Whole Foods + Daybreaker = Experiential Grocery

Dan McCombie is a Research Associate at Larisa Ortiz Associates

**The following blog post contains a brief discussion of the state of online grocery retail, and then turns to look at an experiential company (Daybreaker) that has partnered with a grocery chain (Whole Foods) in what is a unique example of experience-based retail. At root is an exploration about how we understand customers, what they want to see in today's brick-and-mortars, and how "experiential" can have a broad range of applications.**

Here we are now, almost a year out since Amazon officially announced its acquisition of Whole Foods Market, the chain known for its high-quality, natural, and organic grocery store model. This $13.7BN deal fueled speculation that the e-commerce giant was making a play for a larger share of the online grocery retail market, and could feasibly change the entire way we think about food access. Sure enough, we have seen some marked changes in the way Whole Foods functions, but has the trajectory of online grocery retail changed all that much?

Some insight can be gleaned from a recent article by Neil Stern, a contributing writer for Forbes, wherein he summarizes Forrester's "The State of Global Online Retail 2018" report. Here are some of the key findings from it:

• The global online grocery market is predicted to double from $150BN in 2017 to $334BN by 2022
• The online grocery market is still wide open "as retailers race to become the default provider"
• Countries differ in their adoption of online grocery based on factors like geography and economic maturity

To this last bullet point, Stern further explains that geographically concentrated (denser) markets are further ahead in their embrace of online grocery, primarily because their distribution systems are advantaged through economies of scale. They don't need nearly as much infrastructure to serve the same amount of people, whether that's based on home delivery (e.g. Fresh Direct, Peapod) or a click and collect pickup model.

So does this mean that urban markets might start to see brick and mortar grocery lose ground faster than less-urbanized markets? Possibly. If that is the case, it feels like an important one. Grocery stores help support a host of smaller neighborhood services and stores. In short, they're both commercial catalysts and anchors. So any trend in the markets that impact their health is liable to have huge ripple effects. To be completely honest, I find it highly unlikely that Kroger and Publix (shout out to my friends down south) are going to disappear overnight. Nor do I think they'll all turn into Amazon fulfillment centers (or maybe they will). In any event, this got me to thinking about ways grocery stores can adapt. And if we've learned anything in recent years, for retail its either death in the middle, or death for being boring.

Which brings me to Daybreaker.

For those not familiar, Daybreaker is maybe best understood as a company that organizes and manages large, high energy, highly-attended early morning dance parts with a deep health and wellness focus (read: no drugs, no alcohol, only natural adrenaline). Though not the only company peddling the pre-work experiential dance rave model, they've definitely risen to the top with a presence in more than 20 cities worldwide, including San Diego, DC, Vancouver, Sydney, Mexico City, Berlin, Tel Aviv, Stockholm, etc. 

And I bring them up because on May 10th, 2017, they held one of their dance raves at the Whole Foods flagship location on Lamar Boulevard in Austin, TX (a month prior to the Amazon acquisition, for those who are wondering). The itinerary for the event consisted of a 6am-7am yoga class, followed immediately by a raucous dance party from 7am-9am. Music was provided by both a record-spinning (or is it laptop-clicking?) DJ and a "legendary husband-wife hop hop duo." It really doesn't get less boring/more experiential than that for a grocery store. Did I mention Whole Foods provided breakfast? This all brings me to my next point...

Millennials. 

Daybreaker is perhaps the epitome of a company that is operated by and creates events for young Millennials. If you need further proof, one need only look at the event description (posted here). Give it a quick read and you'll notice the frequent use of emjois, the way "yoga session" becomes "yoga sesh" and "amazing" is spelled "uhmazing." If Gigi Hadid was a language, I think this would be it. 

To drive this home a little more, the following quote was culled from the Daybreaker website:

"DAYBREAKER IS CREATING AN ENTIRELY NEW GENRE OF EXPERIENCE. We are a global movement driven by incredible humans who turn crazy ideas - like sober early morning dance parties - into reality. What began as a social experiment and art project, Daybreaker is fueling a worldwide movement to increase mindfulness, camaraderie, wellness, self-expression, and mischief."  

Mindfulness. Camaraderie. Wellness. Self-expression. Mischief. These are the Daybreaker core values. And personally, I think these serve as a great shorthand way to describe the Millennial shopper (depending on how you slice the age brackets). Some might quibble with that statement for reading as reductive, especially the Daybreaker apparatus itself, but often times that's an inherent challenge to understanding any customer demographic. We always prefer to collect primary data when possible, whether through first-person testimonials, surveys, focus groups, etc, but comprehensive big picture analysis also requires we look at things like U.S. Census and Bureau of Labor Statistics data, secondary syndicated sources, and other aggregated information that necessarily obscures individual nuance.

