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

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

The store, which opened in March on the Upper East Side, is the first in the chain to exclusively handle takeout and delivery orders. It’s part of a trend of smaller, takeout-focused stores that have boomed during the pandemic and 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.

The decline has been most visible in coffee shops, where Manhattanites have found themselves with fewer seats, said Gregory Zamfotis, founder and CEO 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 is difficult to determine precisely to what extent cafes and fast food restaurants have become smaller. Many commercial real estate agencies, 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 renters all agree that retailers are cutting staff.

“The smaller the better,” said Steven A. Soutendijk, executive managing director of Cushman & Wakefield. “There are a lot 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 Petite Mamans — after opening the first one in Moynihan’s train hall in 2022.

Smaller Maman boutiques range from 350 to 800 square feet, while a full-service Maman boutique can be as large as 3,200 square feet, Sormonte said. The smaller stores allow him to target customers on the go and give him 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 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 evolving and evaluating. That’s what good retailers do.

Chick-fil-A has both cards up its sleeve 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 sit-down location 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 complement the first and accommodate the growing number of digital orders.

Small stores have another significant 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 separate spaces from work or home where people can linger for hours , talk to friends and make 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 go there to gather, says Kathy Giuffre, professor emeritus of sociology. at Colorado College. When speed of service, reduced hours or space constraints limit social gatherings, loneliness and isolation can increase.

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

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

“I’m a big believer in the future of third places,” he said. It might be a different version, he noted, “but it’s always going to be there because people always want a place to gather. And coffee has always been that central gathering point for people.”