2017 CONCESSIONS RFP PHASE 2

Transcription

1 2017 CONCESSIONS RFP PHASE 2 Metropolitan Airports Commission Presenters Eric Johnson Liz Grzechowiak SI Partners

2 2016 COMMISSION PRESENTATIONS AUGUST RFP process overview SEPTEMBER Business terms and MAC RFP review OCTOBER M&O proposed RFP overview and recommendations RFP overview and recommendations NOVEMBER M&O Request for recommendation to publish Phase 2 RFP Commission Request for authority to publish Phase 2 RFP 2

3 OCTOBER M&O PRESENTATION Goals and objectives Concession models Lease terms and RFP requirements: Street pricing ACDBE recommendation Minimum qualifications Lease duration Batch overview Rent Review team Evaluation criteria Unit overview with concepts and descriptions Cone of silence and lobbying Community outreach plan 3

4 GOALS AND OBJECTIVES Meet or exceed the traveling public s desires and expectations for food & beverage and convenience / news & gift concession products or services while traveling through MSP. Offer exceptional price/value and convenience to the traveling public while meeting or exceeding the public s needs. Provide high quality, healthy dining options at varying price points. Provide exceptional customer service and innovative products and services throughout the term of the Agreement. Recruit, hire, train, and motivate only the best management and staff members. In doing so, create a workforce that will result in both repeat business and positive customer service ratings. Maximize revenue to MAC. 4

5 GOALS AND OBJECTIVES Staff Recommendation: Staff recommends the continued use of these goals and objectives for the Phase 2 Concessions RFP opportunity. 5

6 PRIME CONCESSIONAIRE vs. DEVELOPER Prime 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 6

7 PRIME CONCESSIONAIRE Prime concessionaire holds lease agreement with airport for multiple units and actively manages the units. Types of partnerships: Own and Operate airport brand / non-brand proprietary MSP To Go, Camden Food Co., JetSet News, Adventure North, Stone Arch Franchise Agreement Aveda, Dunkin Donuts, Qdoba Licensing Agreement French Meadow, Ike s, Swarovski, Open Book, Kiehl s Sublease Uptown MN, Johnston & Murphy, Vino Volo, Angel Food Bakery Joint Venture / ACDBE Partnership Republic Restaurant & Bar, Angel Food Bakery, LoLo Restaurant & Bar 7

8 CONCESSIONAIRE MODEL Staff Recommendation: Staff is recommending the RFP be directed towards Prime Concessionaires and operators. This includes opportunities for local operators, subtenants, licensing agreements, joint ventures and ACDBE partners. 8

9 STREET PRICING & REQUIREMENTS STREET PRICING: To require products sold at MSP to be priced comparably to items sold locally STREET PRICING up to 10%: To require products sold at MSP to be priced comparably, BUT NO GREATER THAN 10% ABOVE items sold locally. This provides the tenants with the option to charge a reasonable amount over street pricing to cover some of the higher costs associated with doing business at an airport related to labor and logistics. Lease agreement SECTION VIII. F. allows MAC to perform audits 9

10 STREET PRICING MODEL Staff Recommendation: Staff recommends that MAC continue to allow tenants the option to charge prices up to 10% above street prices. 10

11 ACDBE PERFORMANCE & GOALS $195,489,579 Tot. MSP Concession Gross Receipts $203,158,575 Tot. MSP Concession Gross Receipts ACDBE DOT GOAL: 11% Accomplished: 14% ACDBE DOT GOAL: 14% Accomplished: 14% 11

12 ACDBE GOAL Staff Recommendation: Staff recommends an eighteen percent (18%) ACDBE goal for the Phase 2 RFP. This is up 2% from the Phase 1 established goal of sixteen percent (16%) based on: Past RFP Participation (Phase I) FAA s National ACDBE Directory Census Data Minnesota Unified Certification (MnUCP) DBE Directory ACDBE Outreach & Feedback 12

13 MINIMUM QUALIFICATIONS To be considered, all proposers must: Have one year continuous experience directly related to services provided, No pending active or previous legal action in MAC s sole judgement, and Meet the defined local requirements for designated units. Local Regional 13

14 MINIMUM QUALIFICATIONS Staff Recommendation: Staff recommends using similar Minimum Qualifications for the Phase 2 RFP. In addition to designating a local requirement for certain units, some units will have a local/regional requirement. 14

15 LEASE TERMS PHASE 1 RFP Phase 1 Award: 8 year term: Retail 8 year term: Quick Serve Restaurants 9 year term: Full Service Restaurants 10 year term: Duty Free program 15

