Can food halls become retail’s new anchors?

Photo: RetailWire
Apr 16, 2018

According to a new report for the retail real estate developer, Cushman & Wakefield, the U.S. will have 300 food halls by 2020, up from 70 currently.

The halls are basically replacing food courts full of ubiquitous chains with a variety of mini-restaurants run by artisanal and local vendors often offering healthier food options. With tenants ranging from food truck operators to celebrity chefs, halls are believed to be particularly appealing to Millennials looking for variety and authentic experiences.

The mall trend is being driven by challenges in apparel retailing, an uptick in mixed-use projects among developers and foodie culture.

Non-food tenants benefit from the traffic. A report from Jones Lang LaSalle further found shoppers who eat at the mall spend an average of 35 extra minutes browsing stores compared to non-eaters.

“Food halls have become a unique and exciting experience, and not something that can be done or experienced online,” SCG Retail Managing Partner David Firestein, told the Commercial Observer. “Previously an afterthought, they are now drivers of shoppers.”

While halls may charge high rent for food purveyors, they typically come with low start-up costs and built-in traffic. And with the small spaces and minimal design requirements, underperformers rotate out easily enough.

With few failures so far, Cushman sees halls extending beyond urban locales with suburban projects being developed at both shopping malls and mixed-use projects as well as opportunities in rural areas.

Critics complain of crowded spaces, long lines, a general lack of ambience and an overload of choices that leads to decision fatigue, according to Eater.

The biggest concern is over-saturation. New York City, for example, has 25 permanent food halls and another 10 more under construction.

A New York Post article earlier this year exploring potential oversaturation cited one developer indicating many food halls in the city aren’t profitable. James Famularo, senior director of retail leasing at Eastern Consolidated, told the Post, “There are way too many of them. Food halls are good for one thing these days — to occupy a space as a placeholder until the landlord finds a higher-paying, more permanent tenant.”

DISCUSSION QUESTIONS: Do see the food hall phenomenon offering positive benefits to retail, or are they simply temporary “placeholders” for more valuable tenants? Will food halls become critical retail traffic drivers in suburban and rural areas?

Please practice The RetailWire Golden Rule when submitting your comments.
"Food halls, fitness centers, grocery — the anchor store of the future apparently isn’t a department store."
"This all comes down to a couple of factors for me. Foot traffic and money, which simply stated is how success is measured."
"All tenants in retail are really just “placeholders”… and these are good ones!"

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31 Comments on "Can food halls become retail’s new anchors?"

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Max Goldberg

Food halls, if well-executed and populated with interesting vendors, can attract consumers and become retail traffic drivers. Too much of America is populated with “me too” sit down chains. Malls, by offering something different, can drive traffic to non-food retailers, while filling empty space on their properties.

Paula Rosenblum

Since I don’t know what their rent structures are, it’s hard to say if the landlord is forcing short leases or not, making this a self-fulfilling short-term phenomenon.

Is the market over-saturated? Not particularly. There don’t seem to be more than 1-2 per city, maybe 3. Are they profitable? This is the challenge of the food service industry, period — not having too much spoilage or out of stocks.

Personally, I think they are great ideas, and it’s honestly hard for me to see how a place like Eataly is not profitable: there are stalls that sell dry goods along with perishables. This is way, way better than cheap, crummy food courts, and a lot more civilized.

Dr. Stephen Needel

It sounds like this may be a uniqueness factor — it’s something new and different. As it becomes less new and different, it’s not going to drive traffic. I’m thinking fad.

Phil Masiello

If the food hall is done in a way to complement the mall and make consumers comfortable enough to use it, it could be a good short-term driver of traffic. In order for this to work long term, it needs to work for the purveyors.

If these local and niche restaurants do not get the traffic and sales necessary to pay the overhead, they will end up closing. What will take their place are typical mall food operators, and that will kill the concept.

The mall owners will be just as responsible for the success of these by selecting the correct purveyors, making the ambiance less like a food court and making the economics work to sustain the purveyors.

In the end, the entire shopping mall and retail environment need to be re-envisioned for the future. Concepts like this are temporary drivers of small changes when big changes are needed.

Lyle Bunn (Ph.D. Hon)

Food is an attractive option to every outing and an affordable luxury for most shoppers. We’ve seen food halls filled with the usual brands of fast food, but there are options to extend these experiences to offer something new. Food in retail, such as coffee bars in grocery or a bar in Norstrom, is breaking new ground to the addition of food to retail. Food adds to the experience and location appeal.

