Brick-and-mortar stores and shopping malls may be struggling, but urban food halls are multiplying faster than bunny rabbits. Most feature a diverse mix of established concepts that are looking to expand into a smaller footprint with smaller financial risk. But some food halls are also supporting aspiring restaurateurs who are eager to run their first physical eatery. Developers of these dining destinations are increasingly setting aside space to incubate and launch businesses. The economic models may vary, but the goal is the same: to invest in local entrepreneurs and help launch a new concept without breaking the bank. Here’s how four food halls are making that happen.
Smallman Galley, Pittsburgh
Ben Mantica, co-founder and CEO of Galley Group, launched his first food hall incubator in 2015 in Pittsburgh, and has since replicated the model in Detroit and Cleveland, with Chicago’s Fulton Galley opening this summer. There’s an application and interview process to get a space, but “We look for chefs who have a tie to the market and previously held leadership positions in kitchens,” says Mantica. He also aims for a mix of cuisines. Galley Group does the entire buildout, covering all overhead expenses (POS systems, waste removal, shared back-of-house). Each operator is responsible for food, kitchen labor and special equipment. Startup costs are around $7,500, and vendors sign a one-year licensing agreement but pay no rent. Instead, Galley Group has a revenue-sharing plan in place, taking 30% of net profits from each business.
“From the beginning, I wanted to remove barriers to starting up and tie my financial success to the success of the operators—to ‘walk the walk,’” says Mantica. So far, all the operators have stayed for a least one year and some longer; others have gone on to start their own restaurants. One lesson learned from Smallman Galley: Mantica now staggers the licensing agreements. “During the first rotation, everyone left at once,” he says.
One Eleven Food Hall, Chicago
Chicago’s Pullman neighborhood was a culinary desert, admits Ciere Boatright, VP of real estate and inclusion for Chicago Neighborhood Initiatives (CNI). As part of the revitalization of this South Side community, CNI developed One Eleven Food Hall, financing the buildout with city tax credits and public and private funds. “Originally, we thought it would house one user, but the space was really big, so we decided to make it an incubator,” says Boatright.
One Eleven opened in May with three startup vendors—a bakery, a vegan eatery and an all-day restaurant—and pop-up space for a rotating retailer, such as a florist or candy maker. CNI covers utilities, cleaning and furniture, and the restaurants pay approximately $1,500 a month in rent. “We deliberately kept rents low and offered short-term leases for flexibility,” says Boatright. “We want the restaurateurs to focus on their business and be successful enough to grow out of the food hall and into the community, with others taking their place.”
Citi Test Kitchen at Urbanspace @ 570, New York City
Citigroup partnered with Urbanspace before the food hall opened in 2018 and launched Citi Test Kitchen in 2019. The goal: support local culinary entrepreneurs. For many up-and-coming chefs, accruing a solid customer base, raising startup capital and locking down a prime location are insurmountable barriers to entry, especially in New York City. To help lessen the load, Citi provides a fully equipped booth in Urbanspace for three months, covering rent and maintenance fees. The food hall’s 16 other vendors pay their own rent and other costs.
Through the Citi Urbanspace Challenge, potential entrepreneurs applied to compete for the Citi Test Kitchen spot. Following an online vote and judging by a panel of culinary experts, Sonya Samuel was awarded the space for her concept, Bacchanal Sauce. Although her Caribbean eatery is slated to run for three months, Samuel has the opportunity to extend her stay. “At Citi, we’re always looking for new opportunities to help support the growth of small local businesses. … We’re thrilled to have the opportunity to help these culinary entrepreneurs gain exposure and name recognition among consumers,” says Tina Davis, Citi managing director, head of global sponsorships.
Budd Dairy Food Hall, Columbus, Ohio
Budd Dairy Food Hall isn’t opening until the end of 2019, but 110 enthusiastic entrepreneurs have submitted applications for eight vendor spots, says Steve Weis, VP of development for Cameron Mitchell Restaurants (CMR), manager of the operation. CMR whittled down the applicants to 15, and each pitched their idea in front of Weis and his team. Eight chef-partners have been chosen so far, and each is signing a three-year agreement. Rent is low, and in return, CMR covers overhead and offers one-day-a-week workshops to help the entrepreneurs build business acumen, says Weis.
“Some of the applicants already had a catering business or food truck, while others came in with just an idea,” he says. To nurture those ideas, a ninth spot will be a rotating pop-up called Hatch. “We will be providing everything for Hatch, so someone can come in with just food and immediately operate,” says Weis. CMR will charge a percentage of sales. And through a relationship with Columbus State Community College, culinary students will also have chance to open a not-for-profit pop-up for two weeks as part of their curriculum.