
The Troubling Economics of Food Halls - pshaw
https://heated.medium.com/the-troubling-economics-of-food-halls-b301f6563188
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abeisgreat
This whole article feels like they're trying to brew trouble that isn't really
there. They compare cost per sqft of rental space in a food hall, which they
admin includes many extra things related to running the surrounding food hall
(including build out, sanitary maintenance, etc) to renting empty business
space and claims the food hall is expensive. They admit that many vendors
found the food hall to be productive for their businesses, yet focus on the
ones that failed without citing any comparison to success / failure rates of
similar opportunities like food trucks or traditional restaurants. There's
also vague criticisms about a misalignment between how the hall is marketed to
visitors (creative, artisan) vs the pressures put on the vendors (simple to
produce foods, low time-to-table), but this is nothing unique to food halls.
Every restaurant wants high-throughput with the appearance of top quality
food. Overall, strong meh from me.

~~~
ec109685
The fact he has a sweetheart deal from the city and is allowed to own the only
bar in the hall and keep all its profits has the real risk of him making all
the money at the expense of all the other stalls.

~~~
phkahler
He's also paying 5k per month to lease the building and collecting almost 10x
that much in rent from the others. A better solution might be to form some
kind of collective/group to lease the facility at no profit. Like a condo
association of sorts.

It's obvious these people are working for someone else.

~~~
awillen
But the issue is that putting together a collective to lease the facility at
no profit plus take over everything else he's doing (finding insurance,
handling janitorial and maintenance work, marketing, etc.) is a lot of work,
and it's work that aspiring chefs don't necessarily want to focus their time
on. That's why they come - he's providing a lot of value. Whether you think
the amount of value is worth what they're paying is up to you, but the fact
that he's still able to find tenants says that a lot of people think the
tradeoff of not having to worry about all those ancillary things is worth the
money.

~~~
phkahler
The group could hire people for some of those things. The other guy certainly
does.

Most dentists have had to figure out how to run a business. At some point
these chefs have to decide weather they are owning a business or just cooking.
This situation allowed them to confuse the two.

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sailfast
“Perhaps this is due to our placeless society where the town green was... and
now gig workers drop packages”

Counterpoint: food courts are terrible and the food in these places is
typically good, varied, and wonderful. Of course they would win over chain
food courts. It’s nice to have variety. I don’t understand why the author has
to insert this random, anecdotal hypothesis looking toward yesteryear.

These things are ancient. Literally been around in markets forever. This is
not a new concept.

That said - abusive lease terms are no good. Definitely would read the lease
before signing!

~~~
samschooler
The full quote is:

"Perhaps the rise of the food hall is a reaction to our increasingly placeless
society, where the town green has been replaced by the shopping mall, which
has been replaced by gig workers dropping boxes on doorsteps."

This is in reference to the modern explosion of these food halls across the
country (not that this is a new idea). Just on the front range in Colorado we
have had 6-8 of these open within the last 3 years (of now 13 total).

This is, at least in part, a reaction to the hostile public areas of American
society today. These food halls are a nice counter to these public places -
welcoming, varied offerings of food and drink, and no pressure to leave as
soon as your meal is done.

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aklemm
The massively disappointing thing about modern food halls is that they aren’t
like classic ones in Seattle, Toronto, or other places where you can actually
get groceries. There should be, at minimum, local bread, meat, produce, and
dairy at any of these places. Instead it’s all overpriced food porn.

~~~
ghaff
I imagine the rents at a lot of these places make it difficult to profitably
sell unprepared food--especially things like vegetables as opposed to twee
craft honey and the like.

~~~
hanniabu
If it's ingredients that they use anyways then instead of using some back
closet for storage they can simply put them out on display.

~~~
Nasrudith
While tidy conceptually I don't think the economics and logistics work for
that - retail space is more expensive than storage. Even if the ownership
could be worked out to stock the same thing competively it would make more
sense to get it from shared storage than use the more expensive retail space.

Said assumption also isn't trivial in terms of "what people want to buy vs
what is sold".

~~~
ghaff
There are some specific exceptions. For example, it's not that unusual for
"artisan" sandwich places to also sell their bread. But it doesn't really make
sense to imagine a pizza place that also had un-prepped mushrooms, green
peppers, etc. out on display for separate sale. It's just not their business.

~~~
redisman
A finished "artisan" bread is high value-added product with great margins. Can
you also imagine if they selled flour and tried to price it at a similar
multiplier as the finished bread

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ghaff
Interesting read even if a lot of it boils down to the restaurant business
being tough and that's true even if food halls simplify some things (while
bringing their own set of costs and constraints).

