JC, I thought about what you said last night because in some ways I tend to agree at first glance, but in the long run I have to respectfully disagree. Here's why.
1) Malls are dying. But is it because of Amazon and online shopping, or is the primary factor because the so-called "anchor tenants" are controlled by private equity groups and hedge funds that saddled stores like Sears, JC Penny, etc with massive amounts of debt that is now starting to mature? I think it's a combination of both, but you're right that malls are dying.
2) The thing about Giggles though is that parents will go there regardless of whether its in a mall or in a free-standing location. I don't know how true it is that mall owners are "rolling out the red carpet" for Giggles, and are offering massive reductions in up-front build out -- Parsi spews a lot of nonsense, including how the Tanforan mall is going to be renovated (who wants to bet this doesn't happen in the next few years to the extent where it shuts the entire mall down) -- but if what he says is true and there is a discount to open a location in the mall, it makes sense to take it. You wouldn't get this sort of incentive leasing a freestanding location, and Giggles isn't in the financial position to begin acquiring ownership stakes in real estate.
3) Does it really matter if Giggles is located in a mall or some other free standing location? As long as the area is safe, parents will drive anywhere because Giggles n Hugs IS the destination. Stores previously wanted to be in malls because of the foot traffic. You'd go to Sears for some tools and you'd end up buying a watch at the jewelry store next door, or a pair of shoes at the Foot Locker. But I think people tend to go to the malls primarily to visit Giggles n Hugs, and they'd make the drive regardless of whether its to a mall or a freestanding location. Giggles isn't the sort of place people walk past and decide to stop in. Some do, I'm sure, but I'd say the bulk of parents go to the mall with the specific intent of going to Giggles. In this sense, Giggles has become the new anchor tenant.
4) Parking. Malls have LOTS of it, for free. If you have a freestanding location and you want to make it easy for parents and kids (i.e. no street parking), you're going to pay a premium for all that extra concrete. Don't underestimate the importance of parking, especially in a big city like Los Angeles or Seattle or Boston or New York or Miami. I've avoided places many times because going there is too much of a pain to make it worth the trip.
I guess I fail to see the benefit of freestanding locations. If Giggles were the type of place that required foot traffic, then I would totally understand. And I don't believe for a minute that malls will roll out the red carpet because of the amount of foot traffic that Giggles generates for other stores -- maybe there's some, but again, I think the majority of customers go to the mall specifically to go to Giggles, and when they are done, they go home without spending much time shopping elsewhere.
So if parents are going to Giggles exclusively, does it matter if the location is in a dead mall? As long as it's safe, I don't think so.
I'd like to see Parsi partner with movie theaters -- they are in a lot of malls and this is the one area where Giggles could offer child-sitting service (including healthy dinner) while parents go to the movies.
