Trendwatch: Are Food Halls the Next Food Trucks?

Food halls are taking America by storm – and may offer easier entry for restaurants and food retail businesses.
foodhall
Learn why the upscale version of a food court may be the next big step for your restaurant. (Photo: posztos/Shutterstock)

The restaurant industry is growing, but at a pace that could be described at plodding. Quick-service and fast-casual restaurants are faring better than others. Doing best of all are restaurants that offer a niche menu, “authentic” food and/or unique dining experience.

Related: How to Appeal to Millennial Diners

“Niche,” “authentic” and “unique” are the names of the game at food halls, which are growing in number across the globe — and presenting fresh opportunities for current or wanna be restaurateurs and food retailers.

If you’ve never experienced a food hall, picture an upscale mall’s food court that features both prominent and relatively unknown chefs offering everything from street food to upscale, white-tablecloth fare. Some food halls specialize in a certain kind of food — be it Mediterranean, Asian or Southeast American — while others offer broader cuisine options from across the globe, all under one roof.

Often, food halls also feature vendors selling a variety of goods, from artisanal foods and unprepared items (like gourmet meats and cheeses, chocolates and caviar) to farm-fresh groceries, specialty cookbooks and kitchen décor you won’t find in Pottery Barn.

The food hall explosion

The world’s first food hall is credited to Harrods Food Hall in London, established in 1849. But only in the past few years have food halls really gained traction. By 2020, the number of food halls in the U.S. is expected to double, with proposed food halls introduced at a rate of one per week.

You can expect to see more of these halls in large metropolitan areas like New York, Miami, Chicago and Atlanta, and also in suburban and more rural areas.

While food courts offer fast food to hungry shoppers at a mall, food halls aim to bring together restaurateurs with thoughtfully prepared dishes, elevating the dining experience. They have proven successful in part thanks to the rise of foodie culture, particularly among millennials — and also the rise in rents.

According to a 2016 food hall report by Cushman & Wakefield, “The intense popularity that food halls are experiencing did not occur by chance. The rise of food and beverage retail, the explosion of new and unique fast casual and chef-driven startup concepts, and the increasing in restaurant rents in major cities are among the many real estate factors that have aligned to propel this trend.”

Atlanta food hall Krog Street Market describes its market as “west-coast inspired, offering both casual and upscale dining experiences all within one place,” according to David Cochran, President of Paces Properties. “Krog Street Market provides restaurateurs and retailers an opportunity unlike any other. With an expansive selection of produce, goods and prepared foods, all under one roof, we are creating an unparalleled destination for both our patrons and our tenants.”

Food halls are opening in former department stores, warehouses and historic buildings. Ponce City Market, for example, also in Atlanta, reopened the fully renovated Sears, Roebuck & Company building and established a food hall within it in 2014.

Since then, Ponce has been a staple of the Atlanta food and social scene, offering “everything from Georgia and Carolinas-caught seafood, to classic burgers, cold-pressed juice and locally-made kimchee and Korean steamed buns,” according to its website.

Setting up shop in a food hall

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The risk of starting a restaurant is lessened when you choose to open shop in a food hall with pre-existing pedestrian traffic and communal amenities. (Photo: panitanphoto/Shutterstock)

The restaurant business is a challenging one, with daunting failure rates due largely to undercapitalization. But opening shop in a food hall may be less risky. The overhead expenses are much lower compared with renting your own location, and you benefit from built-in pedestrian traffic.

Communal amenities are split among tenants, dramatically cutting costs for dining areas, janitorial services, maintenance, electricity, security, office space, landscaping and marketing. Oftentimes, the liquor license for the entire market is handled by the landlord as well.

The lease commitment is typically shorter at a food hall, with leases sometimes as short as one to three years.

What concepts work best?

According to the Cushman & Wakefield report, “Food hall tenancy is overwhelmingly made up of fast casual players whether chains, startups or one-off locations. More importantly, it is those concepts that offer what millennial consumers want to eat and that is authentic, quality food that will succeed.”

Food halls are trending thanks in part to the rise of the “foodie” culture and the coming-of-age of millennials, so ask yourself if your concept is a fit. The report noted, “Developers, food purveyors (of any type), and investors would do well to recognize what those trends represent: a new consumer who looks for authenticity, source-ability (farm-to-fork), quality and uniqueness in their food offerings, as well as quality in the surroundings in which the food is presented.”

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