STREETSIDE-AIRSIDE, WHAT’S THE DIFFERENCE?

We’re at an “important crossroads.” The airport concessions industry is in a “reset mode.” It’s time for a “collaborative, transparent conversation.” These sentiments ran throughout our July Forum with Riley Lagesen, chair of Greenberg Traurig’s Global Restaurant Industry Group, and Rich Schneider, COO of Areas USA.

Today’s prevalent concessions model is based on the street: we wish to present a street-side experience to our passengers: street brands, street experiences, street prices. The idea is good, but does it work in the distinctly non-street environment of an airport? Especially in our post-Covid economic environment.

​For ARRA’s July Forum, we asked the question: “Streetside-Airside, What’s the Difference?” Riley and Rich answered the top-line question: there are many differences. The differences are stark. And, more ominously, without collaborative action, the differences threaten the future of our industry as we know it today.

Here are three Forum takeaways:

· The big elephant in the room is occupancy costs. Occupancy cost in an airport – especially as a percentage of sales – is generally significantly higher than any place on the street. Absent unusual circumstances, everybody on the street keeps occupancy under 10%. You won’t find that in an airport. Moreover, in the airport, numerous other costs pile on top of rent to greatly increase occupancy cost.

· The brand model is at risk. Both parties – brand and operator – need to succeed for a successful licensing relationship. However, the economics of operating in an airport are pushing operators too hard to have a successful brand relationship. Rents are different, labor is different, capital is different – there’s not much left to pay a royalty and that’s where brands aren’t going to want to do these deals anymore.

· The labor challenge is with us forever – we’re never going to say, “we’re settled.” The industry must adapt to a new labor environment: accepting flexibility in scheduling; making the airport more attractive and easier as a place to work; introducing technology, not as a substitute for labor, but to enhance labor; working together to fix this challenge.

These are just three important topics; there were many more, too many to highlight here. We encourage you to watch the replay to learn more about the challenges airport concessions operators face as they work to enhance the passenger journey.

Over the past 30 years, forms of street pricing became the norm at U.S. airports. Airports adopted these policies to supposedly assure passengers of “fair prices” at the airport – that the price at the airport is like off-airport prices. Whether the policies work for this purpose is a discussion for another day. Rather, for ARRA’s July Forum, we will examine an underlying premise of street pricing – that the businesses of airport concessionaires are comparable to their street side counterparts.
 
We will see that the premise is not true. Many aspects of an airport business are not like the comparable street side business: hours of operation, security, degree of unionization, logistics, and, of course, capital costs, to name just a few. We invite you to join our July Forum as we welcome Riley Lagesen, Shareholder and chair of Greenberg Traurig’s Global Restaurant Industry Group, and Richard Schneider, Chief Operating Officer of Areas USA. Riley and Rich will add their insights of street-side and airside restaurant and retail costs and operations to ARRA’s ongoing conversation to evolve a sustainable, resilient, and fair business framework for airport concessions. No doubt this will be an informative conversation. We hope you can join us.

ABOUT OUR GUESTS
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​Riley Lagesen
Shareholder
Greenberg Traurig
 
Riley Lagesen, chair of Greenberg Traurig’s Global Restaurant Industry Group, serves as lead counsel to many of the nation’s most well-known restaurant brands and culinary talent. Riley’s passion for the restaurant industry comes from his many years as a restaurant employee, and later, a restaurant owner, in Los Angeles. He saw an opportunity for law firms to better serve restaurant industry clients, and has dedicated his career to supporting both clients and the restaurant industry.
 
Ranked and recognized in the restaurant industry as a leading legal and business advisor, Riley has deep restaurant finance and development experience, enabling him to help clients develop and execute up growth strategies. He is also well-connected in restaurant and food policy circles, leading efforts to create greater public access to real food, among other things.
 
During the COVID-19 pandemic, Riley co-founded the Restaurant Employee Relief Fund (RERF) with his long-time client Chef Guy Fieri, which raised approximately $23 million and provided over 40,000 grants to impacted restaurant employees. In recognition of this work, Riley was selected as by the National Law Journal as a 2020 Crisis Leadership Trailblazer. Riley also founded and created Restaurant High, a popular not-for-profit and invitation only business, leadership and advocacy summit that attracts leading restaurant minds from around the country.
 
Concentrations

• Restaurant finance, mergers and acquisitions (including both concept and investor-side representation)
• Restaurant development strategies (non-traditional venues (airports, casinos, hotels, resorts, university, corporate and healthcare campuses), ghost kitchens and virtual concepts)
• International development
• Franchising and licensing

 

Richard Schneider
COO
Areas USA
 
Richard is a top-performing hospitality executive credited with combining brand operations and marketing expertise to deliver substantial revenue growth in highly competitive business markets. He currently serves as the COO of Areas USA responsible for company operations, IT, Concepts/Standards, Brand Development, Purchasing, Construction and Risk Management. He also shares in responsibility for Business Development.

While Richard is a highly competent mechanic of day-to-day execution, at his core he is a true culinarian and has helped redefine our culinary culture and strategy. Richard has developed many strong culinary relationships across the country in multiple verticals to help design award winning concepts. Richard also serves as a member of the National Restaurant Association Board of Directors and as a member of the Board of Trustees for the National Restaurant Association Educational Foundation. Richard is also a member of the Florida Restaurant and Lodging Association State and Miami-Dade Board of Directors and the FRLA Education Foundation as a Trustee. 

Richard has helped guide our charitable giving and has helped in creating our Areas Cares program to support the communities we serve.  Richard has also led our community education program in supporting local high school culinary programs through culinary and financial support to help build opportunities for students to gain experience and opportunity in our communities.

Richard joined us from Spectra where he served as Executive Vice President/COO and Head of Foodservice for Spectra responsible for our day-to-day food-related operations across 243 Spectra food venues and the operations of Brulee Catering.  Previously, he was also COO of Delaware North’s Sportservice, COO of Delaware North’s airport food and retail business and Vice President of Hospitality and Guest Services, Gaming and Entertainment. His background also includes leadership positions with Midwest Gaming and Entertainment, Caesars Entertainment, and MGM Entertainment.