challenging the F&B concessions status quo

(A collaboration between The Moodie Davitt Report and ARRA) 
Dawn Hunter, Seattle-Tacoma International Airport 
Bill Wyatt, Salt Lake City International Airport 
Nick Crews, Crews Hospitality 
Pat Murray, SSP America 
 
What a conversation! Dermot Davitt and Andy Weddig co-hosted four of our industry’s most brilliant minds for a special session during The Moodie Davitt Report’s 2022 Food and Beverage Conference and Awards. And our guests did not disappoint! Our wide-ranging, profound conversation about the depths of the pandemic, the current recovery, and a vision of the future “new normal” lays out a road map for the evolution of the airport-concessionaire business framework. 
 
Motivating this conversation are many changes in the aviation industry – and the broader economy – that followed the pandemic and continue in the recovery. Many of these changes are likely permanent. Higher wages are not rolling back. Lower inflation does not mean lower costs. The changes frame the overriding challenge – perhaps crisis – the concessions industry faces: the ability to make money in a new economic environment. In other words, how does our industry continue to provide food, beverages, goods, and services to the traveling public, yet earn sufficient profits to attract capital? The solutions to this question define our new normal. 
 
What Dawn, Bill, Nick, and Pat said during our panel merits reflection and action. We did not find all the solutions, but new ideas for progressing to a sustainable future for all participants in this industry emerged – new ideas to refresh an industry that is so vital to achieving a memorable passenger travel experience. 
 
Here are three key takeaways:  
 

• Labor shortages, supply chain disruptions, airline chaos, and inflation have dramatically increased operational and financial pressures on concessions operators. Severely reduced hours because we just cannot get people to keep the units open full time. Crews Hospitality operates about 70% of its pre-pandemic hours with about 65% of the total staff. SSP, 55% of its pre-pandemic staffing. As a consequence, sales are lagging: although airports approached 90% of pre-pandemic enplanements over the summer, sales are only 60% to 75% of 2019 levels. 

 

• Airports should let concessionaires recover their increased costs: “if we’re okay with airlines and rental cars doing cost recovery for Covid, why are we not okay with the concessions also doing some cost recovery?” Covid taught us the 20- to 30-year-old standard concession model is not working. The industry needs to reimagine its business framework so we have a win-win. 

 

• When a crisis happens, the MAG is kind of worthless – “the boat is sinking, and we all have a job to figure out how to get the water out.” The pandemic has changed how airports need to think about their business partners; the pandemic has taught us this is a partnership. We must share. “When times are good, we’re all happy. When times are tough, we’ve got to find a way to be sure nobody is penalized.” 

 
These are just three important takeaways. Our panel offered many more profound insights and bold ideas. We encourage you to watch the replay here. 

This session at FAB 2022 was a collaboration between The Moodie Davitt Report and the Airport Restaurant & Retail Association. You can read The Moodie Davitt Report’s session by session coverage of FAB 2022, “People, Planet, Partnership and Progress,” at this link. ​

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