Restaurants’ growth plans get stuck in red tape
Operators have increasingly aggressive growth plans, but permitting and construction delays coming out of the pandemic are slowing it all down.
According to Restaurant Business Online, delays in approvals for site plans—sometimes lasting months or, in the worst cases, years—have dogged operators eager to get building again.
Michael Osanloo, the CEO of Portillo’s says delays in getting local government approval put back new unit openings in 2022 by six to eight weeks. As such, the hot dog and Italian beef chain is pushing back projections for new restaurants this year to be better prepared and avoid disappointing Wall Street.
Dutch Bros, on the other hand, opened more new locations in 2022 (133) than it did in 2021 (98). “Our box is pretty simple,” CEO Joth Ricci said at the ICR Conference. “It’s a 900-square-foot rectangle. It can fit in a lot of places.”
Shake Shack, which like Dutch Bros is aggressively expanding with new units, said that it opened 36 new locations in 2022. That was the same number it opened in 2021 but was on the low end of its expectations for 35 to 40 per year. Executives suggested that permitting and construction delays—as well as the availability of equipment—caused development problems.
Demand for new restaurant development is clearly here. Commercial construction increased 40% in the U.S. between October 2020 and October 2022, according to Census data. So, for the moment builders, operators and developers are adjusting to allow more time for these specific delays.
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