Along the piers of Lower Manhattan’s Seaport district, the Tin Building by Jean-Georges is bleeding money.
Visitors to the food hall, which debuted in 2022, have an eye-popping array of choices, from fine-dining restaurants and bakery kiosks to shops teeming with fancy cheeses and artisan candies, all under the roof of a historic former fish market. But the crowds haven’t come — at least not in volumes to support the project’s nearly $200 million cost.
After reporting a $33 million loss for its share of the business last year, landlord Seaport Entertainment Group Inc. aims to scale back the sprawling venture to reduce “cash burn,” company executives said on a recent earnings call. Plans include closing one of two commissary kitchens and scrapping underperforming concepts to focus on the successful ones.
“They spent a fortune on that project,” said Andrew Moger, vice chairman at RIPCO Real Estate, who’s not involved in the Tin Building. “The hope was if you build it, they will come. While they’ve done well to some degree, it is challenging down there, but they’re on the right trajectory.”
In a city with its fair share of food halls, the Tin Building stands apart for its culinary options masterminded by a celebrity chef, Jean Georges Vongerichten, as well as its sheer size, at 54,000 square feet (5,017 square meters). It’s also notable for its spot right along the East River — off the beaten path for many tourists and tucked away from the financial district’s office towers, a locale that’s both an asset and a potential liability.
A spokesperson for SEG said the company couldn’t comment on the Tin Building. On the earnings call, Chief Executive Officer Anton Nikodemus described the food hall as a “beautifully created culinary experience” and said the firm was developing new partnerships that will draw more New Yorkers and tourists to the area for dining and entertainment.
“We’re excited about the momentum we have had with our leasing and partnership initiatives,” he said, adding that a new immersive art company and more concerts will “continue to add to the vibrancy of the overall neighborhood.”
Food hall struggles
It remains to be seen if the Tin Building can turn around, but its plight highlights the difficulty many food businesses face in coming up with a successful recipe for drawing steady traffic. When management, development and operators aren’t lined up perfectly, a food hall can struggle, especially in a market like Manhattan, where competition abounds and scores of workers are still clinging to their Covid-era hybrid schedules. Gotham West in Hell’s Kitchen and the Market Line on the Lower East Side are among ventures that have shut down recently, citing post-pandemic challenges.
“It is not a business that you’re able to just fill space and put your hands up and walk away,” said Michael Morris, a former CEO of the Food Hall Co. “If you’re not actively engaging in managing the environment, it will manage you — and not in a good way.”
At the same time, the food hall concept is evolving. New businesses are coming along and existing ones are getting refinements as operators bank on tourism growth and continued return-to-office momentum. Some places are adding entertainment options to capture customers outside the normal lunch rush.
“It’s obviously been a rough four years for the food halls in Manhattan,” said Trip Schneck, managing partner at Colicchio Consulting, which works with food hall operators. “But we’re starting to see food and beverage as a vehicle for bringing people back out.”
At the Tin Building on a Thursday evening, many guests made a beeline for House of the Red Pearl, its Chinese-inspired, speakeasy-style restaurant tucked behind curtains at the back of a second-story market selling noodles and hot sauce. A bar area on the same floor was almost full, while the rest of the building was eerily empty. On the previous Sunday morning, customers crowded the first floor’s cafe and bakery, where people sat working on their laptops, sipping $7 lattes.
Real estate company Howard Hughes Holdings Inc. spent five years transforming the 1907 property before spinning off Seaport Entertainment Group into a separate public entity that counts Bill Ackman’s Pershing Square Capital Management as its biggest shareholder. SEG leases the space to a joint venture with a subsidiary of Jean-Georges Restaurants and holds a majority stake in the venture.
A Pershing Square spokesperson declined to comment, and a Jean-Georges Restaurants representative didn’t respond to a request for comment.
Seaport visitors
Many observers expect the Tin Building to have an easier time drawing customers as the weather warms and tourists return to the area, famous for the South Street Seaport Museum and outdoor exhibits of historic ships. Foot traffic in the neighborhood — about a 30-minute subway ride south from Times Square — tends to drop significantly during the winter months, according to data from Placer.ai.
On its earnings call, SEG said it’s working to draw more visitors to the Seaport district in the cooler months. Plans include a “seasonal floor-to-ceiling glass enclosure” for the Pier 17 rooftop so it can host concerts year-round instead of just in summertime.
Eventually, completion of 250 Water St., a project SEG is working on that’s slated for 399 residential units, would give the Tin Building an even bigger boost, according to John Kim, a BMO Capital Markets analyst who tracks real estate companies including Howard Hughes.
Kim also has a personal connection to the food hall: He lives four blocks away and said he goes there at least once a week. His kids like the ice cream parlor, and he’s a fan of many of the restaurants.
“It’s great, but I could see why it doesn’t make money,” Kim said. “I’m curious to know how much longer the Seaport Entertainment Group is willing to take the cash-flow bleed because I think if you look at the medium-term, there are many reasons to think it’ll be successful, but getting there might take a couple years, at least.”
While some food halls are scaling back or shutting down, newer ventures are taking advantage of an expected influx of workers.
Amazon.com Inc. hired the Food Hall Co. to develop and run a 35,000-square-foot operation in Fifth Avenue’s Lord & Taylor building, where the tech giant has offices. JPMorgan Chase & Co. also plans to open a food hall at its new headquarters on Park Avenue. Developer RXR debuted the Olly Olly Market in 2022 at its Starrett-Lehigh Building on the far west side, one of Manhattan’s largest office properties.
The number of food halls in Manhattan has increased slightly since the pandemic, according to data from New York City in partnership with Live XYZ. But that’s largely because of Wonder, a business led by Marc Lore, a former Walmart Inc. executive with a net worth of more than $2 billion, according to the Bloomberg Billionaires Index. The company has opened 11 locations in Manhattan in the past two years.
While Wonder offers dishes from about 20 different cuisines and restaurant concepts at any given time, it isn’t a food hall as New Yorkers have come to know them. Meals are partially prepared at a central kitchen then finished off to order at each location. While customers can eat on-site, most choose takeout or delivery. In a move toward efficiency, the company recently acquired delivery services GrubHub and Relay, media firm Tastemade and meal kit company Blue Apron.
“It’s a different experience, but there’s a familiarity and hipness there,” said Daniel Shlossman, chief growth and marketing officer for Wonder, which aims to have 90 locations nationally by the end of the year. “We hear from people that it feels like a new-age food hall.”
Other venues are adding in-person events and spiffing up their bars to draw bigger evening crowds. More owners are leaning toward simplifying by managing their entire spaces instead of renting booths to individual vendors, according to Michael Wetherbee, co-CEO of Hospitality HQ.
While the consulting and management firm is working on restaurant deals in New York, it has so far stayed out of food hall operations in Manhattan’s tricky landscape.
“NYC has a specific market to make things work,” said Akhtar Nawab, a chef and the other co-CEO of Hospitality HQ. “It’s hard to make the numbers work in New York if things aren’t working optimally all the time.”
