Corporate café lets landlords savor the savings

After opening three initial locations in the state, Dartcor Food Service, based in the Whippany section of Hanover, is gearing up for a full-scale launch of a corporate café concept called Caffe Cucina in office buildings in northern and central New Jersey.

NJ Estates Real Estate Group Paul Stillwaggon

October 2009 LINKING THE LATEST TECHNOLOGY TO OLD FASHIONED SERVICE

"A lot of landlords, they wanted to know how to have great quality food in office buildings - but also how to keep costs to a minimum," said Warren Leeds, president of Dartcor.

On-site foodservice "is probably one of the most important amenities that a landlord can typically offer," said Mark Yeager, president of Gale Real Estate Services Co., in Roseland. "Employees want the amenity, it's much more convenient for them not having to get into a car to buy lunch, and employers like it; from a productivity standpoint, they can control the employee population more by keeping them on site."

In a typical full-service corporate cafeteria, the landlord will be responsible for building out the space, while the operator will contribute toward furniture and equipment, while paying the operating costs, said Jeff Schotz, executive managing director of FirstService Williams, a commercial real estate services firm.

The operator also will usually pay a portion of the cafeteria's gross receipts to the landlord, but "these are not always profit centers for the landlord on a direct basis," Schotz said. "They are amenities that ultimately make up for themselves with the ability to attract tenants to the building."

Caffe Cucina is set up as a kiosk that sells items such as sandwiches and salads, and is staffed by at least one barista who makes coffees and other drinks, Leeds said. Each café costs about $50,000 to build, compared to up to $1 million for full-scale corporate cafeterias, he said.

The kiosk is designed to be located in a lobby, to avoid taking up leasable office space, although a landlord can choose to build the café elsewhere in the building, he said. The landlord can modify the café design to match the interiors of the office building and adjust the size to fit the facility's needs, with kiosks ranging from 300 to 1,200 square feet, he said.

"If you have a full-service cafeteria, it's going to be much more challenging, if you have only 50 percent of the building full, to make that work financially," Leeds said. All the food is made fresh daily at a commissary, or a central facility in Whippany, eliminating many of the costs associated with running traditional corporate cafeterias.

The food is delivered in the morning to the kiosk locations from the 7,000-square-foot commissary, which has the capacity to service between 40 and 50 buildings within 20 miles, he said.

The owner of a fully occupied building would typically pay for only the initial construction cost of the café, though the landlord of a facility with lower occupancy levels may have to pay a monthly fee if the cafe does not generate high enough revenue, Leeds said.

Currently, three Caffe Cucinas are operating in the state, Leeds said. The first, located in Bridgewater, opened in April 2006 at Wells Real Estate's 400 Crossings Blvd.; it is the sole foodservice operation at the building, as is the case at 123 Tices Blvd., in Woodcliff Lake, owned by Behringer Harvard REIT Inc. At RXR Realty's 51 JFK Parkway, in Millburn's Short Hills section, the kiosk was added to an existing cafeteria.

Another Caffe Cucina is in the works at 101 Wood Avenue South, which currently is undergoing an extensive renovation in the Iselin section of Woodbridge, said Leeds, whose firm is in discussions to open five additional locations in Mercer, Essex, Bergen and Morris counties.

By Evelyn Lee

E-mail to elee@njbiz.com

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