To summarize, if you feel like you don't understand how Millennials shop, perhaps this is a good template. I don't have figures for direct economic impacts of the Daybreaker event, but without a doubt it created strong associations between an established retailer and an exciting experiential brand. Nor was this the first time Daybreaker had collaborated with a large retail brand, having also partnered with Saks, Nike, IBM, Samsung, Macy's, GE Electric, Clinique, etc.  It also raises an interesting paradox when you go back to Forrester report: dense urban centers where brick and mortars may be more imperiled by online retail is precisely where young Millennials concentrate, and thus where it makes more sense to explore experiential marketing opportunities.

Key takeaways:

• The Amazon acquisition has not impacted brick and mortar grocery the way many anticipated
• Regardless, online grocery is a growing share of the overall market
• With that in mind, retailers still need to think about how to differentiate themselves and not be boring
• That means understanding your customers and what gets them up in the morning (in this case kombucha and a dance party)

For those who were good enough to make it this far in the post, I definitely recommend revisiting a past post on this blog by Mike Berne of MJB Consulting, written in the days following the announcement of the Amazon acquisition of Whole Foods. One of Mike's main points is that Amazon's motivation for the deal was driven not so much as a way to "conquer the grocery space," but rather to gain valuable real estate in close proximity to their predominantly urban Amazon Prime customers.

Thanks for reading!

Instagram post from the Daybreaker Austin launch
Image: @dybrkr

Instagram post from an event at the National Building Museum, DC
Image: @dybrkr

Millennials' Impact on Health and Wellness in Retail

Nur Asri is an Associate at Larisa Ortiz Associates

Health and wellness is no longer characterized by illness or disease, but to a more holistic state of being that considers the wellbeing of one’s mind, body, and emotions. According to Jack Ma, Chairman of China’s largest e-commerce company, Alibaba, “…today’s customers want to be healthy and happy, no matter who they are”.  As a result, they are showing an increasing preference for products, brands, and experiences that appear to promote their overall wellbeing.

                                                                                                                      

Wellness has become one of the world’s largest and fastest-growing industries. According to Global Wellness Institute, the global wellness market is estimated to be worth $3.4 trillion, three times the size of the global pharmaceutical industry. The industries measured as part of the global wellness market included fitness and mind-body, healthy eating, nutrition and weight loss, preventative and personalized health, spa, beauty and anti-aging and alternative medicine – many of which we now find downtown and along our commercial corridors.

The wired and self-reliant Millennial is particularly dedicated to health and wellness. The group’s disillusionment with the current state of health care costs has apparently pushed Millennials to behave differently when it comes to taking care of themselves. They are relying on personal networks and wider ranges of products, services, and providers to manage their health and wellness. Many are even tracking their levels of activity and calorie consumption on mobile apps.

Most importantly, they are increasingly willing to spend money and time on ‘preventative health care’ through exercising, eating right, and conscious living. This daily pursuit to wellness and the subsequent lifestyle changes have influenced trends in food and drink, fitness, and fashion, and as a result, the retail tenant mix that we are seeing in our commercial districts.

Here are some key retail categories that are growing with Millennials’ pursuit of health and wellness:

Apparel & Accessories

Millennials are paying more for athletic gear or what is now more commonly known as, athleisure wear. According to research firm Forrester, Millennials and Gen Zers account for 69% of all fitness wearable owners. In fact, these young consumers are wearing athletic outfits for activities other than working out and this trend has grown rapidly with various brand apparel retailers growing their active wear options.

Popular athleisure retailers that are growing in urban markets with higher shares of Millennial customers include Lululemon, Sweaty Betty, Alo and Outdoor Voices – each with its unique brand and community of followers.

                                                              

Alo has built its brand specifically around yoga. Its product offerings are designed for yogis and its stores offer extensive yoga class schedules. Alo has opened three stores in urban neighborhoods in California, where the wellness and yoga movement is particularly strong.

Outdoor Voices, on the other hand, has built its brand as technical apparel for ‘recreation’ – which really is all-encompassing. Anyone participating in a recreational activity, whether it’s dog walking or yoga or a fun group sport, would easily identify with the brand and its products.  The store has opened locations across the country – from Colorado to Texas and New York.

Fitness

Gyms have long been tenants in many of our downtowns and commercial districts, however, in recent years there has been a significant growth in boutique fitness concepts. According to the International Health, Racquet & Sportsclub Association, these types of spaces now account for 42% of the entire health club market and they range from yoga, spinning and boxing studios to grungy crossfit facilities. In particular, the 2016 IHRSA Health Club Consumer Report found that Millennials preferred specialized fitness classes like kickboxing, barre, crossfit, and yoga as opposed to Gen Xers. They love the personalized and community experience that these boutique fitness concepts provide and are willing to pay more than the monthly average of $33 for these classes.

Like the athleisure stores that have grown in numbers, boutique fitness concepts have built strong brands and communities of followers that subscribe to distinct sets of values.