16 LEASE TERM Staff Recommendation: Staff recommends that all Phase 2 concession leases be assigned a nine year term to ensure operators are able to propose competitive rents with ample time to recapture capital investment. 16

17 RENT DETERMINATION Establish minimum percent rent Project reasonable sales Reasonable sales multiplied by minimum percent rent equals projected annual rent 85% of the projected annual rent equals MAG 17

18 RENT Rent is the greater of percent rent or the MAG (minimum annual guarantee) for each batch in each calendar year Proposer may not deviate from MAG Proposer may bid percent rent greater than the minimum May vary by location At gross revenue break points Over time 18

19 RENT Staff Recommendation: Staff recommends continuing the industry practice of calculating rent as the greater of the percent rent or the MAG for each batch. Additionally, staff recommends establishing the MAGs for each batch and allowing proposers to bid percent rents, subject to a minimum percent rent established by staff. Staff believes setting the MAG and minimum percent rent for the RFP process is the best way to ensure that all proposals submitted can be competed for fairly. 19

20 REVIEW TEAM: SCORING MEMBERS Dan Boivin Commission Chair Eric Johnson Director, Commercial Management & Airline Affairs Liz Grzechowiak Assistant Director Concessions & Business Development Jeff Nawrocki Assistant Director, MSP Airport Operations Alan Howell Senior Airport Architect 20

21 REVIEW TEAM: NON-SCORING ADVISORS The non-scoring advisors for the Review Team are: Mike Batt Financial Analyst Cameron Boyd Senior Attorney Matt Grimm Manager, Concessions & Business Development Debra Johnson Contract & EEO Specialist in the MAC s Office of Diversity & Business Development Department Jim Laurent Director, Human Resources & Labor Relations Ed Podnieks Manager, Financial Analysis & Business Planning Kate Webb Manager, Contracts and Proposals The non-scoring outside specialists on the Review Team are: Cliff Dunham Principal, Architectural Alliiance Adam Ryan Above Wing Director, Delta Air Lines 21

22 EVALUATION CRITERIA 400 points 300 points 200 points 200 points 100 points Concept, Merchandising and Design Plan Rent Offer Management & Operations Plan Employment Practices ACDBE Participation 1,200 POINTS 22

23 CONCEPT, MERCHANDISING & DESIGN (400 points) Proposed concept or theme by location How does concept or brand meet MSP s goals Submit merchandising plans and or menus Sustainable attributes Pricing plan Management of seasonal shifts, product lifecycles and trends Inventory, purchasing and management plans Explication of design with dynamic storefronts with renderings or pictures Support and logistics space Gross sales potential by proposed concept(s) 23

24 RENT OFFER (300 points) Proposer provides pro-forma operating statement with projected sales per unit and expenses Proposer offers percent rent Score derived by evaluating percent rent proposed over lease term. The highest offer receives maximum points, each thereafter a proportionate value 24

25 MANAGEMENT & OPERATIONS PLAN (200 points) Company history, ownership and financial viability Submit agreements or letters of intent for branding Organization charts with defined management and staffing Proposed management team with resumés Examples of brand experience and airport setting success Maintenance and delivery plans Customer service, marketing and promotions 25

26 EMPLOYMENT PRACTICES (200 points) RFP requires proposer to provide information regarding labor and training practices proposed to accomplish MAC s goal of improving the employee working environment such that quality employees seek out the opportunity to work at MSP. Proposers required to describe: Wages 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 (ESL) training 26

27 EMPLOYMENT PRACTICES (200 points) Proposers required to describe: Benefits Health, Life and Dental insurance coverage Employee premiums / flex spending plans Co-pay values Annual maximum benefit plans Pension / retirement plans Vacation / sick / personal leave / holidays plans 27

28 ACDBE PLAN (100 points) Include ACDBE plan and proposed percentage Time table for implementation Describe efforts to secure participation Define role and structure of ACDBE and agreement Score is all or nothing May meet or exceed goal Or must show Good Faith Effort 28

29 EVALUATION CRITERIA Staff is proposing changes to the evaluation criteria for the Phase 2 RFP. 400 points 300 points 200 points 200 points 100 points Concept, Merchandising and Design Plan Subjective Same as Phase 1 Rent Offer Objective Change requires proposer to submit financial plan separately for separation during review Management & Operations Plan Subjective Change from Phase 1 splitting points equally weighted with new category for Employment Practices Employment Practices Subjective Change from Phase 1 splitting points equally weighted with Management & Operations Plan ACDBE Participation Objective/ Subjective Same as Phase 1 1,200 POINTS 29

