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

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.

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.

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 turnover or changes by other companies in reducing the number of seats, people simply have fewer options for where they can stay,” Mr. 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.

“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.”

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 in Moynihan’s train hall in 2022.

Petites Mamans range from 350 to 800 square feet, while a full-service Maman can reach 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 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 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 is having a field day 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 design of the new outpost 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.

“Sometimes it’s hard to justify paying three, four, five hundred extra square feet for seats that you don’t necessarily need,” Mr. Zamfotis said. “We don’t need a lot of seats. We need just enough to support 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.

“The profits are probably large in places where you can get in and out very quickly,” she said. “The social costs are invisible, but very profound.”

Mr. Zamfotis doesn’t think the small-format stores spell the end of the coffee shop 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 may be a different version, he noted, “but they will always exist because people still want a place to come together.” And the café has always been this central meeting point for people. »