The Drive Through Dialog

JR Moore of CBRE recently spoke to cities that are interested in joining EDCUtah at the ICSC retail convention in Las Vegas in May. During that wide-ranging discussion, he broached the topic of restaurant drive throughs (or more commonly drive thrus). He mentioned some national trends of which cities should be aware.

As background, CBRE is the largest commercial real estate services company on the globe. JR has been involved in retail brokerage for 20 years and is part of a team of four licensed agents who cover Utah and Idaho from CBRE’s downtown Salt Lake City office. Here’s the follow-on interview on that specific topic.

How do many communities currently perceive drive-thrus?

JR: A challenge is that the perceptions communities hold of drive thrus are old fashioned. Historically, drive thrus have been associated with fast food establishments of lower quality. The reality is changing both nationally and here in Utah. Higher-end “fast casual” establishments – such as Panera Bread Company and Costa Vida – are pursuing drive-thru options for all of their new locations.

What are the economics that are driving retailers to request community approval of drive thrus?

JR: The need to have a drive-thru option is not a whim. Restaurants are experiencing increased costs of doing business across the board. Land values, construction costs, city impact fees, real estate taxes, and cost of labor are all increasing dramatically. Restauranteurs are looking for ways to increase sales volumes to compensate for the increased costs.

When effectively operated, drive thrus have proven to increase revenues—in many cases by 30 to 50 percent. In the mind of the restaurant industry, drive thrus are not going away.

How can communities demonstrate flexibility in light of these trends?

JR: The biggest challenge arises in the zoning process. A number of communities have blanket restrictions on drive thrus. Generally these blanket restrictions cover the prime retail area in their community.

If a community has a blanket restriction, their staff often wonders, “Why can’t we get the retail tenants we want?” The retailer has already taken that community out of consideration due to the restrictive zoning. The retailer doesn’t even start the conversation with that community; they’ll just go to another community without even engaging with the first one.

A best practice is to provide allowances for drive thrus with specific conditions as opposed to a black-and-white restriction. That at least gets the conversation started.

Looking into the future, what might the impact of driverless cars be? Or services such as Postmates, Grubhub and Uber Eats?

JR: Thought leaders anticipate an increase in driverless cars and associated services. They also project that there will be an increase of “subscription” car services, where you pay a monthly fee to use a car but don’t actually own one.

These trends will probably reduce the need for parking stalls, but should increase the demand for drive thrus and for drop-off/pick-up areas in the vicinity of retailers. As far as we can see, the need for drive thrus is not going away, and communities are best served by re-examining their policies.

 

If your community is interested in exhibiting at the Utah booth at the 2019 ICSC RECon conference, contact Katherine Morrell at kmorrell@edcutah.org.

 

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EDCUtah Thu, 02/21/2019 - 12:58