2012 ACI-NA Concessions Benchmarking Survey Summary Results

2012 ACI-NA Concessions

Benchmarking Survey

Summary Results

Contact:

Economic Affairs and Research

Tel: 202-293-8500

Email: [email protected]

www.aci-na.org

November, 2012

mailto:[email protected]

http://www.aci-na.org/

2

Overview

Designed by the ACI-NA Concessions Benchmarking Working Group during February to June, 2012,

launched in June to all ACI-NA airport members, data collected in June - October online using

SurveyGizmo tool, and last response received on October 12, 2012.

Survey Methodology

ACI-NA Survey Participation

Survey Sample

General Information

Big Picture of U.S. Airports

Passenger Demographics

ACI-NA Survey Disclaimer and Conditions

The information contained in this publication has been compiled based on information submitted to ACI-NA.

ACI-NA accepts no responsibility for contributions provided by third parties for inclusion in this document. Moreover, no

reader of this publication should act on the basis of any information contained herein without referring to applicable laws and

regulations and taking appropriate professional advice. Although every effort has been made to ensure accuracy, ACI-NA

shall not be held responsible for loss or damage caused by errors, omission, misprints or misinterpretation of the contents

hereof.

The information contained in the aggregated ACI-NA summary presentation may be referenced or used publicly.

Overview

Overview Concessions Statistics

Type of Concessions Agreements

Staff Dedicated to Concessions Management

Food & Beverage Median Gross Sales Per Enplanement

News, Gift and Specialty Retail Median Gross Sales Per Enplanement

Food & Beverage – Rent Calculation

News, Gift & Specialty – Rent Calculation

Median Total Rent Per Square Foot

Rent Percent of Gross Sales

Concessions Contract Length

Percent of Gross Sales Breakdown by Category

Carts/Kiosk Program

Concessions Branding

Overview

Commercial Management Operations and Programs

Concessions Planning

Concessions Marketing Program

Customer Satisfaction/Monitoring Programs

Operational/Performance audits

Pricing Methodologies

Airport Mobile Applications

Central Distribution Center

Common Area Maintenance Charge Food & Beverage Concessionaires

Refurbishment Requirements

Closing Remarks

Participating Airports

Definitions

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Survey Methodology

Goal: To build a comprehensive database of key industry measures for benchmarking

with peer airports

Survey questionnaire in three parts:

Part 1 General Information

Part 2 Food & Beverage (F&B)

Part 3 News, Gift & Specialty Retail (NG&S)

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ACI-NA Survey Participation

92% increase in airport

response rate from 2011

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Survey Sample

Hub

Category 2010 2011 2012

Number of

Airports in US by

Hub Size (FAA)

% of Airports

Participating

(2012)

Large 18 13 26 29 90%

Medium 21 20 26 35 74%

Small 11 10 29 74 39%

Non-hub 3 3 4 249 <2%

Canadian 8 5 13 -- --

Total 61 51 98

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General Information

2012 ACI-NA Concessions Benchmarking Survey November, 2012

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Big Picture of U.S. Airports

Aeronautical vs. Non-Aeronautical Revenue

Source: FAA, ASS-400: CATS: Report 127

2011 (In Millions of U.S. Dollars)

Total Operating Revenues $16,701 Million

Total Non-Aeronautical Revenues $7,507 Million

*Includes revenues for services such as telecommunications, internet access, advertising,

barbershops, shoeshine stands, spas, and revenues from other non-aeronautical terminal uses not

otherwise listed.

10

Passenger Demographics

100% of airports have made efforts to collect passenger demographic information.

70% of airports have updated passenger data since 2010.

The median age of passengers is 44.

The median household income is $86,925, significantly higher than the national

median of $50,054*.

Business travelers account for 40% of passengers.

*Note: 2011 data from US Census Bureau

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Overview Concessions Statistics


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Type of Concessions Agreements

Prime operator - Airport leases packages of locations to two or more operators, each of which has multiple locations

(more than 3) within the airport.

