Quick casual is the fastest growing segment in the restaurant business today.  You certainly don’t need an expensive survey conducted by a team of lawyers to tell you that.  All you need to do is take a drive to the mall and you’ll quickly find yourself running a gauntlet of quick casual restaurant on the pad, just to get to the mall entrance.  And if the mall has theatres, you can double the number of restaurants surrounding it.  After a few years where the economy was in a slump and unemployment numbers being high, the quick casual format became the ‘darling’ of the business with its continued growth.  With jobs scarce, new franchisees were investing in businesses to buy jobs. And there is always to one-off plans to “build a restaurant just like McDonalds or Wendy’s…….only different.”

Landlords, true to form, have built more than enough locations to accommodate the demand.  Now, when the economy is starting to gain traction, we are starting to see some very expensive vacancies.

This year, to make a difficult situation worse, weather is playing a major roll in screwing up the retail and restaurant business, especially over the past months.  Up and down the East Coast, we’ve been plagued by wind storms, rain storms, snow storms, floods, power outages and unseasonably cold temperatures.  As a result, many of these quick casual restaurants, who depend on the teen to young adult spending patterns, are hanging on by a thread.  Sales are off because the clientele isn’t venturing out.

Some of the hardest hit restaurants won’t make it to Summer but this isn’t unexpected.  Any period when a category shows accelerated growth is usually followed by an adjustment period where the category, like water, finds its own level.

This time, however, the adjustment might very well be brought on by the recent State of the Union message in which there was a call for an increase to the hourly wage.  For a category that is already on the edge, a payroll increase will push some past the tipping point.

The restaurant industry and the fragile quick casual category in particular, would be negatively affected by an increase in the hourly rate………….at this time.  Oh, make no mistake, it will happen that wages will be increased.  At this time though, the ripple effect will upset more than just the restaurant owner.

In a category that is already over-built, an increase in hourly wages will immediately result in reduced staff and fewer part-time hours. And as we all know, ‘doing more with less’ only works for a short time.  Oh and by the way, this is also the category that has absorbed some much of the previously unemployed.  The ripple will be felt on the suppliers’ sales floor and yes, even in the landlords’ leasing departments.  Are landlords ready to listen to rent reduction requests again?....................WP