Mall owners are now devoting a significant portion of their square footage to restaurants and bars. This shift is driven by the hope that diners will continue to shop after their meals. Malls are no longer just about shopping; they are becoming destinations for dining experiences as well.

Discover the New Dining Hub in Malls

Department Stores vs. Restaurants

The slow death of department stores and the rise of online shopping have had a profound impact on U.S. shopping malls. In the 1980s, there were around 2,500 shopping centers, but now the number has dropped to roughly 700. This decline has led mall owners to look for new ways to attract customers. One such way is by increasing the space dedicated to restaurants and bars.It used to be that the shopping occasion drove people to the mall, and they might grab a bite to eat. However, now the dining options are driving people to the mall. David Henkes, senior principal at Technomic, a market research firm focused on the restaurant industry, explains, "It used to be that the shopping occasion drove people to the mall and then maybe you grabbed a bite to eat. In a lot of ways, that’s been flipped on its head. Now, the dining options drive people there, and then you’re hoping that they’re going to do a little shopping while they’re there."

Yelp's Insights on Popular Mall Brands

Yelp's report published in October found that 17 of the 25 most popular mall brands, based on consumer interest, were restaurants. This clearly shows the growing importance of dining in malls. Going back 10 or 20 years ago, restaurants accounted for only about 5% to 10% of general leasing area in malls operated by Brookfield Properties. But in recent years, this has increased significantly. In some of their shopping centers, they are seeing 20% to 30% of the total [general leasing area] being dedicated to food.Brookfield's portfolio of 129 malls includes Tysons Galleria in McLean, Virginia; Christiana Mall in Newark, Delaware; and First Colony Mall in Sugar Land, Texas. Their mall restaurant tenants include more than 540 full-service eateries and around 2,000 fast-casual establishments.

More than the Food Court

Brookfield Properties gave the Staten Island Mall's food court a facelift in 2018, with an upgraded look and new restaurants. More than half a century ago, the Paramus Park shopping mall in New Jersey opened a food court on its second floor, becoming the first example of a successful mall food court in the U.S. A decade later, food courts became a staple of the American mall.Full-service chains like the Cheesecake Factory, TGI Fridays, and California Pizza Kitchen were once the mainstays of mall dining. But now, malls offer a much wider selection of eateries and refreshments. "What malls are looking for tend to be more high end, what we might call a ‘contemporary casual’ restaurant," Henkes said. These "contemporary casual" eateries include upscale options like Korean barbeque, steakhouses, or sushi. A meal at these new mall eateries will likely cost upwards of $30 per person.For James Cook, head of retail research for real estate firm JLL, the expansion in dining options offers an experience that's familiar but still elevated. "The distinction that I make is that I’m not necessarily dressing up nice to go to a mall. This is a restaurant where I could pay more money, but not necessarily feel like I have to wear a suit jacket or anything like that."The pandemic also made malls a more attractive option for restaurateurs. During lockdowns, their traffic disappeared. But malls bounced back quickly as consumers started dining out and commuting again. "Even today, foot traffic to suburban malls is back above pre-pandemic levels, where in the cities and the city centers, foot traffic has not returned," JLL's Cook said.This foot traffic also appeals to emerging chains like Sweetgreen and Mendocino Farms, which have opened new locations in malls to grow their sales and brand awareness.

The New Food Court? Food Halls

As malls devote more space to food and drinks, food courts have been supplemented by a newer, more upscale alternative: food halls. Like food courts, food halls offer an array of dining options, usually from stalls. But unlike food courts, food halls typically offer more expensive options and tout ties to local chefs.For example, Eataly inside Short Hills Mall in New Jersey sells fresh pasta and other artisanal groceries. It sells itself as a trip to Italy without the plane ride. Its large locations feature full-service restaurants, artisanal groceries, quick-service counters, and cooking classes. Eight of Eataly's 13 U.S. locations are in malls, with more on the way next year.But food halls haven't won over everyone. Brandon said that food courts have performed better for Brookfield's malls. He pointed to Chick-fil-A and Panda Express as two tenants that typically see strong sales in food courts. In 2023, the average annual revenue for a mall location of a Chick-fil-A was $4.5 million; the chain's best-performing mall restaurant raked in nearly $19 million in annual sales.

The Cheesecake Factor

Even with more competition than ever for shoppers, The Cheesecake Factory has managed to stay on top. It is ranked number one in Yelp's mall brand report. The chain, known for its comprehensive menu and towering columns, has had a rocky year. Like many restaurants, it has struggled to attract diners, and its same-store sales grew just 1.6% in the latest quarter. Activist investors have also been putting pressure on the company to spin off its smaller brands.Still, the company is outperforming the broader casual-dining category. Shares of the Cheesecake Factory have risen 43% this year, outstripping the S&P 500's gains of 27% over the same period. And while fellow mall staples like California Pizza Kitchen and TGI Fridays have filed for Chapter 11 bankruptcy in recent years, the Cheesecake Factory has escaped the same fate.It might even have helped its landlords' finances. Enclosed malls with a Cheesecake Factory location are more likely to be current on their loan payments, according to a Moody's Analytics report. But it's more likely the result of the company's strong site selection rather than cheesecakes saving a mall.Brookfield's Brandon agrees, saying, "My god, are they productive. It’s pretty incredible what they’re able to do, and they’re a valued partner of ours. We have dozens of leases with them, and we truly value them as a tenant."