Fast-Food and Coffee Chains Are Opening Smaller, Takeout-Only Stores

Chick-fil-A opened its first takeout-only store in Manhattan in March, joining a wave of retailers experimenting with smaller outposts.

Correction: June 28, 2024

This article has been revised to reflect the following correction: An earlier version of this article misstated the difference in rent among large and small Gregorys Coffee stores. The cheapest 1,800-square-foot store would cost $60,000 a more a year than the most expensive 400-square-foot store, not $60,000 more a month.

The Gregorys Coffee location at 100 Wall Street is one of the company’s smallest in Manhattan.

Chick-fil-A’s new location in New York City has everything you’d expect from the chicken shop: friendly servers, crispy waffle fries and a line of hungry customers. It’s missing just one thing: seats.

The shop, which opened on the Upper East Side in March, is the chain’s first to exclusively handle pickup and delivery orders. It’s part of a trend of smaller, takeout-focused stores that boomed during the pandemic and stayed popular, especially among Manhattan’s coffee-shop and fast-food chains.

From 2019 to 2023, the average size of a retail lease in Manhattan shrank 17 percent, to 2,585 square feet, according to the CoStar Group, a commercial real estate data company.

That decline has been most visible in coffee shops, where Manhattanites have been left with fewer places to sit, said Gregory Zamfotis, the founder and chief executive of Gregorys Coffee.

“In many locations, because of turnover or pivots other businesses have made in reducing seating, there’s just less options for folks to be able to have somewhere to stay,” Mr. Zamfotis said.

It’s difficult to pin down exactly how much smaller cafes and fast-food restaurants have become. Many commercial real estate brokerages, such as CBRE and Cushman & Wakefield, track only a handful of small leases signed by these tenants each year. But real estate analysts, brokers and tenants all agreed that retailers are slimming down.

Jared Caldwell runs the new takeout-only Chick-fil-A on the Upper East Side in addition to a larger, more traditional location a few blocks away.

“Smaller is better,” said Steven A. Soutendijk, an executive managing director at Cushman & Wakefield. “There are way more tenants looking for smaller stores than there are looking for bigger stores.”

Among those thinking small is Benjamin Sormonte, co-founder and chief executive of the cafe and bakery chain Maman. Mr. Sormonte plans to open more miniature Mamans — appropriately called Petite Mamans — after opening the first in Moynihan Train Hall in 2022.

Petite Mamans range from 350 to 800 square feet, while a full-service Maman can be as large as 3,200 square feet, Mr. Sormonte said. Smaller stores allow him to target customers on the go and give him more flexibility when scouting for new locations, a crucial advantage given Manhattan’s historically low retail availability.

Buffalo Wild Wings, Starbucks, Blank Street Coffee and even Whole Foods have also announced or rolled out smaller, to-go-focused stores in New York City alongside their existing outposts. Blank Street, in particular, was born out of the small-format model: Most of its stores are below 350 square feet and are designed to serve customers at a rapid pace.

“All the retailers that are trying this have both models,” said David Firestein, managing partner of the brokerage SCG Retail. “The brands that have 10, 20, 50 or 100 stores, they’re constantly looking at the model and they’re constantly changing and evaluating. That’s what good retailers do.”

Chick-fil-A is having it both ways on the Upper East Side, with the new mobile pickup store on Second Avenue at East 80th Street just a few blocks away from a more traditional location with seating on Third Avenue at East 86th Street. Jared Caldwell, the owner and operator of both locations, said he wanted the design of the new outpost to complement the first and to accommodate the growing number of digital orders.

Gregory Zamfotis, the founder and chief executive of Gregorys Coffee, says he tries to include some seating at all of his coffee shops.

Tiny stores have another huge advantage over regular-size stores: lower rents.

For example, Gregorys Coffee locations range from 400 to 1,800 square feet in Manhattan, Mr. Zamfotis said, and he looks for rents between $100 and $300 per square foot. Within those ranges, the cheapest 1,800-square-foot store would cost him $60,000 a year more than the most expensive 400-square-foot store.

“Sometimes it’s hard to justify paying for that extra three, four or five hundred square feet for seating you don’t necessarily need,” Mr. Zamfotis said. “We don’t need a tremendous amount of seating. We just need enough to support some traffic that wants to stay.”

For cafes, smaller stores represent a departure from the “third place” business model, popularized by Starbucks, in which stores function as spaces separate from work or home where people can linger for hours, talk to friends and make new ones.

Third places can be anything — your hometown bar, a public park, even a fast-food restaurant like a McDonald’s — so long as people go there to gather, said Kathy Giuffre, an emerita professor of sociology at Colorado College. Where speedy service, short hours or space constraints limit social gatherings, loneliness and isolation can grow.

“The profits probably are great at places that can get you in and get you out really fast,” she said. “The social costs are invisible, but very profound.”

Mr. Zamfotis, however, doesn’t think small-format stores herald the end of the coffee shop as third place, even given Manhattan’s limited space and high rents.

“I’m a firm believer in the future of third places,” he said. It might be a different version, he noted, “but it’s still going to be there because people still crave a place to gather. And coffee has always been that central gathering point for folks.”