Food Halls Bring a Glimmer of Hope to the Beleaguered Restaurant Industry

A new report from commercial real estate firm Cushman & Wakefield predicts that food halls—where multiple vendors operate food stalls within a shared space—are well positioned to pivot and grow in the aftermath of COVID-19 and are likely to be among the first in the restaurant sector to bounce back post lockdowns.

“Against this backdrop, it would seem that socially driven food and beverage concepts would be the most vulnerable and that the era of the food hall may be ending abruptly,” reads the report. “Yet, as counter intuitive as this may sound, we see a strong case as to why the exact opposite is true—not just in terms of the ability to survive the immediate challenges posed by the pandemic, but to emerge as one of the dominant forces to rebuild the independent restaurant industry in the post-COVID world.”

First of all, food halls are extremely popular with millennials and Generation Z consumers, who appreciate the social dining aspect that they offer. A recent survey of people in those categories showed that a much higher percent said they will to return to restaurants as soon as lockdowns end than to activities such as going to the movies or the gym. (55% of the millennial and Generation Z respondents said they would return the restaurants as soon as isolation ends.) Thus, Cushman & Wakefield anticipates pent-up demand from the demographics to which food halls cater.

Second, the open-space design of most food halls should help them easily implement social distancing measures, be it spaced out lines for people waiting to order food at stall, or reconfigured seating to separate groups of diners. Moreover, many food halls already have outdoor space or flexible space designed for the use of performers or other entertainment that can be converted for diners.

“Ultimately, how much these measures mitigate the ongoing challenges facing food halls, and the entire [food and beverage] sector, remain to be seen,” the report reads. “But we do see the inherent design flexibility of the food hall as giving them an advantage in the months to come. And the pandemic will not last forever.”

One thing that is certain is that food halls were on an upward trajectory before COVID-19 hit. Researchers had tracked 223 such food halls operating or having opened since 2016. Another 165 have been announced or are in development. Food halls could be a key growth area for landlords looking to fill vacant retail space—something there is likely to be far more of in the wake of the coronavirus.

“Moving into the post-pandemic era, we will likely see both significant belt tightening from consumers and pent-up demand for socialization (both of which will favor the traditional fast casual tenant of food halls and the venues themselves),” according to the report. “We will also see more landlords and developers in need of backfilling retail space lost to the crisis and absolute need to reconfigure shopping centers towards those concepts that resonate with consumers.”