“Vendors first,” says Adair Mueller, the owner of the Durham Food Hall, leaning against the oblong bar that anchors the hall’s main dining space. “You have to think about your vendors. Because if they’re not healthy, the hall’s not healthy.”

On this rainy December morning, three days before Christmas, vendors are indeed breathing life into the food hall, which stands at the base of the Liberty Warehouse Apartments complex on Foster Street.

Balls of pizza dough sigh under flour-dusted fists. Oven doors open and shut, burping out buttery wafts of cake. Chicken breasts sizzle on a flattop.

Dripping umbrellas in hand, the lunch crowd trickles in.

When the Durham Food Hall—a sizable operation with a slate of chef-driven concepts—was first announced in August 2018, its impending launch was met with broad enthusiasm. News outlets published features and vendor roundups detailing the hall’s emphasis on environmentally friendly practices and local sourcing. Downtown developments marketed it prominently as a soon-to-open walkable destination.

But since last spring, the food hall has worn the kind of gap-toothed smile you notice right away, with several of its vendor stations standing dark and empty.

When the INDY started working to understand why so many vendors are exiting the food hall, a complicated story emerged. In dozens of conversations, vendors—former and existing—expressed frustration at legal and financial troubles, broken promises, poor upkeep, and a hostile work environment not conducive to running such a massive, multipronged operation, nor one that rewarded the financial risks that vendors had taken.

Of the nine former and existing food hall vendors who spoke with the INDY recently, five say that the operation’s dysfunctionality either drove them from or likely will drive them from the space, once their leases expire, if glaring issues aren’t addressed. Two vendors say their departure stemmed from multiple causes, but that their chances of staying would have been better were they afforded a more transparent, cohesive working relationship with ownership.

Two existing vendors say they are content in the food hall and plan to renew their leases, while two other vendors did not respond to the INDY’s request for comment.

Ownership of a brand like the food hall is more involved than being a landlord but less involved than operating one of the businesses in it. This also prompts questions about the model itself: How much does a business owner owe its tenants? Do food halls, which designate vendors as independent contractors but sometimes limit their input in daily operations, really work for small businesses? And if the food hall is driving vendors away, what does that mean for Durham?

Food halls are status symbols for midsize cities, coaxing foot traffic downtown and helping to nurture and get small businesses off the ground. Raleigh has two: Transfer Co. Food Hall and Morgan Street Food Hall. At their best, food halls—which originated in Europe and are often implemented as incubator spaces with rotating vendors—afford vendors the opportunity to pilot concepts in a budget-friendly space before committing to a full-size business.

“They’re such a vibrant community space,” says Mueller, a Durham native who first encountered the model while living in New York City during the early 2010s. Upon returning to Durham, Mueller partnered with Michael Olander Jr.—who helms the Raleigh-based firm MDO Holdings and serves as owner and CEO of O2 Fitness Clubs—to launch the food hall, which operates under the legal name Minerva Projects, LLC. (Olander’s firm is also a partner in BB’s Crispy Chicken and Happy + Hale, among other operations; he was not available for comment for this story.)

“All signs pointed to Durham as being ripe for this type of business,” Mueller says.

Following the takeout-only opening of the hall in May 2020, the work of sustaining small businesses intensified, as restaurants took hit after pandemic hit. For vendors, who took risks in signing multiyear leases with Mueller, the pressure to eke out a success story was especially high. And at such a venue, designed as a gathering place, the launch was particularly tricky: much of the seating is communal, and the aesthetic—marked by wide front windows, funky light fixtures, and a sleek industrial finish—places the food hall in a sort of Goldilocks zone for indoor dining, where diners can relax in a space neither too stuffy nor too stark.

While the outbreak of the pandemic put the communal aspect of the hall’s vision on hold, the Durham Farmers’ Market—hosted weekly, even throughout the pandemic, at Durham Central Park, located across the street from the food hall—acted as a lifeline during what would’ve otherwise been a lethal dry spell for the newborn operation and its vendors, with market-goers routinely adding a smashburger or a spicy chicken sandwich to their Saturday morning shopping lists.

After the hall’s transition to indoor dining in April 2021, the habit stuck, with other communities of customers filling in the gaps.

Inside Durham Food Hall. Credit: Brett Villena

With dine-in service in full swing by summer of 2021, vendors say their concepts proved successful, including three—Lula & Sadie’s, Afters Dessert Bar, and Bowerbird Flowers and Apothecary—who each left the space in May 2022 at the expiration of their two-year leases. The three vendors have opened, or will soon open, permanent locations in Durham’s Lakewood, Brightleaf Square, and University Hill neighborhoods, respectively.

Mueller says her operation is intended to act as a launchpad for businesses and that the departure of these vendors is a testament to the efficacy of the incubator model.

