The coronavirus crisis changed the restaurant scene. In the course of the pandemic, many diners opted to stay out of restaurants and instead order their meals for takeout or delivery. That shift taxed a lot of restaurants, as some lacked the capacity to keep up with demand.
At the same time, the pandemic also had a huge impact on malls -- and not for the better. At the height of the outbreak, 32% of consumers were too fearful to enter an enclosed shopping space. As such, many people shifted to e-commerce over the past year, and now, the fear among real estate investors is they'll be hesitant to return to malls even once the pandemic is behind us.
There's a pretty good solution to both of these problems: giving restaurants the option to expand their food prep space, and giving customers more of an incentive to come back to malls. And two giant mall operators are backing a company that addresses both issues.
Bringing ghost kitchens to malls
The pandemic has fueled the need for more ghost kitchens -- restaurant spaces that generally don't feature a dining area (or at least not a large one), but rather, provide space to cook food for takeout and delivery. Unlike regular restaurant kitchens, ghost kitchens can be shared across different brands and eateries. Often, a ghost kitchen will employ people to work with different brands that utilize that space.
Such is the setup at C3's ghost kitchens. Short for Creating Culinary Communities, what C3 does is instead of building out kitchens from scratch, it takes over old hotel and restaurant kitchens and brings in different brands to utilize that space. That allows restaurants to increase their delivery capacity quickly. The company has already expanded its ghost kitchens into hotels and residential real estate complexes, and it has plans for 1,000 ghost kitchens by the end of the year.
It's not surprising, then, that mall operators Brookfield Asset Management (NYSE: BAM) and Simon Property Group (NYSE: SPG) are backing this venture. First of all, a lot of mall space is being underutilized right now, so it makes sense that Brookfield and Simon would support an initiative rooted in the idea of making abandoned space useful.
But by partnering with C3, Brookfield and Simon can improve their properties' food courts. And that could, in turn, be the ticket to drawing more customers back to malls.
At this point, it'll take a lot to convince consumers to abandon the simplicity and convenience of online shopping. Now, Brookfield and Simon are setting the stage for customers to not only visit malls but enjoy a fulfilling culinary experience while they're out. In fact, if all goes well, shopping malls could, in time, evolve to become dining hubs of their own. That would, in turn, be a good way to help ensure malls' long-term viability, especially in an age when so many risk closing.
Investors in Brookfield and Simon should be excited about this development. It's innovative moves like these that set the two mall giants apart and make them a solid long-term bet.