Every industry has been hit hard by the COVID-19 pandemic in some form, but the restaurant industry has faced especially tough challenges. Lockdown restrictions resulted in many small restaurants having to close their doors, and those that survived either couldn't serve their menu to dine-in customers, or they were extremely limited.
These restrictions resulted in rapid changes in the restaurant business, many of which seem to be becoming the new normal. A great example is the surge in popularity for online orders, and online food ordering is expected to grow to a $200 billion industry by 2025. In addition to delivery orders, curbside pickup and takeout options have also exploded in popularity.
Online orders, and online food ordering is expected to grow to a $200 billion industry by 2025.
These developments over the last year aren't the only things that are changing for restaurateurs, though. As restaurant owners have discovered that they can greatly boost their monthly sales and diversify their revenue streams by working with online ordering platforms, many have taken to using ghost kitchens to prepare online food separately from their other food orders to increase efficiency.
We're also seeing independent restaurants, bakeries, coffee shops, and more turn to relatively new or unexplored options for getting their food to customers.
A noteworthy example is the current rise of the food hall.
What is a Food Hall?
While the name may sound similar, it's important to point out that food halls are absolutely not the same thing as a mall food court. While food courts in shopping malls primarily focus on large fast-food chains, a food hall is a marketplace that contains local mini-restaurants, assorted food shops and vendors, and even services like a butcher shop. Everything from a food hall menu is generally prepared fresh to order as well, and they may even feature live entertainment for diners.
The rise in popularity for these halls is comparable to the rise of food trucks in the late 2000s, when customers were trying to move away from large fast-food chains and support local eateries, while also receiving fresh (and possibly healthier) food.
Food halls are also popular with entrepreneurs who aspire to become restaurant owners since the startup costs to get involved with one are significantly less than constructing or renting your own brick-and-mortar restaurant.
The landlords of food halls also generally provide the equipment you'll need to run your stand, making the daily work in a stand similar to that of a ghost kitchen, although halls will serve dine-in customers in addition to filling takeout and delivery orders.
If getting involved with a food hall stand sounds right for you and your vision for customer service, here are a few tips to give you your best chance at success.
Why have food halls become so popular?
While they were once a bit of a rarity, food halls are now appearing in U.S. cities like Nashville, Raleigh, D.C., and San Francisco at a rapid pace. There are a few good reasons for their rise in popularity. In a way, it's comparable to the popularity of food trucks in the late 2000s. Customers have a long-standing desire to break away from fast-food chains and embrace local, and possibly healthier, options. Food trucks also gave customers ways to support their communities and socially interact, two things that are now possible at food halls.
Of course, there's also the fact that a food hall makes it easy to take your family or a group of friends out to eat and find options that suit everyone while still eating in the same place. You can get an appetizer from a Mexican stand, choose an entree from a seafood stand, and wash it all down with craft beer from yet another stand if you want. Once you're done with all that, you can even swing by a bakery for some dessert. It's also easy for customers to get their food to go, and some food hall vendors even offer delivery through an online order system.
Food halls are also great for restaurant owners. They tend to have shorter operating hours compared to traditional restaurants, and the smaller location means that you'll have fewer house staff to manage. You'll also have significantly lower start-up costs since there's no need to invest in your own building.
If you think working in a food hall may be the best option for you, here are 8 tips to help make your venture a success.
8 Tips for a Successful Food Hall
1. Choose your operating method
There are two basic food hall options when it comes to how you want to run your operation.
The first is a multi-vendor food hall. These food halls connect buyers with multiple food vendors in the same location, and they generally have the advantage of providing more options.
The second type of food hall is a true tenant operation. These food halls still have multiple restaurant stands, but they're all operated by the same vendor. Advantages of this option include the fact that a single vendor is more likely to have their menu management under control, and it may be easier to file your documentation for a single tenant food hall for the tax year.
2. Install a restaurant point of sale system
A POS (point of sale system) is important for any business that sells products, and it's hard to overstate the particular importance of a restaurant POS. It's easy to confuse these systems with a retail POS system, which would be equipped with a cash drawer, credit card and debit card reader, customer-facing display, barcode scanner, and more.
