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Beeps chirp through the cavernous Cambridge Street Collective on a busy weekday, as buzzers alert the lunch crowd to collect their sushi tacos, rendang curries or Palestinian chicken musakhan.

The Sheffield food hall is Europe’s largest purpose-built venue of its kind, at 20,000 sq ft, and arrived in 2024 as part of a major redevelopment of the city, which has brought in businesses including HSBC.

Food halls are on the rise as restaurateurs face a challenging economic climate in which rising energy costs have been exacerbated by US-Israeli attacks on Iran ,and labour costs have spiralled as a result of increases to the minimum wage and national insurance contributions for employers. Many diners are also opting to stay at home as the cost of living bites. But while brick-and-mortar restaurants across the UK are closing, food halls are making money; in major UK cities they average £5.6m in annual revenue, with year-on-year growth of 10.75%. Eating at a food hall is usually a lot cheaper than going to a restaurant.

There are 65 new food halls in development all over the country, including a 60,000 sq ft behemoth in Newcastle, in the old Debenhams department store, due to open this June. Manchester already has seven food halls, including the 55,000 sq ft Freight Island complex in an old depot, and Liverpool has a growing scene, including Renshaw Street Market which serves dishes from around the world. In London, more keep opening, with four from the Market Halls company, which opened its first venue in Victoria in 2018 and boasts big-name vendors including Roti King and Le Bab.

“Food halls have become incubators for new businesses and have given opportunities to operators who can’t even entertain the costs of bricks and mortar sites,” said Matt Farrell, founder of Bold Street Coffee, who has a kiosk in Liverpool’s Duke Street Market as well as coffee shops in Liverpool and Manchester. “We have actually seen restaurants close and become traders, and vice versa. In this almost impossible climate they shine some hope for creativity and growth.”

In food halls, infrastructure and risk are shared, and in the case of Sheffield’s Cambridge Street Collective, energy costs are paid by the owner, Blend Collective. The company also employs the front of house staff, supplies plates and crockery, and runs the till system across the venue. Vendors pay the owners a cut of their sales each month.

“We try to mainly host local businesses,” said James Cowan, the finance director at Blend Collective. “People want to come and try something new and support local people, it keeps our offering fresh.”

Last week, the large, warehouse-style space was packed with people of all ages, including parents with children, who enjoy the sandpit on the top floor. Customers hunched over laptops appeared to be “working from home” with a bubble tea or a coffee. Cowan said their roof terrace gets very busy in the warmer months.

At the Little Penang kiosk, the chef Jack Yeap was chopping fragrant herbs and garlic for his mise en place. “I’m Malaysian, but for over 10 years I worked as a chef at a Cantonese restaurant,” he said. That restaurant shuttered during Covid. “But now I have opened a Malaysian restaurant here, which is much better, it’s my own place but also it’s my own food,” he said.

It may have been difficult for him to get funding for a bricks-and-mortar restaurant to sell his cuisine, which is less well-established in the UK than Cantonese food, so opening a kiosk in a food hall seemed like a perfect low risk option. “We have become popular, I am very happy,” he said.

Some of the restaurants have made the leap from the food hall to brick-and-mortar sites after proving their concept is popular. Baity, which first opened in Blend’s Manchester food hall, and now has a kiosk in the Sheffield offering, is Europe’s first multi-city Palestinian chain. It will be one of the launch restaurants at Blend’s newest food hall, in the former Bird’s custard factory in Birmingham’s trendy Digbeth.

Bao, which now has multiple critically acclaimed sites across London, first traded in Netil Market in Hackney. Black Bear Burger has nine restaurants in London, but first operated at the food hall Street Feast, where Michelin-recommended Smokestak in Shoreditch also debuted.

Kevin Hong started his career as a chef at what he calls a “standard Japanese ramen restaurant”, but longed to experiment with fusion food so he pitched an idea to Blend, who took it up. Now, he has a ramen bar which marries Japanese and Korean flavours.

He is also extremely excited about his new sushi taco kiosk, which opened a month ago. “We are trying something new, a crunchy fried seaweed shell filled with Japanese filling like chicken teriyaki or prawn tempura,” Hong said.

Hong has now also opened a brick-and-mortar restaurant, serving Japanese barbecue and sushi. “I am delighted,” he said.

But has the UK reached peak food hall? Cowan disagreed. “I don’t think it has, there is still a lot of growth, and it depends on the area,” he said. “It is unclear if Sheffield can support more than six, we probably do have enough here, but there are areas around the country which have a lot of growth potential.”

In Sheffield’s former industrial stronghold of Kelham, once populated with steel factories, is the Cutlery Works food hall, also owned by Blend. As the name suggests, it is in an old cutlery factory.

With exposed brickwork, neon lighting and large windows through which a disused steel factory can be seen, it feels very post-industrial. Last Wednesday, groups of people were gathered to have lunch, with some indulging in a cheeky afternoon pint from the upstairs bar.

“This area is being redeveloped,” Cowan said. “You can see that big digger out the window, that pile of rubble will be flats.”

But not everyone is happy with the prospect. A short walk from the Cutlery Works, graffiti scrawled on the side of a derelict building reads “yuppies go home”.