The rise of food precincts

Take a stroll around the CBD of any capital city, and you’ll most likely come across a number of dining hubs, whether it’s an open-air laneway or humble food court peppered with fast-food outlets.

Hawker centres in Singapore and Malaysia have been around since the 1950s, offering up a diverse range of food options to appease all appetites. The concept has global appeal, and Australia is beginning to establish food precincts in the same vein.

Sydney’s Steam Mill Lane and Melbourne’s HWKR are two food precincts answering consumer demand for casual dining options. We talk to HWKR’s Simone Gervasi and Steam Mill Lane’s Gary Horwitz about working with tenants and standing out in the marketplace along with Ronald Poernomo from KOI Dessert Bar and Amy Tran from Marrickville Pork Roll about their experiences operating in food precincts.

A NEW OFFERING

The changing face of food courts is attracting a wide range of consumers from students to corporates and everyone in between.

Modern food precincts are no longer the domain of fast-food aficionados and are filled with recognisable brands that tend to operate standalone venues, too.

HWKR opened in Melbourne’s CBD last year and is a tech-heavy, more progressive version of an Asian hawker centre. The precinct has a roster of venues that pop-up for approximately three months before a new set of operators take their place. “We liked the idea of a food offering that was ever-changing and one that evolved alongside consumer taste buds,” says Simone Gervasi from ICD Property.

KOI Dessert Bar co-owner Ronald Poernomo and his brothers were keen to get into the Melbourne market and launched KOI and Monkey’s Corner pop-ups within HWKR earlier this year. “We always wanted to do a pop-up in Melbourne,” says Poernomo. “The guys from BrandWorks [designers of HWKR] approached us and said they’d provide the kitchen and all the equipment, which is why we agreed.”

Sydney precinct Darling Square recently debuted a new eat street called Steam Mill Lane, which has seen a number of venues launch since its April opening. Steam Mill has a wide range of operators that don’t follow a particular theme — you can find Belles Hot Chicken sitting alongside cult burger shop 8bit and Marrickville Pork Roll, which expanded outside the Inner West for the first time.

“The opportunity came up and we thought it was an exciting precinct to be a part of,” says Amy Tran, manager of the Darling Square venue. “There are a lot of people who may not have heard of banh mi before and introducing consumers to something we love was one of the reasons why we wanted to move. We knew our offering was something people enjoyed and being able to take that to a more convenient place was appealing.”

PROS AND CONS

One of the most appealing elements of opening up shop in a food precinct is access to customers. Other benefits include working with new technology, not having to worry when the air con breaks down and having the opportunity to launch a new concept.

HWKR is unique in that it provides vendors with a fixed kitchen that’s essentially ready to go. There are little to no upfront capital costs, no fixed fees and the centre supplies vendors with equipment (within a set budget), front of house staff, marketing and social media. “We have set up HWKR so it’s flexible — we want tenants to focus on putting food on the plate,” says Gervasi. “They don’t need to spend money on building a kitchen and HWKR is an established brand, so people are already coming. Operators can test a concept and there’s no long-term commitment.”

However, one size doesn’t always fit all, which is what KOI discovered during their pop-up. Running a pastry kitchen requires costly equipment such as blast chillers and stand mixers which KOI had to source from their suppliers due to HWKR budget constraints.

“Equipment-wise, they didn’t give us a lot of budget — pastry equipment is expensive,” says Poernomo. “Unox lent us an oven and KitchenAid gave us a stand mixer, which helped a lot in terms of what we could do. We didn’t get a freezer and there wasn’t a lot of storage in the kitchen.”

KOI planned to bring some desserts from Sydney as a backup in case they were swamped with customers, but ended up driving cakes from Sydney full-time throughout the tenancy due to kitchen issues. “We made the plated desserts at HWKR, but in terms of the actual cakes, we had to bring them up from Sydney.”

Marrickville Pork Roll used their new venture as an opportunity to diversify their menu, adding a crackling pork belly option previously not available at their tiny Inner West shopfront.

“It’s become our most popular roll at Steam Mill, and we’ve since introduced it to our little store,” says Tran. The brand also adjusted prices according to the CBD location — but not by much. “Everything is $1 more at Steam Mill than our Marrickville sites,” says Tran.

A lesser-heard benefit of operating in a food precinct is the social aspect, which can often result in building business connections and unexpected collaborations. “We try to interact with our neighbours and it’s a nice community which is different from Marrickville,” says Tran.

“We recently participated in a chili festival, and as we grow, we will continue to do cross-collaborations. I recently saw a photo where someone [Pat Nourse] put chicken from Belles on our roll, and that’s something we had randomly spoken about with the guys from Belles over a few drinks.”

RENT SITUATION

Deciding to commit or dodge a food precinct tenancy usually comes down to the rental agreement, which can vary considerably. Lendlease, who run Steam Mill Lane, don’t disclose the nitty gritty of their agreements, but say they have taken a balanced approach.

“There was a lot of demand for retailers at Steam Mill Lane,” says Horwitz. “We talk to the retailers, we understand their business and we provide fair rent so they can set up their tenancy to the high standards we need.”

HWKR operate on a turnover rental basis, which means rent is calculated according to performance. “Turnover rent is really attractive to tenants,” says Gervasi. “They’re not forced into a fixed rental agreement — it’s based on their success.”

KOI decided to approach their tenancy at HWKR as a chance to test the Melbourne market. “We didn’t make much money — it was more of a branding exercise for us,” says Poernomo. “The response from customers was really positive, and since we did the pop-up, we’ve been offered a few sites.”

Even though the operation wasn’t a roaring success financially, the KOI team is open to a future tenancy at HWKR and saw the pop-up as a valuable opportunity. “It was worth it,” says Poernomo, “otherwise we wouldn’t have any opportunities to expand.”

Food precincts are a great opportunity for operators to diversify their offering, test an innovative concept and tap into a new location. Consumers are all about convenience and options, which is why food precincts could very well be the future of dining.

This article originally appeared in Hospitality‘s October issue. Subscribe here.