Food and Beverage stores

As part of their shift toward holistic health and wellness, Millennials are also increasingly spending on healthy produce. According to the Organic Trade Association, 52% of organic consumers are Millennials. Furthermore, Millennials eat 52% more vegetables than their older counterparts and about 12% of this age group claimed they are totally vegetarian back in 2011. These shares may even be even larger today.

Grocers and convenient stores that offer organic and locally-sourced produce such as Whole Foods, Trader Joe’s are growing fast in urban markets and in even smaller formats. Whole Foods opened its first 365 small store concept on the east coast in downtown Brooklyn, where the psychographic group known as the ‘Laptops and Lattes’ has grown rapidly in recent years. This group is essentially made up of single, affluent and well-educated Millennials with a median age of 36.9.

Food and drinking places

Even when they’re eating out, Millennials continue to demand responsibly-sourced, health-conscious food and drink options. Research shows that Millennials look for food options that are wholesome and healthy. Organic, freshly-made, and authentic foods are all important labels to Millennials. This has led to a strong growth in quick-service juice and salad bars across many metropolitan cities. Sweetgreen, a fast-casual salad bar that prides its offerings on being locally sourced and customizable, started in DC in 2008 has since grown to 85 locations across 8 states. Again, its locations are mostly in urban neighborhoods with strong Millennial representation.

Beauty and Personal Care Services

The final retail tenant type that has grown in many urban markets as a result of the Millennial shift toward holistic health and wellness is beauty and personal care services. This includes everything from spas and salons to meditation clinics.  From 2007 to 2013, the spa industry grew 58% with a 47% increase in spa locations from 71,762 to 105,591.

The truth is Millennials want the experience of being ‘transformed’. Even department stores like Saks Fifth Avenue are addressing that desire by introducing wellness service centers in their stores such as the Wellery in New York. These wellness centers offer spas and detox treatments, and even meditation clinics that help those who are constantly wired from busy lifestyles to unplug.

The Original Food Hall

Nur Asri is an Associate for Larisa Ortiz Associates

Hawker centers in Singapore go way back. Its history goes back to the 1950s and 60s when migrants took up hawking on streets as a quick and easy means of earning a living. However, the conditions in which street hawking was being carried out were bad – drains were polluted, sidewalks and roads were strewn with trash and as a result, vermin were a common sight. The government became concerned about the state of hygiene in the city and, in the style of Mayor Fiorello La Guardia’s campaign in the 1930s to rid New York City streets of pushcart vendors, began relocating street hawkers to facilities with proper sewers, safe water and electrical lines, and full kitchen and storage equipment in 1971. These are now widely known as hawker centers. Hawker centers are semi-enclosed buildings that house a variety of food stalls serving food, drinks, and desserts that are almost always prepared to order. Sounds familiar, no? Read: The Modern Food Hall 

In fact, there are a number of similarities between the food halls that have recently grown in metropolitan cities here in the US and the over 100 hawker centers in Singapore.

1. Size and Layout

Stalls in both food halls and hawker centers are small in size. At hawker centers, stalls typically measure no more than 80-100 sf each.

Also, the seating layouts of both food halls and hawker centers promote a sense of community. Seating is dispersed throughout both and are not assigned to customers so it works on a first-come- first-serve basis. This means that you might very well be sitting with strangers during busy lunch hours.

2. Tenant Mix

Hawker centers feature food from Singapore’s various ethnic groups – Malay, Chinese, Indian – and is a direct reflection of local inhabitants. In food halls, offerings are also diverse, however, they may be less organic and more curated. Some food halls, for example, brand themselves as chef- driven halls and provide offerings that are completely distinct from local residents’ tastes and preferences.

3. Employment opportunity

Both food halls and hawker centers provide great inclusive employment opportunities. Given the low barriers to entry (presumably the smaller spaces ask lower rents compared to full-service restaurants or cafés), many more aspiring food entrepreneurs are able to enter the culinary field via these facilities.

As reported by JLL, startup costs are much lower and lease terms more flexible in food halls than traditional retail leases. Lease terms for food hall vendors are typically one to two years, much shorter than the five- to 10-year terms that landlords command for conventional full –service restaurant spaces.

4. Social space

With more food halls being located in mixed-use developments and transit-oriented developments, they are also becoming more physically accessible to wide range of customers. This has also been thecase with hawker centers in Singapore. Many are located in residential neighborhoods or near transit stations and therefore has successfully served local residents, workers, and visitors.

As a result, food halls and hawker centers provide a great shared space for informal social gatherings, community events and programs. For years, hawker centers have served as meeting spots for the elderly during the day as they sit and enjoy coffee and toast. Families also gather on weekends to eat together without spending too much money.

However, despite these similarities, the modern American food hall hasn’t quite matched up to the hawker center of Singapore. There are stark differences between the two.

 

1.  Customer

Legacy Food Hall in Plano, TX famously tagged in posts on social media site, Instagram.

While food halls here in the US strive to meet the needs and preferences of a variety of consumers from low- to mid- price points, how many can really show a diverse customer base? Food halls here in the US often have carefully curated brands and marketing materials that, for the most part, appeal to millennials and mid- to high- income customer segments.