“They would have never been able to do that without the success of the food hall,” Mueller says.

While these vendors do credit the food hall for its role in expediting the launch of their businesses, they also tell the INDY that they did not simply outgrow the space as Mueller suggests: if things had been different, they say, they almost certainly would have stayed.

Construction on the Durham Food Hall began five years ago, around the same time most of the hall’s original vendors were signing their leases.

From the start, it was a gargantuan task: the 15,000-square-foot space would comprise a split-level dining area with 10 vendor stations, each outfitted with custom equipment that varied by vendor; a central, elliptical bar that the food hall would operate; and an upstairs mezzanine with three private event venues, one of which would host another bar.

Setbacks came early and often. Mueller’s team of architects, engineers, and contractors were experienced in restaurant, but not food hall, design, and Mueller, with a business degree and a sales background, also lacked experience in the hospitality industry. (Mueller says Olander Jr. is involved in “strategic business decisions” and Olander’s firm, MDO Holdings, provided the following company statement: “We have been investment partners in the Durham Food Hall, but we are taking a deeper look into the day-to-day operations. We are committed to doing whatever is needed to provide the best experience for the vendors and guests.”)

Vendors signed onto the project in spring of 2018 and were told the project would finish construction by December 2018. The project hit a few early roadblocks: the Liberty Warehouse building didn’t have enough amperage to meet the food hall’s utility needs, for instance, so Duke Energy had to install new power units and lines. Delays aren’t uncommon in the food world, and vendors say they were excited about the project and were understanding of the adjusted timeline.

“I never really wanted a big, 5,000-square-foot brick-and-mortar, and I definitely didn’t want to go the food truck route,” says Stephen Kennedy, who owns Afters Dessert Bar with his wife Lindsey. “The food hall was much more along the lines of what we were looking for—a small, casual little space to work with and get to know people in the community.”

Construction finally wrapped up in January 2020 and an opening date looked promising. Two months later, COVID-19 brought on the shutdown.

At the onset of the pandemic, Mueller put a brief pause on the hall’s launch, but by May, she had no choice, she says—she’d been paying rent on the space for two years and the operation had to open in some capacity.

On May 10, 2020, she announced the hall would open for takeout.

For vendors, launching businesses at the start of a global pandemic was not ideal. While Mueller offered to defer a chunk of their rent payments (most rents total between $4,000 and $5,000 each month) and gave them some flexibility in the hours that their leases required, she also only gave them around two weeks’ notice to prepare for the hall’s opening.

Vendors scrambled, with some enacting drastic, takeout-friendly adaptations of their original business models.

Ex-Voto, for instance, a Mexican concept whose menu originally centered around tamales and hand-ground nixtamal tortillas, started serving burritos and crunchwraps.

But after opening for business at the worst possible time, many vendors feel that the food hall’s subsequent delay in opening for dine-in service, the following May, was longer than necessary. In Durham, where local COVID-19 safety precautions were more rigorous than anywhere else in the state, the vast majority of restaurants had reopened for indoor dining by November 2020.

While vendors had the option to defer their rent payments during the hall’s year-long takeout-only period, the payments still loomed over their heads.

The period was especially taxing for vendors who relied chiefly on foot traffic, like Bowerbird Flowers and Apothecary, a vendor that sold bouquets, trinkets, and tonics in the upper level of the main hall.

“When you’re coordinating this many different vendors, it can be hard to know what to do,” says Bowerbird owner Diane Joyal. “But I really wish that indoor dining could have started sooner.”

And between 2018 and 2021, while vendors were bending over backwards to earn a living while adapting to the delays, two things happened.

According to court records, Gateway Building Company—the construction company that Minerva Projects, LLC, contracted to build out the food hall—fully halted its work for a total of more than three months during 2019 and 2020.

The stoppages came after Minerva repeatedly failed to pay the company for its work, Gateway alleges, and neglected to take actions necessary for Gateway to complete its work, such as procuring a gas meter.

On July 30, 2019, Gateway filed a lien—a legal claim against property that can be used as collateral to repay a debt—against Minerva and its landlord, DPR Liberty Warehouse, LLC, in the amount of $97,042; the lien was canceled two months later, when Minerva paid up. In early 2020, Minerva again failed to pay Gateway, the company alleges, and Gateway halted work.

In response, according to court documents, Mueller assured the company’s president “that Gateway would be paid in full for all work performed on the project” and “told him to stop speaking with his attorneys and to finish the project.”

Gateway resumed work on the food hall, but after the project was completed the company remained unpaid, Gateway alleges. In May 2020, Gateway filed another lien against the food hall, this time for $247,476. Months passed. At the end of the summer, Gateway filed a lawsuit to foreclose the lien. After the second lien was eventually paid off, the construction company voluntarily dismissed the suit.