30 UNIT OVERVIEW 7 Full Service Restaurants and Bars 4 Limited Service Restaurants and Bars 19 Units Concepts 4 Food Courts (with a minimum of 14 concepts up to 19 concepts) 4 Other (2 coffee units, 1 Juice Bar, 1 Snack concept) 30

31 MIX OF NATIONAL, LOCAL AND PROPRIETARY Local/ Proprietary/ National Regional No Preference Total PHASE 1 SF 3,559 31,681 4,321 39,561 % 9% 80% 11% 100% PHASE 2 SF 27,885 25,610 8,159 61,654 % 45% 42% 13% 100% TOTAL 31,444 57,291 12, ,215 % 31% 57% 12% 100% Note: Phase 2 food court seating areas are not included above. The seating areas represent approximately 17,000 SF. Approximately 14,000 SF supports national concepts and 3,000 SF supports local concepts. 31

32 CONCOURSE C GATES C1-C3 1,211 SF - Existing Starbucks/Author s Proposed: Fresh Pressed Juice Bar with Limited Coffee and Tea service 4,471 SF Existing Pei Wei space (expanded) Proposed: Nationally Branded Full Service Restaurant Serving All Day Parts 32

33 CONCOURSE C GATES C4-C11 1,593 SF - Existing Dairy Queen Proposed: Limited Service or Fast Casual Restaurant with Bar serving all day parts Alternates encouraged 33

34 CONCOURSE C GATES C12-C27 6,018 SF Existing Food Court Proposed: Food Court with minimum of three concepts. Proposed concepts must be Nationally Branded, with the exception of up to one proposed concept as Local/Regional. One unit must have a strong presence of coffee. 34

35 CONCOURSE A 3,501 SF Existing Itasca Grill Proposed: Full Service Restaurant and bar with Local/Regional element serving Midwestern Regional fare during all day parts 5,670 SF Existing Food Court (expanded into Gate Hold Room A1) Proposed: Food Court with minimum of three concepts. Proposed concepts must be Nationally Branded, with the exception of up to one proposed concept as Local/Regional. One unit must have a strong presence of coffee. 1,049 SF Existing Skol Proposed: Café with bar serving all day parts 35

36 CONCOURSE B ~1,500 SF - Existing Home Town Sports Proposed: Café with bar offering limited food service serving all day parts 36

37 CONCOURSE F 1,068 SF Existing Caribou Coffee with Restroom Proposed: Coffee with Local/Regional element 6,384 SF Existing Food Court & Ike s on Summit Proposed: Food Court with minimum of three concepts. Proposed concepts must be Nationally Branded, with the exception of up to one proposed concept as Local/Regional. 2,806+ SF Existing Arcade, Restroom, Store Room Proposed: Full Service Restaurant Mexican or Latin cuisine 2,425 SF Existing O Gara s Proposed: Full Service Restaurant and Bar with Local/Regional element non-burger focused 37

38 MAIN MALL NORTH TERMINAL ~7,500 SF Existing Ike s Proposed: Full Service steakhouse with seafood restaurant with Local element ~2,500 SF Existing Rock Bottom Brewery Proposed: Quick Serve or Fast Casual Restaurant; Nationally Branded or with Local/Regional element. Asian cuisine preference ~5,000 SF Existing French Meadow Proposed: Full Service upscale Bakery and Café with Local element serving both healthy and organic fare; breakfast menu available during all operating hours ~1,200 SF Existing Starbuck s Proposed: Nationally Branded coffee 38

39 MAIN MALL FOOD CENTRAL FOOD COURT 19,739 SF Food Court with Expansion Proposed: Food Court with minimum of five concepts. Majority of concepts must be Nationally Branded and may include a Local/Regional Concept. One unit must have a strong presence of coffee. (Minimum may increase upon determination of CIP funding, prior to RFP publication) 4,411 SF Existing Axel s Proposed: Full Service Nationally Branded casual restaurant; serving all day parts 39

40 CONCESSIONS BATCHING Airport combines individual units to create a batch lease. Common practice among airports Balance geographic locations throughout terminal: Shields individual units from variations in passenger flow Ensures terminal-wide concessions coverage by pairing more profitable locations with less profitable locations Provides ACDBE / small business opportunities for partnerships Access to capital, operational efficiencies, mentorship, etc Vary in size Health code compliance Administrative efficiency 40

