Here for the Long Haul

Rents are rising, labour is more expensive and the cost of food continues to grow. Canada’s next wave of food halls may be the answer.

By Gregory Furgala

There’s no singular concept for a food hall. It’s a broadly interpreted term inclusive of countless norms and concepts. Some have full service restaurants in them, while others only opt for counter service. Groceries are a core offering in some but not present at all in others. Some have elaborate bar programmes featuring rare spirits and aperitifs while others stock the essentials — and that’s just in Toronto. Saying “let’s go to a food hall” is about as useful as saying “let’s go to a restaurant.” There are still a lot of questions.

While they vary wildly from one to the other, food halls still have a few key things in common. They’re large spaces under one roof, lack table service (embedded FSRs aside), include a number of different dining options and have fare that’s a cut above the fast casual options found in most malls. Food markets like Toronto’s St. Lawrence Market, Vancouver’s Granville Island and Montreal’s Marché Jean-Talon have been around for ages, and today’s emerging food halls bear some resemblance to them. But their scale and focus is different, and they’re responding to a different set of market and cultural pressures, like rising rents, rising labour costs and a new, hyped, food-obsessed culture. It’s a confluence factors that have made food halls the next big thing in Canadian foodservice.

Assemble the Chefs

“What the chef’s hall model allows us to do,” says Andreas Antoniou, managing partner at Assembly Chef’s Hall, “is continue to offer a full-service restaurant calibre experiences, but we do it in a manner that’s more efficient, so we continue to earn the appropriate reward for everyone time, energy, effort and risk, and I think that’s ultimately why food halls will continue to grow.”

A few years ago, while Antoniou was lining up capital for his food hall — a concept still largely unknown to Canadian consumers at the time — he was also soliciting chefs and culinary talent all over town. It wasn’t a large-scale call out; Antoniou picked and chose who he wanted and pitched them one-on-one. He needed chefs who had established themselves in the city, contributed to its food scene and cultivated their own followings. He needed chefs who, over and over again, proved that they could deliver that “full-service restaurant-calibre experience.” Antoniou proved an able salesman, and Assembly’s roster includes a who’s who of Toronto culinary talent, including Elia Herrera, from Los Colibris; Nick Liu, from Dailo and Ivana Raca, from Ufficio.

And so far, Assembly’s chefs have delivered.

The distinctive, elevated fare has helped Assembly carve out a fresh niche distinct from nearby Pusateri’s, an upscale grocery with counters serving sushi, paninis and several other options, and the mall-standard food courts interspersed amongst downtown Toronto’s network of underground pedestrian tunnels. The sheer number of gourmet options at the Assembly, from Bulldog Coffee’s espresso to Reyna’s charcuterie to Tachi’s omakase, have proven popular morning till night, drawing hundreds of customers daily. The value proposition for guests is clear: several different options, a premium, chef-driven culinary experience at each one and, compared to FSRs, a cut-rate price. The latter, Antoniou says, is especially relevant today.

“When you go out for dinner for two, how much do you expect to spend? People have budgets, and they allocate a certain amount to going out. And the more expensive restaurants become, the less often they can go out,” says Antoniou.

“The challenge,” he continues, “comes in the full service restaurant setting, people are today able to afford full-service restaurants a whole lot less than they were able to five years ago.”

Under Pressure

Rising labour, rising rents, rising food costs, consumers reluctant to foot expensive bills — all of it has contributed to an increasingly hostile financial situation for Canadian restaurateurs. The trend is familiar, but the numbers bear mentioning. In Ontario, the minimum wage rose to $14 per hour, and barring legislative change will increase to $15 per hour come 2019. In 2017, the Globe and Mail reported that the average rent for a 1,500 square foot, 50-seat restaurant in Toronto would be approximately $57,000 per year, a figure that masks the potential rents in localized, high-traffic restaurant-heavy strips. At the upper end on Queen Street West, for example, that 1,500 square foot space could cost as much as $105,000 per year. In the posh Yorkville neighbourhood, it could run as high as $150,000. As for food costs, Statistics Canada reports that a kilogram of chicken costs nearly 20 per cent more than it did in 2010, and the cost for a kilogram of prime rib rose by 45 per cent in the same period. An order of fries now ought to cost 70 per cent more than it did eight years ago. Those operating costs don’t even count the price of a restaurant build out.

“Launching a restaurant in downtown Toronto, it’s at least in the $2-3 million range from the starting point,” says Antoniou, who in addition to running Assembly is also a managing partner at several nearby restaurants. “What I think makes Assembly appealing is that chefs can launch their concept for anywhere between $30,000 to $140,000. We structured this so that you have to pay a fraction to launch your business, probably ten cents on the dollar vis a vis a full service restaurant.”

