivery. Not only will these pared-down restaurants allow the chain to sign less expensive leases, but they'll also make it possible for P.F. Chang's to reach more markets -- namely, packed cities where square footage tends to come at a premium.
To be clear, P.F. Chang's has no plans to replace its full-service restaurants with its To Go stores. Rather, the chain is hoping to expand its empire and reach a different set of customers -- those who prefer to take their food to go rather than stick around, congregate, and eat.
It's a sentiment that's become more widespread thanks to the pandemic. While many people are, at this point, itching to get back to in-person dining, others may still be too skittish to eat inside a restaurant -- especially a crowded one, and especially given the recent emergence of the highly transmissible delta variant. Focusing on takeout and delivery orders could therefore end up proving quite profitable for P.F. Chang's by letting the chain grow its customer base.
The real estate impact
Generally speaking, commercial landlords would rather lease out more space than less, so it's easy to make the argument that this latest move on the part of P.F. Chang's is bad for them. On the other hand, the fact that P.F. Chang's is opening these To Go locations to expand on its existing restaurant footprint is a positive thing. And the fact that it's actively seeking out smaller spaces could work to investors' advantage, especially those with lease opportunities in cities.
Many businesses have shuttered in the course of the pandemic, and commercial landlords all over the country are facing their share of vacancies. Welcoming a tenant like P.F. Chang's is something those landlords are apt to be eager to do -- even if the chain is only looking for so much square footage to take on.