Ricardo Belmar
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
4 years 5 months ago

The food hall concept leverages a strong desire for authentic experiences from local suppliers that many consumers are looking for. It’s no surprise these are performing well and that they bring an uplift for surrounding retailers. However, with anything that rises to popularity this quickly and draws such strong crowds, there is a risk of oversaturation if too many food halls pop up in close proximity. The risk may be higher in urban areas but suburban location may be fertile ground for this approach where these types of authentic, local experiences are rare and consumers may actually crave them more than their urban counterparts. I’m sure there is an element of “placeholder” in the view of landlords with this concept, but if they perform well, I doubt we will see any of them kicked out. If anything, this should fuel adjacent tenants quite nicely!

David Weinand

Always interested me to know whether suburban residents have an appetite for “local.” Suburbia is so dominated by chains, I often wonder if it’s what the desire is or whether real estate costs are prohibitive to local restaurateurs. I was in Easton in Columbus, OH last week — nothing but chains as far as the eye could see. Blech….

Richard J. George, Ph.D.

If the food halls are to succeed they need to be planned destinations, not temporary placeholders. The irony is that in its heyday, stores in the malls were the destinations and food courts were there to satisfy hunger needs while shopping. Now, if properly designed and executed, food halls may become the trip destination with satiated customers browsing the stores after enjoying a satisfying meal.

Dick Seesel

Anybody who has traveled the world (and has visited department stores in the process) can’t help but be dazzled by the food halls, especially in Europe but also in Asia and elsewhere. I realize that this is an extension of “high street” shopping in densely populated central business districts, so it doesn’t necessarily lend itself to the American department store model. And yet … wouldn’t a food hall (in the European sense) be more compelling than a Backstage installation in a Macy’s store?

The growth in self-contained food halls inside malls (but not necessarily inside a department store) is healthy for several reasons — and not just as a placeholder for another anchor tenant. It capitalizes on shoppers’ growing interest in cooking, healthy eating, locavore dining, etc. — and it provides an opportunity for retailers like Whole Foods/365 or Trader Joe’s to expand their footprint. Besides, if you’re waiting for one department store to fill the anchor space of another … you’re going to have a long wait.

Ralph Jacobson

This is a natural evolution. People of all ages, not just Millennials, enjoy the local feel of trendy food halls. Are they a via driver/destination for larger retail malls? Actually, not always.

The anchor store mentality is still the compelling reason for people to shop a specific mall location. We have seen those anchor stored partner with food hall tenants to create a better partnership, though. Malls still struggle not only to attract shoppers, but also purchasers. There are too many shoppers simply window shopping the malls today. Many of the stores are dying, regardless of the food choices available.

Cathy Hotka

Food halls, fitness centers, grocery — the anchor store of the future apparently isn’t a department store. Mall companies like Simon and GGP are going to do everything in their power to keep their offerings fresh and customers coming in. One night last week, Pentagon City Mall was full of hungry teens, and that’s good for business.

Paula Rosenblum

Cathy, you have got to come down and see Brickell City Center. I may not like how crowded the area is, but Simon and the Whitman family (Bal Harbour Shops) have built a stunning new generation mall and mixed use building. And yes, there’s a food hall.

Shep Hyken

Shopping centers who are “retail-only” will have a tough time surviving. Food halls, movie theaters and anything else that will drive foot-traffic will be what keeps malls alive and retailers afloat in the ever-changing world of retail. There are plenty of stats and facts that have come out over the years from ICSC to support the concept of non-retail offerings.

Michael La Kier

Food Halls are becoming big business. They are a benefit to their broader location, adding a little excitement and the element of discovery back into retail that oftentimes is missing. All tenants in retail are really just “placeholders”… and these are good ones!

Tony Orlando

This all comes down to a couple of factors for me. Foot traffic and money, which simply stated is how success is measured. In my town, our mall has one vendor left, and 9 empty food stores, so no it won’t work in our county as the economy is horrible. Suburban malls that still have at least 75-80% occupancy can work, if the selection, and quality of the food is excellent, and food trends continue to change, so it would have to be upgraded every few years to allow for the new trendy operations.

I have been to a lot of cities and there are plenty of empty spaces to fill, so the landlords need to be creative, and accept the fact that high-end leases are a thing of the past, with few exceptions. Restaurants and food trucks are everywhere and to succeed, you better have the right location and a few signature, must-have dishes or sandwiches to survive.

Lee Peterson

DEF a good idea. We’ve done research on this topic so, totally agree with Cushman in that customers, especially younger ones, are being trained to “expect” some sort of food offering from retailers now. Coffee/espresso, snacks, drinks … something, weighs big as a reason to increase visitation and conversely decrease visitation if you don’t have it. BUT — the key is: quality of what you offer. Kohl’s recently learned that by producing half-step coffee shops that were soon closed. So focus on quality of food offering is key to success to making it work to the already receptive customer.