The piece also highlights how some stalls probably haven't given enough
thought to how their menu works in the context of a food hall. Certainly some
menus have more all-day appeal than others which is a problem for the latter,
especially if they're required to keep a full range of hours.

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peterwwillis
Food halls are just food markets without the market, for the "upwardly
mobile".

Baltimore Lexington Market was an indoor food market established in 1782, and
still exists today. It's enormous. There are dozens of vendors selling
everything from cosmetics and electronics to fresh fish & meat, and lots of
prepared foods. One of the city's most famous crab cake eateries, Faidley's,
has been operating here since 1886.

Another famous one is Philadelphia's Reading Terminal Market. Established in
1893 (young whipper snapper!), it's the same idea as Lexington Market, but a
bit more upscale. Tons of vendors selling an array of products, and an easy
(if not crowded) meeting place.

There are very few original food markets left in the US, but the few that do
exist are community gathering places in addition to being a good meal at a
decent price, and a place to do some shopping. They're not inscrutable or
poorly understood. But they're also not regular restaurant businesses. Stalls
come and go every year, and the really good ones (usually family owned and
operated) thrive with a repeat customer base as well as tourist flare.

~~~
pnw_hazor
We visited Philly and Baltimore for Army-Navy Football games. When in Philly,
the Reading Terminal market was our favorite and primary food source.

It was interesting that while there certainly were a lot of tourists there,
you still enjoyed meals elbow to elbow with locals.

I can't remember if we went to the Lexington Market in Baltimore, (we stayed
near the inner harbor area) kind of bummed we didn't check it out when we had
the chance.

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scottlocklin
I have no idea what the economics of the European ones are, but there sure are
a lot of very old "food halls" (usually combined with markets) in European
countries. Presumably they have the economics figured out, since they've been
there for a long time.

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wenc
I've often wondered if a low-end food hall might be a good business idea in
the U.S.

In many parts of Asia, there's the concept of the "hawker center" [1] where
food vendors each occupy a single stall and sell particular types of food
(specific dishes) at low prices. Many of these businesses are
intergenerational, so the food is refined over decades. The quality of the
food is usually very high despite the dishes being inexpensive (vendors rely
on volume). There's even a hawker stall in Singapore that's holds a Michelin
star.

The late travel host Anthony Bourdain was so enamored with the idea of hawker
centers (from his travels to HK and Southeast Asia) that he tried to start one
in NYC but the conditions just didn't align for him. [2]

It is happening organically elsewhere however. In Chicago, there's a Chinese
restaurant _startup incubator_ in Chinatown where upstart restaurants rent a
small space in the basement of a building where they try to build up their
business hawking regional Chinese cuisine. Some succeed and eventually move to
larger spaces. This is food entrepreneurship at the grassroots level.

However in order for hawker centers to really succeed certain factors need to
be present: willingness of vendors to slog for years at a low margin high
volume business, low cost of doing business (cheap labor), consumer culture of
regularly eating out, relatively mild winters, etc. Not all U.S. cities
fulfill these conditions.

Few people know this but many hawkers of popular dishes in Asia tend to end up
being financially well-off after paying their dues (early mornings, late
nights, kitchen heat, repetitive work, scrimping and saving for years). Your
regular soup noodle or chicken rice guy may be humble-looking in terms of
dress, but many have Audis and Benzes parked in the back. They're a bit like
plumbers in that sense.

[1]
[https://en.wikipedia.org/wiki/Hawker_centre](https://en.wikipedia.org/wiki/Hawker_centre)
[2] [https://www.thedailymeal.com/anthony-bourdain-market-
cancele...](https://www.thedailymeal.com/anthony-bourdain-market-canceled-
pier-57-new-york/122317)

~~~
ghaff
Low-end food courts are extremely common in the US. There's probably one in
just about any mall. The problem is that low-end food court in the US mostly
translates into fast food chains which are mostly... not very good.

I expect you'd need a culture that was more open to low-cost non-branded
ethnic cuisines. You have it to some degree here and there. Food trucks
(though those are often a bit higher price point), international food stalls
at outdoor events. But hawker centers (which are one of the things I love
about Singapore) are probably tough to transport to a lot of other situations
--though you do have good street food in a lot of places in Asia.

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auston
I've had Itamae (the Peruvian stall mentioned towards the end of the article)
a whole lot and I have to say that is definitely one of the best food spots in
all of Miami.

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sudosteph
I've got two pretty nice food halls within a short walk, but I don't ever go
there unless I'm in a group that just can't agree on where to eat. Unlike the
place in the article, the vendors at these places seem to have their own
hours, but that really hasn't felt like a bad thing since there are always
other options when a place is closed. And I think they do have some things
that make them attractive.

