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 on the Upper East Side in March, is the first in the chain to exclusively handle takeout and delivery orders. It’s part of a trend of small, takeout-focused stores that boomed during the pandemic and remained popular, especially among Manhattan’s coffee and fast-food chains.

Between 2019 and 2023, the average size of a commercial lease in Manhattan decreased by 17%, to 2,585 square feet, according to the CoStar Group, a commercial real estate data firm.

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 staff turnover or because other businesses have made changes to reduce seating capacity, people simply have fewer options for housing,” Zamfotis said.

It’s hard to pin down exactly how much smaller cafes and fast food restaurants have become. Many commercial real estate brokerages, 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 downsizing.

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

Benjamin Sormonte, co-founder and CEO of the Maman coffee and bakery chain, is one of those thinking small. Mr. Sormonte plans to open more miniature Mamans, aptly called Petite Mamans, after the first one opens in Moynihan Train Hall in 2022.

Petite Mamans range from 350 to 800 square feet, while a full-service Maman 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 store 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 it and evaluating it. That’s what good retailers do. »

Chick-fil-A has it both ways on the Upper East Side, with the new mobile pickup 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, owner and operator of both locations, said he wanted the new outpost’s design to complement the first and accommodate the growing number of digital orders.

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

For example, Gregorys Coffee’s locations range from 400 to 1,800 square feet in Manhattan, Mr. Zamfotis said, and it seeks rents between $100 and $300 per square foot. Within these ranges, the cheapest 1,800 square foot store would cost $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 you don’t necessarily need,” 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, however, doesn’t think small-format stores spell the end of coffee 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.”