Moreover, the rent isn’t fixed, but rather based on performance, which means a slow start for a new restaurateur won’t be death sentence. The capital and operational costing structure enables Assembly to not just showcase established chefs, but to also incubate talented rookies, giving them access to pricey, high-density urban real estate and the opportunity to generate some name and brand recognition amongst the hundreds of thousands of people that live and work downtown. It’s an opportunity rarely afforded to new entrants in Toronto’s restaurant scene.

“This is really a the platform for [established chefs] to leverage their existing infrastructure even more, or conversely, for [for new chefs] to springboard to wherever they want to get to,” says Antoniou.

There are drawbacks to the model. Space is at a premium, so production sometimes has to happen off-site — if the chefs are lucky enough to have a separate production space — or they have to be extraordinarily efficient in their Assembly kitchens. The floating, performance-based rent structure means that, if chefs do well, Assembly will take a greater take than they would if it was fixed. And at Assembly’s core is its variety. The concept is as much built on the individual chefs as it is on the Assembly team’s ability to curate their space, so chefs have less latitude to stray from their initial offering. It also means that new dishes are subject to management’s approval to prevent too much overlap and replication. Through eight months of operation, though, Antoniou says his team has yet to exercise its veto power. Unsurprisingly, Assembly’s chefs are inclined to make their cooking as distinct as possible.

New Market in Newmarket

Although Antoniou started planning and pitching Assembly before the minimum wage increases were announced, it has emerged as a response to restaurateurs’ increasing material costs, city dwellers’ increasing cost of living, their continued patronage of restaurants and the long-term development of chef-centred food culture. The front of house is expensive, and as food grows in importance relative to service, it’s becoming a luxury that customers are increasingly willing to forego.

In nearby Newmarket, Ontario, however, service is still alive and well. Alongside pastry shops, a juice bar, a Starbucks and a Sweet Jesus ice cream shop, the incoming Market and Co., will feature three different full service restaurants, Union Chicken, Amano Kitchen and MidiCi, the Neapolitan Pizza Company. It also features a bevy of artisan retail options providing fish, house-made cured meats, organic bread, imported candy, olive oil and vinegar, local wines and, for everything else, an independent grocery store.

“The concept behind the food market was bringing together an urban market concept that brought best in class merchants and first-to-market eateries,” says Bri-Ann Stuart, general manager of Upper Canada Mall. “We really just wanted to create an inspiring and memorable food gathering experience for our guests.”

Like Assembly, it’s responsive to its surroundings. Space in Newmarket abundant and (much) cheaper than in downtown Toronto. There’s less foot traffic and fewer office workers to drive demand for quick-service and premium options, and it necessarily affected the outlay of its market. Market and Co. will leverage the basic structural benefits of a food hall — variety, shared infrastructure and the other intangible benefits a food hub — but it’s still a very different animal than its downtown counterpart, showing how flexible the food hall concept is.

Market and Co. also shares Assembly’s structural limitations, however, at least outside of the FSRs. Despite its generous 40,000 square feet, operators are nevertheless limited to their own footprint within it. Some retailers have off-site production kitchens, which undermines the financial expedient of settling into a food hall’s existing infrastructure, while others are spatially limited by what they can do, which could potentially undermine any thought toward expanding their offerings or operations. Stuart declined to discuss Market and Co.’s agreements with its vendors, but if they start rolling out products too similar to their market colleagues, it’s not hard to imagine that they might run afoul of management.

But as yet, those limitations are still hypothetical, and even thinking that scenario through to its worst potential outcomes, it’s difficult to imagine anything catastrophic. The vendors have been selected not to overlap. If sweet meat gummi candy becomes a thing, Seed to Sausage Meatery and Sugar King Factory might have issues with one another. But, needless to say, that’s a big — and quite frankly uncomfortable — if.

It’s a new concept here, so time will have to tell what problems food halls will encounter. What’s clear, though, is that Canada has a new and enduring foodservice concept. Toronto is getting an Eataly next year, while another massive food hall, The Well, is included in a proposed development downtown. Campo, a modest 3,500 square foot Spanish-inspired food hall in Toronto’s Entertainment District, opened late last year and has proven a local hit. It’s not a concept that’s going away. Food and restaurant culture is mainstream, and food halls are perfectly positioned to engage in it while responding to market realities and local demands. They’ll become new hubs for eating, drinking and introducing new food to curious people. Some might show off talented new chefs alongside seasoned pros, while others, like Market and Co., make take on the character of a food-focused community centre. It’s an exciting development, so let’s go to a food hall.