National and international restaurant chains are preparing to make their Broadway debuts, with flagship locations on the Great White Way and in other widely frequented locales, in a bet on Manhattan's economic recovery.
Raising Cane's Chicken Fingers, based in Baton Rouge, has acquired an 8,500-square-foot lease at 1501 Broadway in Times Square, a corner location at one of Manhattan's busiest intersections. It will be the chain's first location in New York City, with more than 600 locations worldwide. Din Tai Fung, a Michelin-starred restaurant brand based in Taiwan, revealed last month that it had secured a 15-year lease for a flagship at 1633 Broadway that spans around 26,400 square feet. It will be the company's first trip to the city and the East Coast.
Other businesses are growing their footprint in New York by going into the Broadway theater district and Times Square, the world-famous tourist destination in the heart of the city. Jollibee, billed as the "Filipino McDonald's," opened a 7,127-square-foot restaurant at 1500 Broadway last October. Popeyes Louisiana Kitchen, based in Miami, has signed a 6,172-square-foot lease at 1530 Broadway.
Colorful paintings adorn the walls of P.F. Chang's flagship restaurants. P.F. Chang's (P.F. Chang's)
The Times Square region isn't the only part of New York that is attracting big companies that are new to the city. P.F. Chang's, based in Scottsdale, Arizona, informed CoStar News that it aims to open its first full-service restaurant in the city, a flagship, in Manhattan's Union Square district later this year.
The outbreak in New York, which was once the epicenter of the epidemic in the United States, meant the demise of numerous companies. According to commercial real estate brokers and analysts, this has left some valuable real estate space unoccupied and available at a somewhat reduced price for national and global restaurant chains in regions such as Times Square.
As the pandemic looks to be diminishing, operators of growing restaurant companies can now stake a claim with iconic locations in a city they believe will see an economic resurgence with the return of tourists and office workers.
"Clearly, the tenant pool has been damaged [by the pandemic], which creates an opportunity for those who are healthy," said Andrew Mandell, vice chairman and principal at Ripco Real Estate. "Securing space in the Times Square neighborhood has been difficult for the previous 20 years due to cost or supply. Today there is more space available."
Rents are Lower, but Still Expensive
Rents in the Times Square neighborhood are still high, and there's controversy about how much they've adjusted or declined since the pandemic's peak. According to Victor Rodriguez, CoStar Group's director of market analytics in New York, at the real estate market's peak from 2014 to 2018, landlords were asking for rentals as high as $1,000 per square foot for highly visible properties in Times Square.
"However, with e-commerce sucking business away from brick-and-mortar establishments, rents have been falling since – much more so since the epidemic," he explained.
According to Rodriguez and several brokers, large restaurant chains are among the few that have the financial means to pay them — and are ready to do so because it allows them to have a foothold in a huge lucrative market while also building their brands. According to CoStar records, the asking rent for Popeyes' new restaurant on Broadway in the Bow Tie Building was $800 per square foot.
"For the next decade or more, New York will remain as vital a global city as it has ever been," said Steven Soutendijk, executive managing director of Cushman & Wakefield. "And people were able to eat." We have a diverse population of ethnic groups. We're the world's melting pot, thus we're the world's melting pot of food."
Din Tai Fung will be located in the public plaza at the base of Paramount Plaza, beneath the glass entry cube. (CoStar) That's why, according to Soutendijk, restaurants like Din Tai Fung are signing large leases in Times Square "in an uncertain environment."
He stated, "We're emerging out of a global pandemic." "We're in the midst of World War III in Europe." It's a weird time to consider demolishing 26,000 square feet of space. That demonstrates how optimistic people are about New York City's recovery."
According to Brandon Svec, CoStar's director of U.S. retail analytics, retail leasing activity in Times Square reached a 15-year high of about 171,400 square feet in 2021. In contrast, overall retail leasing activity in Times Square in 2020 was just over 23,000 square feet, the lowest amount in the same 15-year span.
According to Svec, national chains see a Times Square flagship as providing "both sales and marketing potential, with the latter helping tip the scales in favor of leasing despite the higher rent costs."
Tourists and locals are courted
That, according to Darren Tristano, CEO of consulting firm FoodserviceResults, is one of the reasons Raising Cane's is opening such a massive Times Square location. It will promote the company's restaurants in 31 states and Guam, as well as its ambitions to launch over 100 additional sites in ten new areas this year.
"In Times Square, we've seen a lot of chains, and I believe they've been successful," Tristano added. "There is a lot of tourism, not just from locals, that feeds into the sales." It seemed to me to be an opportunity. Because the rent is so costly, [Raising Cane's] being a player in that market could be a loss leader. In order to establish brand recognition, they may really run at a loss or break even."