Meanwhile, in Singapore, the hawker center is the place where Singaporeans from across income levels and ethnicities gather to eat with purpose at all times of the day. At lunch time, business types, taxi drivers, students, and the elderly are all seen queueing for the very same Chinese noodles or Malay fried noodles. This is largely because price points are extremely low that customers run the whole gamut from blue collar to white collar and even the creative in-betweens. Everybody needs quick and cheap food from time to time.

The main reason that price points remain so low at hawker centers however is due to ownership and management.

2. Ownership/ Administrative Capacity

Today, the Singapore government continues to own the majority of hawker centers across the country.  Prospective hawkers have to bid for available stalls and pay rent to the government at subsidized rates. These subsidies allow product prices to be kept lower than that in shopping mall food courts.

Of course, I’m not saying that food halls should be government- owned and operated to truly achieve the diverse customer base it’s currently seeking but it’s important we realize that the profit motive of private food hall developers and operators are often misaligned with the community, economic, and social benefits that could be attained.

In order to maintain the mission of low cost culinary offerings for diverse customers, partnerships and support from public bodies or non-profit organizations must be built to ensure that food halls resonate with local customers and communities. These supporting bodies may even be able to offer complementary community programs at low cost and therefore attract a wide range of customers from the neighborhood. Diversifying ownership of food halls might just solve its issue of not quite reaching the masses in its current branded state.

How is resale adapting in the age of e-commerce?

Source: S Jones

Dan McCombie is a Research Associate at Larisa Ortiz Associates

In my recent experience I keep observing a recurring theme: industrial neighborhoods with concentrations of second-hand furniture and antiques merchants. Another recurring theme is that these neighborhoods are changing from being predominantly industrial to mixed-use neighborhoods and people are concerned that this will eventually displace these merchants. Is there a way they might they be retained?

I’ve learned that antiques are one of those retail categories very amenable to creating niche districts. As observed in these neighborhoods, when they congregate in the same place it can have a powerful magnet effect. In my opinion, therein lies the opportunity to both retain the unique character of the neighborhood while also cultivating a successful shopping district. But that argument may be hard to make if those merchants are struggling to remain competitive. This prompted me to ask some questions. Are they actually competitive? More broadly, are resale merchants subject to the same competitive pressures as traditional retailers in the face of e-commerce giants like Amazon? If so, what are some recommendations that might be made? In my investigations of these questions I uncovered what I consider some best practices in the second-hand apparel industry that may (potentially) be applied to these antiques merchants.

Why look at second-hand apparel?

Photo credit: Jon Fravel

Because an antiquing excursion and a trip to the thrift store share similar qualities.  Both are high-touch and experiential in their basest senses. They’re high-touch because the customer is able to literally reach out and touch the raw products, free of packaging, feeling the texture of the fabric or the grain of the wood. They’re experiential because of the excitement associated with the hunt, so to speak. You and the other customers are engaged in a tragedy-of-the-commons scenario such that if you buy this particular Tiffany-style accent lamp or this vintage levis denim jacket, I cannot. Nor can the sales associate put in an order for another to be shipped to the store (read: you win, I lose). Maybe the allure is also in the speculation—the possibility that any of these items is worth well over the price on the label. Maybe that Tiffany-style lamp is actually a veritable original. Then the shopping experience is elevated into an exercise of your consumer savviness and treasure-hunting prowess.   

This might prompt us to surmise that brick and mortar thrift stores and antique merchants are immune to the encroachment of e-commerce in our rapidly changing retail landscape. Sure, margins can be low. But Amazon doesn’t have the capacity or willingness to sort through mountains of consigned garments and so they don't pose any real threat to the thrift store business model. 

Then why change?

Because even though Amazon isn't selling used apparel, other e-commerce disruptors have figured out that the hunt for pre-owned treasures is easily reproduced in the digital marketplace. In a Forbes article by Richard Kestenbaum, he details how Millenial spending patterns are partially responsible for unprecedented growth in resale. Traditional brick-and-mortar thrift stores are growing by 8% per year while the online resale market is growing by 35% per year, 17 times faster than the overall market for apparel. In his explanation, he points specifically to the growing popularity of internet clothing consignment stores like thredUP, a company that describes itself as “the world’s largest online marketplace to buy and sell women’s and kids’ secondhand clothes,” thereby tapping into an $18BN apparel resale industry that is expected to grow to $33BN by 2021.

In a report on their website, thredUP claims the “fun factor” of the resale market explains their success against pervasive “retail boredom.” Shoppers can sit on their couch with their dog, drink wine, and scroll through similar offerings that they would find at off-price retailers like Marshalls, TJMaxx, and Nordstrom Rack for a fraction of the price. Millennial shoppers are also highly motivated by the eco-conscious associations of buying resale, assuming second-hand is more sustainable for the environment. It also means discretionary income is not as significant a limitation as some might think. But thredUP states that Millennials are not the only target demographic. A significant share of shoppers come from the 65+ age cohort, suggesting that a recession-era mindset drives them towards value-oriented spending too.

