Under One Roof: How Many Food Halls Is Too Many?

BY Allyson Reedy


Under One Roof: How Many Food Halls Is Too Many?

Our last tally put Front Range food halls at 12—with more on the way.

A decade ago, Denver didn’t have a single food hall as we think of them today. Five years ago, we could still safely count them on one hand. And today? We don’t have enough digits to number all the halls that have popped up in Denver proper and its suburbs. With their proliferation, not to mention the pandemic squashing all forms of restaurants, has Colorado maxed out on food halls? Or do our appetites for them—and their profits—remain strong?

“Denver is definitely oversaturated in my opinion,” says Scott Vollmer, director of property operations for Milender White, the developer behind the Bluebird Market food hall that opened in Silverthorne in January. Vollmer has opened food halls in urban hubs all over the U.S., but when he looked into spots in Colorado, he wasn’t touching Denver. Why? It’s already overserved. 

Vollmer is betting on the mountain town of Silverthorne, citing its core of locals (it has the highest year-round population in Summit County) and the throngs of visitors driving through on their way to and from the mountains. While Denver may have more people, it also already has enough halls, he believes, while the Colorado mountains have nothing at all.

“[Population] density is the secret ingredient. A food hall has to be built in a community and for the neighborhood it serves,” he says. “Avanti did great for Highland. Denver Central [Market] is doing great in RiNo. I think Edgewater Public Market is a really great example of a neighborhood food hall, and it did a great job with the Sloan’s Lake area.”

Jesus Silva, who cut his food-hall teeth as a vendor at Denver Central Market and who is now part owner and runs the food operations at the Golden Mill, Broadway Market, and the upcoming Westminster Alley, agrees that Denver has its fill of halls. “The density is not there in Denver. Especially now with COVID, downtown is hard. Downtown is really hard. I feel like the density right now is in the suburbs because people are working from home.”

“A food hall has to be built in a community and for the neighborhood it serves.

—Scott Vollmer, director of property operations for Milender White

Silva also operates inside Milepost Zero at McGregor Square, one of Denver’s newest halls. With a prime LoDo location and stalls from big names like Troy Guard, it should have been a slam dunk. “Milepost Zero, it’s such a beautiful place, and it has all these amenities, but nothing is happening because it’s downtown. It’s supposed to have something like 500 people working in that building, but everyone is working from home. It sounds great when you’re doing a contract and they tell you 500 people, but nobody’s here right now.”

Not everyone thinks we’ve reached peak food hall. Fuel & Iron Realty director of brokerage Zach Cytryn and the director of development Nathan Stern bypassed Denver and went south to Pueblo for their Fuel & Iron food hall (their first), which is expected to open this fall. “We have a general thesis that every community could support at least one food hall, so we were looking at places without them,” Cytryn says. “It wasn’t so much a study of the specific demographics, it was more that we think food halls are the future…We don’t see this model going anywhere. Instead of [opening yet another] in Denver, we’re proud to be the first in Pueblo.”

When the duo found a cool building with lots of character near Pueblo’s popular Riverwalk, they were sold. And considering that it’ll be the first hall in a city of well over 100,000 people, they’re hoping that the $16 million project, which includes 28 affordable housing units for employees, will be a solid investment. “It’s impossible to know how many of anything a market can support,” Stern says. “We’re still early enough in the game, we’re confident to say a community of 170,000 can support one. Can it support two or five or 10? That remains to be seen.”

Erika Thomas, co-owner of High Point Creamery and Eiskaffee, has experience in one of Denver’s original food halls, Denver Central Market (DCM), and one of its newest, DTC’s Grange Hall. “I do think there’s a big difference between being the second or third food hall in Denver and the 13th,” she says. “There’s a different level of excitement. I feel like [newer projects] need to spend more time on developing a point of view and personality for the market to stand out and be more successful.”

Besides stalls at Denver Central and Grange Hall, Thomas also operates two brick and mortars, so she’s basically a walking case study of what works (and doesn’t) for independent businesses like hers. She describes the structure at DCM as a traditional landlord/tenant relationship, in which she pays rent per square foot, plus operational expenses. “The pros are that you’re not begging for services. The con is that they can kind of spend your money how they want and give you the bill,” she says. While she’s been happy there, there are inevitable downsides to being part of a diverse group of businesses, including paying for resources you may never use. “There are definitely things you feel may be beyond your control working within the market versus brick and mortars,” Thomas says. “At my brick and mortar, I can do whatever I want.”

At Grange Hall, she pays a percentage of sales. That means the hall’s management has a clear incentive to get people through the doors and spending money, but that comes with a lack of control. Thomas says vendors don’t get a say in services, like how many bussers are on the floor at a given time. 

A couple of newer projects are employing hybrid economic models, like at Pueblo’s Fuel & Iron, where restaurants will pay base rent plus a percentage of sales. Silverthorne’s Bluebird Market will also take base rent (calculated based upon projected consumption, so the coffee stall isn’t paying the same as the burger joint), plus a percentage of sales from the vendors who are really humming. “If you’re at this sales figure, you’re healthy; you can step up and make an additional contribution to rent. If it exceeds all expectations, great, we’re all happy. If it falls short, you know you won’t be underwater,” Vollmer says. As is common in halls, operating fees for things like snow removal and janitorial services are spread across all the tenants. 

“The pros are that you’re not begging for services. The con is that they can kind of spend your money how they want and give you the bill.”