Pros:

\- Groups can eat out together without having to deal with splitting bills on
venmo

\- Many vendors had established local food trucks before setting up shop, so
if I'm craving my favorite curry truck, I don't have to track them down on
Twitter and drive to them.

\- Kid friendly (dog friendly too), so I can take my family members who have
children and know they have plenty of options, even for kids who are picky
eaters.

\- it's fun to be able to mix little bits of cuisines for a meal (nachos
appetizer from Mexican place and sushi entree)

Cons:

\- The seating situation is the wild west. Food comes out at drastically
different times, so usually one person has to hold a table, which can get
awkward as there never seem to be enough tables

\- prices tend to be high

\- Very loud atmosphere every time I've been there, often filled with
teenagers (probably because it's a place a group can gather and hang out
without everyone spending money)

I think the problem with the management described in the article can be fixed.
I also think there's a big potential for the vendors to run something like
this as a co-op.

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Nasrudith
The oyster example has me wondering if they would have been better off
subletting if say split the morning slot with a breakfast place and do a
change over at some point. The main objection being enpty booths harm the
common's benefit.

~~~
ghaff
One issue is that sharing your facilities with a different business (which
probably has significantly different physical plant requirements) has its own
set of problems. It's actually pretty common in cities more generally that you
have coffeeshops that are closed in the evenings in the midst of a bustling
restaurant and bar scene.

As I recall, Starbucks actually looked into doing some sort of wine bar
transformation in the evenings at some locations. But I've never seen such a
thing so it presumably didn't work out for whatever reason. And that's a
single business.

~~~
mikestew
_As I recall, Starbucks actually looked into doing some sort of wine bar
transformation in the evenings at some locations._

They implemented in at least one store in a Seattle suburb. I'm not a wine
drinker, so I just know they had a flyer for it a few years ago. I don't know
if it is still on-going. But your point stands: I don't know that one can flip
baristas to sommeliers with a switch at 5:00. So is there a shift change?
Employees are trained on both? I dunno, I applaud the thinking, but don't know
that it's practical. I should run up to the Woodinville SBUX sometime and see
if they're still doing it.

~~~
RandallBrown
I'm not sure about any Starbucks that transform into a wine bar, but several
of their Reserve locations do serve alcohol.

~~~
ghaff
Ah. Yes, I assume that's what the wine bar idea they were talking about a bit
a number of years back has morphed into.

[https://www.foodandwine.com/news/starbucks-reserve-store-
sea...](https://www.foodandwine.com/news/starbucks-reserve-store-seattle-
alcohol)

It makes sense although I suspect it's more difficult than is obvious to
handle rather different uses at different times of the day. (It's also
probably notable that they're doing this in locations that are already pretty
differentiated from the standard grab a Cafe Latte in a paper cup on the way
into work.)

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Pxtl
I've literally never seen one of these - are they the new thing? Sounds like
an upscale hipster version of a mall food court. No surprise that owners are
looking to hold the vendors over a barrel - everybody sees dollar-signs at
being able to capture upscale dollars with "rustic" setting.

I mean, we have an indoor farmer's market with eateries in it in my city, and
of course it is a popular destination for hipsters. But I could see how trying
to force that experience could just make a mess.

~~~
hadlock
Food halls are typically in large urban areas with a thriving tourist industry
that can support them outside of typical lunch hours. I have seen them in
Portland, San Francisco, etc.

~~~
jacquesc
I wish SF still had a decent food hall. Used to love "The Hall" on market, but
that place was only temporary as they demolished the space to build condos.

It was in a terrible part of town (south end of Tenderloin), but I ventured
there because of it. Now I actively avoid that area.

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throwaway_law
If you could make money by renting a space and selling food everyone would do
it. Kinda like if everyone could buy a shovel and dig for gold they would do
it. If you could buy a FB or Google ad and make money everyone would be rich.

The US has 1 industry...selling dreams, everyone else is on the bottom of the
pyramid feeling the crushing weight of the people at the top.

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wbradley
My brain kept leaping to this analogy...

Chef : Software Engineer

2017 : 2010

Donaldson : Apple

Alcohol : iMessage

Food Hall : App Store

30% : 30%

~~~
gruez
>Alcohol : iMessage

What? Alcohol is high margin. iMessage has zero revenue and is a loss leader.
Also, you can offer/sell any chat apps you want on the App Store, unlike with
alcohol in Donaldson's food hall.

~~~
wbradley
Yeah, that's true. I could have chosen a better example there. I was trying to
pick a tech that Apple tended to prevent competition in back then. Perhaps
Safari/Webkit would have been a better example.

