# Need to know... the Good, the Bad, the Ugly of Airport Concessions (ACDBE)



## granola girl (Mar 8, 2015)

I wish to know if any of you talented chefs have ever had experience with Airport concessions? I am in the process of filling out massive paperwork to get certified as an ACDBE (Airport Concession Disadvantaged Business Entity). The process is very intense. I feel like they want everything but your blood and first born child. I have been told by the City of Los Angeles rep that of all the certifications. This one is the most challenging to receive. Great. I'm always going for the tough ones. I was wondering what wisdom you can pass on to me from your experience with doing business with airports. I'm not trying to set up a big restaurant. More like put my granola in their gift shop for travelers to buy as a snack or souvenir at LAX. Similar to See's Candies. TIA


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## flipflopgirl (Jun 27, 2012)

Hey GF... altho I bartended at DFW airport wayyy back in the day I have no answers...just here for moral support lol.
Sounds like a great opportunity tho.
The whole "captured" customer theory and all that.
Good luck!

mimi


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## sgmchef (Sep 30, 2006)

Hi GG,

The process you describe is for opening your own kiosk or storefront, right? 
Have you considered offering your product to a gift shop that already has a license, for further resale?

Sorry I don't have anything more useful...


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## granola girl (Mar 8, 2015)

flipflopgirl said:


> Hey GF... altho I bartended at DFW airport wayyy back in the day I have no answers...just here for moral support lol.
> Sounds like a great opportunity tho.
> The whole "captured" customer theory and all that.
> Good luck!
> ...


Thx for the moral support Mimi. I'll let you know how it turns out. Captured audience who need granola to munch on while traveling. If you end up seeing it at the airports, you can say you know the crazy woman who owns the company.


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## granola girl (Mar 8, 2015)

sgmchef said:


> Hi GG,
> 
> The process you describe is for opening your own kiosk or storefront, right?
> Have you considered offering your product to a gift shop that already has a license, for further resale?
> ...


Thank you for your reply. Yes, wholesaling to the gift shop/convenience stand is my first choice. Out here the store is Hudsons. I called the contact person for the Ontario Airport so crossing fingers on that one. If they say they can't take products unless I'm with a big broker, ie Unified Food, Vistar ect. Then I will set up my own Kiosk.


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## chefwriter (Oct 31, 2012)

Please report back with what you learn. While I don't have any plans to do that, I am very interested in knowing what is involved.


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## foodpump (Oct 10, 2005)

If you've never seen a lease for a regular shopping mall retail unit, you'll never be prepared for a lease for an int'l airport retail unit.

There's a reason why a say, Mars bar or pkg of M&M's costs four dollars in airports, or a pair of el-cheap headphones cost 15 dollars when they're normally $5.99 at a dollar store.

If the airport has good public transportation, then staffing issues won't be so bad. But if public transport is lousy, and day parking prohibitively expensive, then you're in for a double treat...


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## chefandrewl (Jun 25, 2017)

I once got to final interview stage for a Director of F&B job for a management company at a major Midwestern airport. I did not get the job, so take my 2 cents with the appropriate hesitation. This particular airport every F&B and merchandise outlet was managed by this company. Half of the outlets were franchises owned and operated by the company and the other half were local business that had separate contracts with the company. All of the hourly employees from the Starbucks, to the McDonalds, to the local Mom and Pop BBQ joint were Union employees paid by the company and all the expenses were paid by the company. The company also owned all the POS and managed all the cash handling. The agreements we had with the local operators were one of two types.

Option 1: Contract Company signs franchise agreement with business owner, operates it to business owners specification. Business owner gets 3% of revenue and it then paid a consultant fee. Standard was $50K per year and requires 10 work days a month on site. Contract Company keeps remaining profit.

Option 2: Business owner operates the business. Does not take any salary from contract company and pays managers out of own pocket. Contract company takes 3% of revenue and deducts expenses such as labor, food and supplies. There is then profit sharing agreement. The business owner keeps the first 12% of profit, then any profit earned after the 12% is split between business owner and company.

Hope this helps. Good Luck!


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## foodpump (Oct 10, 2005)

Yeah, yeah, but the lease. What was the airport charging per sq ft. for retail space?


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## chefandrewl (Jun 25, 2017)

foodpump said:


> Yeah, yeah, but the lease. What was the airport charging per sq ft. for retail space?


It was strictly a revenue sharing agreement, there was no charge for the space.


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## granola girl (Mar 8, 2015)

chefwriter said:


> Please report back with what you learn. While I don't have any plans to do that, I am very interested in knowing what is involved.


Ok. Will do.


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## granola girl (Mar 8, 2015)

foodpump said:


> If you've never seen a lease for a regular shopping mall retail unit, you'll never be prepared for a lease for an int'l airport retail unit.
> 
> There's a reason why a say, Mars bar or pkg of M&M's costs four dollars in airports, or a pair of el-cheap headphones cost 15 dollars when they're normally $5.99 at a dollar store.
> 
> If the airport has good public transportation, then staffing issues won't be so bad. But if public transport is lousy, and day parking prohibitively expensive, then you're in for a double treat...


Those are good points. Yes, I have had a brick and mortar bakery in South Pasadena at a prime location next to the weekly farmers market and the metro train stop. Leases at the LAX airport will be expensive hence I'm going for wholesaling to Hudsons as first choice. The Rose Bowl said I should sell my $3.50 cupcake for $5. So I'm sure LAX will tell me the same if not more. (nod to FlipFlopgirl-captured audience) You make a very valid point about employees and cheap public transport. If I have to have a kiosk, then it will be self service with only one part time employee plus myself. Delivery people will be an interesting problem to solve. But I'll cross that bridge when I get there. First is to get accepted as a vendor.