Ken Lonyai

While the idea of local vendors, food truck operators, and celebrity chefs creating unique experiences sounds great, I’m skeptical about this. Functionally, this is a food court in a mall. Rather than the mall model, the emphasis being on retail with food added as a secondary attraction (rent source), the model is flipped. Especially in a food-oriented city like New York, without additional data, I don’t see proof of long-term viability and am cautious about the property owner’s claims.

And celebrity chefs and most restauranteurs seek to build chains, so with success, the individuality/uniqueness will evaporate.

Dan Frechtling
4 years 5 months ago

This concept is here to stay because it provides a real solution to consumers.

Food halls fill a niche between food truck lots and casual restaurants. They are reminiscent of the college experience. They solve the problem of “what should we eat?” and promote variety for business colleagues previously forced to compromise between vegans, ethnic food lovers, and dieters in different meal missions.

Some food halls have stages for local performers and tables for playing games. They can revive dying malls previously concentrated on retail into town centers bringing people together. They are fluid and Darwinian. New food concepts get started quickly, and are replaced quickly. They crown winners efficiently and relatively inexpensively.

The only thing standing in the way is over saturation. Then the market battle shifts from competition between food stations to competition between food villages.

Cynthia Holcomb

The tipping point for food halls? Let’s drive to the mall to eat! Food halls filled with Indie vendors sounds great. The reality: economically sustaining erratic and variable customer demand while keeping food quality and ambiance worth driving to the mall for a meal.

Richard Layman
4 years 5 months ago
Agreed. Point #1: People eat every day. They don’t buy other retail goods every day. So just like various general merchandise stores added food (Target, Walmart, etc.), it makes sense for shopping districts to up their game and add food to promote shopping frequency. This article is weakened by not including examples from the West Coast, although since they opened awhile ago, the articles aren’t current unlike the other cites. Orange County, California has a number of food halls, integrated with specialty retail. OC Mix for example is one such. I guess you’d call it an example of what the Philadelphia Inquirer recently termed “lifestyling” (a newer iteration of lifestyle centers). Anyway it rocks, although sadly the specialty food service equipment store on the site closed a year or two ago. Shops renamed as The OC Mix TRADE, an open air Irvine food hall, celebrates its grand opening Saturday Santa Ana’s 4th Street Market: Food hall guide and tips on must-try dishes In short, this will be an upscale retail + food initiative. Food halls… Read more »
Rich Kizer

Brilliant idea! Actually we have all seen grocery chains filling this need. We frequently observe customers who waltz into the grocery store and make a direct approach to the food court. There they spend time looking, making decisions, sometimes sitting to eat, other times leaving with their food. We’ve heard “I don’t care how much the sushi is, I just want it tonight!”

We know food courts work, but the challenge is to keep selections fresh, changing and surprising, to ensure that customers repeat their trip. This most assuredly will create more mall foot traffic for retailers. With that increase, the retailers must then make excitement a reality in their stores.

Peter Charness

Food Cart Malls are a prominent feature here in Portland OR, and have been for some years. Food halls capture the same effect — but with parking and better space to gather and socialize. Good plan indeed.

Peter Luff

Yes it’s another tool in the box. If done well, it can be a real draw. It’s not that easy a panacea though, it will need to be worked at to keep it fresh and exotic to avoid becoming a food court. It should be considered as one option for the space, not the only option. There are other tools as the article lays out, other potential experience activities which could work. Do the market research (or employ an agency!) and work out what’s best for your site.

Dave Wendland

Love the concept of the food hall. It serves several different goals: 1) fills space with an interesting and invigorating destination; 2) provides consumers with a new experience; 3) can be used as a launch pad for aspiring chefs/restaurants; 4) creates an exciting number of food choices in one location. In my belief, this trend is only beginning to gain steam and will continue into the future for quite some time.

Andrew Blatherwick

This trend certainly fits on well with the concept that retail needs to become entertainment if it is to survive the constant pressure from online retail. The retailers that remain in the malls can only benefit from the injection of “theatre” that these new food vendors bring and make the mall so much more relevant for the Millennial generation. There is now space in malls for these local artisan foodies and they in turn can save the other retailers in the mall.

This trend could eventually work its way into the very large hypermarkets that are also way too big — they rent space to artisans and help regenerate those stores and attract the younger consumer who is disenfranchised by big business.