California Centers

MAY 2017

California Centers Magazine serves retailers, developers, shopping center owners, investment sales brokers and tenant representation firms throughout the state of California.

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32 California Centers Magazine | May 2017 C C — comfortable enough to even by- pass a national credit tenant in certain situations," says Joseph Kim, senior associate of Coreland Companies in Tustin. "Many of the new concepts are capable of doing more sales per square foot than traditional QSRs. However, it is still a risk for an owner to take a chance on a new concept and less-experienced operator." Johnny Choi, a senior associate at CBRE's Beverly Hills Retail Services Group, believes comfort can be creat- ed if the broker listens to the concerns and requirements on both sides of the table. "There is so much competition in the Asian category now that when considering whether to represent a QSR, I look for concepts that have a differentiating quality," he says, not- ing a deal where Golden Pouch, a high-end dim sum concept, leased space at Westfield Topanga in the food court next to an existing Panda Express. "Malls are looking for the whole package, such as brand pres- ence, consistency in quality, price points and authenticity. Landlords, meanwhile, would do well to remain flexible on credit and keep rents sus- tainable. Percentage rent for the first part of the term is a great alternative to giving up tenant improvement dol- lars." BUILDING A NEW RELATIONSHIP The popularity of certain foreign food concepts can be a no-brainer for busy, cash-strapped diners who can pack a ton of flavor into a fun, healthy poke, pho, ramen or curry bowl. What landlords may not realize, how- ever, is that the customizable, no-fuss, easy nature that inspires these dishes oftentimes extends to the real estate as well. Sweetfin Poke opened its fifth QSR in Santa Monica's 3rd Street neigh- borhood in March, with another opening in Downtown Los Angeles this summer. It is the fastest growing poke concept in Southern California, according to co-owner Seth Cohen, and for good reason. "There is enormous competition for great spaces that are zoned for food use," he says. "Fortunately for us, we can be very flexible with the size of the spaces we take. Our concept requires a minimal amount of cook- ing equipment, so we can work with spaces that are oddly shaped or too small for a traditional QSR user." Most poke concepts don't have a large need for ovens, stovetops or hood ranges, though they do require preparation and storage space. These unique requirements have allowed Sweetfin to modify its footprint based on the spaces available. Its smallest store is 680 square feet and empha- sizes takeout and delivery. Its largest store is 1,680 square feet and has an ample dining area. Cohen notes that just because Sweetfin can adapt to many spaces doesn't mean he and his business partners are willing to take any vacant restaurant space. "We're always looking for spaces that are in areas with a healthy mix of both daytime and nighttime busi- ness," he says. "It is very important for our concept to have an even mix of lunch and dinner sales. Each time we open a new Sweetfin is a chance to introduce our brand to a new market, so it is also important for us to have as much street exposure as possible." Like Peckenpaugh, Cohen also as- serts that data, on-the-ground scout- ing and doing your homework are the keys to success. "Opening up in Santa Monica was a no-brainer," he contends. "From a branding perspective, we wanted to launch the concept on the coast, but more importantly, it was a market that was shockingly underserved for healthy, fast food concepts. In com- pleting our site selection process, it is important for us to group with ten- ants that have like-minded custom- ers." For Sweetfin, "like-minded" trans- lates into other health-conscious en- deavors, such as fitness studios and gyms. Cohen has also learned that Sweetfin skews female, so the com- pany looks for opportunities to open near experiential concepts like Blush- ington and Drybar. For operators like Peckenpaugh, this type of due diligence and brand awareness are just what this new crop of ethnic QSRs needs in order to suc- ceed. "The common denominator with any QSR in this mold is that it has paid close attention to the demands of the millennial generation — design layout, social media presence, fresh ingredients, etc. — which has creat- ed a culture of brand ambassadors," he notes. "Those QSRs that have had success have been able to understand the markets in which they operate and have solid plans in place to grow. They have planned for growth in ad- vance, which has made the process a lot more efficient when the time has come to scale up." For concepts like Sweetfin and many eager, but disciplined QSRs like it, that time is now. CC Hawaiian poke is one of the latest trends, along with Southeast Asian curries and ramen bowls, in QSR. Pictured is poke concept Honeyfish Poke, which has six locations in Southern California.

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