The Happy Hour Show

Food Halls: Opening & Operating with Guest Jessica Gollel

November 21, 2022 Spiritus Law Season 2 Episode 4
The Happy Hour Show
Food Halls: Opening & Operating with Guest Jessica Gollel
Show Notes Transcript

Join The Happy Hour Show as Spiritus Law’s Rob Lewis and Nico Romano, along with guest speaker Jessica Gollel of Gollel Family Properties, LLC, discuss the growing popularity of food halls in the hospitality industry. Topics covered in this segment include the alcohol and real estate regulations surrounding these properties. Jessica will add her insight to assist those looking to break into this market in South Florida as she is currently doing, involving what to consider regarding trendy design aspects, techniques, operating suggestions, vendor responsibilities, and more! 

ROBERT F. LEWIS

Well, welcome to our show. My name is Rob Lewis. This is the spirit of Happy Hour show. And with me today, I have my partner Nico Romano. Unfortunately, Marbet Lewis could not be with us today, so we are kind of piloting the show without her for a change. So this is season two, episode four of our Happy Hour podcast. I'm proud to announce that we have a very special guest, Jessica, and I'd like for you to introduce yourself to the show.

JESSICA GOLLEL

Hi, guys. Thank you for having me. My name is Jessica. I am with Gollel Family Properties. We are a family-owned development company who specializes in commercial development in South Florida, especially food halls.

ROBERT F. LEWIS

That is fantastic.

NICO A. ROMANO

Food halls are exciting.

ROBERT F. LEWIS

They certainly are. And that is a growing trend in the hospitality industry right now, is food halls. And I think there's a lot of reasons behind their surge in popularity. I know food halls have been around for a while, but it seems, post pandemic, it's really coming back with a vengeance. Why don't you give us an idea as to why you think that is.

JESSICA GOLLEL

So post pandemic as it comes back with the vengeance? I think people are looking for something different in the market as they're looking for something different in almost everything. The communities have shifted in almost every category across the board. So in terms of food halls, it's interesting because you would think post pandemic, people would be more inclined to look for something more private or more secluded in terms of dining or as they go out. I think instead, because of the lack of community that we've had over the past two years, there's an influx of that search for it currently.

ROBERT F. LEWIS

I see.  All good comments. Let me ask you this. What do you think some of the benefits are regarding new operators? Maybe successful restaurant tours from out of state coming in and thinking about a food hall to showcase their new menus or their cuisine from different states? What are your thoughts about that? And what are the benefits, I should really say, for a new operator wanting to affiliate themselves with a food hall as opposed to maybe looking at their own bricks and mortar location?

JESSICA GOLLEL

So there is benefits across the board for everyone involved in a food haul industry, from operator to vendor to bar, owner to customer alike. We'll start with the operator themselves, as that's what I consider myself. So as an operator, we function sort of like a landlord. Where we have in our food hall called the bite eatery, we have ten different units or vendor spaces. Within those vendors spaces we have leases and a restaurant or chef comes in and they lease one of those spaces for us. We will continue to hold ownership of the bar and apply for a 4COP license. The benefit we have with that which holding the ownership of the bar and also leasing out the unit is that we qualify for that 4COP which, if your listeners aren't aware of four cop license, is a license that you have to qualify and have 51% food sales to 49% alcohol sales, as long as some other requirements along in there. And holding that license gives us the opportunity to have a more affordable option to provide liquor sales to the public that we serve. In terms of the vendors and restaurant owners or anyone that looking for that type of opportunity. The difference with us and why it's more beneficial to go with a food hall type operation for them is because their costs are significantly lower than opening their own independent brick and mortar. And that's because the costs are shared among the tenants. So between ten tenants, you share the common area maintenance fees as well as we're not paying for full development of your unit within side and you're sharing the cost. In terms of Silverware entertainment, everything of that source is a shared cost. So it is much lower. It's much better to join one of those type concepts because not only are the costs shared significantly lower, but you in our example are getting ten times the exposure because you have ten people promoting themselves which in turn promote each other.

ROBERT F. LEWIS

That's fantastic. That sounds really advantageous for a new operator to go in there. And certainly it seems like with some of the shortages on supplies and ingredients that a lot of restaurant tours are dealing with post pandemic, it seems like a really economic way to get into business without having to COVID some of the long term transactional costs to open up your own restaurant, it sounds like.

JESSICA GOLLEL

Go ahead. I'm sorry.

NICO A. ROMANO

In deciding where to place your food hall, what drew you to your current location? And by the way, where is that?

