Food and drink are the cornerstone to a successful shopping centre. But what do centre managers need to keep in mind?
Food and drink are very much part of a landlord's place making opportunity within a centre, as it is very often a way of extending a shopper's stay and spending within the centre. Good estate management demands that landlords have a good food and drink strategy to ensure that all needs of shoppers are catered for whether this is a quick coffee, or a more longer lunch to recharge the batteries.
Noise, nuisance, litter and waste
Food and drink outlets, often, produce more noise, litter and waste than standard A1 retail units. A manager will need to keep this in mind when designing the unit and approving tenant's works to units, particularly ensuring that all litter and waste can be contained within the unit and easily removed. It will also be prudent to include tenant's obligations in the lease to dispose of waste promptly and in compliance with the requirements of the local authority.
Centre managers and landlords must also consider the location and design of outlets in order to minimise and manage the nuisance to other retailers whilst balancing accessibility and convenience. 'Nuisance' covers a range of matters, including noise, smells and leaks, which interfere with a property owner’s use and enjoyment without necessarily involving physical damage or encroachment. A neighbouring retailer, who suffers nuisance, may have a right of action to either damages or an injunction to prevent the continuation of the nuisance.
Service charge and energy consumption
Given that restaurant and bars are high consumers of utilities, it would be sensible to ensure that utilities, where possible, are metered and that there is a corresponding covenant for the tenant to pay all outgoings attributable to their unit. This ensures that directly consumed outgoings are not only paid directly by the tenant but do not form part of the service charge. The installation of meters ensures fairness between the tenants and reduces the possibility of disputes with other tenants or with the landlord.
This issue of services provided to retail tenants can become contentious where the opening hours of the units or outlets are different. To avoid service charge disputes it is important to have comprehensive and consistent service charge provisions for all the units in the shopping centre and to ensure that the service charge costs are apportioned in a fair and reasonable manner, taking into account factors such as extended trading hours and whether certain services exclusively or disproportionately benefit certain occupiers or occupier types.
As restaurants and bars compliment a critical mix of any shopping centre and often constitute an ancillary service for customers shopping in the centre, it is important that they are open at profitable times (i.e. mealtimes and evenings) but also for the convenience of all-day shoppers. However, where this is expressed as a tenant obligation to open for certain periods, a landlord should be aware that if a tenant fails to open, in accordance with the terms of their lease, the landlord will only be entitled to damages as a court will never force a tenant to remain open for specified periods.
This article first appeared in Shopping Centre Magazine in February 2017.