How can brick-and-mortars compete?

One strategy we’ve mentioned in the past is adopting an omni-channel retail strategy that utilizes the best of both the physical and digital worlds. But how does a merchant make sure their constantly changing inventory is seamlessly represented on the website when sales are also happening at the counter? How do they leverage their websites in a way that actually yields more trips to the store? To answer this I point to several different strategies being employed by apparel thrift stores here in Brooklyn.

Beacon's Closet in Williamsburg, BK
Source: Jennifer Yin

1. Beacon’s Closet has 4 different locations across Brooklyn and Manhattan. Each store has a sizable and constantly changing inventory, meaning maintaining an online directory of products is challenging. However, a visit to their website evidences an online marketplace with a carefully curated selection. The listing is not comprehensive, but what is offered is beautifully staged with multiple photographs of the product and informative descriptions. They even give each individual product its own unique nickname in an effort to cultivate a sense of rare exclusivity. Items are also marketed through their Instagram account, contextualizing them in a way the staged photographs do not.     

2. Maeven is a boutique thrift store started in 2012 by Amy Yee, who had spent the 12 years prior buying and selling vintage clothes on eBay and Etsy. This eventually became profitable enough for her to open up a studio-space in Brooklyn in order to “provide a better shopping experience for her customers.” Maeven resembles that class of click-and-mortars like Warby Parker and Bonobos who have managed to leverage physical locations out of digital success. In spite of this, Amy continues to employ a combination of channels that include her studio space, pop-ups, her website, and the initial online marketplaces that brought her success in a multi-pronged approach to customer engagement  

3. Buffalo Exchange is a company with 49 stores across 20 states. I’ve visited locations in both DC and New York, and noticed large constantly-changing physical inventories in each of them. This seems to explain why they haven’t created an option to order their clothes via their website. But something they have implemented is the ability to sell your clothes to them by mail, requesting a mailbag online and having it sent directly to your home. You can then fill the bag at your leisure and return it to them when you’re ready. They then give you the choice of receiving a paper check, PayPal payout, or in-store credit. By making the selling process more seamless, the store is able to create more opportunities to encourage customer visitation.

What does this have to do with antiques?

Admittedly, I still don’t know whether or not brick-and-mortar antiques are losing substantial market share to e-commerce disruptors in the same manner as the apparel industry. My main point here is that resale is inherently high-touch and experiential, yet e-commerce companies are figuring out new ways to emulate these qualities through their websites and apps. Brick-and-mortar antique retailers would do well to take note of how this is being done and act in kind. If not for fear of losing market share at the macro level, then to take advantage of these lessons to be better positioned at the micro. To summarize, here is what actions are being taken by second-hand apparel retailers which I believe can be replied to others in the business of resale:

1. Establish an on-line marketplace for your products if one doesn’t already exist. If maintaining accurate inventories is challenging, prioritize your offerings and highlight what’s special about what you’ve selected. If you’re a consigner, explore ways it can aid in the appraisal and selling process in order to encourage more in-store visitation and robust inventories. 

2. Consider other ways your website can further engage your clientele. Utilize social media platforms like Instagram to contextualize your products in ways your website does not. Create a blog discussing interesting trends and rare finds while providing personable anecdotes. Paint a picture for the customer whenever possible that showcases your unique brand to them.

3. Recognize changing trends in consumer demand. Are your customers motivated by eco-conscious spending options? Are they bargain-seeking? Or are they simply in it for that chance to find something rare and exclusive? Have you taken the time to look around your neighborhood? Who lives there? Who is patronizing businesses near yours? Use these clues to inform your approach and the way you present your offerings. There could be untapped demand you haven’t seen yet.

This investigation started because I wanted to think about how a cluster of antique stores might remain in their neighborhood despite development pressures that could feasibly displace them. What it turned into was a larger question of whether resale merchants are threatened by the growth of e-commerce. If that feels at all deceptive, I apologize for that. I mean only to emphasize that in exploring what constitutes a robust shopping district, we should leave no stone unturned in our investigations. Having done that, we can create more effective recommendations for future growth.  

Strengthening Your Downtown Night Time Economy

Nur is an associate at Larisa Ortiz Associates

Lower East Side is a popular night-life hub in NYC

Night time economies are typically characterized by business done between the hours of 6pm and 6am. This includes a large range of economic activity taking place in food and drinking places, entertainment centers like cinemas, theaters, comedy clubs, sports and recreation facilities, and even retail stores. While these are typically labelled core night time economies, there are additional non-core night time economy sectors that you might less likely be aware of including transportation, health care and infrastructure. Around the world, many downtowns and cities are seeing an overall growth of businesses operating at night and are therefore taking proactive measures to strengthen those economic sectors that help promote the sustainability of the area.