JESSICA GOLLEL

So our location is located in Pompano Beach on Atlantic Boulevard. It's about a seven-minute walk to the beach, right over the bridge on the intercoastal side. We bought the property with just plans to subdivide it and lease it out. As a normal developer, we got extremely lucky with the location and based on the location, we decided to pivot and do this new type of concept of a food hall, thinking that Pompano would be the perfect place for it. Our location is the perfect place for it. There is extreme amount of development in our city in particular. So with the rise of the development within the past five years, in the coming five years, that's going to grow not only the businesses within the food hall, but ours, ourselves. And when we decide to expand, we can take those businesses that have signed leases with us and expand with them. So Pompano is the perfect location, perfect place to start. And then after we open this one and continue, we are planning to tackle South Florida and then hopefully the rest of the state.

ROBERT F. LEWIS

Wow, that sounds fantastic. Sounds fantastic. I have a question just from an operating perspective. So the ten restaurant tours that lease in your food hall, is there one kitchen or does each unit have their own kitchen? How does it work?

JESSICA GOLLEL

Yeah, let me explain the layout a little bit. I apologize. So I like to explain it for lack of better terms, similar to a food court. Now, in a food court, you think of Chick fil A, McDonald's. Our food hall has a similar layout where you have the perimeter is different, small kitchens, about 400 sqft each, and then the center is common area seating. The difference with us is that obviously we're not going to have national brands like McDonald's or Chickfila or anything like that. All of our tenants are either chefs or people who originally had a food truck and now they want to move into brick and mortar or they have another location and wanted to open one in Pompano. We have different stories, but that's how I like to explain it. And then we also have the center bar as well, which you don't have in a mall with full liquor available.

ROBERT F. LEWIS

I got you. So do you control the center bar and patrons have access to that or how does that work? So if I'm one of your tenants, am I actually selling the alcohol or is it just you're selling the alcohol? How does that work?

JESSICA GOLLEL

So we are holding ownership of the bar where you're the only ones allowed to sell the alcohol. And that is obviously with a liquor license. We can't have multiple liquor license to one property. So we are going to hold the liquor license and hold the bar ownership as well. Then the tenants are not allowed to carry liquor. But what we're doing, and something that's different with other food halls, is that each of our tenants are working closely with our bar manager and they're creating special menu items for each of their foods. So our food hall, we have a non-competition clause in our agreement. Each menu is totally different. So we don't have two items. There is not two items alike on a menu. So, for example, we have a ceviche unit. They will recommend what they think would pair best with their food with our bar manager, and she'll make a special cocktail. If a customer goes and buys food from them, they go ahead and recommend the cocktail. The customer goes to the bar and orders the cocktail.

ROBERT F. LEWIS

That's very interesting. Just a follow up question because I find it fascinating. So as a patron in your food hall, I can go to your bar and I can order a drink. Can I move around with it inside the building to the different venues? So if I want to take it with me and eat food from tenant one, I could take it to ten and two. How does that work?

JESSICA GOLLEL

Yup. So because we have a common area seating. The liquor license is across our property, so the bar holds liquor license, but it also carries on to the seating and everything of that such you can sit wherever you'd like. We actually also have QR codes on the table. I like to say we have an almost full-service restaurant. So you can go ahead, walk in, sit down, scan your QR code, and order everything like that, and it's brought to you along with your food. You can even order say your wife wants pizza, your son wants tacos, and you want a burger. You can order it all in the same tab as well as your liquor, and it'll all rise to your table.

ROBERT F. LEWIS

That's fantastic. That sounds like a great place to eat as far as I'm concerned.

JESSICA GOLLEL

Yeah, we wanted to keep it very I come from a big family, a lot of kids. We wanted to keep it very family oriented because when all 21 of us, for example, try to go out, it's a mess. Everyone wants something different, and no one can decide, and then it's chaos. So we decided to fix that problem by providing a service like this.

ROBERT F. LEWIS

That's great. That sounds like a typical Friday night at my house, actually. So it's great to know that there are venues out there where you can kind of satisfy everybody's needs in the family, all at one stop shopping.

NICO A. ROMANO

I didn't think that was possible.

ROBERT F. LEWIS

It was just a dream until now, actually.

NICO A. ROMANO

Let’s talk a bit more about the real estate behind it? As far as I know, we sort of talked about what drew you to this location, but more maybe what are the benefits of maybe even challenges that you face with this location, with either with tenants, with your build out, maybe what are some of the lessons you've learned? Maybe something that is some words of advice for people that are going to be starting their own food halls.

