Cities and urban centers date back to the earliest days of civilization, but in the last couple of centuries, the number and scale of metropolitan areas has compounded several times over. Rural communities are aging, while younger generations seek better opportunities in more densely populated terrain.
But how does this inevitable shift affect restaurants? In terms of real estate, it means pricier spaces and stiffer competition. The flipside to those drawbacks is that urban locations open operators up to a bigger, broader consumer base. Concepts with growth in mind often use big cities as a sort of proving ground. (To wit, “If I can make it there, I can make it anywhere.”)
So just who are these urban dwellers and what do they look for in their restaurant experience? The answer, like the cities themselves, is complex and even a bit messy.
Where are they? Everywhere
As of the 2010 census, 83.7 percent of the U.S. population lived in metropolitan areas (defined as cities and suburbs with 50,000 or more residents). The top 10 metro areas were home to some 74 million people, accounting for about a quarter of the total population. It was a 9 percent uptick from figures of the 2000 census, and the past decade has almost certainly increased that portion.
While New York, Los Angeles, and Chicago may remain the largest and most quintessential cities, they aren’t experiencing the same population boom as second- and third-tier markets like Las Vegas and Austin, Texas, per the census.
In town, off premises
As varied as cityscapes can be, consumer demand for delivery remains fairly consistent, accounting for some 63 percent of all restaurant traffic in urban areas, according to the National Restaurant Association. Whether it’s braving the subway or battling traffic, customers are buying into a more convenient means of enjoying fare from their favorite restaurants.
That being said, residents of certain cities spend more on their off-premises dining habits than others. DNA testing and analysis firm Vitagene broke down the numbers to determine the most and least expensive cities for takeout and delivery. At an average of $210 per month, Seattle consumers spend top dollar for off-premises, followed by Pittsburgh and San Francisco at $199 and $195, respectively. Across the 52 cities included, Detroit spent the least at $142 per month.
The limited-service split
Quick service is alive and well in cities thanks to relatively low ticket averages and nimble footprints that can be shrunk to fit even the tightest of squeezes. But it is also in major metropolitan areas that the divide between fast food and fast casual is particularly pronounced. Online rental resource Apartment Guide found that when it comes to traditional fast food, cities that rely more heavily on cars than mass transit have a greater number of such establishments per capita. For example, Orlando, Miami, and Cincinnati have the highest ratio of residents to fast-food unit, while New York and Boston are among the lowest.
When it comes to fast casual, however, that dynamic flips. Fueled by urbanites’ demand for elevated fare at a reasonable price, the format is fertile ground for up-and-coming concepts in densely populated urban centers. At QSR, we’ve been tracking this new generation of restaurants in cities across the U.S. Unsurprisingly, New York, San Francisco, and Los Angeles take the cake for fast-casual innovation, with each city boasting several dozen original, homegrown micro-chains.
Making it in a city
For restaurants—and for people—metropolitan areas offer opportunity and hardship in equal measure. Before planting a flag in the Big Apple, Chi-Town, or Beantown, restaurants should be firm on who they are and, perhaps more importantly, whom they serve.
Know the neighborhood. No city is homogeneous. Five blocks over can be a completely different world in terms of who lives there (young professionals, families, retirees, immigrants, graduate students, etc.) and what cuisines those residents prefer.
Deliver convenience. Just because you’re located by a subway stop or in a walkable part of town does not mean your customers won’t want an option for delivery. After all, off-premises is on the upswing in cities (and everywhere else).
Rethink your operation. Real estate can be hard to come by in cutthroat markets, and restaurants that are married to specific square footage or floor plans may find themselves waiting for an ideal spot that may never come to pass. Think like a “cityzen” and adapt to your surroundings.
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