Shifting gears to drive future success in a pandemic-adapted world
The summer of 2022 has given the strong impression that many consumers now view the pandemic in the rearview mirror. And yet, retailers are experiencing significant headwinds from inflation, ongoing labor issues and persistent supply chain disruptions.
This begs the question, how are tenants navigating the current market and what are their future plans?
The outlook for most businesses, particularly within the retail and restaurant sectors, is that there are still many of the same uncertainties as there were at the beginning of the pandemic. The ebb and flow of infections over the years has led to a cycle of consumer behavior that is difficult to anticipate. However, there is reason to remain relatively optimistic.
The following description of the plans of two restaurants, one new to the market and one more established, help offer a clear picture of the confidence we see outside the urban core.
Navigating the road map of a pandemic-tolerant world
In July of 2021, we featured the restaurant and bar chain Hops n Drops as a standout example of a company that acted promptly and thoughtfully to the changes required to be successful in a pandemic-affected environment. In particular, we highlighted their shift to a 100% takeout and delivery model and the initiatives they took to relieve some of the pressures of the pandemic.
A year after that update, this family of restaurants continues to expand aggressively throughout the west—despite potential signs of an economic recession building. Kevin Eggen, the CEO, reported that,
"We are continuing to grow in Oregon, Colorado and Washington. Our year-over-year sales are up 8-12%. Third-party and online ordering are still a major part of our business, 20-25% of overall sales, with DoorDash and UberEats being our top two partners. Growth is on our minds, and we continue to work through deals in all three of our markets."
Assisted by George Macoubray and his team, Hops n Drops has a lease signed for a new location at Lacamas Square in Vancouver, Washington (due to open in early 2024) and has active negotiations for several additional locations in Oregon. As George explains, this continued organic expansion is thanks to Hops n Drops' big-picture thinking.
"Hops n Drops was resilient and creative during the pandemic. Moving forward they are expanding into neighborhood locations or near regional shopping areas. They can continue to compete against the national chains by providing great food and first-class customer service."
George added that Hops n Drops is actively looking for 4,000 SF spaces throughout the state.
It’s a detour, not the final destination
While established operations like Hops n Drops look to expand their footprint in the market and build on existing success, we are also seeing new concepts arrive and expand aggressively. Graze Craze is a charcuterie boards and boxes restaurant with a focus on to-go products crafted by a personal “Grazologist.” Represented by Gael Zongazo, the tenant set a goal of opening 20 locations across Portland and seven in Vancouver within the next year.
As a novel, yet innovative concept in the market, with demonstrated success across the country, the aggressive expansion into the Portland market indicates a strong willingness of experienced operators to expand their bullish view of the region. Reflecting on the expansion, Gael commented,
"We gathered information regarding over 150 locations all over the Portland Metro Area to find the ideal space and submitted dozens of LOI’s. The process was slow at the beginning as we sorted through responses but now things are picking back up and we’re getting it done."
That extensive market research, along with a thorough and defined process for working through simultaneous deals has started to bear fruit. Graze Craze is scheduled to open their first location this month, inside the Von Ebert Brewing’s Glendoveer location, with a wave of further openings to soon follow.
Graze Craze’s Director of Brand Development, Joe Janaszek elaborated, “We are working towards our fifth lease this year and I couldn’t be happier with the progress.” Along the way, Gael has facilitated the leasing activity with Joe adding, “The leasing experience has been great.”
Together, Hops n Drops and Graze Craze offers two compelling examples of the current success of pandemic-adapted restaurant concepts taking advantage of active consumers to plan further expansions. We believe that these two restaurant examples are an accurate reflection of the broader energy within the suburban markets amongst retail concepts including fitness, personal care, automotive, pet service, daycare and schools, and more. Retail businesses have a chance to pivot not only business models, expansion plans or trade areas but the overall attitude of living in a pandemic-adapted world.
Instead of being deterred by the obstacles set forward by our current situation, we believe tenants and landlords continue to optimistically search and find new paths forward—and as we’ve seen with the examples above, with notable success.
With knowledgeable, efficient and effective transactions facilitated by experts like George and Gael, we project active tenants of this type throughout suburban markets across the Portland region. The downtown core? Well, that’s for another newsletter…