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How to Become an Airport Concessionaire

Airport Life

Employees that work at SAN share one common goal. That is to help the passenger navigate through the terminals in a safe, secure, and hassle-free environment. Law enforcement officers patrol the terminal and TSA officers’ staff the checkpoints to provide security. Maintenance crews and the janitorial team make sure that the facilities are clean and functioning.  Concessionaires provide services that can enhance a positive experience.  The responsibility of providing travelers with a world-class experience isn’t limited to airline personnel but to everyone who claims San Diego International Airport as their workplace.

Navigating through an airport terminal is full of necessary steps that may add to a traveler’s frustration. To the seasoned traveler, these steps are expected but disruptive. Sometimes elements out of our control may further disrupt a traveler’s plans. A concessionaire can provide first-class customer service.  It may not solve the dilemma, but it’s certainly will help to ease the traveler’s anxieties.

It is the role of all employees at San Diego International Airport to provide treatment in a safe and secure environment. A concessionaire can do so with the quality product found in its goods and services.

Operating a business at SAN has constraints. The boundaries that define a concessions space are confined. The priority in a terminal design is to provide space required by airlines’ operations. Airlines create passenger flows and concessionaires demand to be successful.  An airport operator is required to provide space for security and screening to make the facility safe.  Space is required to maintain the facilities with utilities and cleaning services.   Needed amenities for passengers either traveling for business or leisure are required.  Passenger services accommodations must be made to accommodate the volume of people that pass through the terminals.  After all the required components are carved out, what remains are spaces for concessions.   This most likely means space that is condensed and/or irregular in shape.

Airport life means living with restrictions that you may not encounter in your daily street-side operations. Going through security checkpoints with the traveling public is standard operating procedure. To make more parking available for travelers, employees are asked to park in remote lots and utilize the shuttle system to get to their posts.  There are strict requirements that all employees must go through before they’re cleared to start a new shift.

Working at SAN comes with its excitement.  The airport is a partner to the region when special events occur like a major sporting event, national conventions, recognizing our VIPs, celebrating new routes and services.  As a concessionaire, you are part of the celebration.

Want to learn more about airport concessions?  Click on the continue button to see how an airport operation compares to a traditional street-side store.

Traditional Operations vs Airport Concessions

How does an airport concession differ from a traditional store?  In many ways!  Earlier we pointed out that space is going to be on a smaller scale.  This means that your inventory is going to be smaller which may mean a compressed menu.  Inventory must move faster off the shelves.  A good concessionaire will avoid the temptation to squeeze in too much product and end up diluting the customer experience.  With a smaller space, the cost per square foot in buildout and operations will be much higher than on the street.

Your labor cost will be much higher.  All employees must be screened and pass a background check.  Your employees will have to go through security with everyone else while making their way to their post.  Parking is not convenient which adds more time for an employee to get to work.  A challenge that they don’t face in a traditional store.  Employees may request union representation which is not uncommon in an airport environment.  All employees must comply with the airport’s rules and regulations or risk having their badging rights revoked. 

SAN uses a central receiving distribution center for all deliveries. In a traditional model where you may be accustomed to receiving services through the front door, all deliveries must be coordinated through the Central Receiving and Distribution Center (CRDC). Space constraints limit on-site stocking which may require more frequent deliveries. Therefore, the cost for products needed to serve your customers will be higher than a street location.  Your storage area will be on a different level and may be at the other end of the terminal meaning more time is required to retrieve the product.  Badging restrictions limit who may receive and deliver inventory.

Your customers’ motivation is different.  In the street location, customers are shopping to purchase.  At an airport, passengers are there to catch a flight.  This means that service must be fast to not enhance a traveler’s anxiety about catching their flight.

Small operators in shopping malls depend on the draw of large department stores to attract customers to the location.  These customers are walking past your store with shopping on their mind.  In an airport, what draws the traffic is travel.  The mind set of the traffic passing by your door is different from locations street-side.

A concessionaire's rent structure in an airport may differ from the traditional model. At SAN, rent is calculated as a percentage of the gross revenues supported by a minimum annual guarantee, or MAG, that is a part of the leasing requirements.

The cost of design and construction for your space is going to be much higher.  Contractors are not exempt from the security requirements and must be screened when entering the terminal.  Tool inventory is part of the process going in and at the end of the day.  The contractor’s employee will have the same parking challenges as all other airport employees adding time to complete their tasks. 

Because your operation is going to receive much more wear and tear by the large number of people passing through the terminals, materials used in your buildout must be more durable and be able to withstand the test of time. Midterm refurbishments are generally a requirement within the lease and your cost of maintenance will be higher as your facilities are taxed to the limit.  Facilities are inspected by SAN personnel to ensure compliance to lease provision and to make sure that your facility meets expectations.  You’re not just representing your business.  You are representing San Diego International Airport!

Operations will impact your cost. SAN requires that you maintain the same operating hours as the airport.  The traveling public expects that your operations will be open early in the morning when they first arrive or late at night catching the last flight.  Concessionaire must be prepared to stay open even after the posting hours due to flight delays.

If after this introduction into airport concessions and you are still interested in learning more about airport concessions?  Click "Continue” to learn what you should expect in operating a concession.

What to expect with an airport concession?

The old saying of location, location, location is just as important in an airport terminal as on the street.  However, a concessionaire must remember the passenger’s primary goal is to catch a flight. You may think you have a captured audience, but the competition for that customer’s attention is strong. Your concession must be appealing enough to grab that traveler’s attention.

An appealing storefront that will attract attention is part of the concessionaire’s design.  To set up a concession, you need to be prepared to make a significant investment.  The airport team at SAN will take into consideration the capital investment cost and provide a reasonable time for the concessionaire to recapture that investment.  However, it’s the concessionaire’s responsibility to propose a program that is consistent with SAN’s requirements.

Because operating a concession is a complex business, it’s not a place for somebody to start a business. It is an opportunity for a business to expand its model. To be successful, a concession needs a strong management team and a good staff to endure the prolonged operation in an airport environment.

All concessionaires need to be prepared for a change in their operating environment.  Airline operations may change at any time and minor changes occur daily.  Concessionaires must have the flexibility to deal with these changes. Airlines may experience operation changes brought on by global events.  Weather is always a factor. Even a city with ideal weather conditions is impacted by major storms that may engulf other regions of the country.

Changes in security directives may also impact a concession operation. Whether it influences the average dwell time of the passenger or disrupts the supply chain.

Regardless of the cause, a concessionaire needs to be prepared to adapt to these changes and continue to provide customer service to impacted travelers.

At most airports, including SAN,  lease terms may make financing difficult. In the case of a default, all assets are controlled by the airport.  This removes collateral that a financial institution may require when considering a loan.  A well-informed financial institution is necessary when shopping for a loan.

And remember that your cost of operating concession is going to be higher than your traditional operation.  Although airports like SAN may allow you to charge more for your product compared to street-side, there will be a cap on the amount charged to the customer.