Courting fast food

Compass Retail Catering sees the opening of its third and biggest retail food court this month, at the Glades shopping centre in Bromley, Kent.

The company's proposition to shopping centre owners is that it is a single operator offering a range of brands. In contrast, for the first four years of the Glades' operation its owner, Capital Shopping Centres, dealt with six different mamma and pappa operators, as they are termed, as well as another contractor to clear the seating area.

Benefits for the shopping centre are twofold. First, it deals with only one tenant, rather than a handful of individual operators. Second, since rent is turnover-related, the presence of a company with financial strength to invest in brands, increases its income. In many cases where Compass has converted its former Casey Jones - the old Traveller's Fare brand - outlets to Burger King, turnover has increased by 40% - even on like-for-like products such as Coke.

The Glades food court seats 350, and is served by six food kiosks - Café Select, Upper Crust, Pizza Hut Express, Jackets, Traditional Favourites and Burger Box. The latter two have been developed specifically for the needs of the site.

Burger Box is essentially a repackaged Casey Jones which Compass dropped in favour of an agreement with Burger King. Although the agreement means Compass can no longer use the Casey Jones name, there is a provision allowing Compass to develop another brand for sites where a Burger King already operates nearby - as has happened at the Glades.

Compass's other two shopping centre operations are the Cambridge Grafton Centre's phase two development, which opened in April, and the Princes Mead shopping centre in Farnborough, Hampshire.

The company's move into shopping centres has grown from its presence on railway stations and at airports. In many ways the developments evolved rather than being part of a deliberate strategy - approaches have tended to come from shopping-centre operators rather than the other way around.

"The decision-makers use airports and railways, so they see our operations," says business development manager Steve Rister. Certainly there seems to be anecdotal evidence to support that view - at the opening of the Grafton Centre, owned by Grosvenor Estates, the Duke of Westminster claimed to be a regular Café Select cappuccino drinker when waiting at railway stations.

There are currently no plans to open any more retail food courts. Starting three within a relatively short period of time, the company aims to see how they develop before committing to more.

Although there are more than 150 shopping centres in the UK, not all would be suitable candidates for Compass. "Some don't have enough through traffic, some have the food court positioned away from the main shopping area, others are already tied into 25-year leases with other brands," says Rister. Compass's initial research suggests there are perhaps 25-30 centres which might meet its criteria.

Grafton Centre's food court, where turnover is up 25% on projections of £1m since opening in April, in many ways represents the ideal situation. The food court is situated on the same floor as a multiplex cinema, and film-goers have to walk past the kiosks to get to the car park. It also has a good selection of big-name stores with entrances near the food court.

Since the opening of the phase two development, and addition of the food court, the cinema and other draws, dwell time in the Grafton Centre has increased from one-and-a-half hours to four hours.

For Capital Shopping Centres at the Glades, moving to a single operator has been a big move - for the first four years of the centre's operation the owners were convinced individual operators were the way to achieve a varied offering.

However, with its income based on turnover-related rent, it became clear that there was a limit to how much could be achieved from mamma and pappa operators. "Because individual operators do not have the money to invest, they cannot adapt so readily to food trends and nor can they provide the same level of marketing that Compass can," says Rister. "Besides any marketing done by the shopping centre, we can bring the benefits of national promotions that come with high-profile brands," he adds.

Refurbishment at the Glades, which is on a seven-year lease, has cost Compass £200,000. The company has invested its contribution in the back of house areas, while the shopping centre has paid for upgrading the seating. Compass believes it can increase the current turnover from £1.6m net to £2m simply through improved marketing and customer awareness.

At all its shopping-centre operations rents are turnover-related. The actual percentage paid depends on a number of factors including the centre's popularity and number of anchor stores such as Marks & Spencer or Debenhams.

The tenant mix is a vital element when negotiating a lease. "You have to ensure there is a fair mix of tenants and not too many catering offers," says Rister. "If more catering operations were to come in to a centre where we operated and it affected our revenue we would reserve the right to negotiate."

At the Glades there are currently 15 food operations, of which Compass operates six, while at the Grafton centre there are six, of which Compass operates three.

Similarly, lease lengths vary, from five to 25 years, although Compass has gone for relatively short leases in all three of its shopping centre operations, in order to give itself flexibility. The Grafton Centre is on a six-year lease, Glades a seven-year lease and Farnborough a 10-year one.

With the Grafton Centre and the Glades giving the company a high profile, Compass expects other shopping centre owners to be keeping a close eye on how the operations work. But Compass has no plans for any others yet - wisely, it wants to catch its breath and monitor the existing operations before making any further commitments.