Vendors say they were in the dark about the financial issues driving the construction delays and several say that, had they had a better sense of the situation, they may have tried to negotiate out of their lease agreements before the food hall opened.

Over email, Mueller wrote that Gateway had tripled its budget for the project and she was not “provided substantial receipts or reasoning as to why.” As for keeping vendors looped into the process, she says she shared as much information as she could “while navigating a legal dispute involving multiple private entities.”

Alongside the financial setbacks, vendors also were unaware of the financial assistance that the food hall received.

According to public records, the Durham Food Hall received approval for a federal Restaurant Revitalization Fund (RRF) grant worth $531,239 on May 17, 2021. RRF grants, unlike loans, do not have to be paid back and were awarded as a way to help business owners keep their doors open.

A vendor stall stands empty at Durham Food Hall. Credit: Brett Villena

(For businesses that opened after 2019 and thus could not prove losses using revenue data from the previous year, like the Durham Food Hall, RRF grants were calculated by taking a business’s eligible expenses—including items like rent payments and payroll costs—and subtracting gross receipts since opening.)

Mueller is cagey in response to the INDY’s questions about the $530,000 grant, but says she would “just prefer to say that we got pandemic funding, only because that money literally went in and out,” and that it was entirely used to pay rent owed to Liberty Warehouse. Both Mueller and her landlord declined to disclose how much Durham Food Hall pays in rent each month, but Mueller wrote in an email the food hall “has over $70k in monthly fixed costs before we even turn the lights on.”

While some vendors received small amounts of pandemic relief funding that they applied for themselves, they say they didn’t receive any of the RRF grant money disbursed to the food hall, nor did they know until much later that Mueller received it. Still, in June 2021, just two weeks after records show the food hall received approval for an RRF grant worth $531,239, and roughly two months after the food hall started its first phases of indoor dining, Mueller terminated the vendors’ “rent deferral” period. Over the next nine months, vendors paid Mueller back in full.

While a business paying off deferred rent using a pandemic relief grant but still demanding deferred rent payments from its debtors isn’t illegal, it’s still questionable, according to Davey Orts, a Durham-based accountant with experience in restaurant management.

“I would be upset if I was one of the vendors,” Orts says.

The majority of vendors who spoke with the INDY were not aware that the food hall had received a sizable RRF grant—nor were they aware of the hall’s legal issues with Gateway—until the INDY informed them during the course of its reporting. Most vendors found the news to be dismaying but not surprising; they’ve grown accustomed to a lack of transparency from ownership, they say.

“We were not aware of the work stoppages,” says Lindsey Kennedy, co-owner of Afters Dessert Bar. “Obviously, if we had known about that, it would have given us a clue into the management style—a preview of the troubles that we would face later on.”

While Mueller was working behind the scenes to keep the food hall afloat financially, vendors say she struggled­—and continues to struggle—to manage day-to-day operations.

“Between all of the vendors, we’re talking about at least a couple of centuries’ worth of restaurant experience,” says Harry Monds, who owns Lula & Sadie’s. “Our advice was rarely paid any attention, even from the very beginning in the design of the space. It became a tenuous situation.”

Many vendors say they feel Mueller and her design team structured the space without considering the needs of tenants. The main dishwashing area, for instance, comprises just two midsize four-compartment sinks.

“It becomes a real problem,” Monds says. “There’s nowhere near enough space for the dishes to get washed.”

And while the food hall has an industrial, high-power dishwasher, its usage is strictly limited to customer-facing dishes like plates and silverware, and the machine is cumulatively only accessible to vendors for a few hours during the day.

Mueller says it is a “continued challenge to satisfy the varying opinions” of the vendors but that she has been open to vendors’ feedback.

Other areas of contention include the lack of space allotted to vendors, particularly in the walk-in refrigerator and freezer, and poor accessibility to the upstairs events spaces, where there is no service elevator for event planners and renters to use.

“It speaks to this pattern of perpetuating the Durham Food Hall as being a part of the community, but yet, you’re not providing access to everybody in the community,” says Lindsey Kennedy.

About six months after the food hall opened, vendors say, it became clear Mueller had not given vendors an accurate estimate of how much they would have to pay for communal cleaning staff. Vendors say they were forced to pick up the slack. (During the first six months of service, most of the cleaning was handled by the hall and beverage directors, according to vendors.)

“[Mueller] had planned initially on paying them like $10 or $12 an hour,” Stephen Kennedy says. “And when she found out that wasn’t going to work, she just passed that cost on to us. A lot of that type of thing happened—these extra costs just kept building up.”

Monthly operating costs for communal supplies and cleaning staff now total around $1,000 per vendor. Vendors say they are frustrated that those costs keep rising and that receipts aren’t itemized, so they don’t know how the money is being used.

