As retailers like Macy's (M) - Get Report , Sears, (SHLD) and J.C. Penney (JCP) - Get Reportsink deeper into the pit of no return, a star in the sector has risen and is shining brightly for purveyors and customers alike.
The sparkly object? Food halls.
"No other retail category has generated as much aggressive expansion in the past few years as food-related retail," wrote the authors of Cushman & Wakefield's Food Halls of America, 2016 Edition. "And arguably, there is no hotter trend within the category than food halls."
U.S. food halls are sprouting up everywhere, according to the Cushman & Wakefield report: in the first nine months of last year, the number of food halls increased 61%, and more are in the pipeline, especially in New York, which has a fourth of them. By 2020, according to the study, some 200 major food halls, up from 150 currently, are expected to be operating throughout the country.
Food halls are thriving because customers love what they offer and the business model works better for food service professionals than owning and running a sit-down restaurant.
The vendor's financial outlay is much less for setting up a food hall "stall" than opening a restaurant, which comes with burdesnome overhead costs that cuts into profits, and requires that the eatery draw the foot traffic. Customers are built-in at food halls, because food halls are typically at transportation hubs, or in gentrified city neighborhoods or new developments, where people are passing through on their way to someplace else and find it easy to grab a bite on the go.
Food halls are not food courts, those areas in malls chockablock with fast food restaurants like McDonald's (MCD) - Get Report , Yum! Brands' (YUM) - Get Report KFC, Pizza Hut and Taco Bell andDunkin' Brands (DNKN) - Get Reportnotorious coffee spot.
"The food hall is about authentic concepts, farm-to-fork, slow-cooking, ethnic foods," said Garrick Brown, national retail research director at Cushman & Wakefield. They feature original dishes by celebrity chefs, ethnic cuisines or novel fusion creations from up-and-comers or vendors who may sell only craft beer or freshly roasted coffee or chocolates. A long-standing tradition in Europe, food halls pride themselves on offering quality, authentic eats that are tasty, fresh and usually produced and sourced locally.
Those familiar with the food halls concept may think of Eataly, the Italian food and restaurant emporium that started in Turin, Italy, and is closely associated with celebrity chefs Mario Batali and Lidia Bastianich. It has locations in Boston, Chicago, Los Angeles and New York and key cities around the world.
"We are one of the first ethnic food halls in America," said Bastianich, who is a partner in Eataly, to TheStreet. "Eataly came with a very genuine and true message of the Italian culinary culture. When Eataly was first founded in Italy with the slow food movement, it was with the idea of delivering the best that Italy has to offer from those small producers that make authentic products. Here at Eataly, we sell those products that are hard to find."
Taking a page from Eataly is Michelin Star chef Jose Andres, whose ThinkFoodGroup will open an outlet next year dedicated to Spanish food in Hudson Yards, a development under construction on the Hudson River in New York City.
However, "most of the growth we're seeing isn't coming from a single operator, like Eataly or [chef] Todd English [who has a food hall in the basement of New York City's Plaza Hotel]," said Brown, but from small relatively unknown vendors who may have only one location.
Read on to learn about food halls across the U.S.