As if Houstonians don’t have enough restaurant options already, another new concept is coming to the Bayou City. But this time, hungry Houstonians will be able to choose from among many options in one place.
By the end of 2019, Houston’s downtown area will have at minimum five operating food halls, which is a concept that’s similar to a food court in a mall or airport but elevated by offering different food options from independent chefs rather than chains.
The area’s first food hall — Conservatory at 1010 Prairie St. — opened in 2016. By the end of 2018, it will be followed by Bravery Chef Hall at Aris Market Square at 409 Travis St. and Finn Hall inside The Jones on Main at 708 Main St. Next year, two others will follow: Lyric Market at 411 Smith St. inside the Lyric Centre garage as well as Understory at 800 Capitol St. inside the new Capitol Tower.
“A food hall is taking that same dynamic that we know works: Creating a destination and making it convenient to people by offering a wide variety of products at the same time so that there’s this heightened sense of community — but with a higher level of quality,” said local restaurant consultant Chris Tripoli, owner of A La Carte Restaurant Consulting Group.
It was only a matter of time before Houston encountered its own food hall craze because the trend has been in full force across a few years. In 2010, there were less than 50 food halls in the U.S., according to the April 2018 report “Food Halls of America” by commercial real estate services company Cushman & Wakefield PLC. By 2015, there were more than 100 operating halls, and by 2020 there will likely be 300.
Although Houstonians are proud of their city’s culinary reputation, the question remains whether they will flock to five food halls within a six-block radius in downtown.
“I like that we are getting food halls, but there’s only been Conservatory, and it has had mixed results,” Tripoli said. “And now we have Finn, Lyric, Bravery and Understory, and all will be larger. Having that many food halls with that many tenant spaces available, we might be overserving today’s market.”
Click the following links to read more about each food hall:
However, the odds are in favor of Houston’s fab five: Of the 200 current operating food halls in the U.S., only four permanent projects have closed in the past two years, said Garrick Brown, a national retail real estate analyst who wrote the Cushman & Wakefield food hall report.
To survive, food halls must do high volume of sales because of their size and high investment costs. They also must attract a regular, affluent consumer willing to spend at least $15 per meal a few times a week.
Garrick Brown is the vice president of Americas head of retail research at Cushman & Wakefield.
COURTESY CUSHMAN & WAKEFIELD
“I do think that there are enough people downtown who will utilize food halls for meals on a regular basis,” said Jonathan Horowitz, who is the former president of the Greater Houston Restaurant Association and currently serves as CEO of Houston-based Legacy Restaurants, which owns Antone's Famous Po’ Boys and The Original Ninfa’s on Navigation. Ninfa’s will be opening a concept inside Understory.
“The one question I have is: Will there be enough evening business that the developers are hoping for?” he said. “And I think that’s just an unknown.”
Attracting the downtown food hall consumer
Tripoli, Horowitz and other local industry experts expect the five food halls to be busy on weekdays during breakfast and especially lunchtime thanks to the nearly 158,000 people who work downtown. About three-fourths of these workers earn more than $3,333 a month, according to a June report from public agencies Central Houston and Downtown District.
“It’s a captive audience, obviously, because most of those folks who work in those office buildings don’t want to walk to the parking garage, get in their car and try to drive somewhere else (to eat),” Horowitz said. “You can never say anything is certain, but I don’t see downtown all of a sudden losing all of its workers.”
However, Brown wasn’t as optimistic — though a majority of the current 200 food halls do survive primarily on daytime business, he said.
“A workforce of about 160,000 could support two food halls,” he said. "It's going to be competitive."
For these five food halls to survive, they need to build an evening and weekend crowd. Local restaurant experts aren’t sure how successful those efforts will be.
“The key thing for one of these things to work well in downtown Houston is marketing,” said commercial real estate broker David Littwittz of Littwitz Investments Inc. “And the marketing money has to come from the landlord because you have to get people in the door, and — in this case, in Houston — you have to change their thought patterns and explain to them what it is.”
Food halls will have to persuade office workers to stay in the area after 5 p.m.; sway theatergoers, sports fans and residents to choose a food hall over a full-service restaurant or favorite bar; and convince Houstonians across 655 square miles that the drive, traffic and parking is worth it. But most importantly, these new food halls will need to create a sense of community.
“Food halls in other cities are successful because they don’t just serve food,” said Greater Houston Restaurant Association Executive Director Melissa Stewart. “They’re a community center.”
Can 5 food halls survive in downtown Houston?
HBJ asked several retail experts, chefs, developers and food hall operators whether they think Houston's downtown can support five food halls. Here are their answers.
Luckily, downtown is no stranger to change. In the past 15 years, GreenStreet and Discovery Green opened. The METRO-Rail launched. Minute Maid Park, the George R. Brown Convention Center and theater buildings were renovated and expanded. Market Square Park was updated. And several office and residential high-rises were built.
“Everything’s moving downtown. It’s become a bigger city,” said Phi Nguyen, owner of The Pho Spot, a concept inside Conservatory, and The Waffle Bus food truck. He recently moved downtown. “It was dead for so long, but now on Friday and Saturday nights, there’s people everywhere.”
