Policy Basis for Formula Retail (Chain Stores)
Certain commercial uses are considered to be formula retail establishments in San Francisco. Existing formula retail controls are based on 2004 legislation that established, in specific zoning districts, a definition of formula retail, a notification requirement, a requirement for Conditional Use authorization for formula retail on certain blocks in the Haight/Cole Valley, and a prohibition on formula retail in the Hayes-Gough Neighborhood Commercial District. In 2007, San Francisco voters passed Proposition G, which expanded the controls by requiring Conditional Use authorization for all formula retail establishments within all Neighborhood Commercial Districts.
Formula Retail - What Is It and Why Does San Francisco Care?
In an effort to "protect San Francisco's vibrant small business sector and create a supportive environment for new small business innovations," Section 303.1 of the San Francisco Planning Code mandates specific controls on "formula retail" uses.
Formula retail uses are commonly referred to as "chain stores." Under Section 303.1 of the San Francisco Planning Code, they are defined as "a type of retail sales activity or retail sales establishment which, along with eleven or more other retail sales establishments located in the World, maintains two or more of the following features: a standardized array of merchandise, a standardized facade, a standardized decor and color scheme, a uniform apparel, standardized signage, a trademark or a service mark." In other words, retail stores with multiple locations and a recognizable "look" or appearance.
The definition of formula retail applies only to specific retail uses, including: bars, restaurants, limited restaurants, liquor stores, retail stores, movie theaters, video stores, amusement and game arcades, fringe financial and limited financial services, tobacco and massage establishments, and personal services such as salons and gyms.
This is a map of our current Formula Retail controls, illustrating whether a proposed Formula Retail establishment is Permitted, requires a Conditional Use authorization, or is Not Permitted. In certain districts, a use may be permitted if it's an independent operation, and may require Conditional Use authorization – or may not be permitted -- if it's a formula retail business. For more information about the review and approval process for a Formula Retail establishment, please visit this page.
In June 2013, in response to a number of new and pending proposals to revise the City's policy toward formula retail, Commission President Rodney Fong directed Planning Department staff to review and analyze the current planning controls in San Francisco. On July 25, 2013, the Planning 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 before any new legislation was enacted. The Planning Department selected Strategic Economics Consulting Group from the City's pre-qualified economic consultant list maintained by the Controller's Office to carry out the study.
Funded in its entirety by the Planning Department, the study was completed in June 2014. Based on the data gathered, the Department analyzed existing policy and controls to determine whether changes to the definition, process, or applicable geographic areas would improve neighborhood character and economic vitality. This study provides data and technical analysis to assist decision-makers in analyzing current and future legislation. Key findings of the study may be found on pages 2-10, highlights of those findings include:
- There are approximately 1,250 formula retail establishments in San Francisco, accounting for 12 percent of all retailers.
- Formula retail appears to be significantly less prevalent in San Francisco compared to the national average. Although exactly comparable numbers for other cities are not available, 32 percent of all retail establishments in the U.S. are associated with firms that include 10 or more outlets. The prevalence of formula retail varies significantly by business type and size: 49 percent of San Francisco's coffee shops are formula retail, compared to 11 percent of all restaurants.
- Formula retail is most highly concentrated in places that do not have formula retail controls: formula retail accounts for 25 percent of retail in commercial/mixed-use zoning districts without formula retail controls, compared to 10 percent of retail in commercial/mixed-use zoning district with controls.
- Formula retailers generally occupy larger spaces than independent retailers do. Almost 85 percent of San Francisco's formula retailers occupy more than 3,000 square feet, while 80 percent of independent retailers are in spaces that are 3,000 square feet or less.
SAN FRANCISCO FORMULA RETAIL STUDIES
Studies of formula retail in San Francisco.
- San Francisco Planning Department Study
The San Francisco Planning Commission requested this report. It was prepared by Strategic Economic consultants and published on June 16, 2014. This report reviews the role that existing formula retail establishments play in San Francisco's neighborhoods, the impacts of the City's existing formula retail controls, and the potential effects of certain proposed changes to the controls.
- San Francisco Retail Diversity Study
This 2007 study was completed by Civic Economics at the request of the San Francisco Locally Owned Merchants Alliance. The study looks at San Francisco, Daly City, Colma and South San Francisco and provides a Market Share Analysis, Economic Impact Analysis, and Consumer Guidance.
- Expanding Formula Retail Controls: Economic Impact Report
Released in February 2014, the Office of the Controller prepared a report in response to a proposed ordinance (item #130788), introduced by Supervisor Eric Mar in 2013, which would expand the definition of formula retail and require the Planning Commission to consider an independent economic impact report detailing how a proposed chain store would affect existing businesses.
- The Board of Supervisors adopts San Francisco's first formula retail controls. Retail controls require neighborhood notification for new formula retail uses, Conditional Use Authorization (CU) for the specific area of Cole and Carl Streets and Parnassus and Stanyan Streets, and a prohibition in the Hayes-Gough Neighborhood Commercial District (NCD).
- New amendments expand formula retail controls, with CU requirement for formula retail uses in the Haight Street NCD and the NC-2 District along a portion of Divisadero Street and a prohibition in the North Beach NCD.
- Additional amendments expand CU controls to the Japantown Special Use District (SUD) and in the Western SoMa Planning Area SUD.
- City voters approve Proposition G, the "Small Business Protection Act," which amends the Planning Code by requiring CU authorization for new formula retail uses in all NCDs.
- An amendment to the Planning Code is added to include "Financial Services" as a use type subject to formula retail controls.
- April: Planning Commission adopts Resolution No. 18843, establishing the first quantitative measure for the concentration of formula retail uses; Planning Department staff is required to recommend disapproval of new formula retail based on concentration of existing formula retail in the Upper Market Neighborhood.
- June: Planning Commission president directs staff to review and analyze planning controls for formula retail uses due to the numerous pending proposals to change these controls.
- June: Ordinance No. 119-13 amends the Public Works Code to restrict food trucks that are associated with formula retail establishments in the public right-of-way; the formula retail definition now includes "affiliates" of formula retail restaurants, or an entity that is owned by or has a financial or contractual agreement with a formula retail use.
- On November 18, 2014, the Board of Supervisors finally passed the Formula Retail and Large Scale Retail Controls Ordinance [Board File No. 140844] with a unanimous vote of 10-0 (with Supervisor Campos absent). The Board of Supervisors approved ordinance (Board File No. 140844 Amended in Board) went into effect on December 26, 2014. For more information, check the Clerk of the Board's legislative database.
- Ordinance No. 235-14 establishes the basis of current formula retail controls citywide, amending the definition of Formula Retail to include businesses that have 11 or more outlets worldwide, and expanding the applicability of formula retail controls to other use types, among others.
Visit the Chain Stores webpage for more details.
- "Chain Fight Postmortem: How Jack Spade Changed the Formula Retail Conversation"
The Mission Blog, Daniel Hirsch
January 3, 2014
- "Chain store foes expected to make a stink over new perfume shop on Valencia Street"
San Francisco Business Times, Renee Frojo
December 19, 2013
- "New Fight About Chain Stores May Erupt on Valencia Street"
San Francisco Public Press, MC Anderson
December 17, 2013
- "What it Means to Keep Chain Stores Out of San Francisco"
The New Yorker, Lauren Smiley
September 20, 2013
- "San Francisco to chain stores: Get out!"
Salon, Henry Grabar
August 31, 2013
- "New Regulations for Chain Stores in S.F. Proposed"
SF Examiner, Joshua Sabatini
August 1, 2013