For any mall manager, giving kiosk space to F&B brands has always been more profitable than giving that space to retail businesses. For many of the known malls across the country, the kiosk format has been working really well, especially in the food and beverages segment. According to the operators, such kiosks tend to do extremely well as they mostly offer seasonal delicacies and customize their menu based on demand. On the other hand, with more shopping sprees and increasing spending power of the customers, the food joints across the globe have gone a step ahead and preferred opening outlets inside malls rather than a prime market or local area, despite the heavy rentals.

However, the last two years showed us a completely different picture. Due to the pandemic outbreak, the F&B brands were rigorously stepping out of mall locations as the operators were unhearing the rental cry. But with things getting back to normalcy, the food kiosk business is coming back to a better place. We are now entering an era of contactless food ordering, and with self-order kiosks, this ordering method has never been easier. Mall food courts can install self-ordering kiosks to reduce lines, increase revenue, and allow customers to choose precisely what they want. 

Additionally, for any small or new F&B business that is not looking for a full-on, large scale retail store but would like the benefits of selling in a high traffic area to targeted customers, with low-cost market entry and lease term flexibility, all in a small footprint, the mall kiosk has proved to be an ideal location for them. 

Reconsidering the Rental War

According to Sharad and Naresh Madan from Imperfecto Group and Khubani, "If the product has potential, rentals are secondary. People are coming back to the malls. Malls and brands have a symbiotic relationship as having a restaurant in the mall creates a beneficial buying mindset in a consumer's mind." 

The pandemic has been a major catalyst in changing the face of the food market in India. Restaurants witnessed an exponential increase in their delivery business, enabled by the widespread penetration of food aggregators across the country. However, despite this growth in the food delivery market, customers continue to yearn for front-end food experiences, ensuring the relevance of brick-and-mortar establishments. Thus, in a post-pandemic world physical/ dine-in restaurants will once again become mainstream in a customer's food experience again. Hence, kiosks at a mall will be a great first step in the direction of trying to address this demand.

DLF Shopping Malls, in the first quarter of FY21, waived the minimum guarantee (MG) rental for its retailers. In Q2, it offered a 70 percent rebate on MG rentals to food and beverage outlets and a 50 percent rebate to other retailers. Inorbit Mall and Nexus Mall also gave rental waivers to their tenants.

Why You Should Invest?

According to a spokesperson of Pa Pa Ya, there is a rationalization in rental costs coming in. “I don’t think restaurateurs will sign crazy rents anymore. The size of restaurants is also going to be reduced. Malls will also have to rework some of their financials as some of the occupancy costs, especially when you add CAM and other charges to the occupancy costs will become unviable for the restaurant industry itself. So there are going to be some of these changes,” he added.

Having said that the crowd will move towards mall setup, investing in mall kiosks will be a nice idea in terms of brand positioning and marketing technique. As a sign of relief, earlier this year, it was announced by the industry body Shopping Centres Association of India (SCAI) that mall owners will stand by their tenants as they did in the last two waves and are likely to offer relief to retail stores, food outlets and multiplexes amid the fresh Covid pandemic wave.

What Will Change?

A lot changed after the pandemic hit us all, with malls being closed due to virus spread to reducing the footfall capacity, restaurants started facing losses but with things looking back to normalcy, the graph is definitely getting better by the day for serious players as the footfall in the malls has also increased.

Dining has undergone a significant change in the last two years with restaurant closures and multiple lockdowns. Menu sizes have become a lot smaller. The new trend is for smaller restaurants and so will be witnessed at food kiosks. “Occupancy costs are going to get lower. Also, we are seeing a lot of limited menus and regional cuisines come up. So smaller menus, smaller restaurants, thereby lower rents, and regional Indian food will see a renaissance. People appreciate it because a smaller menu means lower food costs, less food waste, and ultimately higher quality because chefs must prepare fewer dishes,” PaPaYa spokesperson added.

According to Kabir Bose, Co-founder of Burgerama, "The resurgence along with an increase in awareness about authentic flavors once again makes mall stores viable for brands, however, it may take slightly longer for mall food courts to come back to full strength. Additionally, food brands are now moving towards experiential stores, finding ways to expand their brand experience beyond the food by engineering the physical and digital brand experience. 

“From creating AR/VR food experiences to digitizing the in-store customer experience, restaurants are finding innovative ways to engage with their customers. And this trend is likely to form the majority of the upcoming post-pandemic dining experiences. The way ahead is phygital,” he asserted.

Taking cues from Select CityWalk, a popular shopping destination in New Delhi has about eight percent of its space under fit-out for new stores. “In the last 15 days, we have seen heads of several international brands visit the mall and the plans for expansion and fit-out are back on track,” said the mall’s Executive Director.

Many shopping malls have space under fit-out, a term used for the process of making stores ready for occupation by retailers, who are expanding their outlets rapidly with the return to the ‘old normal’ as Covid-19 cases drop and shoppers throng the malls. Footfalls are at 80-85 percent of pre-Covid-19 levels and sales are already at pre-pandemic levels, giving us a much-needed hint of the potential.