A restaurant POS will be equipped with many of the same functionalities, but it will also include an online food ordering system. Ordering systems like ChowNow, GloriaFood, Restolabs, Upserve, MenuDrive, and iMenu360 all do a great job of simplifying communications between customers and kitchen staff. All orders will go through the POS, which will automatically create tickets for the kitchen, dramatically cutting down on order errors.
This is just scratching the surface of the true value of a POS system, however.
They track everything from sales and payroll to your most popular menu items and most used ingredients. If your quesadillas are extremely popular, for example, your POS will let you know, and you'll have incentives to stress them on your online menu and in your on-location menu as well. You can even use your restaurant POS system to collect customer data, which makes it easier to provide high-quality customer support. You can save a customer's favorite orders in your system and expedite their ordering process the next time they use your restaurant online ordering system.
Quick access to customer data also makes it easier to create lists for things like email marketing campaigns, and you can even contact your best customers about promotions that might interest them, coupons and discounts, or even enroll them in customer loyalty programs.
3. Combine your delivery platforms
To keep up with the high demand for food delivery, there's a good chance you'll be working mobile ordering apps into your online ordering system. Such mobile apps may include Grubhub, DoorDash, Uber Eats, Seamless, or another similar widget. A potential downside of working with these mobile apps is that they generally charge commissions on sales, which might eat into your profits too much, especially if you're just starting out.
Wouldn't it be great if there was a way to combine all your delivery mobile apps on a single tablet or device? That's the exact service we offer at Cuboh through our online ordering system. With Cuboh, you'll just have a flat monthly fee to take care of all your delivery systems, instead of having to worry about separate commission fees for each one. We offer a restaurant partners program as well, where we'll share your restaurant app on the Cuboh dashboard, and you'll also be able to integrate with other apps in your area. No matter the size of your restaurant or the number of clicks you typically get on your restaurant's website, partnering with us will give you a boost in brand recognition.
4. Optimize each menu to your advantage
A big advantage of setting up in a food hall is that you'll be getting consistent foot traffic, in addition to the online orders you get on your own website or through apps, so there are plenty of opportunities to earn profits. In order to entice as many customers as possible, you'll want to draw attention to your stand and use your menu to your advantage. Consider posting QR codes on your stand or on your in-person menu that customers can scan to get special offers or access to newsletters. Customer experiences in your hall can all make great stories to share on your social media pages as well, so this helps take care of your digital marketing.
You'll want to follow best practices for online menus also, such as emphasizing your most popular items, limiting your online selection to about 20 items, and optimizing your restaurant website for mobile-friendliness, so it's easy for customers to make an order when they find you in local search results.
5. Select your branding type
Once you know how you want your food stands to be operated, you'll need to think about your food hall brand identity. There are four major brand types for food halls, and each one can cater to a different target audience.
General marketplace: This is a common type of food hall that provides customers with a wide variety of shopping options. In addition to traditional restaurant stands, customers may find beverage stands, bakeries farmer's markets, or even bars. It's the food hall that has something for everyone.
Incubators: These food halls focus on startup incubators for new restaurants and ideas. Kitchen incubators have become especially popular for launching plant-based food products, and an incubator food hall is a great way to introduce customers to new twists on familiar favorites.
Convenience market: These food halls focus on providing customers with the ultimate convenience and tend to compete directly with fast-food chains in the community. Convenience food halls are more likely to have stands that operate as ghost kitchens or specialize in online ordering options like pickup and food delivery.
Community food halls: Community halls, as the name suggests, are focused exclusively on offering food options from the local community. Here, you'll find plenty of independent restaurants, markets, craft beer and wine stands, and anything else you'd hope to see from local food and drink options.
Whichever type of brand you go for will have a major effect on your promotions, marketing tools approach, and any restaurant website you launch.
