LOS ANGELES—Fast casual restaurants have been dominating the retail scene, and it seems that even new concepts and burgeoning fast casual brands are making a splash in the retail market. Yellow Fever, a fast casual concept, has just signed a 1,500-square-foot 10-year lease deal for its second location in Venice. Kennedy Wilson VP of brokerage Michael Pakravan negotiated the lease deal on behalf of the tenant and the landlord, along with his colleague Ed Sachse, and is a huge believer in the fast casual movement. Last year, we spoke with him about the expansion of fast casual chains, but to find out about how this trend is evolving and spreading to regional brands, we sat down with him for another exclusive interview. Here, he talks about the growth of regional and local fast casual restaurants, what tenants are looking for and what landlords should know.

GlobeSt.com: Why has this trend spread to non-chain or non-credit fast casual restaurants?

Michael Pakravan: Social media is having a huge part in this. It is allowing these companies to advertise to the masses in a very convenient and inexpensive way. You find these cult followings. We were shocked to see how many people drove from all over Southern California to visit Yellow Fever, and that was all because of social media. In the past that wasn't a way that people could advertise, and it has really helped the regional, mom-and-pop user. From a consumer perspective, people want variety and people eat out more often. That is also helping tenants like Yellow Fever to grow and expand more quickly.

GlobeSt.com: What should a landlord look for when considering leasing to a new restaurant concept, like Yellow Fever?

Pakravan: Social media is a huge source of great information. You have hundreds to thousands of people that comment on a daily basis about how the restaurant is doing, customer service, cleanliness and about the product itself. Landlords would be naive not to consider social media. There are also so many different social media channels. Yelp is the big one, but top of that, you have Facebook, Instagram, Zagat and those are just a few. The second piece to this is sales. In the past, getting access to sales information was more difficult but today, landlords are able to get sales information pretty easily. Landlords have to look at the sales information for previous location. For Yellow Fever, for example, we looked at how they were doing in Torrance and compared the demographics in Venice, and figured if they were doing X per square foot in Torrance, they would be able to do that number if not a higher volume based of the demographics of an area.

GlobeSt.com: How do you qualify a totally new restaurant concept? Can you still rely on social media?

Pakravan: No. When you are dealing with a first time restaurant, there are other ways to qualify a tenant. Restaurant experience is a huge factor. You want to make sure that there is experience on an operational end as well as front of the house and back of the house experience. You also want to make sure that the infrastructure that is in place would be able to accommodate a future restaurant owner if that restaurant were to fail. A landlord is going to limit tenant improvement allowances for a first time business.

GlobeSt.com: Let's flip it around and look to the tenant perspective. What is a new tenant like Yellow Fever looking for in a space?

Pakravan: Within the space, high ceilings are a trend that we see more and more tenants prefer, and another is patio space, especially being in Southern California. Customers love being able to sit outside. From the real estate perspective, you want to be around like-minded tenants, whether they are similar restaurants that go after the same client or like-minded businesses. Yellow Fever, for example, is health conscious and they love being in this area because there are a number of gyms and yoga studios nearby that are like-minded.

GlobeSt.com: Can we expect the fast-casual restaurant trend to be here to stay?

Pakravan: Yes. Food costs and employment costs are steadily increasing, so having a smaller setting without traditional white tablecloths and a high staff count you are able to cut down costs significantly. The consumer is also realizing more and more that the quality of the product is not dependent and the setting in which the food is served. You don't need to have white table clothes to have an A-plus quality meal.

GlobeSt.com: Why has this trend spread to non-chain or non-credit fast casual restaurants?

GlobeSt.com: What should a landlord look for when considering leasing to a new restaurant concept, like Yellow Fever?

GlobeSt.com: How do you qualify a totally new restaurant concept? Can you still rely on social media?

GlobeSt.com: Let's flip it around and look to the tenant perspective. What is a new tenant like Yellow Fever looking for in a space?

GlobeSt.com: Can we expect the fast-casual restaurant trend to be here to stay?

Instant Insights /

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