Analysis of U.S. consumer spending and demographic patterns suggests significant changes for food and beverage operators and the real estate they occupy, including a greater push for convenient, prepared foods, a growing Millennial influence and the emergence of inner-ring suburbs as the industry’s hottest market.

The new report, published by CBRE, Los Angeles, makes several predictions about the near-term outlook for the U.S. restaurant and grocery industries and potential implications for retail real estate. Those industries – collectively the food and beverage sector – will undergo rapid evolution due to demographic shifts, economic factors and automation.

“The food and beverage category claims nearly 25% of retail sales in the U.S., and few other sectors have expanded their presence in shopping centers as quickly as restaurants and grocery stores,” says Melina Cordero, global head of retail research. “But, this sector is just as susceptible as others to sweeping demographic changes, which we’ll see influence real estate through formats such as grocery-restaurant combinations, more kitchen-only outlets and delivery services.”

Among CBRE’s predictions:

Neighborhoods on the edge of the urban core will become even hotter food and beverage destinations.

Much densification is occurring in inner-ring suburbs. In turn, restaurants, bars and grocery stores are ideal anchors for mixed-use complexes developed in these neighborhoods, serving as gathering points for residents and employees alike.

Due to their location, these inner-ring suburbs get the dual benefit of higher food and beverage spend by suburban households. Few first-ring suburbs have the higher lease rates typical of urban cores.

Growth of single-person households will boost demand for convenient dining.

The percentage of single-person U.S. households rose to 28% last year from 17% in 1969, with growth across most age groups, according to data presented from the United States Department of Commerce, Washington, D.C. That, coupled with a rise in dual-income households, means people have less time to prepare, cook and clean up meals.

Among the real estate implications of this shift are added momentum for convenient food and beverage formats like fast-casual and fast food restaurants and inclusion of bars and restaurants in grocery stores to offer made-to-order, higher-margin fare. Some restaurants are adding kitchen-only locations catering solely to delivery and carryout customers.

Spending in restaurants and grocery stores will outpace other soft-goods categories for the next five years.

The food and beverage category’s share of total U.S. retail sales has grown to 24.3% in the past 10 years from 22.7% in the eight years prior to the recession, according to data from the United States Department of Commerce. Meanwhile, the category sees lower e-commerce penetration than most others.

Those factors have resulted in restaurants, bars and grocery stores claiming an expanding share of retail real estate. According to the International Council of Shopping Centers, New York, the U.S. mall square footage dedicated to restaurants – excluding food courts – increased by 18% since 2007 to 43 million square feet.

Millennials’ spending on food and beverage will exceed all other generations within 10 years.

Millennials dine out more than other generations, but they’re thrifty diners. Currently, Baby Boomers collectively spend the most on food and beverage, and Gen Xers spend the most on a per-household basis.

However, Millennials’ wealth constraints will ease over the next decade, as they pare their debt and their income grows, resulting in Millennials spending more on food and beverage, sometimes in volume and sometimes in price. Meanwhile, Boomers are likely to spend less as they progress in retirement. These shifts underscore the need for retailers and retail-center owners to analyze and understand their customer base, often through location-analytics technology, so they can tailor their menus and store locations accordingly.

“We see consumer preferences influencing many facets of retail real estate, including store location, store design to accommodate delivery pickup or pre-packaged meals and different store layouts to incorporate automated ordering and self-service,” says David Orkin, executive vice president of the U.S. restaurant practice.