08 January 2016 #Commercial Real Estate
New street food markets continue to open across the UK at a rapid pace with many new food trucks and vendors opening each week. How can landlords, developers and food entrepreneurs take advantage of this trend and how is the sector evolving?
London is leading the way on the street food scene and currently there are, approximately, 40 regular food markets in the inner London area. There are a few established types of street food operations with the most common being:
Street markets - these will usually be on Local Authority owned streets or land such as car parks or public parks and gardens. One example in London is Whitecross Street Food Market which although it has been in existence for many years continues to attract crowds of hungry lunchtime workers. Street markets such as this will be regulated by the Local Council by way of a Street Trading Licences and each trader is likely to have a specified pitch for a fixed period.
Privately Owned land and buildings – these will often be sites that are earmarked for redevelopment or simply a site where a landlord sees the benefit of occupying some hard to let space with a street food event. Also, more developers are trying to bring a balance to living and working environments with retail and food outlets and see a real benefit from bringing in street food vendors to add some character to these areas. A good example of this would be the expansion of KERB. KERB is a “membership organisation for London’s most exciting street cooks” which started out on part of the development land at Kings Cross and in many ways the members have helped the emergence of Granary Square as a “go to” foodie destination. Since then they have expanded further with regular food markets across London, including at the base of the Gherkin building in the City.
Most street food vendors will ideally aim to operate in both of these types of location.
There are a few key legal considerations for land owners and the food vendors themselves:
As mentioned above it is likely that a food vendor will need to obtain a Street Trading Licence from the relevant Local Authority. These will also be required where operating from private land if the public have unrestricted access to it without payment. Food vendors will also need to comply with all food hygiene laws and regulations including in relation to any additional areas used for food preparation.
If the property hosting the event is selling alcohol then it will need to have either a Temporary Events Notice licence (“TEN”) or a premises licence in place before it does so. A TEN restricts the event to fewer than 500 people at all times, including staff running the event and must last no more than 7 days.
Each trader will need public and personal liability insurance and any building on any private land will need to be insured and the land owner may pass this responsibility and cost onto the event organiser.
A key consideration will be the use the event organiser intends to put the property to and the extent of any works that may be required in preparation for the event. If the existing permitted use of the site needs changing, there is a listed building on site or works are potentially substantial then it is probable that a planning consent will be required.
An event organiser is unlikely to want to be responsible for putting the property into any better state of repair than they take it in. It may be that they take the property subject to a schedule of condition to ensure no potentially onerous rectification requirements are imposed at the end of their occupation. If the building or land is earmarked for redevelopment then it is possible that the land owner would not be too concerned about any repairs.
Security of tenure
Any land owner is likely to want to ensure the occupier does not obtain any rights to remain in the premises at the end of the agreed period of occupation, particularly if they are redeveloping or expect to sign a more permanent occupier of the site. As the land owner is likely to insist that it is clear that the occupation is by way of licence and not a lease or if a lease, it is excluded from the Landlord and Tenant Act 1954. This is to ensure that the tenant would not have an automatic statutory right to renew their right to occupy when ithe lease or licence expires.
A landlord will be keen to fill the vacant unit not just to receive some income but also to pass on any business rates liability to the tenant. However, due to the nature of the occupation, the event organiser may wish to avoid this extra cost and instead agree an all inclusive licence fee/rent.
How is the sector evolving?
Together with an increased number of traders and food event organisers entering the market there is beginning to be a move by some of the larger street food groups away from the temporary nature of the events. This includes looking to own and occupy permanent street food markets.
The leader in this progression is Street Feast who recently teamed up with the founder of the Leon restaurant chain, Henry Dimbleby to form London Union PLC. London Union successfully raised their target of £3.5 million from a recent crowdfunding campaign. Their aim is to open up to 20 new local markets in London in the next five years alongside a flagship permanent street food market in an iconic London building by 2017.
If you need help or advice with any of the issues raised in this article then please do get in touch.