Master concessionaire - Airport leases all food service concessions to a single operator, who may or may not also

operate retail. The Master Concessionaire may sublease some of the locations to other operators.

Direct leasing - Airport leases individual locations or small groups of locations (no more than 3) directly to the

operators.

Developer - Airport has agreement with a third party to develop/lease and manage the concessions without operating

any directly. Developer invests in facilities directly.

Note: Combined Food & Beverage and News, Gift & Specialty Retail Concessions Agreements

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Staff Dedicated to Concessions Management

Percent of airport staff dedicated to

Concessions Management

Factors affecting staffing levels:

Airport size and hub status

Management methodology

Number of contracts

Monitoring requirements

Note: Included separate airport responses, from airports with different terminal management (i.e. PANYNJ – JFK Terminal 5)

14

Food & Beverage

Median Gross Sales - Per Enplanement


The overall Food & Beverage median gross sales, per enplanement is $5.00 compared to $4.69 in

2011. All hub sizes across the board have seen an increase gross sales per enplanement since

2010. Only the Canadian airports have a slightly lower median in 2012, compared to 2011 for Food

& Beverage.

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News, Gift and Specialty Retail

Median Gross Sales - Per Enplanement


The overall News, Gift and Specialty Retail median gross sales, per enplanement is $3.10

compared to $2.91 in 2011. Most notability the JFK Terminal 1 had the maximum gross sales per

enplanement at $62.60. On the other hand, at least three Canadian hubs, that have not previously

responded to the survey included Duty Free, thus increasing the 2012 News, Gift and Specialty

Retail Canadian median.

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Food & Beverage - Rent Calculation

Median Percentage of Gross Sales, if rent is

calculated by percent of gross sales:

Food & Beverage - 10.50%


Calculated by Minimum Annual Guarantee

(MAG) or percent gross sales, whichever is

greater:

Food & Beverage - 13.00%

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News, Gift & Specialty - Rent Calculation


calculated by percent of gross sales:

News, Gift & Specialty Retail - 11.50%


Calculated by Minimum Annual Guarantee

(MAG) or percent gross sales,

whichever is greater:

News, Gift & Specialty Retail - 15.00%

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Median Total Rent per Square Foot

Overall the median total rent per square foot is $66.07 for Food and Beverage, meanwhile the

median total rent per square foot for News, Gift and Specialty Retail is $93.68. Across all hub sizes

News, Gift and Specialty retail has a higher median rent per square foot.

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Rent Percent of Gross Sales

News, Gift and Specialty Retail have a higher rent percentage of gross sales across all hub

sizes, with the exception of Non-Hub airports. The average rent, 12.3% of gross sales relates to

Food and Beverage, while News, Gift and specialty Retail account for 15.0% based on rent as

percentage of gross sales.

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Concessions Contract Length

The most common length of all airport concessions contract is 10 years.

The median length of contacts for Food & Beverage:

Fast Food/Quick-Service – 10 Years

Sit Down/Casual/Bar – 10 Years

Specialty Coffee – 10 Years

The maximum length for Food & Beverage contracts is 30 years, while the

minimum length is 5 years.

The median length of contacts for News, Gift and Specialty Retail:

News & Gift – 9 Years

Specialty Retail – 7 Years

Other – 7 Years

The maximum length for News, Gift and Specialty Retail contracts is 33 years,

while the minimum length is 1 year.

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Percent of Gross Sales Breakdown By Category

Food & Beverage News, Gift and

Specialty Retail

22

Carts/Kiosk Program

Food & BeverageNews, Gift & Specialty

Retail

Presence at the airport 32% Yes 43% Yes

Status

47% Permanent

32% Temporary

21% Both

63% Permanent

15% Temporary

22% Both

Automated Retail Program

41% Yes (43 airports)

Median – 2 units per

airport

Management

Master Concessionaire/Prime Operator operates

them directly

Airport leases directly to vendor(s)

Master Concessionaire/Prime Operator/Developer

leases directly to vendor(s)

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Concessions Branding

Airport Brand/Non Brand - A generic brand relative only to the airport.