The importance of sustaining your night-time economy

Opponents of the concept however, including residents and business owners alike, have negative perceptions of the crime and disorder that night time economies are supposed to bring. Many fear alcohol-fueled violence on the streets and heightened underage drinking offences, and as a result, higher spending on policing, emergency services and law enforcement. These potential problems of crime and violence, however, have increasingly been shown through research to be easily overcome by numerous other benefits brought by night time economies, including increased employment opportunities, increased footfall and sales for businesses from extended business hours, extended overnight visitor stays, and ironically, even improved crime and safety. In fact,a report found that a more diverse night time crowd in Belfast City not only impacted footfall but crime & anti-social behavior and perceptions statistics.

London, UK shows it has a strong Night Time Economy.

In the UK, night time economies has been estimated to value up to 27% of total town and city center turnover and between 5-10% of overall employment figures. In London, the nation's most populous city, that figure is even more impactful with 1 in 8 people employed in the night time economy. Night time footfall across a number of city centers in the UK has also been found to have outperformed figures captured during the day.

Meanwhile in Australia, a similar contribution was reported by night time economies to job creation and revenue. Between 2009 and 2013, night time economy sales increased by 20% from $90 billion to $108 billion, even higher than the broader Australian economy growth of 14% in the same period. In addition, the night time economy in Australia employs over 1 million people nationwide.

Other studies have also found that night time economies increase the vibrancy of cities through increased access to businesses, services and entertainment for residents and visitors, and promotes and markets local cultural venues that are typically only open in the day and inaccessible to most of the working population. For smaller downtowns and cities, night time economies can go so far as attracting and retaining the younger Millennial population seeking nightlife options in their place of residence, and this might even prevent a brain drain in the local workforce.

Strategies to boost the night time economy

London's Night Czar Amy Lame and Mayor Sadiq Khan

These measurable impacts of the night time economy in various parts of the world have since led more cities to take on a more comprehensive outlook on managing the night time economy, including establishing offices or commissions of the downtown night life. Many cities in Europe have taken this on including London, whose Mayor formed the Night Time Commission and appointed Amy Lamé as the city's "Night Czar". Last month,  New York City Council passed a bill allowing Mayor de Blasio to appoint a Director of Nightlife to oversee a newly-established Office of Nightlife. Regardless of title, the role of such an office and/or leader is to effectively bring together various stakeholders in the night time economy before planning and implementing a suite of strategies that will tie together all of a city's retail, cultural, entertainment attractions. In a way, these Night Mayors are really the downtown's "place managers". Their greatest task of course is to convene all of the unsung night time heroes who work to keep downtown alive and safe at night, from business owners, waiters and bartenders to security staff, police and sanitation workers. Every voice needs to be heard in the planning conversations in order to ensure the night time economy is sustainable.

Some strategies that Offices of Night Life across the world have implemented to boost the night time economy include: 

1. Coordinating extended retail and cultural institution opening hours - whether annually, bimonthly, or weekly. 
2. Implementing quality urban design features along nightlife corridors - lighting, CCTV cameras, ground floor transparency
3. Maintaining a robust night-time program that converges with business hours - light festivals, outdoor music performance, cultural events
4. Conducting a liquor law review to ensure appropriate businesses are able to serve drinks late at night
5. Creating a new or building upon an existing cultural quarter to serve as a new hub of night life

These strategies, however, must be supported by a slew of other more complex actions that are critical to ensuring a safe, viable and sustainable night time economy. Sanitation procedures must be managed and well-coordinated in order to protect the amenity of local residents and businesses without disrupting the flow of night time festivities. Garbage pick-up times, for example, may need to be revised on nights where businesses are open late and a light festival is expected to take place with over a thousand participants roaming the streets.

Public transit authorities and local cab companies also need to be in close coordination with entertainment venues and bars to ensure that late night revelers are able to travel safely before and after spending time downtown. In addition, police authorities and public safety partners must be aware of business hours and night time programs and be prepared to delegate personnel to core areas of night time economies. 

Late night business operation licenses must also be carefully granted to businesses that can demonstrate appropriate safety measures, including the ability to disperse patrons quickly and quietly when the premises closes so as not to have an adverse impact on neighbors. If the downtown does not currently allow mobile food trucks to operate in the night, it may be a good idea to extend the licenses and permits to allow for such businesses to operate late into the night so as to ensure a diverse offering of food and drinking places for patrons. 

How to know if your night time economy is successful?

Sydney produces an area profile sheet annually
to track the progress and impacts of its late-night
management stategies

London and many other cities around the world that have adopted comprehensive strategies to boost their night time economies have also begun to measure the impacts of their actions. For them, the success of a night time economy not only depends on the ability to attract a diverse range of people to a variety of activities at night, but also the ability to increase sales and tourism receipts downtown.

