Outdoor Spaces Require Extra Planning

Outdoor patios are often a “bonus” space that restaurants can use to boost sales without shelling out more money in extra rent. But the logistics of activating that outdoor space can require some careful planning to understand what works and what doesn’t.

Al fresco dining areas come in all shapes and sizes. Some restaurants will add a few token seats outside on a city sidewalk, while others put considerable time and money into the design, décor and furnishings in those outdoor spaces.

In fact, some restaurant operators spend upwards of $1 million to build out an outdoor dining area with features such as a permanent rooftop cover, a full bar, a variety of seating options and decorative landscaping.

Outdoor dining provides a variety of perks for restaurants. It can be a very inexpensive way to increase seating capacity. In most cases, the outdoor space is not included in the rentable square footage of a space. For example, a 5,000- to 6,000-square-foot restaurant might be able to increase seating and sales with a 1,000- to 2,000-square-foot outdoor dining area. However, those restaurant operators that include percentage rent in the lease will pay the landlord a portion of the additional sales generated from that outdoor space.

Both restaurants and landlords are using outdoor patios as a way to “energize” the front doors of their properties, says David Orkin, executive vice president, restaurant practice leader, Americas for CBRE. “They are more focused on it and more sensitive to it than they may have been 10 to 15 years ago, because there is much more competition and developers recognize that restaurants are what are really driving traffic for their retailers,” he says.

Outdoor dining helps to create excitement, energy and color in front of a restaurant that helps to draw people. It also can be a big money maker. Some brands generate over $1 million in sales annually just from those outside areas, notes Orkin.

Growler USA has 15 locations and most have outdoor dining that ranges from a dozen seats up to about 80. “Any chance we get to have outdoor seating, we take advantage of it,” says Ron Curnutt, executive vice president of operations at Growler USA in Centennial, Colorado. The outdoor space helps to increase seating capacity for locations that are typically about 2,500 to 3,000 square feet, and people really gravitate toward the outdoor seating and the colorful umbrellas. “It’s not a deal breaker, but it is certainly beneficial to have the outdoor seating,” he says.

Read Beth Mattson-Teig’s full story on Franchise Times.