—Erika Thomas, co-owner of High Point Creamery and Eiskaffee

Food hall operators tend to be much more than just landlords, though, with more than one describing their relationship with their vendors as landlord/partners. Most take on the role of front-of-house employee, which puts them deeper into the trenches with the restaurants than a typical landlord/tenant relationship. They also tend to be responsible for marketing, general upkeep, utilities, managing common areas, and scheduling entertainment and events. Obviously, it’s also a huge upfront investment to create a hall, and with anywhere from $5 to $25 million at stake—Vollmer’s estimates to get a food hall going—those landlord/partners are highly invested in their tenants’ success.

For independent restaurant operators, the decision to go into a food hall versus opening a brick and mortar typically comes down to the money, and costs differ greatly based on the hall. Thomas says that opening in DCM, where she paid for part of the build-out and her percentage of the common area, cost her about two-thirds of what it cost to open her High Point location on Tennyson Street. Because the lease is set up differently at Grange Hall, she paid much less: opening Eiskaffee there cost just two percent of the Tennyson High Point investment. 

In the Pueblo hall, which Stern and Cytryn hope will be a restaurant incubator along the lines of Avanti Food & Beverage, Stern believes vendors can get up and running for just $15,000 to $20,000. There, he says, “They can get two years of tax returns, put together their core team, and establish their brand and customer base. It makes it a lot easier for the next generation of restaurateurs to get started.”

“In the markets, the energy is always there. People are usually around, no matter what.”

—Jesus Silva, co-owner of the Golden Mill, Broadway Market, and Westminster Alley

Vollmer estimates that going into a food hall costs about 20 percent of what it would for independent restaurants to open a brick and mortar. That’s because rent is cheaper for the smaller space, menus are typically streamlined to reduce food costs, expenses are shared among multiple vendors, and you don’t need as much labor. “You create fewer job classifications at a food hall,” he says. “No busser, no server—you essentially take front of house out and replace it with back of house. The lower upfront investment made it more attractive for the existing businesses in Summit County to grow and open a second or third location [inside Bluebird].”

And a bonus? The margins are better. “This model allows restaurant operators to be more profitable out of a 250-square-foot stall than out of an 1,800-square-foot restaurant,” Vollmer says, citing margins at 10 to 18 percent in a food hall versus five percent at many restaurants. “The model in the restaurant industry has been broken for a long time. People pay exorbitant amounts of rent for location. There are a lot of thin margins in this business, and the more you can do to collaborate and extrapolate those costs and spread them across based on volume of business, the more successful each of those tenants will be.”

Thomas’ experience at DCM corroborates this; she says her margins per square foot there are better than at her other stores. (It’s too soon to tell at Grange Hall, as she just opened in fall 2021—and that’s not exactly prime time for ice cream.) From an operator standpoint, Stern forecasts the net margin at Fuel & Iron should be about the same as for the restaurateurs. 

Using the “rising tide lifts all boats” logic, just being in a hall can boost sales in a way that a restaurant can’t get on its own or in an invisible ghost kitchen. Silva says one of the main draws of being in a food hall is the energy, as it has the ability to draw more people than a single restaurant. “In the markets, the energy is always there,” he says. “People are usually around, no matter what.”

Sometimes, though, there can be tension with so many different business owners under one roof. Operators offer varying products, so they have varying needs and wants. Even things as simple as consistent opening and closing times can get murky when you have, say, a coffee stall that wants a.m. hours and an ice cream vendor who doesn’t make money until at least the lunch crowd.

Some food hall operators are starting to take a different approach—running all of the food and drink stalls themselves. Frank Bonanno’s Denver Milk Market is an example of this, as will be Silva’s Westminster Alley. When Silva and his co-owners first opened Broadway Market, they did so with a bevy of independent restaurants, but, he says, “Sometimes it becomes complicated with so many different owners in one little place.” Over time, they consolidated the stalls until Silva was operating most of them. When the group opened the Golden Mill, Silva ran three of the five eateries, and in Westminster, he’ll take pretty much the whole thing. 

Silva says the single-operator model is more efficient in terms of labor and build-out. You have the ability to put your employees where you actually need them, and when you initially design the kitchens, you can do so in a more efficient way than building a warren of single kitchens. It’s also easier to manage everything going on in the hall without so many different people (and differing business models) involved. Plus, you can reduce food costs by cross-utilizing ingredients across menus in different restaurants. “You move things faster, keep things fresher, and it becomes easier,” Silva says. It’s also easier to absorb losses when it’s slow (e.g., winter, or when a worldwide pandemic springs up) if you have multiple concepts. 

“A food hall is a neighborhood gathering spot. It’s not a fad. It’s not going away.”

—Nathan Stern, director of development for Fuel & Iron Realty

Yet another benefit of being a solo show is that it’s easier to change up concepts that may not be working. Instead of feeling like competitors—in the traditional model, independent restaurants are competing against fellow tenants for their piece of the pie—there’s more flexibility to adjust to best serve the audience. And, of course, the money stays closer to the ownership when there aren’t independent operators who also need to be profitable. 

Some argue, though, that a single operator kills the spirit of the food hall, where multiple independent restaurants coexist under one roof. Vollmer originally pitched his Silverthorne food hall to a different company, but they had diverging ideas about how to run it. The company didn’t want to give away the profits to independent operators. “But it wouldn’t be a true food hall,” Vollmer says. “I was turned off with the direction they wanted to go.”

Based on the number of halls still popping up in and out of Denver, the answer to how many food halls is too many appears to be greater than what we’ve got now. “A food hall is a neighborhood gathering spot,” Stern says. “It’s not a fad. It’s not going away.”

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Allyson Reedy