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## granola girl (Mar 8, 2015)

chefandrewl said:


> I once got to final interview stage for a Director of F&B job for a management company at a major Midwestern airport. I did not get the job, so take my 2 cents with the appropriate hesitation. This particular airport every F&B and merchandise outlet was managed by this company. Half of the outlets were franchises owned and operated by the company and the other half were local business that had separate contracts with the company. All of the hourly employees from the Starbucks, to the McDonalds, to the local Mom and Pop BBQ joint were Union employees paid by the company and all the expenses were paid by the company. The company also owned all the POS and managed all the cash handling. The agreements we had with the local operators were one of two types.
> 
> Option 1: Contract Company signs franchise agreement with business owner, operates it to business owners specification. Business owner gets 3% of revenue and it then paid a consultant fee. Standard was $50K per year and requires 10 work days a month on site. Contract Company keeps remaining profit.
> 
> ...


Thank you very much. This type of insight is so helpful. Of the two options, I believe option one sounds like the one for me so that I have a salary for only X number of days at the site. No employees for me to daily oversee. That way I can set up the other kiosk at other airports, bus, train stations. I had already negotiated a great deal with ARTIC station in Anaheim. But that's a whole different story.


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## granola girl (Mar 8, 2015)

chefandrewl said:


> It was strictly a revenue sharing agreement, there was no charge for the space.


Long Beach airport, a much smaller airport than LAX, must do something like that too. I saw a sandwich shop for sale that listed the rent at the airpot as $550/month. How lucky if I could get no rent at LAX. I'd be happy with no rent, I would be ecstatic if i get a salary or franchise fee, and wholesale pricing for my products sold there.


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## foodpump (Oct 10, 2005)

Hi Granola girl,

I wrote in my post good public transport, not necessarily cheap public transportation to the airport for employees.

If someone has to take two busses with a ten minute wait for each bus to the airport, then that employee must be pretty dedicated....

The Europeans and the Asians figured out a loong time ago about good public transport to the airport, the N. Americans are way behind. Vancouver only got direct public transportation to YVR (Vancouver int'l airport) in 2010


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## granola girl (Mar 8, 2015)

foodpump said:


> Hi Granola girl,
> 
> I wrote in my post good public transport, not necessarily cheap public transportation to the airport for employees.
> 
> ...


I agree good public transport is key. LAX is working on it and have a conceptual video showing the New people mover and metro so there is hope for the future. Remains to be seen as to when it will be done. They are taking applications for food vendors for the new concourse right now. That's why I'm hoping to get my paperwork squared away and turned in. Thank you for your insights.


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## granola girl (Mar 8, 2015)

sgmchef said:


> Hi GG,
> 
> The process you describe is for opening your own kiosk or storefront, right?
> Have you considered offering your product to a gift shop that already has a license, for further resale?
> ...


I believe it's Hudson who has a corner on the convenience store contract. So I would need to be with a broker. Not willing to pay for one yet. But thank for thinking of it.


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## Mischief (Dec 13, 2018)

I hope all is going well Sonia, good luck with LAX!


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## foodpump (Oct 10, 2005)

Lease rents of $550....sounds almost too good to be true...
A) Is there a “target” , or expected sales per month?
B) what is the “cut” or percentage the landlord wants?
C) what happen so if you don’t make your target? One month?two months. Three months?
D) if forced out before the lease is over,can you keep/sell your fixtures and equipment, or are they forfeited to the landlord?
E) are there advertising/promotional fees you are expected to pay?
F)are theremaintainence/security fees you are expected to pay?
G)is there a vacancy clause: other tennants have to cover the cost of a vacant unit until a new tenant is found?
H) are you billed direct from utility companies ( power, gas) or do you pay a “share” of the utilities?

And I) but not directly related to the lease, will your suppliers charge extra to deliver to an airport?

Many leases are over 30 pages long, but a lot of this stuff is hidden in those pages.

Conclusion: There is a reason you don’t see many—if any— small indie businesses in large malls and airports


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## granola girl (Mar 8, 2015)

foodpump said:


> Lease rents of $550....sounds almost too good to be true...
> A) Is there a "target" , or expected sales per month?
> B) what is the "cut" or percentage the landlord wants?
> C) what happen so if you don't make your target? One month?two months. Three months?
> ...


Thank you so much for such a detailed list of the points that I certainly must consider. I will be meeting with their sales rep soon to view the space and see in real time how Vanilla Bake shop is doing in Tom Bradley, international terminal. They are offering me terminal one. the Southwest airlines terminal. I am really excited to move forward and hopefully not have to pay an arm and a leg in a lease. The rep is speaking this Saturday at the Building LA businesses Today event hosted by the Mayor's office. I have gone to that in the past and was already registered to attend so that is perfect. I know the Mayor's Office wants to see more ACDBE minority women owned business vendors there so that makes me a unicorn. Hahaha


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## granola girl (Mar 8, 2015)

Mischief said:


> I hope all is going well Sonia, good luck with LAX!


thank you so much. Please read my message to Food Pump. I have been working on getting into LAX for soooo long. I'm excited to see the ball finally rolling in that direction. I even have a co packer on stand by since last year.


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## granola girl (Mar 8, 2015)

granola girl said:


> Ok. Will do.


Please see my update on the reply to Food Pump. I'm cautiously optimistic.


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## granola girl (Mar 8, 2015)

flipflopgirl said:


> Hey GF... altho I bartended at DFW airport wayyy back in the day I have no answers...just here for moral support lol.
> Sounds like a great opportunity tho.
> The whole "captured" customer theory and all that.
> Good luck!
> ...


Hope you are well. Please see my update in my reply to Food Pump


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