Friday, October 31, 2014

Food Fight

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Sky Harbor Airport’s Terminal 4 will soon be loaded with local eateries, but behind the scenes of the competitive bidding process, tensions are simmering.

Thirty-eight million travelers passed through Phoenix Sky Harbor last year, with approximately 80 percent of them trekking through Terminal 4, robotically snacking on overpriced Cinnabon rolls and reheated Pizza Hut pepperoni slices.


That’s about to change in a profound way: The quality and cost of the food passengers devour will be dramatically different – and decidedly local – thanks to the Phoenix City Council. But the flight plan from boring chain restaurants to fresh, exciting, local restaurants didn’t occur without turbulence.

Terminal 4 opened in 1990 with HMS Host, a multi-billion-dollar food, beverage and retail company, as the sole concessionaire. When the contract ended, the airport granted several extensions, never incentivizing HMS Host to update its roster of ho-hum restaurants. Meanwhile, cities across the country were outfitting airports with fresh concepts, including local eateries.

In May 2009, the Phoenix City Council issued a mandate to the Phoenix Aviation Department to get on board with the new locally-flavored trend in airport dining. The Council also mandated new street pricing, meaning the cost of a meal at the airport must be equal to or less than the same meal at the restaurant outside of the airport.

The Aviation Department, headed by Director Danny Murphy, put Terminal 4’s food and beverage concessionaire contract up for bid in late 2010. To ramp up the competition, the Council requested that the proposal be broken into two packages with a roughly equal number of outlets and square footage. Financially, the Package 1 contract is worth upwards of $500 million in revenue over 10 years. Package 2 has a similar revenue projection, for a combined impact of $1 billion.

Three non-local concessionaires (HMS Host, SSP America and Areas USA) each recruited the biggest names in Valley restaurants to prove they had the locavore cachet to win the contract. HMS Host dazzled the airport selection committee with a solid lineup of local restaurants (see sidebar) including three concepts from Sam Fox and four from Bob Lynn’s LGO restaurants, both of whom signed on to install new concepts in Terminal 4 before the Request For Proposal was even put out for bid. The bidding process for the first package concluded earlier this year, and HMS Host was awarded the new 10-year contract.

“In the end, the airport is going to be a better place to eat than it was before, and we’re thrilled to be part of it,” Fox says.

Construction on more than 20 new restaurants awarded through Package 1 will begin in January 2012, with some new concepts, such as Fox’s Olive & Ivy Marketplace, opening as soon as February or March. Chef Silvana Salcido Esparza’s Barrio Café Por Avion (translation: by airplane) is expected to open in May.

“At first I said no to the offer,” Esparza says. “I come from a contract management background, so I wasn’t sure I wanted to jump back in, but then I thought I need to represent my city, and this is what I do, so I was in.”

She believes that the airport revenue will help smooth out typically slow summers, and was impressed by HMS Host’s offer to hire her nonprofit mural project, Calle 16, to paint a wall mural inside Barrio Café Por Avion.

Still, awarding the first package to HMS Host was a bumpy affair. In a series of public meetings with the City Council, one of the losing bidders voiced concerns about fairness and transparency in the procurement process ranging from how the evaluation panel was selected to the curious destruction of individual panel members’ score sheets on each bidder to concerns that the incumbent was allowed (legally, according to the airport) to swap out restaurant partners during the Package 1 bidding process.

As a result, the City Council directed the Aviation Department to implement key changes to the second package bid process (currently in progress), including forbidding mid-bid concept changes and bringing in new panelists and a non-affiliated manager to watchdog the process.

With $1 billion at stake, it’s no wonder the competition is cutthroat. “To be in the airport and get that much exposure to that many people? Life changing. Restaurant changing,” says one local chef represented in a Package 2 proposal who requested anonymity. “It really could be a game changer for my restaurant.”

Package 2 bids were submitted to the airport on August 31. The airport placed a gag order on the bidders, forbidding them to reveal which restaurants are included in their proposals, even though once the bids are submitted, bidders are not allowed to change or modify their proposals.

The award for Package 2 will be decided by the full City Council in January. Meanwhile, Aviation Director Murphy will marshal the airport evaluation committee’s bid recommendation through committees including the Phoenix Aviation Advisory Board and the City Council’s Downtown, Aviation and Economic subcommittee.

“It is important to bring this community and our visitors a choice of local flavor and nationally known brands through a competitive RFP process,” Murphy says.

Regardless of which company triumphs, the real winners are the City of Phoenix, which will receive a percentage of the gross revenues (13 percent of food sales and 16 percent of alcohol sales) and travelers, who will experience a taste of Arizona’s restaurants at fair fares.

Phase 1 Local Restaurants Coming to Terminal 4

• Barrio Café
• Blanco Tacos + Tequila
• Cartel Coffee Lab
• Chelsea’s Kitchen
• Cowboy Ciao
• Dilly’s Deli
• El Bravo (a remodel)
• Grateful Spoon Gelato
• LGO Burger
• LGO Deli
• LGO Pizza
• Modern Burger
• NYPD
• Olive & Ivy Marketplace
• Press Coffee
• Sauce
• Sir Veza’s Taco
• Garage

 

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