John Tesar is joining the exodus of local chefs from Plano's Legacy Hall.
Tesar, the hall's highest profile tenant, opened the first location of Knife Burger in a prime first-floor spot when the three-story, 55,000-square-foot food hall debuted in November 2017. Now the chef says he will close it at the end of this week, following a dispute over details in his contract.
"I was always the number one, two or three stall there," Tesar said, referring to sales at his burgers-and-fries spot. "But it's not worth suing because I probably grossed $1 million while I was there, but I made maybe $35,000. It's all tilted in their favor and they just keep tilting it."
Tesar is the seventh local restaurateur to leave the hall since it opened. With 22 vendors overall, Legacy Hall's turnover rate after just 14 months is about 33 percent -- or higher, if you consider that many of the stalls are owned and operated by the Food Hall Co., a division of the Front Burner Group, which owns Legacy Hall and local restaurants including Sixty Vines and Whiskey Cake.
Departures from the hall also include Monkey King Noodle Company, the Chinese street-food spot based in Deep Ellum, which left its third-floor outpost at the end of 2018. Chef Tim Byres, now in a partnership with chef Stephan Pyles, closed a grain-bowl stall called Tight Quarters after a few months. A fajitas-and-quesadillas specialist called FAQ, Glazed Donut Works, the Juice Bar and Chez Dip, a French dip sandwich place from chef Tom Fleming, also recently closed, as first reported at Escape Hatch Dallas this week.
Fleming, who also owns Crossroads Diner in Dallas, gave up on Chez Dip after just six weeks in business, saying he was already "significantly" in the red.
"I've been in the restaurant business for over 35 years, and if the math isn't there it doesn't matter how delicious the food is," he said. "There just weren't enough people coming through. I'm not going to say they misrepresented, but they said there would be 5,600 to 6,000 a day. There was just one day when we even came close to that."
Tesar, who also owns Knife steakhouses in Dallas and Plano and other Knife Burger locations, said that after a strong six months, "like a romance," his business at the hall plunged by more than 30 percent.
David Daniels, the senior vice president of marketing for the Food Hall Co., would not comment on sales or contracts with restaurateurs, but said the slowdown was seasonal and that hall management thought Chez Dip was doing well. "Frankly we were pleased with the revenue performance right out of the gate," Daniels said. "For Tom [Fleming] and his team, apparently it didn't meet what their expectations were."
Like Fleming, Tesar said it was difficult to be profitable. The hall, which requires customers to pay with credit cards or hall gift cards, collects all of the revenue and then returns a portion of the sales to the vendors, depending on their contracts. Generally the hall also fronts operators the cost of building out their spaces, a sum that is repaid later. Tesar said the hall got 28 percent of his sales, while Fleming said he paid more than 30 percent.
Andrew Chen, an owner of Monkey King, has been scouting locations in other food halls since leaving in December. "We're happy we went into Legacy Hall, but I get how a lot of the other chefs can be frustrated," he said. "The food halls we're talking to now are generally more favorable to vendors. They're coming in at a few percentage points less [in rent], which makes a huge difference."
Another problem for profitability is that Legacy Hall also owns every outlet selling alcoholic beverages, including the third-floor brewery Unlawful Assembly, all of the cocktail bars, and the first-floor wine bar, which reopened this month as Blush Wine Bar. It opened a new food-and-liquor outlet this year, called High Bar Kitchen and Tap, replacing Monkey King.
Bar sales typically contribute a high share of profits to a dining establishment, as do beverage sales. Hall tenants are now required to turn over more than half of all soft-drink sales as well, according to Tesar and Fleming.
Daniels says all of the changes were planned, and more are ahead, as the hall tailors itself to customer demands. "We had a great 2018, our first full year of being opened, and we are really pleased with the results," he said. "A lot of moves happen this time of year, the slowest time of year. It's the perfect time to optimize the mix."
By March, Daniels expects two new stalls to open, followed by two more in April and another in May. The second and third floors are also being reconceived to offer more service. High Bar Kitchen and Tap offers full service, with waiters taking and delivering orders. The new spot on the second floor, which will also be owned by the hall, will offer "elevated service" when it opens, he said.
Until now, dining at the hall has meant customers lined up to pay for their food and drinks and ferried everything to their tables. In November, Legacy Hall earned a one-star review from the Dallas Morning News because of difficult logistics and food that was mostly "utterly unremarkable."
So far, two of the hall's three floors will be entirely owned and operated by the Food Hall Co., rather than by local chefs and purveyors, as will all of the wine and cocktail establishments on the first floor. Daniels would not say who owns the incoming spots.
Turnover is part of the business plan for food halls, according to Garrick Brown, a consultant with global real estate company Cushman and Wakefield, who notes that the halls are booming. By 2020, their number will quadruple to more than 400 across the country, he says, attributing part of their success to showcasing "local, artisanal" producers and not large corporate brands.
"Turnover to a certain extent is actually a good thing for a food hall," Brown said. "It gives people a reason to keep going back to see what's new."
Back in 2017, before Legacy Hall opened, Front Burner CEO Randy DeWitt put it this way in D Magazine, referring to the hall's purveyors: "We want to make it easy for them to get in, and easy for them to fail. If they're not happy and profitable, they can leave."
This week, Tesar promised to leave with some drama.
"On Friday or Saturday, I'm gong to have a social media departure and give away burgers until I get tired and go home," he said. "I want to say thank you for coming here, and now you can go to Knife in Willow Bend, where it's less chaotic and I'll park your car for you if you want."