Local/Regional Brand - A brand that is developed, distributed and promoted within a

defined geographical area.

National/International Brand - A brand that is marketed and distributed

nationally/internationally.

Food & Beverage News, Gift and Specialty Retail

Note: 2011 Concessions Benchmarking Survey – Food and Beverage Concessions Branding

(Airport Brand/Non Brand: 17%) (Local/Regional Brand: 41%) (National/International Brand: 42%)

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Commercial Management

Operations and Programs


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Concessions Planning

The most common method of soliciting and awarding concessions contract is Request for

Proposals (RFPs). However, many airports often use a mixture of methods. The ‘other’ method

included Request for Letters of Interest (RLI). In addition, 43% of airports require minimum

staffing levels in concession agreement, while 80% of airports define & control product lines

sold.

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Concessions Marketing Program

67% of participating airports have a marketing program for airport concessions.

87% of these airports collect a concessions marketing fee.

The majority of airports calculate their concession marketing cost by a percent of

gross revenue to the airport.

Top 3 in-kind services airports contribute to the marketing of the concessions

program:

In-terminal advertising

Market research

Marketing materials preparation/printing/distribution

Top 5 items airports spend marketing funds on:

Customer service training

In terminal advertising (CNN monitors, etc.)

Marketing materials preparation/printing/distribution

Shopper service (mystery shopping/award)

Social Media

27

Customer Satisfaction/Monitoring Programs


Airports use a variety of customer satisfaction/monitoring programs for concessionaires. The

most common include frequent meetings with concessionaires, website feedback, customer

comment cards and more recently social media.

28

Operational/Performance Audits

All 98 respondents perform operational/ performance audits. While 85% of respondents conduct

operational/performance audits in house. In addition, 49% of airports have fines tied to these

audits for non-compliance.


29

Pricing Methodologies

The majority of airports use Street Plus and Street Pricing Methodologies. These two pricing

methodologies account for 86% of responding airports. Only 8 airports have no comparison,

and these airports are small or non-hub airports. Often either Street Pricing or Street Plus

Pricing methodologies are used in conjunction with comparison to other airports based on

airports size, or geographical location.


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Airport Mobile Applications

33% (32 out of 98) of airports have a

mobile application.

The most common method the mobile

app was developed include:

Joint (Airport & Third Party) – 50%

Third Party – 44%

Airport – 6%

73% (23 out of 32) of airports promote

concessions offerings through the

airport mobile app.

31

Central Distribution Center

Central Distribution Center - Is defined as a location for the receipt, staging, and

handling of most goods and supplies delivered to the airport and the distribution of

the goods and supplies to all concessionaires, other tenants, and Aviation

Departments, as deemed appropriate whether operated by airport third party tenant

or other.

Only 18 out of 98 airports have a

Central Distribution Center.

Meanwhile all airports have recycling

program for airport concessions

Airport – 57%

Tenant – 4%

Both Airport & Tenant – 39%

32

Common Area Maintenance Charge

Food & Beverage Concessionaires


Common Area Maintenance Charges

are paid to the airport or to another

concessionaire as reimbursement for the

maintenance of common (shared) areas,

such as food courts.

A large number of airports/terminals levies

a Common Area Maintenance charge on

food and beverage concessionaire(s).

The most common charge is for Janitorial

services that accounts for 32% of total

airports/terminals that levies this charge.

Other Common Area Maintenance

charges include Utilities, Repairs and

Lighting.

33

Refurbishment Requirements

Most commonly all agreements have mid-terms refurbishment requirements, particularly for

Food and Beverage. Airports prefer mid-term requirements rather than annual refurbishment

requirements for Food & Beverage and New, Gift and Specialty Retail.


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Closing Remarks

Use survey data with caution.

Choose your peers for comparison based on a number of factors such as airports size,

hub status, and geographical location.

When making decisions consider your local situation as well as what is going on

nationally.

All airport participants will have access to the raw data after the conference. Airports

will be able to filter responses for all questions.

