Foodservice Remains Retail Darling as Customers Have Appetite for Experiences

by Jeff Shaw

LOS ANGELES — Whitney Livingston had a question for those in attendance at the annual Entertainment Experience Evolution conference in Los Angeles: Which user — food halls or restaurants — are more beneficial to driving traffic at retail properties?

By show of hands, most attendees said food halls.

Livingston, president of Centennial REC, was moderating the event’s “Fireside Chat: What’s Better for Traffic, Food Hall or Restaurants?” panel at the JW Marriott LA Live. Each of the categories was embodied in the form of a panelist. Representing food halls was Michael Morris, CEO of the aptly named Food Hall Co., with Rich Renninger, SVP and chief development officer of Darden Restaurants, weighing in from the perspective of more traditional, full-service restaurants.

Despite what the name of the panel might suggest and Livingston’s opening poll, the dialogue that emerged between Renninger and Morris did not take on the shape of a debate so much as a conversation that illustrated that, for all their distinctions, there are many commonalities between the two types of food-and-beverage users. 

Ultimately, the panelists revealed that though food halls and full-service restaurants may take different paths, there is one shared recipe for success: creating a robust customer experience. 

Wraps and Rap 

Morris said his company’s food halls craft customer experience through entertainment programming. The company has a flagship location, Legacy Hall, in Plano, Texas as well as another, Assembly Food Hall in Nashville, Tennessee.

Events are a regular occurrence at the Nashville location, which plays host to two indoor stages as well as an outdoor stage, dubbed the Skydeck. According to Morris, the indoor stages are activated seven days a week beginning in the afternoon, and the latter has a capacity of over 1,700 people.

Recent performances included one by Jelly Roll, a country-Western rapper with a name appropriate for the venue. The same day, the location saw a morning exercise class, a watch party for the NHL’s Nashville Predators and an EDM (electronic dance music) concert. 

Morris said that such events directly translate into increased sales, primarily in the form of alcoholic beverage purchases. 

“We know that the average food hall that doesn’t have the programming and activation — typically their liquor, beer and wine sales are in the high teens or low twenties as a percentage of their gross sales. For us, we’re able to achieve way north of that. We’re about a 10-point increase,” said Morris. “So we typically hit 27 to just under 30 percent.”

Food Hall Co. is able to allow for such programming with abundant space incorporated into the design of the company’s locations. Morris pointed out that though the average food hall ranges in size from 15,000 to 18,000 square feet, Food Hall Co.’s average is “well north of that,” with Legacy Hall and Assembly Food Hall totaling 45,000 and 66,000 square feet, respectively. 

Service as Experience

Though Renninger noted that one of Darden Restaurants’ concepts, Eddie V’s, features live jazz in the bar each night, he also points out that Darden doesn’t prioritize entertainment — at least not in the sense of televised concerts or workout classes. 

Rather, customer experience at the company’s restaurants — which include the brands Olive Garden, Longhorn Steakhouse, Cheddars, Capital Grill, Season 52, Bahama Breeze and Yardhouse — comes in the more subtle forms of presentation and sense of place. Attention to detail and finer touches create what Renninger called the “total package.” 

“That’s our entertainment; that’s how we make a decent business,” said Renninger.

Livingston also pointed out that sit-down restaurants allow customers the social experience of conversation. 

“The best restaurants offer memorable experiences and high-quality food in a relaxing environment,” said Livingston. “With a restaurant you get to sit down and focus 100 percent on the conversation at hand, and it’s someone else’s job to take care of everything else.”

A Landlord’s Role

Food Hall Co.’s locations are distinctive not just for their notable size and breadth of programming, but in another aspect. The company occupies the dual role of both tenant and landlord. 

Morris said that in addition to acting as landlord to the 20 to 22 vendors that occupy each food hall, Food Hall Co. serves as an operating partner. 

“We support them from the culinary perspective, we support them from standard operating procedures and IT, and we really try to act not only as their landlord in the physical space, but also in the operational aspect and making sure they’re as successful as possible.” 

The relationship is also unique in that the rent paid by food hall vendors is fully a portion of their sales. 

Though all landlords might not be as involved as Food Hall Co. is with its vendors, Morris and Renninger noted that they should participate in driving traffic. 

“Everybody wants to go to the mall with their family on the weekend,” said Renninger. “When it’s cold or when it’s not quite excellent, if we can find other ways to incite people to show up, we’ll provide a great time for them.”

Create Synergy

Another question posed by Livingston, this time directed to the panelists, was whether food halls and restaurants can successfully coexist in the same location without one being detrimental to the sales of the other. “Is that complementary or does that cannibalize your sales?” asked the moderator. 

Morris was quick to point out that the two can be “completely complementary,” as in the case of Assembly Food Hall and the Eddie V’s restaurant situated next door to it. “Ultimately it’s a different consumer for that time and place.” 

According to Morris, food hall patrons normally skew “a little younger” and are ultimately in search of a particular experience, one with a fast-casual bent. 

Renninger added that it is all about synergy, a central concept of late, with the focus on mixed-use properties. 

“There’s as many synergies as I think there are competitive pieces,” said Renninger. “Kids are going to run over to the cool food stall and do their own thing, and the parents are going to sit down at the restaurant and have a great time.”

As Livingston summarized it: “This panel reinforced that when it comes to restaurants and food halls, it doesn’t have to be ‘either/or.’ It can be ‘both.’” 

In short, landlords can have their food hall and restaurant too, so long as they succeed at creating the kind of experience that draws consumers in — and keeps them coming back.

— Hayden Spiess

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