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HomeRLI Food for ThoughtWhere Dining Meets Retail: A Vision for 2025

Where Dining Meets Retail: A Vision for 2025

Where Dining Meets Retail: A Vision for 2025 1
Jonathan Doughty

Jonathan Doughty is a global thought leader, consultant, speaker, moderator and C-suite executive in the foodservice and leisure sectors working around the world in retail, transit and leisure. In our first issue of the year, he takes a look at the challenges of leasing restaurants in commercial shopping centres around the world in 2025.

Leasing restaurants in centres is a complex process that presents unique challenges for both restaurant operators and landlords. In 2025, this sector continues to face various obstacles, exacerbated by shifting consumer behaviours, economic pressures and new technological developments. As restaurant businesses strive for profitability and sustainability, understanding the key challenges they face when leasing space in commercial centres is critical to navigating the changing landscape.

Increased competition and changing consumer preferences

One of the most significant challenges in 2025 for restaurants leasing spaces in shopping centres is the increased competition. The global restaurant industry has seen a surge in the number of operators and concepts in recent years, fuelled by the rise of food delivery services, ghost kitchens and innovative dining models. Consumers, too, have become more discerning, seeking diverse, unique and high-quality experiences.

Additionally, consumer preferences are shifting towards health-conscious, sustainable and eco-friendly dining options. Restaurants in shopping centres must not only offer good food and service but also adapt their offerings to cater to the growing appetite for plant-based menus, locally-sourced ingredients and more inclusive options for various dietary needs. This shift in consumer expectations can complicate the leasing process, as landlords are now seeking restaurant tenants that align with these new trends, adding another layer of complexity to negotiations.

High rental costs and lease terms

Rental rates in commercial shopping centres have continued to rise, driven by the increased demand for prime real estate in high-traffic areas. In 2025, landlords are focused on maximising their return on investment, which can lead to higher lease rates, sometimes beyond the financial capacity of smaller or newer restaurant operators. These increased rental costs, combined with additional expenses like common area maintenance fees, utilities and insurance, make it difficult for restaurants to maintain profitability and mean that landlords increasing rely on those that “can pay” rather than those that “can delight”.

Moreover, the lease terms themselves can present challenges. Operators face long-term commitments with inflexible clauses, which lock them into financially burdensome situations should their business model not succeed. Where restaurant operators are required to pay higher rents based on sales performance this can help align landlord and operator interests, but it also increases financial risk for the tenant. This is another “uncertain” in their world.

Evolving regulatory and sustainability standards

Global regulatory standards and environmental sustainability are becoming increasingly important in the restaurant industry. In 2025, restaurant operators must navigate a complex web of local and international regulations. These include food safety and hygiene regulations, labour laws and environmental sustainability mandates. This may require restaurants to implement energy-efficient equipment, reduce waste and manage their carbon footprint. Globally, these challenges are very different from mature economies to those that are in the early stages of massive growth, for example Germany and Saudi Arabia.

Additionally, shopping centre landlords are also adapting their spaces to meet stricter environmental requirements, such as the installation of green infrastructure, energy-efficient lighting and water-saving technologies. These efforts, while positive for the environment, can lead to additional financial burdens for restaurant tenants who may have to invest in retrofitting their space or comply with new green building standards.

Integration of technology and consumer expectations

As technology continues to reshape the dining experience, restaurant operators must adapt to the growing demand for digital integration. In 2025, customers expect seamless online ordering, delivery and payment systems, as well as personalised dining experiences through AI and data analytics.

For restaurants leasing space in commercial centres, however, integrating these technologies can be costly and time-consuming. Space requirements for tech infrastructure, such as advanced point-of-sale systems, kitchen automation, or designated areas for delivery operations, can be difficult to reconcile with the limitations of smaller restaurant spaces. Additionally, landlords may not always be equipped to meet the technological needs of restaurant tenants, requiring the tenant to bear the cost of upgrades. These challenges create a tension between keeping up with consumer expectations and managing operational costs and available space.

Impact of remote work on foot traffic

The global trend for remote work, which surged in the wake of the COVID-19 pandemic, continues to influence foot traffic patterns in commercial locations in 2025. As more individuals work from home, the traditional lunch-hour crowd has diminished, resulting in fewer potential customers during peak hours. We are now seeing real changes “back to office” driven by occupiers needing higher output from their teams.

This affects the attractiveness of locations as leasing options for restaurants, particularly those relying on in-person dining. The decline in office-based workforces has led to fluctuating customer numbers, making it more difficult for restaurants to predict demand and maintain consistent revenue. Finding where the guests are on each day of the week has become an art form!

So let’s look at the global restaurant industry in 2025. It is expected to experience moderate growth, but it will face significant challenges that will test the resilience of operators. While demand for dining out remains strong, rising inflation and supply chain disruptions will continue to put pressure on food costs, labour availability and profitability. Operators will need to embrace new models of dining, such as takeout and delivery, to meet the demands of the modern consumer without access to the quality and quantity of staff we were used to.

Ultimately, the key to success will be flexibility and adaptability. Restaurant operators who can effectively navigate these challenges will be well-positioned for success in 2025, without forgetting that dining out is still largely an emotional experience, enjoyed by many every day.

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