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By Ed Avis
When Lucero Martinez and her brother Luis Martinez-Obregon were searching for a location for Taqueria La Luz in early 2021, the real estate consultant they were working with suggested something other than the usual stand-alone restaurant: a spot in Chattahoochee Food Works, a food hall located in a redeveloped industrial site in Atlanta’s Upper Westside neighborhood that had opened the year before.
Lucero and Luz, who already operated Zocalo Mexican Kitchen & Cantina in Midtown Atlanta, found the option appealing, especially because of the lower cost.
“Given the more affordable cost for us to open a concept at a food hall rather than a stand-alone brick-and-mortar, we chose the food hall,” Lucero says.
Lower cost is not the only advantage the duo have discovered. Others include the community feeling of the hall, the large space with loads of seating, and the steady traffic. Of course, there are a few potential downsides — but overall, the pluses outweigh the minuses for many Mexican/Latin restaurant owners.
A Community of Restaurants
It’s long been understood that restaurants benefit if other restaurants are nearby. If a neighborhood has multiple options, more customers are likely to travel to the area when they’re seeking a place to eat out. Shopping mall food courts proved that 40 years ago.
According to real estate brokerage Cushman & Wakefield, there were 321 food halls operating in the United States in early 2023, and another 145 were in some stage of development. There were 220 food halls in 2019, so the idea has been growing in recent years.
The community feeling of a food hall is one key reason restaurants choose to locate in food halls.
“It’s true what they say, the more the merrier,” Lucero says. “A variety of foods attract more people. People like options, especially with families and groups, everybody can eat what they want and find a common place to gather and sit.”
However, those myriad food options mean more direct competition, which means Taqueria La Luz has to work hard to rise above the crowd. “We do have to stay on top of our game so we can offer the best quality product since we are surrounded by many very good choices from the other vendors,” Lucero says.
Good foot traffic does temper the competitive situation. The more potential customers milling about, the less likely any single concept will be ignored. And of course, it helps a Mexican/Latin restaurant if there are no similar concepts in the hall, which is the case for Taqueria La Luz.
Minimized Management Tasks
Ivy Stark, founder of Mexology, chose food halls for all three locations of her upscale taqueria: Time Out Market and JACX&CO in New York City and Houston Lyric Market in Houston. Money played a key role in her decision to chose food halls over stand-alone locations, but the services that the food halls provide also persuaded her. The food halls her restaurants occupy manage the utilities, handle ware-washing and cleaning, service equipment, and in general manage the whole facility.
“The primary reason [I chose food halls] was that it was a smaller investment to open than it would be if I had to build out a restaurant, but there are some great advantages that come along with it, like a marketing team who is not only marketing the food hall but also your individual kitchen,” says Stark, who previously was the chef at Dos Caminos and Rosa Mexicana in New York.
Food hall-sponsored events also help boost traffic, according to Lucero. For example, every week, Chattahoochee Food Works runs Chill Tuesday — “Georgia’s Largest Happy Hour” — as well as an artists’ market every Thursday. The brother-sister team also value the efficient management of the common eating area, parking lots, and other amenities.
“Our team wouldn't have the bandwidth to run all these extra events to help draw attention, so this is a big plus for us,” Lucero says. “Also, the common areas offer dining inside and outside, there is ample parking, security, and of course restrooms. All of these things are not something that we have to worry about or take care of which is a relief. These things can be expensive for a small business owner and take up a lot of your space in a small restaurant, too.”
The Economics
Restaurants that open in food halls avoid the typical construction costs incurred with stand-alone locations, at least in part. However, depending on the hall and the restaurant, operators usually still must customize the build-out of their individual space and/or bring in any specialized cooking equipment they need.
The on-going costs of operating a location within a food hall vary. Some halls require the restaurants to pay a base rent plus a percentage of sales, others just a percentage of sales, which can range from 12 percent to 30 percent.
Stark pays a percentage of sales to keep her Mexology locations running. “It ends up shaking out at around the same percentages you would pay for rent, utilities etc., but it streamlines it in such a way that it economizes at the management level,” she reports.
Potential Disadvantages
In addition having to compete with so many restaurants concepts, operating in a food hall can present other challenges, too.
One is that the stalls must follow the rules, which in some cases include hours of operation. If a restaurant doesn’t serve breakfast yet the food hall requires that all stalls be open from 9 a.m. to 9 p.m., that restaurant will have to add breakfast to the menu or end up paying staff for several unproductive hours per day.
Another potential risk is if the food hall fails. In that case, even a successful stall operator suddenly must find a new location.
That’s why researching the operator before signing the lease is worth the effort, Stark says.
“Do your homework on the location as you would a freestanding location,” she stresses. “Vet the operators and make sure they are experienced operating a food hall, as it is a completely different animal. And negotiate a percentage rent that allows you to take a profit.”
Regardless of the potential problems, Stark and Lucero say they are happy with their food hall decisions.
“I always learn something new with every new business venture,” Stark says. “But I have no regrets about choosing this path.”
Ed Avis is the publisher of el Restaurante.
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