Several local restaurant experts expressed that there is a demand for more dinner options before theater performances and drinks afterward. With 13,000 seats in the Theater District, many of those attendees need a place to sit down and eat. In fact, a lack of dinner options before a theater performance was the inspiration behind Lyric Center, which is a block away from the Alley Theatre, developer Jonathan Enav said.
What will drive people into food halls at night, Brown said, is evening programs, such as poetry slams, live music and cooking classes, in combination with more residents living within walking distance or a short Uber or Lyft drive away.
More Houstonians are calling downtown home. The household population in the 2-mile radius of greater downtown Houston is about 67,000, a 30 percent increase since 2000, per Central Houston and Downtown District. These organizations and others are working on growing the downtown area. And with more businesses, families and places for entertainment, there comes the need for more food options.
“We absolutely need and can support these food halls,” said Angie Bertinot, director of marketing for District Downtown. “I think they will all complement each other, and the clustering will continue to position downtown as a foodie destination.”
If downtown food halls survive, it will be because they attract more residents and offices. Brown said that in the current amenities’ arms race, many multifamily, office and mixed-use projects want a food hall component with local vendors. Developers often see a halo effect from a food hall in which they’re able to lease space easier and at a higher price in part because of the food options. As such, some developers won’t close a food hall even if it is losing money.
In particular, tech companies highly desire office space with a food hall component, Brown said, citing Google’s recent purchase of New York City’s famous Chelsea Market and Facebook’s own campus restaurants in Menlo Park, California.
But four food halls that will open within 12 months and a total of five food halls within six blocks of each other is worrisome, said Scott Taylor Jr., a professor at Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston.
“I don’t know if huddling around Main Street is the right thing,” he said. “Five operations is too many. ... Maybe in five or 10 years when more people live downtown.”
Taylor also doubts that attendees at the George R. Brown Convention Center will make the nearly 1-mile trek to Finn Hall, the nearest food hall, between activities. He felt that Discovery Green, with its established green space and many nearby hotels, would have been a better location for a food hall.
In the next 18 to 24 months, Brown expects to see a wave of food hall closures across the U.S. The ones that shutter will be those that aren’t authentic to the food hall concept as a food destination with local vendors; are inefficient with operations; and are located outside high-density areas.
“I do have concerns in markets where multiple food halls open up in close proximity to one another,” Brown said naming Denver and Miami, which had five open over 18 months, though none of them have closed. “What’s going to be important (for Houston’s downtown food halls) is that they differentiate themselves in meaningful ways from one another.”
Of the five food halls, experts say Lyric Market has the best chance of survival because it caters to a specific niche market: Theatergoers and an evening crowd. Its market vendors selling fresh goods will also set it apart from the other food halls.
Experts predict that Bravery Chef Hall will also do well because it will attract true foodies thanks to its chef-driven tenants who are up-and-comers driven to create. Time will tell for Finn Hall and Understory, both of which are from out-of-town operators, though Understory does have an advantage with its five access points to the underground downtown tunnel system along with street access.
Houston’s food hall future
Brown and local restaurant consultant Tripoli stressed that food halls aren’t a fad but rather an example of how the food and beverage industry is changing in response to a growing foodie consumer segment, millennials’ desire for experiences over physical items, e-commerce and higher rent.
“It is not just a short-term trend,” Tripoli said. “This is a trend in food service, whereby developers can use square footage in highly populated area to create much larger variety than they would be able to if they just split (the property) up and put in three or four tenants. It’s a wiser, better use of space.”
Brown added that the food hall trend is the industry’s sharing-economy model, and it will continue to evolve.
Similar projects are popping up all over Houston: The 24,000-square-foot Bellaire Food Street in Chinatown, which will bring nine vendors offering Asian cuisine; the redevelopment of the 17-acre Houston Farmer’s Market in Greater Heights; the 3-acre Railway Heights Market near the Memorial Park Golf Course; and a food hall at The Grid in Stafford.
Overall, food halls are a win for the many parties involved: The developer adds value to his or her property, the operator generates high revenue from alcohol sales, tenants gain exposure in a new market with a low cost of entry and consumers have more dining options. Some restaurants in downtown even see food halls as a boost for their own sales.
“If anything, the new food halls will be good for business and increase exposure to our two Hearsay locations downtown,” said Zaidi Syed, director of operations for Landmark Houston Hospitality Group, which owns the Hearsay restaurants downtown. “An influx of people will be in the area to dine at the food hall, which will create an opportunity for us to capture their interest for a cocktail or light bite.”
Regardless, there’s a good chance that not all five food halls will make it, but that’s how the food and beverage industry is, Stewart said. Restaurants close frequently. Luckily for food hall operators, if one tenant doesn’t work or pull in their share of the revenue, contracts are usually set up in a way to quickly get a new concept in.
Stewart, like many others, wants Houstonians to support food halls.
“When we open the five food halls here in town, and if one of them doesn’t succeed in 18 to 24 months, and we are back down to four, that to me is in no way a failure of the concept,” she said. “It’s just how business works sometimes. I think it speaks very well of our continuing food industry here in Houston, and there’s going to be a lot that we can learn from this no matter what things look like in five to 10 years.”
Source: Houston Business Journal