35

Participating Airports

ATL

BOS

BWI

DCA

DEN

DFW

EWR

FLL

IAD

IAH

JFK

LAS

LAX

LGA

MCO

MDW

MIA

MSP

ORD

PHL

PHX

SAN

SEA

SFO

SLC

TPA

ABQ

ANC

AUS

BNA

BUR

CLE

CMH

CVG

DAL

HOU

IND

MCI

MEM

MKE

OAK

OMA

PBI

PDX

PIT

RDU

RNO

RSW

SAT

SJC

SMF

SNA

ACY

ALB

AUA

BOI

BTR

CHS

COS

DSM

ECP

ELP

GEG

GRR

GSO

GSP

GUM

HSV

ICT

IWA

JAN

LGB

MHT

MSN

OKC

PIE

SAV

SDF

SRQ

TUL

TUS

AVL

JNU

MRY

ROA

YCD

YEG

YHZ

YOW

YQB

YSJ

YUL

YVR

YWG

YXE

YXS

YYC

YYJ

Large Hub

26 Airports

Medium Hub

26 Airports

Small Hub

29 Airports

Non-Hub

4 AirportsCanadian

13 Airports

Note: (*Separate Responses)

EWR – Terminals A&B

EWR – Terminal C

IAH – Terminals A-D

IAH – Terminal E

JFK – Terminal 1

JFK – Terminal 2&3

JFK – Terminal 4

JFK – Terminal 5

JFK – Terminal 7

JFK – Terminal 8

LGA- Terminals A-C

LGA – Terminals D-E

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Definitions

Developer - Airport has agreement with a third party to develop/lease and manage the concessions without operating any directly. Developer invests in facilities directly.

Direct leasing - Airport leases individual locations or small groups of locations (no more than 3) directly with the operators.

Fast Food/Quick Service - Food is served at counters or is pre-prepared for "grab and go." Food may be quickly prepared to order, and may be branded or non-branded.

Fee Manager - Airport has agreement with a third party to develop/lease and manage the concessions without operating any directly. Fee manager does not invest in facilities.

Master concessionaire - Airport leases all food service concessions to a single operator, who may or may not also operate retail. The Master Concessionaire may sublease some of the locations to other operators.

National/International Brand - A brand that is marketed and distributed nationally/internationally.

News/Gift (also referred to as Convenience Retail, Newsstand or Sundries Retail) - A type of Concessions Operation that specializes in the sale of magazines, newspapers and other periodicals, candy, gum, snacks, sundries, magazines, paperback books and souvenirs. Some news/gift stores may sell hardcover books as part of its product mix, but such books are not the primary item offered. Single-serve canned or bottled drinks may also be sold at such locations.

Prime operator - Airport leases packages of locations to two or more operators, each of which has multiple locations (more than 3) within the airport.

Sit Down/Casual/Bar - Typified by table service, although there may be carry-away or "grab and go" components. Food is prepared to order and restaurants of this type often include a bar. Examples include TGIFridays, Carabbas, Outback, Max & Ermas, Chili's, etc.

Specialty Coffee - These venues focus on coffee & may offer other beverages as well along with pastries, bakery items or other light food. The venue may have take away items such as sandwiches & bottled beverages. Includes Starbucks, Seattle’s Best, Peet’s Coffee or a local specialty coffee concept.

Specialty Retail - A type of Concessions Operations that specializes in the sale of a particular category of consumer products such as clothing, sporting goods, electronics, travel accessories, books, leather goods and luggage, souvenirs, lotions and personal care items, and home accessories. Automated retail of good that would generally be sold in specialty retail shops may also be included in this category; may be individual locations or small "stores-within-a-store" that are accounted for separately from the larger location. Stand-alone bookstores should be included as specialty retail.

Total Rent - Consideration received by the airport for the right to operate at your airport, not including fees paid for parking, security badging, deliveries, marketing, etc.


Contact:

Economic Affairs and Research

Tel: 202-293-8500

Email: [email protected]

www.aci-na.org

mailto:[email protected]

http://www.aci-na.org/

Documents

2012 ACI-NA Concessions Benchmarking Survey Summary Results