41 BATCH OVERVIEW BATCH PROPOSED USE EXISTING CONCEPT LOCAL / REGIONAL SQ. FT. Bakery & Café Restaurant & Bar French Meadow Required Local 5, Steakhouse with Seafood & Bar Ike's Required Local 7,500 Asian Fast Casual with bar Rock Bottom Option Local / Regional 2,500 TOTAL 3 units 15, Main Mall Food Court Food Court Option Local / Regional 19,739 Casual Restaurant & Bar Axel's 4,411 TOTAL 2 units, 6-8 concepts 24,150 Café with Bar (Limited) Skol 1, C Concourse Food Court Food Court Option Local / Regional 6,018 Restaurant & Bar (Limited) Dairy Queen 1,593 Fresh Juice Bar Starbuck's 1,211 TOTAL 4 units, 6-7 concepts 9,871 Casual Restaurant & Bar Pei Wei 4, F Concourse Food Court Food Court Option Local / Regional 6,384 Mexican/Latin Restaurant & Bar Restroom 2,806 Snack Restroom Option Local / Regional 608 TOTAL 4 units, 6-7 concepts 14,269 A Concourse Food Court Food Court Option Local / Regional 5, Restaurant & Bar Itasca Required Local/Regional 3,501 Café with Bar (Limited) Hometown Sports 1,500 Restaurant & Bar O'Gara's Required Local/Regional 2,425 TOTAL 4 units, 6-7 concepts 13, Coffee M&O Caribou Meeting October 3, 2016 Required Local/Regional 1, Coffee RFP Phase Starbuck's 2 Recommendations 1,200 41

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49 CONCESSIONS BATCHING BATCH PROPOSED USE EXISTING CONCEPT LOCAL / REGIONAL SQ. FT. MAG Bakery & Café Restaurant & Bar French Meadow Required Local 5, Steakhouse with Seafood & Bar Ike's Required Local 7,500 Asian Fast Casual with bar Rock Bottom Option Local / Regional 2,500 TOTAL 3 units 15,000 $ 2,082, Main Mall Food Court Food Court Option Local / Regional 19,739 Casual Restaurant & Bar Axel's 4,411 TOTAL 2 units, 6-8 concepts 24,150 $ 2,177, Café with Bar (Limited) Skol 1, C Concourse Food Court Food Court Option Local / Regional 6,018 Restaurant & Bar (Limited) Dairy Queen 1,593 Fresh Juice Bar Starbuck's 1,211 TOTAL 4 units, 6-7 concepts 9,871 $ 1,190, Casual Restaurant & Bar Pei Wei 4, F Concourse Food Court Food Court Option Local / Regional 6,384 Mexican/Latin Restaurant & Bar Restroom 2,806 Snack Restroom Option Local / Regional 608 TOTAL 4 units, 6-7 concepts 14,269 $ 1,487, A Concourse Food Court Food Court Option Local / Regional 5, Restaurant & Bar Itasca Required Local/Regional 3,501 Café with Bar (Limited) Hometown Sports 1,500 Restaurant & Bar O'Gara's Required Local/Regional 2,425 TOTAL 4 units, 6-7 concepts 13,096 $ 1,297, Coffee Caribou M&O Meeting October Required 3, 2016 Local/Regional 1,068 $ 214, Coffee Starbuck's 1,200 $ 297,

50 CONCESSIONS BATCHING Staff Recommendation: Staff recommends the continued batching of units for most leases to ensure balanced services for passengers and financial protections to the operators within the airport. Staff will also include a small number of single unit batches to provide maximum flexibility where past practice has shown it is most needed. 50

51 LOBBYING No communications from proposers to Review Team from submission of proposals until Review Team s recommendation for award is made to M&O Committee Commissioners may communicate with proposers throughout the selection process A commissioner serving on the Review Team is not subject to the prohibition on communications from proposers 51

52 COMMUNITY OUTREACH CONCESSIONS 101 MEDIA PARTNERS AND ADVERTISING MAC INITIATIVES SMALL BUSINESS OUTREACH ACDBE OUTREACH 52

53 COMMUNITY OUTREACH Hospitality Minnesota Hispanic Chamber Black Chamber Minnesota American Indian Chamber Airport Revenue News POTENTIAL PARTNERSHIPS Food Service News Bloomington Chamber Black Women's Wealth Alliance Minneapolis Chamber Latino Economic Development Center 53

54 RFP TIMELINE Q4 2016: Request authorization to issue RFP Q1 2017: Issue RFP Q2 2017: Mandatory Pre Proposal Conference Q2 2017: Deadline for Submission Q3 2017: Recommendation of award to Commission Q4 2017: Finalize agreements Q Q4 2019: Build out 54

55 QUESTIONS? 55