The easiest ways to measure these are of course total sales figures, employment statistics, visitor rates, and pedestrian counts (comparing night time figures to daytime figures, or year-on-year changes). Town centers in the UK have also taken a step further to measure qualitative impacts of their night time management plans by surveying customers and making social observations of the types of street activity and behaviors that take place during the night.

After all, monitoring and managing the process of your downtown's night time plan and strategies is a critical step in the process to ensuring long-term success of your downtown night time economy.

The Growth of Food Trucks

Food Truck Fest in Troy, NY (Photo: Townsquare Media)

Here at LOA we are paying close attention to food trends as this category continues to grow its share of overall consumer spending. Consumer dining habits are rapidly shifting as more and more spending is happening on meals outside the home than on buying groceries and eating in, according to the most recent expenditure data (Bureau of Economic Analysis, Q1 2016). In recent months, we’ve covered the new categorization of food services, and delved deeper into food hubs and food halls, but now it’s time to take a closer look at food trucks.

Food trucks are establishments primarily engaged in preparing and serving meals from a mobile truck. Food is normally prepared, stored and cooked on the truck and the truck may or may not use the same location every day. Today, there are over 4,000 food trucks across the nation. According to IBISWorld, a market research firm, from 2011 to 2016 industry revenue grew at an annual rate of 7.9% and in 2016 reached over $1.2 billion – and that’s why we’re paying attention to this industry.

NYC Food Truck (Photo: Sacha Fernandez)

Like full service restaurants and other eating places, food trucks can primarily be found in densely populated cities and regions. According to a Zagat survey from 2012, the most concentrated cities include New York (11.1% of industry establishments), Boston, Washington, DC, Miami, Houston, Austin, TX, Cleveland, Chicago, Portland, OR, and Los Angeles. The West and Mid-Atlantic are the most important regions for this industry, accounting for an estimated 25.2% and 23.3% of food trucks in 2016, respectively. As its popularity grows in Florida, the Southeast is also anticipated to account for a greater substantial share of food truck establishments.

Food trucks, however, were never this popular in the past. Early on in its inception, food trucks predominantly existed to serve the budget-strapped working class citizen searching for a cheap lunch deal. Trucks would be parked by construction sites and a hefty meal would cost no more than $6-8. Food trucks were also widely acknowledged by entrepreneurs as the quickest and most affordable way to break into the food business with low set-up, operating and licensing costs.

Today, the tables have turned. Food trucks are increasingly being used as promotional and marketing tools for established chefs, hotels, and restaurant brands. Bigger companies and national chains are using food trucks to service private events and music festivals just to get their name out there. Brian Pekarcik and Rick Stern, co-owners of Spoon and BRGR restaurants in Pittsburgh, launched a BRGR truck for that very reason. “As brand recognition, it's a great advertising piece,” they explained. “And we expect that it will drive customers to our restaurants.”

Food Trucks on parking lot in San Francisco, CA (Photo: Quinn Dombrowski)

And meals are not as cheap anymore because the trendy, young professional seeking new and gourmet food has now become a major customer segment in densely populated cities.  These changes are also reflected in successful sales locations for food trucks. In 2015, only 15% of food truck sales were made at industrial/ construction work sites versus 18% at venues and events, according to Mobile-Cuisine.Com.

Cities, however, are still trying to navigate this burgeoning industry. Some are implementing programs and policies in support of these small food businesses, while others are taking a protectionist approach by heavily regulating and hindering the growth of food truck operators for fear that they may take away sales of brick-and mortar restaurants and eateries. Others also blame mobile food trucks for congesting sidewalks and streets and diminishing the urban quality of life.

Food trucks outside restaurant in Cleveland, OH (Photo:E Little)

In Chicago, IL, for example, food trucks are being held back by regulations that prohibit them from setting up shop within 200 feet of a bricks and mortar restaurant or from parking in any one location for more than two hours. Bricks and mortar restaurants are often, if not always, located near the retail core of downtowns and near entertainment and leisure destinations where a considerable amount of foot traffic is already established. By disallowing food trucks from setting up in those areas, they may be pushed to peripheries of downtowns or less attractive streets where there isn’t a sufficient threshold of customers to break even. Also, in Chicago, where parking ratios are lower, food trucks would be hard pressed to find desirable parking spots quickly – resulting in lost critical sales hours. These restrictions and more have stifled the industry’s growth in Chicago at a 1:100 ratio of food truck to restaurants.

Food truck on Leather Lane, London UK (Photo: duncan c)

This defensive position, however, may be unfounded because the Bureau of Labour Statistics has found that counties that have experienced higher growth in mobile-food services have also had quicker growth in their restaurant and catering businesses. For example, in Seattle, the number of restaurants and surrounding King County has grown by 16% since 2010 in spite of a thriving food-truck scene. In Travis County, Texas, which includes Austin, the restaurant count has jumped 18% even as food trucks have increased more than six-fold. In fact, in Houston TX, restaurants have experienced increased business generated by food trucks parking nearby and drawing more people to the restaurants’ neighborhoods. Restaurant owners themselves have reportedly asked the Houston City Council to ease existing laws that make it difficult for food trucks to operate.

