Over the last five years, we’ve seen significant disruption in the foodservice space. From meal kits, to delivery services, to new technology, the pace of change has been unrelenting. And, while many bricks-and-mortar restaurants have struggled to keep up amidst the torrid pace of innovation, some restaurateurs have taken the bull by the horns in an effort to “disrupt the disruption.”
For example, the food-hall concept, which centres on quick, upscale dining in a public-market setting, has its roots in Europe and is often considered a spinoff of the modern-day shopping mall food court.
Food halls have quietly emerged as a growing trend in cities across North America. These open spaces are modelled after tech-incubator spaces, where multiple start-ups can come together, share ideas, be creative and eventually grow together — sharing the space and, in some cases, even the expenses.
In most cases, chefs and restaurateurs are invited to apply to open restaurant spaces and are selected through a competitive vetting process. Some companies, such as Pittsburgh-based Galley Group, which has successfully opened several food halls across the U.S., implement a financial structure that helps ease the burden of opening a traditional restaurant.
According to a recent article in Eater Detroit, The Gallery Group has implemented a unique operating system. Unlike a typical lease requiring down payments, security deposits and rent, Galley employs a profit-sharing model where approximately 30 per cent of each restaurant’s revenue is returned to the company. Galley also takes care of the build-out for the space, the insurance, utilities and marketing for partnering restaurants. This results in a relatively low cost of entry for the operator — approximately $7,500 for inventory and labour. The result? According to Gallery, most restaurant owners can break even within a month of opening, which allows them to save and reinvest that money in a future bricks-and-mortar restaurant space.
Another factor driving the growth of these food halls is that developers are looking for new ways to leverage the abundance of space being created by the bricks-and-mortar retail downturn. In other words, large retail and office spaces have become available and the owners of those buildings are looking to fill those large spaces.
Experiential dining is alive and well in the food-hall concept, where socializing, trying new flavours and unexpected delicacies is par for the course. It’s all about the experience, which is what millennial diners value most. Another key differentiator that draws in millennials is that food-hall menu choices aren’t limited to the types of fast-food chains you would typically find at a local mall. Instead, food halls tend to embrace the local-food scene while integrating new and exciting tastes.
While the concept is still in its infancy, it appears it’s here to stay. The number of food halls operating in the U.S. is expected to exceed 200 in 2019 — about double the number open in late 2016. Given the pace of growth, Canada should be preparing for its own food-hall boom in the coming year.
By Robert Carter