Airport foodservice contractors say that while the economic crisis has created operational turbulence over the last several months, they are guardedly optimistic that the worst is over and sales will start taking off around the third quarter.
Though the airline industry was sputtering before the recession, the economy’s continued downward spiral exacerbated the situation, causing people to travel even less—for business or pleasure. In response, routes and services at several airports, mostly in smaller and midsize markets, were cut and food and retail sales have stalled.
“We’ve been bouncing along the bottom,” said Bob Stanton, vice president of business development for Delaware North Companies in Buffalo, N.Y. “Enplanements were down last year between 10 percent and 15 percent and they’re down slightly from last year, about another 3 percent or 4 percent. But the optimist in me is hoping for an uptick this summer.”
Though the Air Transport Association, the organization that represents all of the major air carriers in the United States, reported in March that passenger traffic was down 10 percent for the first quarter of 2009, its president and chief executive, James C. May, said he “certainly would like to believe we have seen the low point,” despite the fact that “the industry faces demand uncertainty as we head into the summer.”
Despite that reduction in traffic at some of the larger airports, like Los Angeles International, concessions executives said that even though the numbers of transactions are down, more people are spending more money.
“One of the things we’ve noticed,” said Amy Shaw, concessions manager for LAX, “is that even though total sales are declining, total transactions are increasing, so they’re spending more per transaction. I think a lot of this has to do with the fact that airlines are no longer offering food and in many cases not even offering snacks. And people are still arriving at the airport earlier so the longer dwell times are helping.”
Shaw added that LAX officials were concerned the recession would take even more of a toll.
“Actually, at LAX it hasn’t been as bad as it has at other airports, like Las Vegas. We’re pretty flat right now, and we’re still trying to maximize revenues, but we’re not as bad as we thought we’d be [when the recession began].”
Shaw said the airport is doing some of its best business in the morning, at its coffee and news shop kiosks.
“The purchasing there is still the same,” she said. “People are still looking for their coffee and newspapers. In the morning, our coffee shops are jam-packed; that’s truly the backbone of the concessions plan.”
Les Cappetta, chief executive of SSP America, the Landsdowne, Va.-based contract foodservice concern, said the return of consumer confidence will signal the start of the economic recovery, and he indicated that industry players anticipate that will happen sooner rather than later.
“We’ve definitely seen a change in the mix of travelers,” Cappetta said. “Businesses have either postponed or eliminated meetings by 40 percent, and there is now an over-saturation of seats in the international market, so that shift of equipment from domestic to international routes has slowed. But I don’t think anyone believes this downturn is going to go through 2010.”
Though SSP America’s same-store sales have declined since the summer of 2008, Cappetta said the company is in a fortunate position.
In Milwaukee, he noted, “there are 10 percent to 40 percent less travelers out in the concourses, but we’ve managed to hold our own because the number of customers who use our brands has increased. You can clearly see demand for quality food and beverage.”
Still, Cappetta said passengers who are flying right now have changed their food-purchasing styles to accommodate their smaller pocketbooks, but that doesn’t mean they’ve abandoned their favorite upscale concepts.
“There has been a shift in consumer buying habits to reflect more price sensitivity,” he said, “so we have to make sure we have quality products at different price points so we make the sale.”
At HMSHost, Susan Goyette, a spokeswoman for the Bethesda, Md.-based concessionaire agreed, saying people aren’t wholly trading down; they are still dining at the concepts they enjoy, just buying lesser quantities from them.
Goyette also noted that tapas and small plates are exceedingly popular at the company’s casual-dining concepts.
Delaware North’s Stanton said his company also is capitalizing on the increased demand for small plates with the launch of its new proprietary concept, Heineken Lounge, at some airport accounts. The first unit opened at New Jersey’s Newark International Airport in December, and Delaware North said it is including it in future request for proposal contracts it is working on.
“Consumers still want quality, and they’re moving towards tapas menus [to get it],” he said. “We’re incorporating this into the bars and restaurants we’re developing. You’re going to see things like bruschetta, small cheese plates, and sushi by the piece and even half-sized panini sandwiches pop up at Heineken Lounge.”
Cappetta said the challenges the airport environment is presenting have forced concession-aires to become better and more efficient operationally.
“Times like this require us to focus on things that matter because we have to allocate scarce resources to those things and the people we think will make a difference,” he said.
“I will say there are fewer viable feeders out there than last year, and some of the major airports are holding off right now [on upgrading their concessions],” he added. “But we’re in a cyclical business and have been through these down cycles before. By the time we submit RFP responses and negotiate [new] contracts, we’ll be back in an economic upturn.”
