Formula Retail Comes Under the Microscope

​Last Thursday, the San Francisco Planning Department delivered its first informational presentation to the Planning Commission on the status of a study that could have far-reaching effects on the City’s future regulation of formula retail (a.k.a “chain store”) uses.

In the summer of 2013, faced with a dizzying array of 9 new and pending proposals that would revise the City’s treatment of formula retail, the Planning Commission called for a time out.   On July 25, 2013, the Commission passed Resolution No. 18931, recommending to the Board of Supervisors that the issue of formula retail be further studied to  “increase understanding of the issue overall and to examine potential economic and visual impacts of proposed controls versus the absence of new controls,” before new legislation was enacted.

Hot on the heels of this resolution, the Department commissioned a new study of formula retail uses in the City, with the goal of assisting decision-makers in analyzing future legislation.  Strategic Economics was selected as the consulting firm to carry out the study, which is funded entirely by the Planning Department.

The study is anticipated to be complete by the end of April and involves two phases.  The first phase (already underway), focuses on data collection and analysis, including mapping of the City’s existing and proposed formula retail controls, identifying and mapping existing formula retail locations citywide, and collecting data on a range of economic and neighborhood characteristics.   

The Department will then select four narrower topics on which to base written issue briefs that will be presented to the Commission in late February.   Likely areas of study for these briefs include: (1) Exploring the potential effects of changes to the definition of “formula retail” uses under the Code; (2) Additional characterization of existing formula retail uses in San Francisco (such as by size of chain, square footage of establishments, type of retail, etc.); (3) Focusing on the effects of formula retail controls on specific store types (e.g. restaurants, groceries, coffee shops, pharmacies, pet stores, etc.); and (4) Employment impacts of formula retail versus other retail uses.  However, the Department is still in the process of selecting final topics.

In the second phase, the Department will select three neighborhoods to be evaluated through focused case studies.  These case studies will assess the impact of formula retail and formula retail controls at the neighborhood level.  

The Department has already conducted two small focus group meetings attended by stakeholders from a range of interests, including large formula retailers, small independent businesses, neighborhood advocates and business groups.  Similar focus groups will be conducted during the second phase as well.  In addition, the Department is seeking to solicit public feedback through its informational presentations to the Commission.  The tentative dates for future Commission presentations are February 27th (at the completion of Phase 1); March 27th (during Phase 2); April 24th (at the completion of Phase 2).  

Once the study is complete, the Department plans to use the data and analysis to recommend a series of policy changes to the Commission.    The Commission may then make recommendations to the Board of Supervisors regarding future legislation.

At last Thursday’s hearing, the Department shared some of the study’s Phase 1 preliminary draft findings, based on data purchased by the City from Dun & Bradstreet.  These draft findings included:

  • There are approximately 1,180 formula retail establishments in San Francisco, accounting for nearly 11% of all retailers.   By comparison, nationally approximately 32% of all retail establishments are part of chains that include 10 or more outlets.

  • Stores account for the majority of formula retailers in the City, followed by restaurants, bars and cafes.   Of the 1,180 existing formula retail establishments in the City, 57% are stores; 22% are restaurants, bars or cafes; 19% are banks, credit unions or savings and loans; and 2% are retail services such as copy centers, pet care, laundry mats or dry cleaners.

  • Banks, credit unions, and savings & loans make up less than 20% of the City’s total formula retail establishments, but more than 80% of all banking establishments in the City are formula retailers.

  • Within broad use type categories, there is significant variation in the prevalence of formula retail.  For example, while only 10% of the restaurants, bars, and cafes in the City are formula retail, nearly 50% of all coffee shops are formula retail.  

  • For some other retail types, the prevalence of formula retail varies by size of the establishment.  For example, 84% of all large pharmacies (3,000 square feet or more) are formula retail, compared to just 3% of small pharmacies (less than 3,000 square feet.  Similarly, 76% of grocery stores with at least 12,000 square feet are formula retail, compared to 1% of grocery stores with fewer than 12,000 square feet.

The Department is scheduled to deliver its next informational presentation to the Commission on February 27th, which will include a discussion of the focused issue briefs.

Additional information on the status of the Department’s study is available at:

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.