Fast food chain Grubbs Take Away is looking to eat up some 30,000 s/f of New York City retail space as part of a plan to build its customer base during an unprecedented boom in take-out and delivery.
The company – which has built its own delivery platform with a focus on hyper-local business – has just signed a 10-year, $3.4 million lease for a 2,000 s/f space at 287 Seventh Avenue in Chelsea.
Its first NYC store opened in Lenox Hill last year and it is in talks for two additional spaces downtown and in Murray Hill as part of a plan to open a total of 15 restaurants within the next 12 months.
With 40 in-house delivery personnel, owner Ian Mitchell is working to corner a delivery market he believes is in danger of being wiped out by corporate giants such as UberEats, DoorDash and the $7 billion behemoth, Grubhub.
“Fees that corporate delivery companies charge are a cancer to the very survival of local restaurants,” said Wayne Rose, vice president of Rose Retail RE Group, who represented Grubbs in the deal..
“That’s why Grubbs founder, Ian Mitchell, is leading his own Save Our Stores campaign (SOS Campaign) with a family-friendly program which rewards customers for ordering direct. His program lets customers keep a little money in their pocket while helping a local business not just survive, but thrive.”
According to consumer data company, Statista, the online food delivery business is expected to grow to $23 billion a year by 2023. The lion’s share of that is expected to go to third-party online platforms.
Three months into the coronavirus pandemic, New York City Council ordered a limit how much third-party delivery companies can charge restaurants for orders for the duration of the pandemic.
Under the emergency order, delivery providers like Grubhub must limit their fees to 15 percent or less an order. The council also voted to approve caps of five percent for non-delivery services ordered via third-party platforms.
Jersey City, NJ, Seattle and San Francisco introduced their own emergency caps of fees as restaurants across the nation were shuttered during the pandemic.
While many struggling restaurateurs continue to use the third-party platforms as a way to grad a share or business, Mitchell is looking to build on razor-thin profit margins with fast, friendly and personal service.
“With more and more people now working from home, we have been forced to really think out of the box,” said Mitchell, noting that the owner of Chicago Pizza Boss posted his Grubhub receipt on Facebook showing that he made only $376.54 on $1,042.63 in orders.
With the COVID pandemic wreaking havoc across the retail sector, Mitchell – who already operates Grubbs Take Away in Hoboken and Jersey City – has been negotiating new terms with property owners that include a discount on pre-COVID rents, payment step ups for the first few years, extended free time and caveats providing reduced rent in the event of future shutdowns.
Rose explained, “We do have a pandemic clause that covers future stoppage of indoor dining, but this way, ownership doesn’t sit with an empty store and we work with them to cushion the blow.
“Grubbs already has market stability. If it can strategically locate its stores, grow its loyal following and facilitate a high-volume sales business in a market with a huge demand for quality food delivery, the success rate is far more than probable.”
Mitchell – a British-born former airline worker – added, “New York City is the greatest place on earth and it has gotten through some rough times.
“But people need to really help save our local operators, particularly at a time when many are throwing in the hat because of competition from conglomerates. My hope is that more people will get behind my campaign to support local business and together we can recover from this latest crisis.”
Mario Rapo, of Home Quest Properties, represented the landlord in the 287 7th Avenue lease.