Despite dishing out extra funds, many vendors say they have found the hall’s day-to-day upkeep consistently poor, particularly since spring of 2021, when the hall opened for dine-in service.

While staff shortages have certainly plagued the restaurant industry in recent years, former food hall employees say there’s a larger issue at play: Mueller enforces a strict separation between the responsibilities of cleaning staff, whom vendors pay, and bar staff, whom the food hall employs directly.

Mueller doesn’t refute this; “that’s exactly the delineation,” she says. But former hall employees and vendors say Mueller’s preoccupation with creating this division of work—a preoccupation, they say, with who is paying for what—has created a backwards system where bartenders are forbidden from assisting understaffed clean teams, and clean teams are barred from helping out overwhelmed bartenders.

This preoccupation is so extreme that Mueller has monitored the food hall using security cameras and scolds workers when they deviate from their assigned tasks, former employees say.

“A bartender or a bar manager would go out and try to help get things clean,” Monds says. “And they were called, or texted, and told, ‘Stop doing what you’re doing.’ It’s a little unsettling when you’ve got somebody that’s constantly watching you.”

Mueller denies surveilling employees, outside of one instance with “a new employee.”

Former hall employees aren’t the only ones looking over their shoulders.

At the time they signed their contracts, vendors say they were told they could have some flexibility in their hours, and that their hours were open to negotiation. But when they tried to negotiate or diverge from those hours, multiple vendors say they received legal threats.

Monds, who operated Lula & Sadie’s for more hours than any other vendor during his two years at the food hall—for the first chunk of the pandemic, he was even open on Mondays and Tuesdays, when the food hall’s own bar was closed—says he received numerous legal threats from Mueller at times that he deviated from the hours in his lease.

“Verbally, I was told that, you know, this wouldn’t be a problem,” Monds says. “But then I started getting threatened with ‘default, default, default,’ because I wasn’t adhering to the letter of our operating hours,” he says.

When this started happening, Monds decided that he would only correspond with Mueller in writing; ultimately, the relationship became so frayed that Monds insisted on communicating with Mueller only through his attorney, he says.

Over email, Mueller wrote that the hours of operation have been an ongoing issue at the food hall, as the hours of one vendor can greatly impact the rest, and denies making any legal threats to vendors.

Months after the exits of Afters Dessert Bar, Lula & Sadie’s, and Bowerbird, the food hall is finally working its way back up to capacity.

In July, novice vendor Little Barb’s Bakery opened in the space formerly occupied by Afters.

In coming weeks, Mango, a branch of the Chapel Hill Indian restaurant CholaNad, will open in the former Lula & Sadie’s spot, and MILKLAB, a Triangle-based bubble tea shop chain, will launch where Bowerbird once stood.

The three former vendors, whose operations are now taking shape in new spaces, describe their food hall departures as upsetting, particularly after forging friendships with fellow vendors and employees, outfitting their stations with expensive equipment, and marketing themselves under the food hall brand.

“I did want to stay,” Stephen Kennedy says. “And if a second location came by organically, that’d be great. It was never my intent to leave—I saw it as a place that we would be for a while.”

“If we had a good relationship [with ownership], we probably still would have gone out to another building, but we would have stayed in the food hall to have a presence downtown,” Monds says.

“I really wish I could have stayed in the food hall, in some ways, but the rent was just too high,” Joyal says.

Another vendor, Old North Meats and Provisions, left the food hall last month; its successor has yet to be announced.

Old North Meats owner Joel Schroeter declined to comment on the role that specific operational issues played—or did not play—in his departure, but he noted that while his business proved to be profitable, he and his business partner still took steps that allowed them to cut their original lease in half.

“We wouldn’t have felt the need to spend the money on lawyers to reduce our lease, when we had very little money in the bank—we wouldn’t have done that if we had felt supported and kind of, you know, confident in the situations,” Schroeter says.

Eric Montagne, on the other hand, still has a few years on his lease for Locals Seafood, and says he doesn’t see any reason why he wouldn’t renew it.

“There’s issues everywhere,” Montagne says. “We opened in one of the most stressful periods in modern history. And so I kind of take things with a grain of salt. I’ve really enjoyed pushing on past that.”

While other vendors agree that the operation is running more smoothly than it once was, several say that things have only improved because Mueller no longer has day-to-day contact with vendors and that some of the issues detailed by former vendors and former employees are ongoing.

Vendors who spoke with the INDY emphasize that the food hall is a fantastic concept—one that truly belongs in the heart of Durham—but feel it needs nurturing in order for existing and future vendors to thrive.

Otherwise, they fear the operation may become a black eye to the city; an incubator space with the opposite of its intended effect, driving bright-eyed novices with creative concepts to leave the industry entirely. 

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Follow Staff Writer Lena Geller on Twitter or send an email to lgeller@indyweek.com. Comment on this story at backtalk@indyweek.com