Thursday, January 5, 2017

The Food Hall Revolution

The retail industry has seen its fair share of trends and advancements this past year – ecommerce is up and millennials are driving experiential shopping. However, one that has inescapably stood out has been the development of food hubs and food halls all across the country. In fact, earlier in 2016, UrbanLand predicted that food was to be the ‘anchor of retail developments’ based on the rising proportion of store growth being attributed to restaurants. From Detroit to Irvine, cities and developers are catching onto the culinary-oriented developments in their own unique ways but are these places simply sexier, marketable versions of the traditional food courts? Let’s find out what constitutes food hubs and food halls and what impacts they are having on economic revitalization and food access.

Marketplaces have been a key economic, cultural, and social component of villages, towns, and cities for thousands of years and food, particularly fresh produce, has always been a vital commodity for trading at these markets. A food hub, as defined by the National Food Hub Collaboration and Michigan State University, is a “business or organization that actively manages the aggregation, distribution, and marketing of source- identified food products primarily from local and regional producers”. By doing so, food hubs bridge the gap between food producers and consumers and satisfy wholesale, retail, and institutional demand all under one roof much like traditional marketplaces. Today, many fresh food producers lack the capacity and financial resources to access these markets on their own so food hubs are indeed making it possible for these producers to gain entry into new markets, increase their incomes, and up scale production.

Not only are food hubs profitable to producers, distributors and retailers, they are also vital in improving neighborhood access to local foods by offering complementary programs and resources such as shared community kitchens for healthy cooking classes and food incubators for budding restaurateurs. All of these components that make up a food hub differentiate it from farmers markets that simply provide platforms for producers to sell directly to consumers like you, but what about the difference between food hubs and food halls?  

As it turns out, the term ‘food halls’ is increasingly being used interchangeably with food hubs. However, food halls are more often than not one of the many programs within a food hub (complementary to grocery stores, food education facilities, food distribution centers, and kitchen incubators). When food halls function separately and independently, they are often less community- and agriculturally-based. While they may claim to support locally-owned businesses and chefs, they often do not guarantee as tight a policy of local produce-sourcing as food hubs do given their varying administrative organizations and missions. Often, these food halls simply bring together multiple vendors, carefully curated to meet the targeted consumers’ taste and preference, and provide them space in high traffic areas at potentially lower rental rates.

Regardless of semantics, both food halls and food hubs are cooking up destinations for local food and providing opportunities for local businesses to grow – albeit to different degrees. Given the infancy of these food-based developments, we can only begin to predict their position as catalysts for redevelopment and socio-economic revitalization.

The Eastern Market in Detroit, Michigan, for example, demonstrates the potential for food hubs to be really sustainable and efficient food sources for communities. The food hub is the “largest historic public market in the Unites States” and has been connecting small farms with customers from metro Detroit for over a century. It has done more than just organize farmers markets for locals; the Eastern Market also hosts a massive wholesale market for local restaurants and grocers from midnight to 6am on weekdays. In addition, the market has incubator spaces for food entrepreneurs and provides professional kitchens for entrepreneurs who would otherwise be unable to access such resources. At Eastern Market, entrepreneurs can develop and test-market their products before expanding regionally. Take for example, McClure's Pickles. The firm got its start at the market and has since expanded nationally.

The Eastern Market not only meets the scope of a regional food hub but has certainly met its mission to “build facilities and critical infrastructure that fortifies the food sector as a pillar of regional economic growth while improving access to healthy and affordable food choices in Detroit”. A survey conducted by Michigan State University found that the majority of food hubs in Michigan helped increase access to healthy foods in underserved neighborhoods, thereby supporting a healthier population. More than 95 percent of Michigan's food hubs are experiencing an increase in demand of their products and services with restaurants, small grocery stores, and kindergarten through 12th-grade school food services being their number one customers. Furthermore, among the food hubs surveyed, about half of food hubs were equipped to accept federal Supplemental Nutrition Assistance Program (SNAP) benefits.

Food hubs also have the potential to act as arts and cultural centers for their neighborhoods. The large halls and spaces located in the hubs are conducive to art and design festivals. Eastern Market, for example, is home to the Detroit Design Festival every fall and many other creative pop-up events and programs. Like other food hubs, it is increasingly becoming a mixed-use building and yet food-based hub. Even food halls that simply feature chef-driven vendors and tenants are becoming arts and culture centers hosting a myriad of events throughout the year. In a time where millennial customers seek out unique retail experiences, the merging of the arts and culinary worlds was only an inevitable next step.

On the other side of the coin, when food-based developments do not serve the wider community, however, it stands to run into accusations of causing gentrification and rising property values. In Anaheim, California, where a former fruit packing and distribution center was transformed into a food hall dedicated to local vendors, it has quickly evolved into  a selling feature for new residential developments in the neighborhood. Broookfield Residential for example is hoping to “attract young buyers with units priced between $300,000 and $400,000” in a neighborhood that was once a sleepy town known only for Disneyland. Whether intended or not, the Packing House food hall in Anaheim has led to huge inflow of development into the neighborhood, raising prices of property in the area.
Furthermore, food halls that only serve ready-made meals or chef-made meals are often too upscale for the average customer. While they may help fill gaps in a food desert, prices often prevent lower income bracket groups from accessing these freshly-made and locally-grown foods since most prepared foods are not even eligible for SNAP benefits. So while food hubs and food halls may have a right to celebrate their contributions to the local food system and local communities, there are a few implications to also be wary of.

If that didn’t scare you enough, there are also a set of complex challenges involved in setting up and running food-based developments. Start-up, administrative and operational costs can run up high, especially when run by a nonprofit. Although finding capital through donations, grants, and city funding is a common strategy, these funding sources can easily go away. The many moving parts of food hubs also means that overhead costs can arise at all points on the operational chain.
Further still, site development has proven to be a huge challenge for food hubs. This is due to requirements for cold storage, space for processing food, distribution, and strategic marketing. The non-profit Boston Public Food Market, for example, is already spending close to $14 million to turn a state-owned building into a market.

Indeed, food hubs and food halls can take several years to achieve financial profitability. However, it is food hubs that work with various partners, including local farmers’ associations and school districts, which are able to increase their earnings easily by establishing distribution agreements.  These partners often also help with advertising and marketing efforts – lowering food hub overhead – and provide food hubs with a consistent yet diverse customer base.
On the other hand, food halls that function separately and independently with only chef-driven vendors open with 100 percent occupancy before quickly running into problems of high operation and marketing costs. This often leads to high lease rates for vendors. Since local entrepreneurs are particularly susceptible to rent charges and often are unable to make their businesses work in the long run without continued support from the food hall, these food-based developments hollow out and struggle to find replacement chefs.

As we move into a new year, and the trend of food hubs and food halls catches on rapidly across cities, let’s watch out for the saturation point in food-based developments. More importantly, let’s beware of its real impacts on food access and our local neighborhoods and communities. 

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