JESSICA GOLLEL

So it is a huge learning curve. This is our first food hall development, and we are learning a lot. Let's just start with that. The Pandemic has faced its own challenges as well, including supply chain of that such. So I don't know if these are going to continue to be challenges as we go into the future. I see them as they are, but that's something to be aware of for everyone. We have been delayed for about six months for supply chain issues. We're waiting for electrical boxes, so we actually received them a few weeks ago, but it's just one of the challenges. And on top of that, we have tenants to manage. So all these people are waiting for Open to start making their income, to start cooking their food, and they've been so patient with us. We have great tenants, we have great relationships, we're like a family. But that's definitely something to keep in mind as you go forward that COVID does having a big development. COVID faces a lot of challenges with it. Even though we're almost in this post COVID life now, we're still seeing those challenges carry over from there. And those challenges have a chain reaction. So we're suffering, but also ten other companies are suffering because of it. And that's something the management of the tenants and their happiness is very important to keep them happy, to keep them waiting and patient. So that's something that needs to be aware. For anyone interested in doing this, tenant management is very important and a top priority. Another thing that is a challenge going forward that I would fix is in South Florida in particular. We have a saturated market in almost every market, and that includes subcontractors. To find trustworthy, solid subcontractors, and anything you need is a challenge. And when you do find someone you really like and you create a relationship with them, it is pivotal that you stick with them and you hold that good relationship because it's a needle and a haystack.

ROBERT F. LEWIS

We're so shocked to hear you say finding quality contractors and stuff.

JESSICA GOLLEL

I know you never hear that right.

ROBERT F. LEWIS

Florida is a challenge. We're really surprised by that. But I think it's one of our issues that a lot of our listeners are very concerned about is what are the transactional costs to start these businesses? What are the pitfalls everyone's concerned about? Well, I'm interested in opening this restaurant, I'm opening this bar, even a food hall. You know what it is like, the pitfalls that if you had a chance to do it all over again when you were starting out, you would definitely do this to avoid a significant issue. Can you elaborate for us? What would that be?

JESSICA GOLLEL

Of course. So I think having a very strict structure is important going forward. Like I said, this has been a learning curve. This is our first one and we have structure and we had organization to it, but only to the best of our knowledge that we could handle. Now, facing the things we have faced and going forward, we're going to make it much more structured. For example, we signed on our tenants when we still had pretty much a vanilla shell of the property. We had 100% occupancy and they wanted to design their units where they wanted their equipment, et cetera, et cetera. Of course, someone who's cooking pasta doesn't need a fryer, for example. So we let them do that. That created challenges in itself. There was extreme amount of editing and changing and oh, I ordered this, but now I actually want to go back and change this. And you're dealing with restaurant owners. They're not on the real estate side of things, they're not on the development side of things. They don't understand that now we need to go back to the engineer and the architect and change the plans and get A refurbished and everything. So that was about a two month ordeal. Designing the units, getting things repermitted, re editing and going back in there. Going forward, it's going to be extremely structured like, hey, here's option A-B-C and B of unit design. You get to pick one and what it is. If you need any specialty items, we can talk about it.

ROBERT F. LEWIS

That makes sense. That makes really sense because restaurant tours are like artists. They kind of look at the creative and sort of everything magical happens after that. But you're right, dealing with changes to plans, permitting in general, we understand it is a real nightmare, especially post pandemic. So one little alteration of changing out kitchen equipment can have dramatic impact on the build out from the division hotels and restaurants and their plan review approvals to the permitting process from the local jurisdiction. And it's a ripple effect and it could cost you, I think, a lot in unexpected revenue that you kind of have to spend in order to bring everybody into compliance there. So we could certainly see that. Not to press the issue. Any other changes that you would have made other than to the strict compliance with your tenants as to their options? That you can let our listeners know to say, hey, look, whether it's in your lease negotiations with either your landlord or with the purchase of the property, the designs, or anything you might be able to shed some light on, of course.

JESSICA GOLLEL

So I suggest as anything, I don't totally believe in leasing. As a real estate owner and developer, I think always purchase your property outright. If you are going to go ahead and lease to people, you don't want to be sub leasing to them. You want to hold ownership of that property and control of that property. Secondly, in terms of the permitting and everything, I didn't realize how exact it is and I don't think a lot of people do. It's to a point where if you change a microwave model, you need to change on the plans. If you move a plug two inches, it needs to be on the plans. That was a learning curve. So go in with hey, this is how it's going to be. Once you make your final decision, that's it. Let's see what else another item is get close with your city if you can. Try to form good relationships with your city officials. It is a project where you're going to have a lot of inspections and a lot of attention from the community. Hopefully, if you're doing it correctly, get on the good side of your city officials and form a relationship with everyone around you. Also, one thing that we did, which I think is actually beneficial, is we stressed. I'm sorry. Pompano is actually an area where we have it's a very local area. There's also a lot of tourists and a lot of seasonal people. The way we marketed our building is for the locals, for the locals of Pompano, for the community of Pompano. Now, that keyword local brings in the tourists, because what tourists want you to place is for the tourists. All the tourists want you to place us for the locals. So very tight knit with your community. We're very involved. We do outreach, work with them. We give back what we can. All of our vendors and work goes towards people in Pompano, and if not in Pompano, in the close vicinity of South Florida. And really stress that fact that it's for the community, it's for you guys. If you disagree with something or see something we should change, we want to know. But this is for you guys. This is for the bettering of Pompano.