In other cities, parking laws and other ordinances are evolving to catch up with the industry’s transformation and although there is no one-size-fits-all solution, here are some best practices from around the country if you’re looking to take a supportive approach leaned towards fair ordinances that allow food truck vendors to flourish.

BEST PRACTICE: Austin, TX – Simple and non-prescriptive Food Truck Ordinance

In the City’s Zoning Ordinance, mobile food establishments, or food trucks, are permitted in all commercial and industrial zoning districts and are minimally restricted from operating between the hours of 3:00 am and 6:00 am. The distance restriction on operating a food truck near a restaurant is also very minimal at 20 feet, versus the 200 feet in Chicago.  In more residential neighborhoods, the City allows for neighborhood association areas to reasonably request further restrictions on the operations of food trucks to avoid noise and litter nuisances in predominantly more residential areas.  And that really is the end of the restrictions on food truck operations in the City.

BEST PRACTICE: Cincinnati, OH – Streamlined permitting process

Austin , TX and Cincinnati, OH are two cities that have streamlined and centralized their food truck permitting processes. This strategy lowers time and cost on the part of small business owners hoping to license their food trucks and start operating. Austin’s permitting web page has detachable forms and blank spots for the necessary signatures, with instructions regarding who to contact to obtain those signatures. On the same page, it also specifies the actual schematics of the truck components required for food preparation and handling safety, and best of all, nowhere does it suggest to refer to a subsection of the zoning code or statute not included in the document. Simplifying and making the process clear is crucial to encouraging food truck vendors.  Meanwhile in Ohio, the Cincinnati Department of Health is the only agency responsible for the city’s permitting process, application process, and payments associated with the city’s mobile food vending. Half the time, food truck vendors are required to submit applications to four or five different agencies and this process can become confusing for applicants.

Food Truck Thursday in Washington DC (Photo: Ted Eytan)

BEST PRACTICE: Washington DC – Mobile Roadway Vending Zones

Farragut Square, Washington DC, is now a vibrant outdoor food court since the city implemented Mobile Roadway Vending zones, or MRVs, in 2013 allowing trucks to vend for four continuous hours without breaking parking laws. The city rolled out eight MRVs that year, including ones at Farragut Square, Franklin Square, L’Enfant Plaza and Metro Center. 95 parking spots were made available in the MRVs and are handed out via a monthly lottery. These food trucks sell food at lunch hour to the thousands of workers in each district.

Food truck on private lot in Brooklyn NY (Photo: Jason Lam)

BEST PRACTICE: Portland, Oregon – Vacant Lots for food truck clusters

After a study in 2008 by researchers at Portland State University that concluded food carts benefited residents, the city began encouraging the use of vacant land for food-truck clusters or “pods”. The No-Vacancy guide explores temporary use of vacant space (including food truck vending!) and its applicability in the Central Eastside Industrial District. The guide shows property owners and food truck vendors how to navigate permitting and zoning processes in these scenarios.

Establish a pilot program!

If your downtown is still getting its feet wet in the food truck business, try implementing a pilot program to make informed decisions on what regulations to adopt in the future. Pilot programs are meant to test the waters and can very easily bring to light the issues that are unique to your community.  A small pilot program will also minimize any unintended impacts while still gleaning insight on what works and what doesn’t locally.

The City of Cambridge, whom we are currently consulting with on a citywide retail market strategy, launched a pilot program in 2011 that allowed permitted mobile food trucks to park in spots adjacent to riverfront parks. An initiative of the Community Development Department, the program was used to determine whether a future, permanent program should be implemented.  In the pilot, food truck vendors had to apply to participate in the program and spaces were leased on a week-by-week basis for a per-day fee.

By the end of the pilot, the City learned that the designated vending spots did not work for trucks. The City has selected low pedestrian traffic areas or times because it had wanted to activate these spaces, however it backfired on vendors who found they could not make their businesses financially viable in those areas. The City also learned quickly that a cluster of trucks needed to be marketed versus just one at each spot. Marketing and communicating to the customers that there were more than a single food option was found to be more effective.

With all the lessons learned, the City of Cambridge hopes to re-launch a new food truck program with policy improvements that were suggested by food truck operators.

Let us know if your city has an effective food truck program too!

For more examples, read NLC’s Food On Wheels Report: www.nlc.org/sites/default/files/RI_FoodTruckReport2013_final.pdfhttp:/www.nlc.org/sites/default/files/RI_FoodTruckReport2013_final.pdf

Institute for Justice’s Food-Truck Freedom Report:

http://ij.org/report/food-truck-freedom/

http://ij.org/wp-content/uploads/2015/03/7-myths-and-realities.pdf

Urban Vitality Group and City of Portland’s Food Cartology Report:

www.portlandoregon.gov/bps/article/200738