Fri, Sep, 2022

Why Investment in Food Court is a Good Investment Choice in Real Estate?


A food court is a continuous commercial space with a series of food counters with shared seating.  Food counters are of different Brands that provide a variety of food options to the customer. Food court facilities are mainly found in shopping malls, commercial buildings, airports, etc.

Food court are preferred over fine dining restaurants as they offer a wide variety of dishes and fast delivery. This concept saves time and provides a quick meal for shoppers, moviegoers, visitors, etc. Popular shopping malls in most cities are crowded on weekends and busy during the week. Food court are a good choice for investors. 

Let’s try to identify a few of the reasons for the same :

Recession Proof Industry :
The food and beverage industry is one of the most recession-proof industries due to the fact that everyone still needs food and drinks to live. It is not a luxury that can be put aside during difficult times, so businesses in this sector can continue to do well even during a recession.

Stable Returns :
Generally, the Lease agreement for the food court is long-term ie. 9 years with 15% rental escalations every 3 years. 

Low Capital Investment :
The food court is low on investment in comparison to commercial shops. Generally, the food court is on higher floors where the pricing is less. Also since the food court is available in smaller sizes that reduce the absolute value of Investment.

High Rental Yield :
Rental income from the food court is higher than from shops and residential properties:- In comparison to a shop on the third or fourth floor, a food court on the same floor will fetch higher rentals. This is because of the high footfall at the food court. Profit margins in the food industry are high and in malls, it becomes even higher, therefore, there is commercial viability in paying high rent and still making a profit in a food court

Easy to Lease :
The food court is comparatively easier to lease out. In most malls, the food court is managed by the developers who generally have a team that assists in leasing out food court. The team even makes efforts to lease the food court to renowned & established brands. 

High Footfall ensures sales volume & good ROI :
Generally, the Food court comes along with Multiplex cinema halls/ entertainment zones The food court is very prominent and families visiting the complex/entertainment zone go to the food court for refreshments before/after visiting the complex/entertainment zone This is a common trend because dining out at a multiplex is very expensive and most households have no one to cook when the family is watching a movie.

Zero Maintenance Investment :
It is a zero maintenance investment as the brands who have taken the unit on lease are the ones who will look after the maintenance of the food court.

Easy Exit Options :
Investment in Food Court is easy to liquidate since it’s a pre-leased asset, it’s easier to find a buyer for your asset looking for rental yield.