Finding Hidden Gems in Australia's Evolving Dining Scene
- KK
- Jul 1
- 7 min read
Updated: Jul 4
In an earlier post, we explored how value-driven diners are reshaping Australia's food scene. Now comes the million-dollar question: how do you find these community-building, profit-generating tenants before your competitors do?
The answer isn't in your usual channels. The best value-driven concepts aren't advertising in Broadsheet or hiring tenant representation. They're bootstrapping their dreams while working day jobs, perfecting recipes in home kitchens, and building followings through Instagram or pop-ups.
With Australian retail rents showing mixed signals - some markets seeing decreases while prime locations experience renewed demand for longer-term leases - smart landlords are adapting their strategies. Here's how to find emerging food concepts and structure deals that set everyone up for success.
Strategy 1: Stop Thinking in Old Categories
Forget "fast food" versus "fine dining." The magic happens in between, and some of the most successful concepts are thriving in compact footprints you might have overlooked.
Think Smaller, But Smarter: Remember when everyone wanted massive restaurant spaces? Now consider splitting that 300 sqm space into three smaller units. You might end up with a specialty coffee roaster, a gourmet dumpling counter, and a natural wine bar—each drawing different crowds throughout the day.
The Numbers Work: More tenants mean more diversified risk and often higher total rent. That Japanese-style coffee roaster in 80 sqm generating solid monthly revenue beats the struggling 240 sqm restaurant with irregular payments.
Look at Melbourne's laneway culture - venues like those in Centre Place and Degraves Street that barely fit 20 people but generate incredible revenue per square metre. While COVID-19 impacted many small venues, those with strong community connections and authentic offerings have shown remarkable resilience.
We've seen this principle in action at one of our previous projects, East Brunswick Village, with its precinct of passionate F&B entrepreneurs who truly understand Melbourne's inner north community, encouraged by a landlord who prioritises the right experiential outcome over the commercials. The key is finding operators who understand their "why" and can deliver consistent quality regardless of footprint.
Strategy 2: Hunt for Community Builders (Not Just Business Plans)
The best value-driven concepts have compelling stories and deep community connections. Maybe it's the chef who trained in hatted restaurants but wants to serve accessible pasta dishes to neighbours while sourcing from local suppliers. Or the third-generation baker whose family fled Vietnam and is finally ready to share authentic banh mi recipes with Melbourne.
At East Brunswick Village, we've learned that authentic community connection isn't just about good food—it's about operators who genuinely understand and reflect the values of their neighbourhood. Melbourne's inner north is home to young families, creative professionals, and long-term residents who value sustainability, social consciousness, and authentic experiences over flashy concepts.
Red Flags to Avoid:
Slick presentations focused purely on profit projections
Generic concepts that could work anywhere
Operators who can't articulate why they're passionate about their specific cuisine or community
Green Flags to Chase:
Operators already building followings through farmers markets or pop-ups
Chefs with restaurant experience who want to do something more personal
Family recipes or cultural food traditions being shared for the first time
Strong social media presence showing genuine customer engagement
Plans to hire locally or source from nearby suppliers
Demonstrable commitment to sustainability and community values
Understanding of the local demographic and their lifestyle priorities
I've seen landlords pass on these operators because their financial projections looked modest compared to franchise restaurants. Big mistake. These passion-driven businesses often outlast their flashier competitors because they're built on genuine customer connection, not just corporate backing.
Strategy 3: Get Creative with Lease Terms
The traditional fixed rent model doesn't always work for emerging concepts. Consider:
Graduated Rent Increases: Start with reduced rent for the first 12-18 months, allowing new tenants to build their customer base. This approach makes sense given current market conditions where secondary retail locations are seeing increased short-term leasing activity. One successful Melbourne landlord offers 60% rent for months 1-6, 80% for months 7-12, then market rate with standard CPI adjustments thereafter.
Turnover Rent Considerations: While base rent plus percentage of turnover arrangements are more common in major shopping centres, they can work for food precincts. However, ensure proper legal structuring and consider that most Australian small food operators prefer predictable base rent models.
Performance-Based Incentives: Reward tenants who become community anchors through rent reviews that consider more than just CPI. Some landlords overseas offer marketing rewards or even small rent reductions for operators who sponsor local sports teams, host community events, or achieve verified customer loyalty metrics.
Market-Appropriate Flexibility: With prime retail locations seeing a 62% increase in 10-year lease commitments, ensure your flexibility doesn't compromise long-term tenant security for genuine community builders.
Strategy 4: Build Your Tenant Ecosystem
Here's where you can really add value beyond just providing space: think like a business incubator, not just a landlord.
Group Purchasing Power: Negotiate better rates for payment processing, waste management, and delivery platform fees when multiple tenants can band together. Five small tenants get much better rates than going solo - this is particularly relevant given Australia's concentrated market for payment processing and waste services.
