2015 CONCESSIONS RFP. Metropolitan Airports Commission. Presenters Eric Johnson & Elizabeth Grzechowiak

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1 2015 CONCESSIONS RFP Metropolitan Airports Commission Presenters Eric Johnson & Elizabeth Grzechowiak

2014 COMMISSION PRESENTATIONS SEPTEMBER Life Cycle of an RFP Blue Ribbon Panel guidelines Evaluation process and scoring Role of the Commission during the bid process OCTOBER Master

2 2014 COMMISSION PRESENTATIONS SEPTEMBER Life Cycle of an RFP Blue Ribbon Panel guidelines Evaluation process and scoring Role of the Commission during the bid process OCTOBER Master Concessionaire (Operator) vs. Developer model Street Pricing Concessions Lease Batching Lease Terms NOVEMBER ACDBE Participation Labor DECEMBER Staff recommendations to Commission for RFP 2

3 LEASE CONCESSIONS STRUCTURES OPPORTUNITIES Three most common leases: Master Concessionaire (Operator Model) Developer Model Direct Leasing 3

4 MASTER CONCESSIONAIRE vs. DEVELOPER Master Concessionaire holds lease agreement with airport for multiple units and actively manages the units. Own and Operate internal brand or concept Franchise concept and exclusively manage concept Licensing Agreement Sublease Joint Venture / ACDBE Partnership Developer holds the right to lease out and assign concepts to parties interested in managing their own brand within airport. Typically longer lease term Typically less revenue to airport 4

5 DEFINITION: STREET PRICING STREET PRICING: To require products sold at MSP to be priced comparably to items sold locally STREET PRICING + 10%: To require products sold at MSP to be priced comparably, BUT NO GREATER THAN 10% ABOVE items sold locally 5

6 CONCESSIONS BATCHING Airport combines lease opportunities from diverse geographic locations throughout terminal. Shields individual units from variations in passenger flow. Guarantees full coverage of concessions throughout Airport Distributes risk Increasing trend amongst Airports Vary in size Currently approximately 20 batches Ranging from a few units to 13 units 6

7 DIRECT LEASES Airport directly holds lease with concept, franchisee or business owner. Historically not included in MAC RFP s MSP examples include Surdyk s, McDonald s, Caribou, XpresSpa, Hot Dish Future consideration affords Small Business or ACDBE potential access, increased revenue potential to MAC or fulfill specific goal of program vision. 7

8 LEASE TERMS Current program: 8 year term: Retail 8 year term: Quick Serve Restaurants 9 year term: Full Service Restaurants Future Consideration: 10 year term: Duty Free program 8

9 2003 MSP CONCESSIONS RFP EVALUATION Financial Plan 300 Points Merchandising, Concept, & Design Plan 400 Points DBE Plan 100 Points Regional/Local Concepts 100 Points Management & Operations Plan 400 Points Field Visits 250 Points Proposer Interviews (if necessary) 50 Points Total Possible 1,600 Points 100 points of 400 points available toward Management and Operations plan solely allocated towards criteria for Quality Sales Associates 9

10 2003 MSP CONCESSIONS RFP Proposers required to describe: Employee transition, recruitment, hiring of existing employees and compensation Motivation programs or incentives Customer service training programs Training programs for those with disabilities English as a second language training Benefits 10

11 2003 MSP Proposers required to describe: Benefits Health, Life and Dental insurance coverage Employee premiums / flex spending Co-pay Annual maximum benefit Pension / retirement Vacation / sick / personal leave / holidays 11

12 ACDBE GOALS FUTURE GOAL 11% 11% 16% ACTUAL 11.4% 11.6% ~16% TOTAL $19,755,252 $21,541,720 ~$30,000,000 Factors in 16% ACDBE Recommended Goal: Past ACDBE proposal participation Ready, willing and able ACDBE s FAA Directory and census data Current capacity of ACDBE operators 12

13 STAFF RECOMMENDATIONS Master Concessionaire (Operator) model Street Pricing + 10% Concessions lease batching model Lease Terms of 8-10 years based on concession type Proposers required to share employee transition, recruitment, hiring of existing employees, compensation, benefits and incentives ACDBE Participation goal of 16% 13

MAC RFP TIMELINE Spring 2014: Research and strategize program vision Summer 2014: Coordinate MAC department assignments and implement passenger surveys Fall 2014: Present history &

14 MAC RFP TIMELINE Spring 2014: Research and strategize program vision Summer 2014: Coordinate MAC department assignments and implement passenger surveys Fall 2014: Present history & recommendations to Commission Quarter : Request authority to publish Summer 2015: Staff recommends lease awards for approval by Commission January 1, 2016: Construction phasing begins for new units 14

15 QUESTIONS? 15

2015 CONCESSIONS RFP. Metropolitan Airports Commission. Presenters Eric Johnson & Elizabeth Grzechowiak

2015 CONCESSIONS RFP. Metropolitan Airports Commission. Presenters Eric Johnson & Elizabeth Grzechowiak 2015 CONCESSIONS RFP Metropolitan Airports Commission Presenters Eric Johnson & Elizabeth Grzechowiak 2014 COMMISSION PRESENTATIONS SEPTEMBER Life Cycle of an RFP Blue Ribbon Panel guidelines Evaluation