ROBERT F. LEWIS

So, Nico, I know that your specialty is in real estate law, real property law. So do you have any advice for our listeners regarding the real estate aspects of getting involved in food halls?

NICO A. ROMANO

Yes. Well, I would say that specifically, maybe with dealing with tenants and whatnot, especially as a landowner, always having proper lease in place with your tenants is always important. And I imagine dealing with Jessica, I'm sure you figured out that maybe having at least for all these different spaces is maybe a little bit different than having a lease with, let's say, an individual stores. But there are different considerations. So if you are going to do this, obviously to have a proper lease, but also have good guidance, because we all know that if you try that, sometimes it can be done on your own, but sometimes it's a little easier with a little bit of help.

ROBERT F. LEWIS

And we always advocate a little bit of help. There's no reason to go this alone. There are professionals. I would advocate highly for spirit of law to assist with licensing, permitting, and real estate and leasing when thinking about opening food halls, but there's certainly a lot of qualified professionals out there that can assist.

JESSICA GOLLEL

A very important aspect is have a good lease that covers you. That might be it's not top priority, top three, that is very important. Like I said, we're like our family with our tenants, but when you're signing on tenants, you don't know who they're going to be at the end of the day. So having a solid lease that protects you and protects your property is extremely important.

ROBERT F. LEWIS

It's almost like any business relationship. I was just going to say it's like the best relationship is you execute a contract or a lease and you never have to look at it, but it's good to know that it's there protecting you in case you need it. Because sometimes relationships don't go the way we want them to and they tend to end badly. So having agreement is very important. I think you would agree with that, sir.

NICO A. ROMANO

Absolutely, I definitely would. Now, can you tell us some of your licensing stories that maybe you thought it was going to go one way and you got to a point where you're like, oh, well, I didn't realize that this was going to be like this. Do you have any stories like that?

JESSICA GOLLEL

Yeah, so along with our liquor license, actually, and this is just it's honestly a rookie state. Like I keep reiterating, I'm learning through all this. But we went ahead and started that four cop licensing I started along with the application, got through that whole application, finished everything, got my first signature. For your listeners who don't know, with this application, you need three signatures, one from the Health Department, one from zoning, and one from taxes. So I went ahead and I got my signature from the Health Department. I went to zoning and they told me, hey, what are you doing? You need your completion of occupancy. I had no idea. So I wasted a few days. It's okay, but we're going to go ahead and revisit that and I'm well prepared for when I need to do it when we do receive that CFO.

ROBERT F. LEWIS

Very nice.

NICO A. ROMANO

Yeah.

ROBERT F. LEWIS

There are obviously pitfalls with licensing and permitting and sometimes it's trial by error and going forward, but it sounds like your food hall is going to be something fantastic when everything is finished. It's very exciting.

NICO A. ROMANO

But most importantly, do you have a target open date or general timeline?

JESSICA GOLLEL

We are looking at opening in the beginning of December and there's still depending factors to it. We're still in development stages, but we're looking at the beginning of I'm sorry, I said December. I mean January. We're finishing up construction and beginning December we're giving a month for our tenants to prepare their recipes, their employees and everything with opening and beginning of January. And that's if we get all of our final inspections. Good. And everything of that sorted out. But, yeah, we're very excited. It's been a long time coming for us. We focus on everything we can focus on, from design to social media to marketing. And we're ready. We're just waiting for our subcontractors to finish up.

ROBERT F. LEWIS

That sounds great. Hopefully everything will go according to schedule.

NICO A. ROMANO

Stories as old as time, right?

ROBERT F. LEWIS

Story as old as time.

JESSICA GOLLEL

As it is with everyone, it is definitely not for the faint of heart.

ROBERT F. LEWIS

Oh, that's great. Well, listen, thank you so much for agreeing to join us today. This has been a great podcast. And again, I'm Rob Lewis, my partner. IGO Romano here at Spirit of Law signing off for the happy hour show. Everybody have a great week.

NICO A. ROMANO

Thank you. Bye.