The Rise of the Food Hall

31 October 2019

The number of new Food Halls opening in the UK has risen dramatically in the past few years, especially within larger cities such as London and Liverpool. The Food Hall has been described as a high street's worth of restaurants rolled into a unique location with a social atmosphere and good vibe. With Food Halls offering DJs, live music, tastings and other events, this has created the ultimate dining destination for consumers, especially younger generations. Food Halls offer a way for groups of people to dine together in a more dynamic way, offering extensive choice, value for money and a sociable atmosphere. With the projected number of Food Halls expected to increase within the next few years, experts are suggesting that Food Halls will become the new norm in the eating out casual dining sector.

But why have they become so popular?

There are two main drivers in the growth of food halls: lower rents for operators and more choice for customers. Food Halls charge tenants a fixed percentage of their turnover, usually around 15% to 30%, dependent on location and size of the unit. In return, tenants receive a base kitchen-retail unit, refrigeration, power, till, all utilities and waste removals covered on 3, 6 or 12-month initial leases. This significantly lowers barriers to entry for chefs in comparison to the barriers that they would face in the high street restaurant market. The Food Hall also creates a platform whereby chefs can demonstrate their fresh new ideas or concepts and begin to build demand and a customer base in an environment where there is consistent footfall.

Furthermore, it can cost as much as a six-figure sum to launch a restaurant, meaning that starting out at in a Food Hall instead of a restaurant site offers a lower cost start-up option. For example, in Liverpool’s Baltic Market, at least three of its traders have been able to launch elsewhere while still operating out of the Baltic unit, demonstrating the ability of the Food Hall to help newcomers enter and compete in the restaurant market-place.

In addition to this, newcomers can benefit from the oversight of Food Hall managers who are attempting to create an open relationship with their tenants, where they assist operators on pricing and branding, among other things. This can be invaluable, especially to new entrants, who are either new to the eating out market or have no experience of running their own business. This relationship can have positive results for both parties, because if the tenants are generating higher turnover, so are the Food Halls. It’s a win-win situation!

The future of the casual dining sector?

Food Halls are popping up in areas where they can attract customers away from the traditional restaurant trade. For example, KERB Seven Dials Market in London sits between Soho and Covent Garden, both highly populated with existing eateries.

However, as overcrowding and over-expansion in the casual dining market has seen the fall of some major chains, most recently Jamie’s Italian, this raises the question of whether there is simply enough demand for the opening of more Food Halls. We believe that there is room for new entrants in the short-term but there will need to be a flight to quality to maintain momentum.

Potential opportunities for landlords too

Food Halls can also be a great option for landlords or developers where they have empty buildings or commercial units. The introduction of Food Halls to the UK can provide landowners with the opportunity to improve rental income prior to leasing or development. This can be seen at Liverpool’s Baltic Market which is in a former derelict warehouse. The success of operators could lead to an increase in footfall in the area, which could have a knock-on effect for property values.

If you have any queries or would like to discuss this topic further, please contact your local UHY adviser.

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