NASHVILLE RESTAURANT UPDATE

With COVID-19 still burdening the nation, I thought it would be worthwhile to take a deeper look at what the restaurant industry currently looks like in Nashville and how it is continuing to cope.

Despite the pandemic, there are still a number of large and small restaurant groups that are trying to get into the restaurant market in Nashville. Right now, there are no vacancies and also not a huge amount of closures or carnage. This is causing challenges for prospective restaurants looking to make a move.

Regardless of how many restaurants are trying to enter the Nashville market, there is still an issue with staffing. From cooks to back of house and front of house, Nashville is not invincible from the staffing shortage that is striking the nation. I definitely think this issue will continue over the next year.

Even though people have concerns with staffing, this has not made Nashville any less appealing to restaurant owners. Most decide they still want to come to Nashville for deals and decide they will figure out the issues with staffing later. While many markets around the country are deciding not to move forward with new deals, these individuals view Nashville as a less risky market, so they are willing to forge forward.

Looking more closely at the types of restaurants emerging in Nashville, we are seeing larger sized restaurants in lower Broadway. These are usually around 10,000 SF and are coming in from all over the country, particularly from areas like New York, Los Angeles, Chicago, Dallas, or any other city with an entertainment twinge to them. They see a lot of promise in Nashville and want to be down here.

In other areas of Nashville, we are seeing QSRs (Quick Service Restaurants) such as Raising Canes, Whataburger, Popeyes, and Coffee Guys. These fast casual dining options tend to run between 2,500 and 3,500 SF. Other popular concepts include salad options such as Cava or Chopped and breakfast-only restaurants like Snooze A.M. Eatery, First Watch, Another Broken Egg Cafe, and Big Bad Breakfast. Restaurant pioneers in this sector figured out how to incorporate alcohol into breakfast, creating popular brunch and lunch options.

While we are seeing many more cafe and breakfast options as described above, there are a lot less casual diners opening up. These spaces, which are usually around 6,000-8,000 SF spaces, were the hardest hit during COVID. With 15-20% of the alcohol removed from those businesses, their profit margins are diminishing greatly. Less people are sitting in the seats of diners, so this sector is simply not expanding anymore.

Fortunately, most of the established restaurant corridors have stayed strong during the pandemic. This includes the upscale restaurants in   and Midtown and hipster chef-driven restaurants geared toward foodies in East Nashville and Germantown. The suburbs still remain solidly populated with fast food chain restaurants.

One interesting example of a new concept is a supper club started by Justin Timberlake and Sam Fox called The Twelve Thirty on 5th and Broadway. This honky tonk restaurant is 30,000 SF and located directly across from Bridgestone arena, offering locals a place to overlook the tourists without being part of it. It will be interesting to see whether this is successful and if it will bring in other similar restaurants.

No matter what style restaurant or neighborhood of Nashville you are looking to move into, you need to have outdoor dining. It’s also ideal to be able to NanaWall the front wall of your restaurant in order to open the space up. In the past, landlords have charged for this but with the trend growing and almost critical for success, it will be interesting to see if landlords still charge extra. If you do not have a planned patio already, you need to look into this, even if it means being creative and taking a drive-thru space and converting it into a patio or making sidewalk space into patio space.

The only group of restaurants that doesn’t need to focus on outdoor space is QSRs because right now they want drive-thrus. Even QSRs that previously didn’t have a drive thru now want one because they wouldn’t have to staff the dining room as high.  Many restaurants are willing to take the gamble and hope it pays off in profitability, especially since all of their competition is doing the same thing. If you have drive thru space that you decide you no longer want, you can at least adapt it into patio space and reuse the square feet. On the other hand, the tricky group of emerging restaurants is fast casual because they want both a patio and drive thru, a hard find.

While 2020 and 2021 have been an extremely interesting and disruptive time for the restaurant industry, the coming year will be even more telling for what the future of the restaurant industry looks like and how new concepts will continue to adapt.