Kirsten Pettit carries a plate of crispy duck wings through the cavernous Assembly food hall. Gently placing the dish in front of a group of diners, who have collected three meals from the 17 fast-service restaurants inside Assembly, Pettit heads back to the DaiLo stall.
It’s a quiet Monday. With about 150 customers lingering over lunch, manager Pettit can get ahead with prep for the week. Many days, the after-work crowd (there’s a cocktail bar at one end) exceeds lunch. On Thursdays, every seat in the 22,000 square-foot space is often filled. But just a few months ago, after a long construction, Assembly sat empty.
“We don’t have power right now,” said its operator, Andreas Antoniou, back in November. “Somewhere along the way a key switch for a transformer didn’t arrive.”
No restaurant opens on time. There’s always a delay due to plumbing, wiring, zoning, fire inspection, health inspection or other assorted plagues sent down by whatever wrathful gods to whom restaurateurs pray or do not pray.
So when someone tells you they’re going to open 17 restaurants at once, be glad it’s not your money on the line.
“I feel pressure,” said Antoniou, who also owns nearby downtown restaurants Los Colibris, El Caballito, El Patio, Little Anthony’s and Estiatorio Volos.
“Every day that goes by costs us real dollars in staff, rent, marketing dollars that we’ve expended. We’ll have to reinvest those dollars again as we get closer to opening. It’s a lot of pressure on a lot of people.”
Still, though Antoniou and his partners had sunk $8.5 million into the Richmond-Adelaide Centre venture, he seemed unfazed.
“We believe we’re building something special. So my outlook on the business as a whole has not changed. Three or five months from now, we’re not even going to remember this,” Antoniou says of their timing.
four more food hall projects are set to open by 2021
Time proved him right. While there is no empirical evidence that Assembly’s success was inevitable, what is certain is that it is something new and part of something bigger.
“Although new to Toronto, this is a long-term global trend,” says Hassel Aviles, a culinary consultant and creator of the Toronto Underground Market (2011 to 2014), a food festival and restaurant incubator that was a testing ground for many successful businesses, including Fidel Gastro, Seven Lives Tacos, Bombay Street Food and La Carnita (which Aviles co-created).
“I’ve sat in meetings with a number of Toronto’s top commercial real estate developers and I know of four more food hall projects set to open between now and 2021.”
But beyond the bubble of developers and marketers, the average consumer might reasonably question what a food hall is, and how it is any different from a food court.
Walk down to the lower level of the Eaton Centre and you won’t be surprised to find an A&W, Freshii, Jimmy the Greek, Teriyaki Experience and New York Fries.
The mall calls it an “urban eatery”, but we know a food court when we see one.
Food courts are predictably lined with the usual suspects, the corporate chain food-service providers found in mall after mall. And that predictability, a tenant who pays their rent on time, is what landlords crave.
Chains and franchises know what they’re doing. They have experience employing low-skilled staff to pump out inexpensive food at a rapid pace (with more cost-saving automation of labour on the way). They’re not tinkering with recipes. They’ve got lab-tested consistency. And they have money. These companies can afford the outrageous rents of the financial district. They can weather short-term revenue dips. No landlord worries that Starbucks is going to declare bankruptcy after one poor season.
A food hall, on the other hand, is filled with independent operators. In the case of Assembly, Antoniou chose to work with restaurateurs who only had one location.
“We went out and started eating,” describes Antoniou of the extensive research process. “We began to target what we felt were some of the best in class within each of their niches. I ate 20 pounds of ramen looking for the best one. And we applied that methodology across the city.”
Food court operators pay different rent based on their position, how much the landlord wants them there or the perceived profitability of the business. The high end of Toronto’s commercial real estate, Yorkville or Queen West, rents for about $100 a square foot. A small space in the densely trafficked core can be double or triple that. For larger spaces, rent is more commonly calculated based on gross occupancy cost. So a landowner will estimate the earning potential of a tenant and charge them 12 to 15 percent.
At Assembly, the chef-owners all pay the same rent, which is based on performance.
“If we’re not helping drive people through the door,” says Antoniou of their shared motivation, “we suffer just as much.”
Additionally, Assembly has put up 85 per cent of the building costs in exchange for a share of the operators’ revenue.
“If you think of any venue that is at-grade, connected to the PATH, that has a patio and that is in the downtown core, every single one of those locations is a chain restaurant, without fail,” says Antoniou, listing the property management companies – Oxford, Brookfield, Cadillac Fairview – that control most of the commercial real estate in downtown Toronto. “So effectively, independent restaurateurs and chefs have been boxed out by the Keg, Moxie’s, Earls, Sir Corp and Oliver & Bonacini.”
Antoniou set out to build his version of a food hall, a massive trend even if consumers don’t know it by name. Kickstarted in North America with the launch of New York’s Eataly in 2010, by the end of 2016 there were 96 major food hall projects in the United States, according to data from real estate firm Cushman & Wakefield.
Assembly mimics some elements of an incubator, with talented restaurateurs gaining access to downtown clientele for a fraction of the investment that it would take to launch independently in the area. Infrastructure costs that make building a restaurant too expensive for small players – exhaust, electrical work, bathrooms, accessibility ramps/lifts – are shared amongst 17 partners rather than each having to build their own.
It’s not about 17 chefs competing with each other
“So it’s not about one of the 17 chefs competing with another one,” says Antoniou. “It’s about us collectively competing for the half million people downtown that are stuck eating at one of the eight similar offerings that are in every single food court.”
