First-timer’s guide to the airport biz
Photo by Nicholas Upton
Airports are intimidating places, whether you’re a smuggler slinking through the security line, an aviophobe mustering up the courage to walk the jetway or a first-time retailer or restaurateur trying to make it big-time on the global stage.
The potential rewards are massive, but you also might lose your lunch, get hauled away by the feds or bankrupt your brand. It’s all happening here at the airport—these bustling cities within cities.
In recent years, airports have become drastically more cosmopolitan as the actual experience of flying keeps falling from the glitzy, jet-setting early days. Barren beige concourses have given way to brighter, bolder storefronts, retail that reaches beyond newsstands and C-stores, and restaurants with local flavors, rather than the same-old array of Chili’s, McDonald’s and Sbarro.
Airports are capitalizing on their moneyed captive audiences with new and better concepts, and a huge chunk of the franchise industry has taken notice by fighting tooth and nail to bring their brands into a concourse near you. Judging from my own interview anecdotes, airports are the hottest non-traditional destinations around—more coveted than stadiums, college campuses and train stations—but also the most cutthroat and complex real estate on the market.
After parking, walking, tramming and then traipsing through security without the stress of long-distance travel, I arrived at my local airport during the Christmas rush to observe the ever-changing retail and restaurant scene with Liz Grzechowiak, assistant director, concessions and business development at the Metropolitan Airports Commission at MSP, a mighty fine airport if you’ve never been.
Grzechowiak cut her teeth in food and beverage with the sharp wit to match. She was the director of operations at Leann Chin and now holds one of the keys to what the airport’s site calls “the most valuable economic generator between the St. Croix River and Seattle.” (The St. Croix divides Minnesota and Wisconsin.) Her time is precious, especially as Minneapolis’ Super Bowl LII approaches, so we quickly got down to business.
“It’s the goal of the commission to have a balanced program,” she said, referring to the 15 Metropolitan Airports Commission members appointed by the state’s governors and the mayors of Minneapolis and St. Paul. “Everybody wants local, and obviously our commissioners who hold a lot of political weight here feel a burden and an intrinsic desire to create opportunities for the state of Minnesota.”
That push for local establishments doesn’t mean Burger King and friends are being kicked to the curb, here or elsewhere. Instead, many airports are building upward and outward to add additional retail and restaurant spaces, while underperforming concepts are being switched out with more appealing and profitable brands, be they local or national.
Walking through the mall area that’s lined with shops and restaurants like any suburban lifestyle center or the nearby Mall of America, she pointed out Stone Arch, a brewpub that pours from a rotating selection of local breweries. This hopping, pleasing space was created through a partnership with the Minnesota Craft Brewers Guild and replaced a Chili’s at one of the airport’s most prominent spaces.
She’s especially proud of this one, which is emblematic of the airport’s newer, hipper retail and restaurant programs. Stone Arch, featuring craft beers from local breweries, is posting $7.8 million a year in sales, she said, significantly up from the previous Chili’s that did $4.8 million in sales at the same location.
“It created an opportunity for the hundred-plus Minnesota breweries to serve their beer in front of 38 million people, and there’s been huge success stories of some of the smaller breweries increasing their revenue based on this exposure,” Grzechowiak said.
Bolder storefronts and increased pressure for local influences are invading concourses across the country as airports become even hotter destinations for franchises.
Dodging roller bags and beeping shuttle carts, we crossed the hallway to Adventure North, a dramatic, protruding storefront that’s much more attention-getting than its previous incarnation. Its wares, outdoorsy gear from Patagonia, North Face, Arc’teryx, Chaco and Red Wing, are intended to communicate the message that Minnesota is more than big malls and frozen lakes.
“We’ve got some of the best biking paths and 12,000-some lakes, so I wanted to have a store that reflected that in the retail program,” Grzechowiak added. “There are very few stores like this in airports.”
A piece of the Bold North
With the Super Bowl coming to town as this issue goes to press, the airport’s retail and restaurant teams were nearing the finish line after years of preparation, carefully phased construction projects and a two-part expansion of the airport’s retail and restaurant lineup. With new spaces to lease, the airport hosted speed dating meetups where local and national brands gave short presentations to “prime concessionaires” like HMSHost and SSP America that operate stores and restaurants in airports across the globe.
“They come in and they’re the master lease-holder, and they’ll either do a franchise agreement or they’ll look to their portfolio of proprietary agreements they already have or they will enter into an agreement with a local concept through a joint venture or a licensing agreement,” she said of the process, which often bewilders airport newbies.
For all the control they give up—and the many airport-specific hoops to jump through, including a lack of storage and daily TSA checks for all staff—these prime concessionaires can require their own competitive bidding process just for a chance to discuss getting a seat at the table. Any way you slice it, airport leasing is a slog.
“What’s stressful for me is wanting to deliver the absolute best product, while being really sensitive to the operators who are opening their checkbooks to execute these designs and ideas, and time is everything,” she said. “At first you’re in shock with how slow things move” at airports. “It could take me two months to get something done because everything is so slow and there are so many people involved in making decisions.”
BurgerFi, a Florida-based better burger brand, just opened its first airport location in Fort Lauderdale after three years of negotiation and construction. CEO Corey Winograd said the seemingly endless wait was worth it, given the potential revenue and exposure he says the location will provide. HMSHost operates the location, which finally opened in late November.
Winograd said giving up control for the licensing deal is still a positive, given the concessionaire’s experience with the intricacies of airport commerce.
“It’s not their first rodeo,” he said. “As with experienced multi-unit franchisees, we can learn from the HMSHosts and Aramarks, we can learn from our great operators new ways of doing things.”
For others sweating their own first airport excursion, Grzechowiak recommends contacting airport staff first to gauge their needs and wants. Next, she said, contact prime concessionaires who are often seeking tenants for their own complex deals, like a recent “five-pack” lease at MSP where an operator was awarded five separate locations to be filled under one individual lease contract. It’s the airport’s way of simplifying the process, while also guaranteeing that less desirable spaces also remain occupied.
“We only have so many staff to work with, so we want one lease agreement so we have one lease contact and we have one payment point and we mitigate our risk and create competition,” she said. “Everybody wants to rent the main mall so we’ll tell you, you can have the main mall, but you also have to take Terminal A,” meaning a less desirable spot.
“What we’re doing is balancing and ensuring that we have passenger amenities that are available through the airport.”
As her voice faded from a pre-holiday cold—and countless Super Bowl-related meetings and phone calls—Grzechowiak left me in the terminal with a final piece of advice for anyone franchising with sky-high dreams: invest in the contract.
“Prime concessionaires know how to do business in an airport—it’s cumbersome and it’s difficult—so what it comes down to is a solid contract,” she said.
“If you want to participate at a certain level, if you insist on touchpoints that you have to have control of, then you need to invest in your contract, make sure you have good legal representation that can ensure that you’re protected, but also that you’re truly entering into a partnership that can benefit you … because they do business in airports throughout the world.”
Tom Kaiser, pictured on opposite page, is associate editor of Franchise Times and writes about urban tales in franchising in each issue. Send story ideas to email@example.com