During the launch of The Marketplace at Watergardens in early 2020, we facilitated collective negotiations with Uber Eats on behalf of all our F&B tenants. What seemed like a nice-to-have service became absolutely critical when the pandemic hit and food deliveries transformed from supplementary revenue to a lifeline. Our tenants secured significantly better commission rates than they would have achieved individually, and the shared onboarding process meant they could pivot to delivery service within days rather than weeks.
Shared Resources: Some Australian shopping centres have created shared commissary kitchens that multiple food vendors use for prep work, reducing individual overhead while maintaining food safety compliance with local health departments.
Cross-Promotion Opportunities: Set up systems that encourage collaboration. Consider central ordering systems where customers can order from multiple vendors, or monthly "meet the makers" events. This works particularly well in food courts and dining precincts.
Marketing Support: Your property becomes known as a place that genuinely supports local business, attracting both better tenants and more loyal customers. Consider shared social media promotion, collaborative events, or loyalty programs that work across multiple tenants while respecting individual business identities.
Strategy 5: Location Matching is Everything
Your tenants don't need to be on Collins Street anymore, but location strategy is more nuanced than ever.
Emerging Areas: Some of Melbourne's hottest food scenes happen in converted warehouses in Collingwood, suburban shopping strips in Footscray, and emerging neighbourhoods in Sydney's Inner West. Lower rents let tenants focus money on incredible ingredients and skilled preparation.
The inner north of Melbourne - including Brunswick, Fitzroy North, and Thornbury - exemplifies this perfectly. These areas attract residents who prioritise authentic experiences over convenience, making them ideal for passionate F&B operators.
Premium Locations: Places like Chadstone's dining precincts or Sydney's Barangaroo command premium rents because they provide access to massive foot traffic and affluent customers willing to pay for quality. These locations work when you're creating a dedicated food destination.
The Sweet Spot: Match your rent expectations to your location's value proposition. Don't charge premium rents unless you're providing premium foot traffic or destination appeal. Remember that retail rent forecasts show varied performance across different location types.
Finding Your Dream Tenants: Where to Look
Active Scouting Locations:
Food Markets: Stallholders testing concepts and building followings (try Queen Victoria Market's Night Market, or Paddy's Night Food Market)
Pop-Up Events: Chefs exploring independent ventures while still employed elsewhere
Social Media: Instagram accounts with genuine engagement around specific cuisines or food philosophies
Cooking Classes: Chefs building communities around their expertise
Catering Operations: Established food businesses looking to expand into retail
Food Festivals: Operators with proven concepts ready to scale
The Screening Process That Works
Beyond Financial Statements: Yes, check their numbers and ensure they meet standard Australian commercial lending criteria, but also experience their food. If it's not genuinely great, community connection won't save them.
Test Their Why: Ask why they're passionate about this specific cuisine. Can they tell you stories about ingredients, techniques, or cultural significance? Authentic passion translates to authentic engagement and customer experiences. Marketing Savvy and Proactive Drive: Assess their digital marketing capabilities and entrepreneurial initiative. Review their existing social media presence, content creation skills, and examples of proactive marketing efforts they've undertaken. Look for operators who can articulate specific strategies for building buzz through social platforms, understand current food marketing trends, and demonstrate a track record of taking initiative to capitalize on opportunities.
Community Integration Plans: How do they plan to become part of the local fabric? Generic answers are red flags. Specific plans to source locally, hire from the community, or support local causes indicate genuine community commitment.
The operators who succeed are those who've already researched the neighbourhood's character—they know about the nearby community garden, the local primary school's sustainability program, and the residents' preference for businesses that reflect progressive values.
Scalability Without Soul Loss: Can they maintain quality and authenticity as they grow? The best operators have thought through systems and training that preserve what makes them special.
Legal and Insurance Compliance: Ensure they understand Australian food safety requirements, workers' compensation obligations, and commercial lease responsibilities.
The Long-Term Payoff
Properties that nail this strategy don't just fill spaces - they become destinations. When your precinct is known for discovering and nurturing local food talent, you attract both better tenants and more adventurous customers.
More importantly, you're building sustainable value. These community-connected businesses weather economic storms better, generate organic marketing, and create the kind of authentic atmosphere that money can't buy. This has proven particularly valuable in Australia's post-COVID market recovery, where consumers increasingly seek local, authentic experiences over generic chain offerings.
The landlords winning in today's market aren't just renting space - they're curating experiences and building communities. And in an era where Australian consumers increasingly seek authentic connections and local stories, that community-building aspect isn't just nice to have—it's your competitive advantage.
Next: In a future post, we'll explore the physical and technological infrastructure changes that turn good food concepts into Instagram-worthy destinations that customers can't stop talking about.
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