I've had Itamae (the Peruvian stall mentioned towards the end of the article) a whole lot and I have to say that is definitely one of the best food spots in all of Miami.
The Troubling Economics of Food Halls
11–20 of 45 posts
Re: The Troubling Economics of Food Halls
#12My brain kept leaping to this analogy... Chef : Software Engineer 2017 : 2010 Donaldson : Apple Alcohol : iMessage Food Hall : App Store 30% : 30%
My biggest takeway, too, was the amount you paid for rent was based on the percentage of sales.
Also of interest was the 20 - 30% of spending was done on the bar, which the person running the food court got, too. So, basically the Food hall is taking in 60% of the revenues.
Not a bad business model. Naturally, they are incentivized to make the individual stalls work as a business, so I imagine there's some negotiation that can go around for the price they charge....
Re: The Troubling Economics of Food Halls
#13Earlier quoted context omitted.
I imagine the rents at a lot of these places make it difficult to profitably sell unprepared food--especially things like vegetables as opposed to twee craft honey and the like.
If it's ingredients that they use anyways then instead of using some back closet for storage they can simply put them out on display.
While tidy conceptually I don't think the economics and logistics work for that - retail space is more expensive than storage. Even if the ownership could be worked out to stock the same thing competively it would make more sense to get it from shared storage than use the more expensive retail space.
Said assumption also isn't trivial in terms of "what people want to buy vs what is sold".
Re: The Troubling Economics of Food Halls
#14The oyster example has me wondering if they would have been better off subletting if say split the morning slot with a breakfast place and do a change over at some point. The main objection being enpty booths harm the common's benefit.
Re: The Troubling Economics of Food Halls
#15Earlier quoted context omitted.
If it's ingredients that they use anyways then instead of using some back closet for storage they can simply put them out on display.
While tidy conceptually I don't think the economics and logistics work for that - retail space is more expensive than storage. Even if the ownership could be worked out to stock the same thing competively it would make more sense to get it from shared storage than use the more expensive retail space. Said assumption also isn't trivial in terms of "what people want to buy vs what is sold".
There are some specific exceptions. For example, it's not that unusual for "artisan" sandwich places to also sell their bread. But it doesn't really make sense to imagine a pizza place that also had un-prepped mushrooms, green peppers, etc. out on display for separate sale. It's just not their business.
Re: The Troubling Economics of Food Halls
#16This whole article feels like they're trying to brew trouble that isn't really there. They compare cost per sqft of rental space in a food hall, which they admin includes many extra things related to running the surrounding food hall (including build out, sanitary maintenance, etc) to renting empty business space and claims the food hall is expensive. They admit that many vendors found the food hall to be productive…
The fact he has a sweetheart deal from the city and is allowed to own the only bar in the hall and keep all its profits has the real risk of him making all the money at the expense of all the other stalls.
Re: The Troubling Economics of Food Halls
#17The oyster example has me wondering if they would have been better off subletting if say split the morning slot with a breakfast place and do a change over at some point. The main objection being enpty booths harm the common's benefit.
One issue is that sharing your facilities with a different business (which probably has significantly different physical plant requirements) has its own set of problems. It's actually pretty common in cities more generally that you have coffeeshops that are closed in the evenings in the midst of a bustling restaurant and bar scene.
As I recall, Starbucks actually looked into doing some sort of wine bar transformation in the evenings at some locations. But I've never seen such a thing so it presumably didn't work out for whatever reason. And that's a single business.
Re: The Troubling Economics of Food Halls
#18My brain kept leaping to this analogy... Chef : Software Engineer 2017 : 2010 Donaldson : Apple Alcohol : iMessage Food Hall : App Store 30% : 30%
>Alcohol : iMessage
What? Alcohol is high margin. iMessage has zero revenue and is a loss leader. Also, you can offer/sell any chat apps you want on the App Store, unlike with alcohol in Donaldson's food hall.
Re: The Troubling Economics of Food Halls
#19This whole article feels like they're trying to brew trouble that isn't really there. They compare cost per sqft of rental space in a food hall, which they admin includes many extra things related to running the surrounding food hall (including build out, sanitary maintenance, etc) to renting empty business space and claims the food hall is expensive. They admit that many vendors found the food hall to be productive…
The fact he has a sweetheart deal from the city and is allowed to own the only bar in the hall and keep all its profits has the real risk of him making all the money at the expense of all the other stalls.
He's also paying 5k per month to lease the building and collecting almost 10x that much in rent from the others. A better solution might be to form some kind of collective/group to lease the facility at no profit. Like a condo association of sorts.
It's obvious these people are working for someone else.
Re: The Troubling Economics of Food Halls
#20This whole article feels like they're trying to brew trouble that isn't really there. They compare cost per sqft of rental space in a food hall, which they admin includes many extra things related to running the surrounding food hall (including build out, sanitary maintenance, etc) to renting empty business space and claims the food hall is expensive. They admit that many vendors found the food hall to be productive…
The fact he has a sweetheart deal from the city and is allowed to own the only bar in the hall and keep all its profits has the real risk of him making all the money at the expense of all the other stalls.
This is what stood out to me. Margins on food are not spectacular, and this place's $4.5k/mo minimum on rent is very high. Alcohol's margins are high enough to where that's where a good chunk of the actual money is made - the landlord is making an absolute killing here given his fairly low rents to the city, and very much at the expense of the profitability of the tenants.