Making Money On Good Eats At The Airport

Frequent (and not so frequent) air travelers have been increasingly challenged over the past few years. Planes are packed from stem-to-stern as airlines cut back routes and increase load factors.

In fact, although the airlines have struggled with higher fuel costs, bad weather and a recessionary environment for business travel, airlines such as JetBlue Airways Corporation (JBLU), Southwest Airlines Co. (LUV), and United Continental Holdings, Inc. (UAL) have seen their passenger traffic increase.

Of course, then we have incremental fees tacked on to everything, from your last bag of luggage to your first bag of nuts. Security lines are getting longer and the TSA rules and procedures seem to change with the seasons.

But one aspect of air travel is changing for the better — the food. Not those $10 dollar boxed sandwich and snack sets sold on board (though I must admit, those are a marked improvement over the micro-waved mystery meals of the past). I’m referring to the food in the airport, from the grab-and-go quick fare to comfortable, casual restaurants to, increasingly, high-end fine dining establishments.

Airport dining, which once conjured up images of heat lamps, stale pizza, overpriced coffee, and terrible service is undergoing something of a renaissance. And there is a good chance it’s coming to a concourse near you.

Slowly but surely, airport managers and authorities (typically an extension of the city or county government) are starting to pay attention to the “experience” travelers have when they depart, arrive, connect, or delayed at the local airport. Executives who run airports are recognizing the terminal experience can be a “window” into their local community, and they are taking steps to improve the experience of the tens of thousands of passengers who pass through their gates every month.

“Airports do want to improve travelers’ overall experience, and dining is a key component of this experience,” says Rick Lundstrom, editor in chief of PAX International, a trade magazine that covers airport dining trends. “We are now beginning to see the effects of these changes as facilities bring in restaurants serving fresher, local foods,” Lundstrom says. “Airports want to create an atmosphere that emulates the actual city they’re in and make the airport more of a destination for shoppers and diners.”

That means great barbeque at DFW in Dallas (the main hub for AMR Corporation (AMR), Southern comfort food at Hartsfield in Atlanta Delta Air Lines Inc. (DAL), or a raw seafood bar at Boston’s Logan airport.

The local airport executives who are driving the change are turning to a handful of major companies that contract to develop and manage the food and beverage facilities at the airports. Within this narrow sector, there are a couple of major international players, including two privately-held companies: HMS Host International (formerly part of Host Hotels & Resorts Inc. (HST)) and SSP Group Ltd., and a few smaller US based firms, including Delaware North Company in Buffalo.

The barriers to entry to this category are high. The requirements to win a long-term concession contract from a major airport are significant, requiring not only financial strength (to develop and sustain capital intensive airport properties and hit revenue and profit targets set by the airport) but also an ability to develop and deliver a product that the traveling consumer wants.

As the standards get higher for choice, quality and service at airport restaurants, the players in the sector are raising their culinary games. One of the emerging leaders in the category here in the US is a company with a long heritage of success in Europe and Asia, SSP America. A regional operating unit of England-based global food service provider SSP Group Ltd., SSP America operates food courts and concession facilities (a total of more than 200 restaurants) at more than 40 airports in the U.S., Canada and the Caribbean.

In the U.S., SSP facilities are located at Toronto, Houston, New York’s JFK Airport, Dallas-Ft. Worth and fast –growing airports such as Milwaukee and Raleigh-Durham.

While some of SSP’s food establishments operate under national chain brands licensed from such companies like Panda Express and Chick-fil-a, SSP is something of an industry pioneer in creating innovative partnerships with independent and local restaurant operators and brands, with menus based on local cuisines, tastes and preferences and local “celebrity” chefs lending their names. SSP has also established its own branded concepts, such as bakery cafe Upper Crust, wine bistro Le Grand Comptoir and healthy market Camden food co.

SSP’s operation at New York’s JFK (serving nine million passengers annually) is a good example of how the company is pursuing innovative concepts that are a reflection of the local community. At JFK, SSP introduced renowned New York steakhouse The Palm to its very first airport location, and just opened the Stadium Club in Terminal 4, a sports bar concept that pays homage to the legendary sports teams of New York City.