6. Design with your audience in mind
This is similar to your brand approach, but you'll want to think carefully about the physical layout and design of your food hall. How much space will you need to host your community? Do you want your food hall to have a uniform style, or do you plan to let restaurant owners design their own stands? Similarly, will each of the restaurant operators handle their own marketing campaigns, or do you want to try an overall campaign for the entire hall?
You may also want to work directly with restaurant team members at your food hall to decide how to represent the overall brand on social media and on their restaurant's website since all of these things can influence customers and affect monthly sales. If you want to take things a step further with stands that have online ordering functions, you might even help guide them on how to make deeper connections with customers and build customer relationships.
7. Invest in restaurant POS systems for convenience
You're likely familiar with retail point of sale (POS), and a restaurant POS shares many similarities. Restaurant POS systems will also include a customer-facing display, credit card and debit card reader, scanner for QR codes, and more.
The best POS systems will also include an online order system to simplify tickets from your online menu. Delivery and pickup ordering systems such as ChowNow, GloriaFood, iMenu360, Square Online, Restolabs, Toast POS, Upserve, and MenuDrive can greatly simplify the communications between restaurant customers and staff, showing clear and organized tickets for every new order with a convenient kitchen display system.
Arguably the greatest value of POS integration, however, is the detailed real-time analytics it can give you. For example, you can use your POS to track your hottest selling items, and you'll then have a greater incentive to advertise them on your restaurant website and on your social media. A reliable POS system is also an easy way for restaurant operators to identify their best customers and offer even better customer support.
By automatically collecting customer data, like email addresses, from online orders, you can send out promotions or invite your best customers into a loyalty program for discounts, coupons, gift cards, or special offers. All of this can boost online sales and customer satisfaction, not to mention further increase customer loyalty. It's not just about tracking customer information or email marketing, either. You can also track your menu items and ingredients, so inventory management is easier than ever.
8. Unite your mobile apps on a single tablet or mobile device
Mobile apps like GrubHub, DoorDash, UberEats, and Postmates are absolutely dominating food delivery and direct online ordering.
Sure, you can try to connect your food hall stands to each of these delivery platforms individually, but the commissions they typically charge can quickly start to eat away at your bottom line.
Instead of having to deal with high commission rates, wouldn't it be great if you could combine all of these mobile ordering apps in one place for a flat monthly fee? *Cough* *cough* Then you should check out Cuboh… (Shameless self promotion over)
Touchpoints Bridge the Digital and Physical World
A majority of the brands we utilize in our daily lives are ones that we've never had interactions with outside of placing an order online or grabbing the product off of the shelf while shopping. Restaurants have to take it a step further and create a brand image, amazing food AND be able to connect with customers and bring them back.
Restaurants can be a risky business endeavor thanks to the sheer amount of competition that exists. What sets one pizza place apart from the other one across the street? Ask locals and they'll tell you exactly why you should eat at Sal's instead of Toni's, and it often comes down to their experiences when interacting with the staff.
Virtual kitchens lack that final point, the one that so often cements the connection a customer builds with their favorite eatery. Food halls help to create touchpoints, or physical locations, for these ghost kitchens to have a low-cost way to meet customers in person and share their passion with them.
Adding this personal touch takes the digital marketing and social media presence created by the brand to and let's it be validated by the customer firsthand.
While the "new normal" we've all been adjusting to is starting to revert back to the norm of dine-in experiences, food halls were surprisingly ready to tackle the changes by going virtual themselves! The kitchens and stalls that make up a food hall tend to be separated from one another enough that it lets each kitchen have their own little staging area for pickup and delivery orders.
Whether a kitchen uses a food hall's specific app or their own restaurant SaaS for taking orders, the symbiotic relationship between the two has never been stronger. The next time you find yourself near a food hall, pop in and see how many new restaurants are setting up shop.
You'll be happily surprised at the new inventions being made by small kitchens who just now have the opportunity to bring their food to the public.
If you're interested in getting into the restaurant industry, don't let the convenience and popularity of food halls pass you by. They're a great investment for those looking for ways to grow with their community, and restaurants of all sizes will want to get involved.