Mexican Malls to Lose 18 Percent of Stores

At the end of 1Q20, Alsea, one of the most important restaurant companies in Mexico and Latin America had lost MX$390 million (US$16.8 million), according to data from the Mexican Stock Exchange (BMV). The company, which in Mexico operates brands such as Starbucks, Burger King, Domino’s Pizza and Vips, among others, did not know how to counter the expansion of COVID-19 in the country. Store closings and the confinement of the Mexican population took care of it. However, Alsea, a success story in the Mexican restaurant industry, is not alone. According to data from the Union of Mexican Retailers o (URM), up to 2,500 stores located in shopping centers in the country could close their doors by the end of July, which would represent 18 percent of all stores located in these types of spaces. The measure, according to the URM, comes as a result of the 70 percent drop in traffic observed in shopping centers since the beginning of March. Today, only pharmacies and convenience stores remain open in malls in Mexico.

The restaurant sector, together with fashion stores, is one of the most affected by the current economic and social situation. Food courts are not only closed at the moment; many specialists see them as a business model that will no longer make sense in the post-COVID-19 world. Home delivery services, although useful in the current situation, have not been able to maintain 2019 sales levels. Moreover, according to the National Chamber of the Industry of Restaurants and Spiced Foods (CANIRAC), only 15 percent of restaurants bet on home delivery services at the beginning of March. “Since March, our sales have been affected by the measures imposed by the governments in all our regions to combat the spread of COVID-19. From January to February, sales in Mexico were slightly higher than last year. In March, they were 18.5 percent below last year’s level and in April they were 94 percent below last year’s level,” Alberto Torrado, Executive President of Alsea, told El Financiero. Alsea has been forced to close 40 percent of its 2,263 outlets and most of the restaurants that remain closed are located in shopping centers and are currently in negotiations for a rent extension, according to Torrado.  For Alsea, the current situation is so complicated that it is analyzing the possibility of closing all restaurants of its brand El Portón, in addition to doing the same with the Wagamama restaurants that it manages in Europe.

CMR, another major player in Mexico with brands such as Olive Garden, Red Lobster and Sushi Itto, closed 32 percent of its restaurants, all located in shopping centers.