According to the CEO of SSP Ltd, Andrew Lynch, this new emphasis on going local and on raising the culinary stakes stems from years of studying consumer behavior and addressing the unique dining needs of the air traveler.

“We have spent million of pounds mapping and understanding consumer needs and preferences,” Lynch explains. SSP canvasses airport travelers and extensively surveys them for feedback. “We found that consumers’ ‘need state’ changes based on their traveling experience at the moment, but their ‘mind set’ of what they like and prefer does not. We have to accommodate those preferences with a broad variety of dining options.”

For SSP America, those options range from traditional US brands that have a special global appeal (even with their American flavor) such as Starbucks (SBUX), Buffalo Wild Wings Inc. (BWLD), Einstein Noah Restaurant Group, Inc. (BAGL) to local brands that reflect a particular market, community or region such as Peet’s Coffee & Tea Inc. (PEET), Tim Hortons Inc. (THI) (the Canadian based donut chain) to what Lynch calls “bespoke” custom concepts designed specifically to give travelers a diversity of options and serve a variety of price-points and palates.

“Airport executives are wanting a sense of identity that align with their local markets,” Lynch says, “and that enables us to get more adventurous in proposing new solutions.” But, Lynch explains, it’s not simply a matter of re-creating the bricks and mortar of a downtown restaurant out at the airport.

“We have to ‘travelize’ the concept to accommodate the different needs and desires of every air traveler, which vary based on day parts (morning through evening) and dwell times,” Lynch says. That’s where the company’s extensive investment into research on consumer attitudes and preferences has paid huge dividends for SSP.

SSP has also partnered with some of the world’s leading chefs to design specific regional dishes, including Chefs Nicolas le Bec in France, Michael Karlsson in Sweden and Gilles Dupont in Switzerland. The company has even established a Food Lab where their global network of food experts is supported and inspired by a close collaboration with Chef Olivier Pichot. In his Le Mans kitchen, SSP food experts work with Pichot and his team to develop new products and design solutions.

SSP America President and CEO Leslie K. Cappetta explains that SSP is “consumer centric – with the emphasis being on the sights, sounds textures, and aromas of the dining experience. We are first and foremost in the restaurant business, and our focus is on creating an environment of hospitality that entertains people, even when they are at the airport,” Cappetta says.

SSP is a company on the move, with continued steady growth projected through securing new contracts at major international airports in Europe and Asia. SSP recently landed a major new contract to run over 30 food-and-beverage outlets at Oslo Airport. The five-year deal means the company will remain the sole food and beverage operator throughout this airport facility.

Oslo Airport’s Director of Business Development and Real Estate Espen Ettre stated “SSP offered an outstanding range of bars, cafés and restaurants that are ideally suited to our passengers here at Oslo. They really understand the travelling consumer, and how to operate within the travel environment.”

Last year the company won a major contract at Hong Kong International Airport (HKIA) for a range of new food-and-beverage units. SSP has managed operations there for over 10 years, developing 29 outlets and over 40 percent of the facility’s food-and-beverage business, which was already well known as a top airport dining location.

HKIA has been named the world’s best for dining now four years in a row according to the SkyTrax survey. HKIA Deputy General Manager, Retail and Advertising Christina Cheng emphasized the strengths that SSP brings to the travelling experience. “SSP’s sound operational and commercial performance, their strong international and local experience, together with their reputation for outstanding customer service made them front-runners in this latest tender, and SSP will undoubtedly help our airport retain its global lead in airport food and beverage.”

Continued growth is also projected for SSP in the North American market, where the company is a relative newcomer (SSP America was established in 2007) but has already notched numerous industry accolades for ‘best new concepts’, ‘green practices’ and ‘customer service and impressive contract wins in markets like Vancouver, Sacramento, and Houston. The company is in the thick of bidding on new dining contracts in Atlanta and Phoenix.

Source:  http://www.forbes.com