Fast food and coffee chains are opening smaller stores, offering takeout only

New York City’s new Chick-fil-A restaurant has everything you’d want from a chicken restaurant: friendly waiters, crispy fries and a line of hungry customers. There’s only one thing missing: seats.

The store, which opened on the Upper East Side in March, is the chain’s first to handle takeout and delivery exclusively. It’s part of a trend toward smaller, takeout-focused stores that boomed during the pandemic and have remained popular, particularly among Manhattan’s coffee and fast-food chains.

From 2019 to 2023, the average size of a commercial lease in Manhattan declined 17%, to 2,585 square feet, according to the CoStar Group, a commercial real estate data company.

That decline was most visible in coffee shops, where Manhattan residents found themselves with fewer seats, said Gregory Zamfotis, founder and chief executive of Gregorys Coffee.

“In many places, because of employee turnover or changes by other businesses to reduce seating capacity, people simply have fewer options for accommodation,” Zamfotis said.

It’s hard to pinpoint the extent to which coffee shops and fast-food outlets have gotten smaller. Many commercial real estate firms, such as CBRE and Cushman & Wakefield, track only a handful of small leases signed by these tenants each year. But real estate analysts, brokers and tenants all agree that retailers are downsizing.

“Smaller is better,” said Steven A. Soutendijk, executive managing director at Cushman & Wakefield. “There are far more tenants looking for smaller stores than larger stores.”

Among those thinking small is Benjamin Sormonte, co-founder and CEO of the Maman coffee and bakery chain. Mr Sormonte plans to open more Miniature Mamans – aptly called Petites Mamans – after opening the first in Moynihan’s train hall in 2022.

Small Maman boutiques range in size from 350 to 800 square feet, while a full-service Maman boutique can be as large as 3,200 square feet, Mr. Sormonte said. The smaller stores allow it to target customers on the go and give it more flexibility when looking for new locations, a crucial advantage given Manhattan’s historically low retail availability.

Buffalo Wild Wings, Starbucks, Blank Street Coffee and even Whole Foods have also announced or rolled out smaller, takeout-focused stores in New York City, alongside their existing outposts. Blank Street, in particular, was born out of the small-format model: Most of its stores are less than 350 square feet and designed to serve customers at a rapid pace.

“Every retailer that’s trying this approach has both models,” said David Firestein, managing partner at brokerage firm SCG Retail. “Brands that have 10, 20, 50 or 100 stores are constantly looking at the model and constantly changing and evaluating it. That’s what good retailers do.”

Chick-fil-A has both cards in hand on the Upper East Side, with its new mobile store on Second Avenue at East 80th Street, just a few blocks from a more traditional location with seating on Third Avenue at East 86th Street. Jared Caldwell, the owner and operator of both stores, said he wanted the new store’s design to be complementary to the first and be able to accommodate the growing number of digital orders.

Small stores have another huge advantage over full-size stores: lower rents.

For example, Gregorys Coffee stores range from 400 to 1,800 square feet in Manhattan, Zamfotis said, and he seeks rents between $100 and $300 per square foot. In those ranges, the least expensive 1,800-square-foot store would cost him $60,000 more per year than the most expensive 400-square-foot store.

“It’s sometimes hard to justify paying those extra three, four, five hundred square feet for seats that you don’t necessarily need,” Mr. Zamfotis said. “We don’t need a huge number of seats. We just need enough to accommodate some of the traffic that wants to stay. »

For coffee shops, the small stores represent a departure from the “third place” business model popularized by Starbucks, in which stores function as spaces separate from work or home where people can linger for hours, talking to friends and making new ones.

Third places can be anything — your hometown bar, a public park, even a fast-food restaurant like McDonald’s — as long as people congregate there, said Kathy Giuffre, professor emeritus of sociology. at Colorado College. Where fast service, short hours or space constraints limit social gatherings, loneliness and isolation can grow.

“Profits are probably big in places that can get you in and out very quickly,” she said. “The social costs are invisible, but very deep. »

Mr. Zamfotis doesn’t think small-format stores spell the end of coffee as a third place, though, even given Manhattan’s limited space and high rents.

“I firmly believe in the future of third places,” he said. It might be a different version, he noted, “but it will always be there because people still want a place to gather.” And the café has always been this central gathering point for people.