CW Retail - Food Halls Report

consumer tastes. Budget-oriented diners are increasingly finding better quality and cheaper pricing at a wide variety of quality fast casual concepts that have opened in the past few years. Meanwhile, consumers willing to spend more are finding more authentic food options as well, and the casual dining world is feeling that competition. Looking forward, increasing levels of market saturation will mean that the number of restaurant failures and bankruptcies will increase in 2017 as the industry’s winners and losers become more apparent. Those failures won’t be enough to offset growth from new, hot concepts but it will mean that many landlords may find themselves playing musical chairs with restaurant tenants. So why are we are so bullish on the success of food halls if the restaurant landscape is becoming more competitive?

franchise fast food categories. The fast casual category is showing the greatest strength. Food hall tenancy is overwhelm- ingly made up of fast casual players whether chains, startups or one-off locations. More importantly, it is those concepts that offer what millennial consumers want to eat and that is authentic, quality food that will succeed. But success is not only a question of offer- ing what consumers want. Rent is a major part of the equation. While rents for food hall space on a square foot basis may seem quite expensive, the amount of space used is generally very small. One restaurateur active in a San Francisco food hall shared this comment with us: “Here I am paying about $120 per-square- foot annually for my 300 square feet of space. That’s about $36,000 per year. If I would have opened my own standalone restaurant I would have been looking at

The greatest weaknesses in the U.S. restau- rant industry are in the casual dining and

In March 2016, Americans spent more money dining out than they did purchasing groceries… The trend has repeated itself every month since.

$1,000 $1,200 $1,400 $1,600

U.S. Food Expenditures Through June 2016: At Home $388.1B Away From Home $393.2B At Home Away From Home

$0 $200 $400 $600 $800

$ Billions

At Home Away From Home

At Home Away From Home

U.S. Depart ent of Commerce/Department of Agriculture

Food Halls of America 2016

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