By: Garrick Brown Vice President, Retail Intelligence
Since Cushman & Wakefield’s 2016 Food Hall’s Report, the number of food halls in the United States has increased exponentially and will have more than tripled by 2020. The question of whether this is a bona fide retail trend or simply a fad has been answered.
We believe this trend is transformative. In the past, who hasn’t been stuck in some ghastly “food court” with only fast food options and that clinging smell of fryer oil?
(CLICK HERE to view our 2018 report.)
“Today’s fast casual approach offers artisan restaurants and other food-related boutiques under one roof – this is more than just sustenance, it is an experience,” said Phil Colicchio, industry expert and co-lead of Cushman & Wakefield’s new F&B, Entertainment & Hospitality Consulting team. This offering greatly appeals to millennials, who now spend 44% of their food dollars on eating out and have embraced a culture that puts experiences above “things.” And since 40% of millennials will order something different every time they visit the same restaurant, the food hall represents a cornucopia of edible experiences.
On the consumer side, food halls are perfect for groups looking for quick and convenient dining options without compromising quality. Four friends can be in and out in 20 minutes, and everyone gets what they want. Ramen, tacos, sushi, donuts, pierogi— no cuisine is off limits to the food hall concept as long as the restaurateurs abides by a few key rules: the best product available, locally sourced if possible, and prepared in an authentic fashion by a staff that wants to serve up a great meal.
“Curating just the right mix of food and beverage vendors can make or break a food hall. It’s important to stay true to the neighborhood’s consumer mix and local vibe,” said Trip Schneck, industry insider and the other co-lead of Cushman & Wakefield’s F&B, Entertainment & Hospitality Consulting team. “The C&W team is able to work with landlords to customize their unique offering.”
For occupiers, food halls are an even sweeter deal. While rents for food hall space on a square foot basis may seem quite expensive, the amount of space used is generally very small. One restaurateur active in a San Francisco food hall shared this comment with us:
“Here I am paying about $120 per-square-foot annually for my 300 square feet of space. That’s about $36,000 per year. If I would have opened my own standalone restaurant I would have been looking at rents probably in the $60 per-square-foot range for about 2,000 square feet. That would have been $120,000 per year and it would have been for space that generates nowhere near the traffic of this place. I would not have been able to afford that, but here I am thriving.”
So, for an occupier, the equation is simple.
Food Hall Rent vs. Standalone Rent:
$120 x 300 sf = $36,000 per year (food hall) vs $60 x 2,000 sf = $120,000 per year (standalone) Additionally, 36% of restaurant operators name staffing as their biggest challenge to success, 20% say the biggest challenge is retaining customers, and 15% say it’s high operating/food costs. Food halls solve all three of those challenges.
The food hall concept is not just a major market phenomenon – while we do see unabated growth in our largest cities, the concept is also heartily embraced by secondary markets.
Cushman & Wakefield has acquired leading food, beverage & entertainment group; Colicchio and Schneck of Colicchio Consulting. The pair has long been regarded as leaders in creating elevated F&B and entertainment experiences for shopping center and mixed-use developers, sports and music venues, universities and hotel brands. The team is behind some of the largest luxury F&B projects and food halls to hit the market over the past decade and have collaborated with more than 75 world-class hotels and over 50 James Beard Foundation Award-winning chefs, restaurateurs, beverage professionals, service professionals, and restaurant designers. CLICK HERE to read the official release.
Garrick Brown is one of the leading retail real estate analysts in the United States; he speaks frequently at industry events and is regularly quoted on retail matters by the Wall Street Journal, the CBS Evening News, NBC News, CNBC, National Public Radio, Women’s Wear Daily and dozens of Business Journals and other industry publications. He is the editor of the Cushman & Wakefield Retail Newsline, a popular publication that reaches approximately 30,000 real estate professionals bi-monthly.