Restaurants are asking state legislators to cap delivery fees at 15 percent as take-out orders have become their lifeline during the pandemic. Chefs and owners complain services like Uber Eats and Grubhub take an excessively large slice of this revenue.
Restaurant owners and workers from across Massachusetts recently made a desperate plea for help on Beacon Hill.
Members of Massachusetts Restaurants United, formed in the wake of the coronavirus crisis, rallied in front of the State House to push for legislation that includes a relief fund to help struggling eateries keep their doors open.
And whether they realize it or not, developers and wide range of other players that make up the commercial real estate industry in the Bay State have a dog in this fight.
Over the past decade, developers across Greater Boston have increasingly relied on hip independents boasting big–name chefs and a never-ending flow of new trendy new chains to generate the excitement and foot traffic needed get new projects off the ground.
Nordblom used restaurants to spearhead its 3rd Avenue lifestyle center in Burlington, with six different eateries and a Wegman’s grocery store.
WS Development rolled out Legacy Place in Dedham back in 2009 using a similar formula. The lifestyle center has 18 different restaurants, including the Yard House, sweetgreen, CAVA, and Genki.
MarketStreet Lynnfield, rolled out by National Development and WS Development in 2013, relied on the same recipe, with restaurants the key ingredient.
And let’s not forget Chestnut Hill Square and The Street in Newton.
Del Frisco’s Grille, Davio’s Cucina and Shake Shack helped get The Street off to a roaring start, while nearby Chestnut Hill Square countered with Brio Tuscan Grille and Seasons 52.
Nor has this just been a suburban phenomenon, with luxury tower developers in Boston recruiting top chefs as well, part of their efforts to woo buyers to their multi–million-dollar condominiums.
Millennium Tower in Downtown Crossing hired James Beard Award–winning chef Michael Mina to run a private bar and club room when it opened in 2016, with meals created exclusively for condo owners and their guests.
And the new Four Seasons One Dalton tower, which opened last year, generated its own culinary buzz with high-end Japanese restaurant Zuma.
The New Anchor Tenant
For developers both suburban and urban, restaurants have taken over the role of the anchor tenant once held by traditional retail stores.
The list of bankrupt or nearly broke department stores is long and growing by the day, with once might names like Sears and Macy’s having found their business model under siege from the rise of e-commerce.
COVID-19, if anything, has only solidified that trend, pushing more and more shopping activity online.
Yes, the coronavirus pandemic has also wreaked havoc with the restaurant industry, with a fifth of all restaurants in the state – well more than 3,000 – have closed permanently.
But unlike the troubled retail sector, the long-term future of the restaurant sector as both a major hub for modern social life and as the spearhead for new development projects appears unlikely to change.
In fact, it’s hard to imagine exactly what would replace the vital role restaurants have come to play in helping development projects get off the ground.
Restaurants Rely on Takeout
All of which brings us back to Massachusetts Restaurants United and its campaign to convince state lawmakers to throw a lifeline to the sinking sector.
A wide-ranging economic development bill that has been sitting on Beacon Hill would establish a Distressed Restaurant Fund and to cap delivery fees by at 15 percent.
That second part is just as crucial, with restaurants being gouged by delivery services with GrubHub, Doordash and the like with fees as high as 20 percent to 30 percent, even as they rely on takeout orders to keep their lights on.
It would be money well spent.
While the big chains will weather this storm, it’s the small independents that are the most vulnerable right now.
Scott Van Voorhis
And it just those small outfits – often startups by ambitious chefs – that often bring the most value to the table when it comes to helping energize a new development project.
Neither the real estate and development industry in Massachusetts nor the business community as a whole can afford to sit by and watch as the state’s vibrant restaurant sector slowly withers, with talent pulling up stakes and moving to greener pastures in other metro markets and regions.
So, should you care about this fight? You bet. And now its time for the real estate industry to step up and make its voice heard on Beacon Hill before thousands of additional restaurants are forced to shut their doors.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
