New restaurants are being utilized by malls to attract consumers as shopping centers undergo reinvention.

• In an effort to increase post-dinner shopping, mall owners are allocating more space to restaurants and bars.
• Local vendors are being featured in food halls, while malls are adding more upscale, full-service restaurants to their food court offerings.
• Despite the shift, large national chains such as the Cheesecake Factory, Chick-fil-A, and Panda Express are still attracting customers and mall landlords.

The third part of a three-part CNBC series explores the future of U.S. shopping malls as developers revamp the spaces to attract new retailers, experiences, and even apartments.

Restaurants have replaced stores as the main attraction in malls.

Over the last decade, the decline of department stores and the growth of online shopping have negatively impacted U.S. shopping malls, resulting in a significant decrease in the number of essential shopping centers. According to Coresight Research, the number of shopping malls in the U.S. has dropped from a peak of 2,500 in the 1980s to approximately 700 today.

Despite rumors of its decline, many in the retail industry believe that the mall is far from dead. In fact, Gen Z consumers are increasingly drawn to in-person shopping experiences and love the mall atmosphere. Developers are also finding innovative ways to repurpose empty department stores, bringing consumers even closer to the stores they love.

Restaurants and bars are increasingly attracting visitors to malls, prompting landlords to allocate more square footage to them.

"According to David Henkes, senior principal at Technomic, a market research firm specializing in the restaurant industry, there has been a significant change in consumer behavior. Previously, shopping was the primary motivation for people to visit the mall, followed by grabbing a bite to eat. However, now, the dining options have become the main attraction, and shoppers are hoping to do a little shopping while they're there."

In October, a report revealed that 17 out of the 25 most popular mall brands, as per consumer interest, were restaurants, according to Yelp.

In recent years, the percentage of general leasing area in malls operated by Brookfield Properties that is occupied by restaurants has increased significantly. This includes not only food courts but also several full-service restaurants.

""Over the past five to ten years, there has been a significant increase in the amount of food-dedicated space in our shopping centers, with some centers seeing up to 30% of their total general leasing area being used for food," Brandon stated."

Tysons Galleria, Christiana Mall, and First Colony Mall are part of Brookfield's portfolio of 129 malls. The mall restaurant tenants include more than 540 full-service eateries and around 2,000 fast-casual establishments.

More than the food court

Over five decades ago, the Paramus Park shopping mall in New Jersey launched a food court on its second level, marking the first successful mall food court in the U.S. Ten years later, food courts had become a standard feature of American malls, contributing to the growth of chains such as Sbarro, Mrs. Fields, and Auntie Anne's.

Like TGI Fridays and California Pizza Kitchen, full-service chains also became popular mall mainstays.

Malls now provide a broader range of dining options, including local chefs, regional restaurants, and emerging bubble tea chains.

"Contemporary casual restaurants are what malls are looking for, according to Henkes. These restaurants are not fine dining establishments but are a step up from traditional casual eateries."

These new mall eateries, which are contemporary casual, offer upscale options such as Korean barbeque, steakhouses, and sushi. Despite the varying price points, a meal at these eateries will likely cost at least $30 per person, if not more.

For James Cook, the expansion in dining options provides an elevated experience that's reminiscent of something familiar.

"He stated that he distinguishes himself by not feeling obligated to wear a suit jacket while dining out at a restaurant, even though he is willing to pay more."

The pandemic also made malls a more attractive option to restaurateurs.

Despite the decline in traffic during lockdowns, malls experienced a resurgence in consumer behavior after restrictions eased.

JLL's Cook stated that while foot traffic to suburban malls has surpassed pre-pandemic levels, city and city center foot traffic has not yet returned.

Emerging chains are drawn to foot traffic, which is why restaurant companies like and Mendocino Farms have opened new locations in malls to expand quickly and increase their sales and brand recognition.

"Our properties offer scale and can quickly increase production. If a food truck is used to doing X, it can now produce X times two or three," Brandon stated.

Din Tai Fung, a Taiwanese restaurant chain, has chosen malls for its U.S. expansion, according to Alison Lin, Yelp's head of restaurants. The chain's upcoming locations will open in Scottsdale's Fashion Square and Brea Mall in Southern California, as per its website. Din Tai Fung ranked second in Yelp's report on most popular mall brands by consumer interest. (Din Tai Fung declined to comment.)

The new food court? Food halls

Food halls have emerged as a more upscale alternative to food courts, with malls dedicating more space to food and drinks.

Food halls provide a variety of dining options, typically from stalls, and offer general seating after diners purchase and pick up their food and drinks.

Unlike food courts, food halls usually feature more expensive options, with a focus on local chefs and unique cuisine. While food courts offer fare from national chains, food halls typically support local vendors with limited locations.

""A food hall enhances the shopping experience at the mall by offering a burger, fries, or pizza to keep you there longer," Cook stated."

Oftentimes, food halls feature multiple vendors. But Eataly is one exception.

Eataly, the Italian chain, offers a travel experience without the plane ride. Its expansive locations feature full-service restaurants, artisanal groceries, quick-service counters selling gelato, pizza, and espresso, as well as cooking classes. Out of Eataly's 13 U.S. locations, eight are located in malls, with more to come next year.

Tommaso Bruso, who has over two decades of experience in the fashion industry, joined Eataly as its North American CEO last year and now leads mall brands such as Bennetton and Diesel.

According to Bruso, people visit the mall for shopping as well as a cultural experience. He noted that Eataly has been successful in attracting consumers both inside and outside of malls.

While food halls haven't convinced everyone, Brandon stated that food courts have been more successful for Brookfield's malls. He highlighted Chick-fil-A and Panda Express as two popular tenants that consistently see strong sales in food courts. In 2023, the average annual revenue for a Chick-fil-A mall location was $4.5 million, and the best-performing mall restaurant generated nearly $19 million in annual sales, according to franchise disclosure documents.

The cheesecake factor

Despite the intense competition among retailers, The Cheesecake Factory continues to thrive and demonstrate how restaurants can contribute to the success of a broader shopping center.

Yelp's mall brand report ranked the chain, renowned for its extensive menu and tall columns, as number one.

Despite the challenges, the company's same-store sales grew only 1.6% in its latest quarter. Activist investors are pushing for the company to spin off its smaller brands, such as North Italia. The Cheesecake Factory declined to comment.

Despite underperforming the broader casual-dining category, the company is still outperforming its competitors, according to industry tracker Black Box Intelligence.

This year, the Cheesecake Factory's stock has increased by 43%, surpassing the S&P 500's growth of 27%.

Although other mall staples such as California Pizza Kitchen and TGI Fridays have filed for Chapter 11 bankruptcy, the Cheesecake Factory has managed to avoid the same fate.

Malls with a Cheesecake Factory location are more likely to be financially stable, according to a Moody's Analytics report from 2023. The report suggests that this is due to the company's strong site selection, rather than cheesecakes being the reason for the mall's financial stability.

Both Reidy and Brandon agree that having one of the restaurant's locations is beneficial.

"They are incredibly productive, and we value them as a partner and tenant. We have dozens of leases with them," he said.