Amira Becarevic is one of Assembly’s chef-owners. Here, the former Chase chef operates a health-centric eatery called Mira Mira.
“I’ve worked in the downtown core for the last six years. I seem to keep ending up in the same six blocks. I think I’ve got my finger on the pulse,” she says.
For Becarevic, Assembly is the only way to transition to ownership, while serving the same clientele she has through her career.
“Not having the huge investment necessary to open a downtown location or even close to downtown, that’s a huge pull. To be able to afford a sort of co-operative that this is. I don’t want to say safety in numbers, but all of us pulling in the public makes us unique, and a destination.”
Landlords, however, don’t make radical changes for fun, or to provide entrepreneurial opportunities. They need a more compelling reason to depart from the dependable Lego-snug adjacency of a street or basement lined with Starbucks-Subway combinations. Food courts, however uninspiring, make sense to land owners, developers and property managers. Or they did.
The reason for innovation is that they are scared. And what scares them is the threat to retail sales from e-commerce.
While Canadian companies can point to a small upturn in sales for 2017, no retailer is safe from what economists call “death by Amazon”. With the purchase of high-end grocery chain Whole Foods, the American tech company, once merely an online bookseller, continues its march toward an end game of selling us everything.
And with economists foretelling a retail apocalypse, property management companies are more open to new ideas.
We need more compelling reason to depart from basements lined with Starbucks-Subway combinations
“Retail spaces need to attract a new demographic and increase foot traffic,” says Aviles. “The consumer interest in food is here to stay. It continues to drive people together. Online e-commerce and Amazon alone have changed the game but you can’t buy a social food experience with your Prime account.”
A senior manager at Oxford, speaking on background, confirms that they will be watching for an increase of footfall, the amount of people who walk through the doors ever year, as a demonstrable improvement to show their retail tenants.
“A traditional leasing process that works for national brands doesn’t apply here and can hinder operators before they even open,” says Aviles. “Without a deep understanding of how to spot the right talent, and applying careful curation, a food hall can lie empty. The space must become a live experience to offer value. Most of the magic required to succeed lies in the strength of your relationships within the food community and industry knowledge of the city’s palate.”
Hudson’s Bay/Saks Fifth Avenue declined to comment on the success of their food hall, a partnership with upscale grocery chain Pusateri’s. But if you were in the ghost town of a department store before, and the bustling beehive now, the difference is apparent.
Meanwhile in Toronto, Selfridges and Terroni are teaming to open an Eataly in the Manulife Centre. And RioCan is developing the Well at Front and Spadina. Yorkdale Shopping Centre has been experimenting with Concept, a pop-up space with rotating tenants, so far hosting food businesses like Buster’s Sea Cove, Chatime, Uncle Tetsu, Pie Squared and Nadia’s Chocolates.
Big players can afford to experiment. For Rob Bragagnolo, everything is on the line.
The chef (formerly of Marben) has no corporate backers. Over the last 18 months, Bragagnolo and his family have invested an estimated $2 million of their own money turning a former furniture store, at the southwest corner of King and Spadina, into the Spanish-themed Campo Food Hall.
“You will see spaces that are essentially food courts,” he says, “just called a food hall.”
Bragagnolo lived in Spain for 12 years and has based Campo on a market in Mallorca, Mercat de l’Olivar, with a mix of retail, take-out and dining that shifts throughout the day.
“So at 7 o’clock in the morning, people are having coffee. Then they’re going for lunch. Then they go back and have drinks and tapas. And it does end up being central to that community,” he explains.
Campo is not the behemoth of Assembly. The 2,500 square-foot space, with its distressed tile and gold-rimmed bar, is a tightly packed, carefully lit, food playground, designed to stay packed shoulder-to-shoulder at breakfast, lunch and dinner by offering something for people all day long – a bakery, bodega, salad stand and Labora, a 75-seat restaurant (all operated by Bragagnolo), plus a couple spaces he’s licensed to ELXR Juice and the Drake General Store.
While they don’t sell groceries, Campo provides reasons – coffee and an apricot bomba in the morning, octopus and potato salad at lunch, a dimly lit dinner – for local condo-dwellers to visit often enough to create what Starbucks-ologists call “a third place between work and home”.
The Toronto outpost of Eataly, at 50,000 square feet, will dwarf Campo in size and attention. And Eataly’s expected opening date of 2019 means that Campo and Assembly will do all the heavy lifting of establishing the food hall culture in downtown Toronto.
“All eyes are on Assembly and Campo,” says Aviles, “Being Toronto’s first-to-market new generation food halls, most companies are watching and hoping to learn from all of the mistakes made. These teams are hoping to apply lessons to their own projects of what works and what misses the mark with Toronto’s audience.”
For major landlords like Oxford, which owns and manages over 50 million square feet of real estate in Canada, this moment is a beachhead, with Assembly and Campo as the expendable infantry. What happens next will guide how they deploy their resources.
“There is a lot of opportunity and loss at stake,” Aviles says. “The transformation happening in retail has created a high level of anxiety in the air, almost tangible when you speak to key players. There are eager tigers waiting patiently on the sidelines, ready to pounce when the food hall business model delivers. The model has been proven for centuries around the world but like anything entrepreneurial, it’s not about the idea. Success lies in the execution.”