Outside its Times Square location, Raising Cane's already has enormous signs stating that it will open shortly. According to Soutendijk, the business signed "a very huge long-term lease in the centre of Times Square for a very big rate."
He stated, "They have an anticipation that they will conduct a lot of business in New York." "From what I gather, they're exploring for other areas."
Because of its size, high visibility, and strong foot activity, Raising Cane's chose the Paramount Building on Broadway between 43rd and 44th streets, which Mandell describes as "an unbelievable, incredible position." Levi's was the previous occupant of the site, which had a duplex clothing store.
Raising Cane's and Newmark, the Paramount Building's leasing broker, did not reply to requests for comment.
Ground-Floor Space's Motivator
According to Soutendijk, food and beverage leasing accounts for 50% of the retail market in New York and is by far the largest driver of ground-floor space rental. "It's no surprise to me that everyone wants to be here," he explained.
According to Soutendijk, Din Tai Fung's entrance in New York will be "a very huge deal." The restaurant in Paramount Plaza's Times Square is being designed by renowned architect David Rockwell. The luxury noodle and dumpling restaurant franchise now includes locations in California, Nevada, Washington, and Oregon.
Many Americans are more familiar with P.F. Chang's, which serves Asian-inspired cuisine, than with Din Tai Fung. The American restaurant franchise has more than 300 outlets in 22 countries, including airport facilities in the United States. In Manhattan, the firm inaugurated a few of its pickup and delivery-only sites, but it has never operated a full-service restaurant. This, however, will change later this year.
The restaurant will open in the Union Square district, according to P.F. Chang's, but the exact site has not been revealed. The address, according to a source acquainted with the matter, is 113 University Place.
P.F. Chang's has announced its arrival in Union Square, and a source close to the issue claims the business has chosen 113 University Place as the location for its first New York City restaurant. (CoStar)
P.F. Chang's has been expanding, with a restaurant in Rockaway, New Jersey, and another planned in Toms River, among other locations. This year, Colorado, Georgia, Texas, and Utah are all planning new full-service restaurants. P.F Chang's will also be upgrading its huge eatery at the Tropicana Atlantic City, which is located in the beachfront gambling mecca of New Jersey.
The Union Square location, according to the brand, will have some special features that it will announce later this year.
In an email, a P.F. Chang's representative stated, "All P.F. Chang's flagship locations are in high-traffic, tourist destinations and complement our bistro and P.F. Chang's To Go locations." "With flagship restaurants in places like Las Vegas and Hawaii, we've had a lot of success. We're looking forward to the remodeling of our Atlantic City flagship facility in 2022. Union Square in Manhattan is a logical next step in our overall strategy because it fits our traffic and tourism criteria."
Diners in New York have a plethora of mom-and-pop Chinese restaurants to pick from, making P.F. Chang's a tough competitor. According to Tristano, the familiarity of P.F. Chang's will be a magnet for some out-of-town tourists who are reluctant to try something new.
Brand Adherence
"It's a pretty mainstream, middle-of-the-road type of restaurant," he explained, "where you know the consistency and quality is there." "Like many Chinese eateries, it's undoubtedly affordable...." Consumers in the United States are extremely devoted to brands, whether it's a hotel, airline, or restaurant such as P.F. Chang's."
According to Soutendijk, the Manhattan P.F. Chang's will be in the same neighborhood as New York University, and students who grew up eating at the chain's suburban sites — such as Westchester County, New York — will likely be drawn to it in Manhattan as well. P.F. Chang's also serves healthier, lower-carb meals than some Chinese restaurants, with its chicken lettuce wraps being a popular seller, attracting health-conscious New Yorkers, he said.
P.F. Chang's will use the Union Square location to "start to expand and populate the New York area," according to Tristano.
He remarked, "There are a lot of affluent consumers and a lot of people yearning for meals like they offer."
The Cheesecake Factory, based in Calabasas, California, is one prominent national restaurant chain that has yet to open in New York, despite multiple brokers claim the corporation has scouted locations in the city.
The Cheesecake Factory is a chain of 306 restaurants owned and operated by the Cheesecake Factory. According to Soutendijk, the chain does so much business and is so successful in its sites across the country that it may not make sense to operate in New York.
He said, "They've clearly flirted with the idea of opening up a [restaurant] in New York before." "I've heard they were searching for a store at least five or six times throughout my career."
While the Cheesecake Factory's development team "is always on the hunt for exceptional venues to further increase" its "brand presence," Alethea Rowe, senior director of public relations and worldwide branding, said in an email that "any sites that fulfill our criteria for success will be thoroughly examined."
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