Albert’t Blog – Food for Thought on the Food Industry
How Much Can We Really Eat?
The Progressive Real Estate Partners team recently returned from a very productive ICSC Western Region Conference in Palm Springs. Typically, the team would publish a blog recapping key takeaways from the event, but this year’s conference largely reinforced the same themes shared after the 2025 ICSC Las Vegas Conference, which may be the real takeaway.
Instead, the focus turns to a topic that has been top of mind for several years: the ongoing evolution of the restaurant and grocery industries.
The Finite Nature of Food Spending
Imagine having an unlimited amount of money. With infinite resources, there would be almost no limit to the amount of clothing, furniture, décor, or other goods a person could purchase. However, there is only so much food an individual can consume. While spending may increase on finer dining, premium ingredients, or upscale beverages, food consumption itself has a natural cap.
This reality makes the food industry, whether groceries or restaurants, effectively finite. For every winner, there is often a loser. The only exception occurs when a trade area’s population grows, expanding total demand. However, in most markets, population growth is modest, making the food sector largely a zero-sum game.
According to the USDA Economic Research Service, “Food Away from Home” now exceeds “Food at Home” by a margin of roughly 59% to 41%, translating to about $1.5 trillion in annual sales. During the height of the pandemic, this divide was nearly even, but since 2021, spending away from home has surged dramatically.
This ongoing battle between “away from home” and “at home” dining, along with competition within each sector, shapes one of the most dynamic and competitive arenas in retail.
How Grocery Stores Are Fighting Back
Gone are the days when consumers went to grocery stores strictly to cook at home and to restaurants strictly to dine out. Today’s grocery retailers are blurring the lines. For instance, a new Stater Bros. near Progressive Real Estate Partners’ office features a sushi bar that attracts customers seeking fresh, ready-to-eat meals. Many consumers who might have gone to a quick-service restaurant for a smoothie, poke bowl, or sandwich now opt for grocery-prepared meals instead.
By expanding in-store dining options and prepared food selections, grocers are strategically reclaiming revenue once lost to quick-service and fast-casual restaurant concepts.
The Most Competitive Sector in Retail
The food industry stands out as the most competitive category in retail. Every new grocery store or restaurant aims to capture sales from existing players by offering something distinctive within its trade area. The competition for consumer dining dollars is fierce, and yet the variety available to Southern California consumers is extraordinary.
It is not uncommon to drive by a restaurant and wonder who its patrons are, only to later discover that friends and colleagues frequent the spot. This diversity of tastes benefits consumers but heightens competitive pressures for operators.
Restaurant Spaces Remain in High Demand
Demand for restaurant space continues to be exceptionally strong. The Progressive Real Estate Partners leasing team reports that second-generation restaurant spaces, those already equipped with infrastructure such as hoods, grease traps, and kitchens, generate intense interest and significant cost savings for new operators.
So far this year, 28% of the firm’s lease transactions have involved restaurant tenants, the vast majority in second-generation restaurant spaces.
Landlords: Are Your Restaurant Tenants Keeping Up?
Restaurant operations have evolved far beyond simple walk-in traffic and coupon mailers. Today, online visibility and reputation play a crucial role. Yelp and Google Reviews can determine success or failure. Delivery and takeout platforms such as DoorDash, Uber Eats, and Grubhub extend a restaurant’s reach, while social media can instantly make or break a brand.
Landlords seeking to understand a restaurant tenant’s performance should evaluate how that tenant engages across these digital and delivery platforms, as well as whether the absence of such engagement stems from overwhelming demand or a lack of adaptation.
Grocery Businesses Becoming More Niche
The grocery sector continues to diversify as new and specialized players enter the market. Progressive Real Estate Partners has completed leases this year with Grocery Outlet and Sprouts, while Vallarta is rapidly expanding with new stores planned in Rancho Cucamonga, Colton, Riverside, and Duarte. Costco recently opened in Highland, and Trader Joe’s has new stores planned for La Verne and Yucaipa. T&T Supermarket, Canada’s largest Asian grocery chain, is slated to open in Chino Hills in 2026.
Unlike the past, when major chains such as Ralphs, Albertsons, Vons, and Stater Bros. dominated the market with similar formats, today’s grocers must clearly define their niche and target audience to thrive.
Final Food for Thought
For Food Lovers: If anyone discovers how to eat more without having to size up, that secret would be well worth sharing.
For Property Owners: Monitor restaurant tenant performance through observation, communication with management, and analytics tools such as Placer.ai. Review online ratings and evaluate whether tenants are keeping pace with technological and marketing trends.
For Grocery Store Landlords: Engage directly with store management, gather both factual and anecdotal insights, and analyze trade area demographics. Understanding how a store’s positioning aligns with its surrounding market and how it stacks up against competitors is key to long-term property success.
For Restaurant and Grocery Operators: Thank you for your hard work and resilience. Running an independent or chain operation in today’s hyper-competitive environment is no small feat.
The food industry’s constant state of evolution and competition naturally creates both opportunities and challenges for property owners. The Progressive Real Estate Partners team is available to:
- Re-tenant restaurant spaces
- Sell vacant restaurant properties
- Sell occupied restaurant buildings for owners anticipating market changes
Even if no immediate transaction is planned, the team welcomes conversations about how shifting trends in the grocery and restaurant sectors may impact property performance in the future.
