Drive-thru outlets demand hits 10-year high
New data from Savills shows that drive-thru’s currently make up 33% of out-of-town new F&B new openings during H1, up from 27% in 2022.
F&B operators consistently feature in the top 20 most acquisitive operators in the UK retail warehouse market, with Savills noting 100 new drive-thru openings across existing retail and shopping parks throughout the UK by the end of last year, which is just under double the number opened in 2019 pre-Covid.
Costa and Starbucks continue to be the most acquisitive brands, each opening 10 drive-thru units across existing schemes in H1 2023, in addition to openings on new mixed use and solus roadside developments. Meanwhile McDonalds, Burger King and KFC remain active in this market having consistently sought drive-thru space over the last 5 years.
There have also been a number of new entrants, Tim Hortons, burger chain Five Guys, Taco Bell and Greggs all competing for space within this format and appearing in the top 10 most acquisitive drive-thru brands over the last 12-months.
As a result, the competition for drive-thru space has become fierce, resulting in headline rents climbing to just under £55 psf on average for 2023, a 25.9% increase on the previous year.
Sam Arrowsmith, retail research director at Savills, comments: “The strong acquisition activity we have witnessed within the drive-thru market has been accelerated by customer demand for convenience, which shows no signs of slowing down. With vacancy so low across the retail warehouse sector, there is very little opportunity to satisfy further demand for drive-thru’s. While the research we have conducted focuses on existing retail warehouse developments, demand for expansion means that we are also seeing significantly more drive-thru openings across newly constructed roadside developments.”
Charlie Greenhalgh, out of town retail director at Savills, adds: “Headline rents have inevitably risen as a result of increased demand but also in order to make new developments viable for landlords and developers, due to the recent inflation and significant increase in construction costs. Currently we are often negotiating rents of £60 psf or more for drive-thru sites of up to 2,000 sq ft in prime locations, which means we should see further growth reflected in the data over the next couple of years. That said, this pattern of growth is unlikely to be infinite, there will of course be a ceiling to what operators can pay in this sub-sector that we may hit sooner rather than later.”
Matt Brown, director for national retail at Savills, comments: “The drive-thru market has gone from strength to strength over recent years having established itself as a firm and relevant sub-market within the overall retail sector. As a result we expect it to continue to attract new concepts looking to expand their portfolio as well as providing an area of growth for existing brands already known within the drive-thru market. The truth is the most acquisitive F&B operators would like to do more were it not for scheme configuration, existing lease restrictions and planning constraints.”