Two Years In - The Concessionaire Perspective

​For its May 2022 Forum, the Airport Restaurant & Retail Association (ARRA) welcomed two industry CEOs –Gregg Paradies of Paradies Lagardère and Michael Svagdis of SSP America. They discussed the industry recovery from the pandemic in the face of the new operating challenges of labor shortages, supply chains, and inflation. A common theme: the industry’s recovery is underway but remains a work in progress. Gregg and Michael also noted long-term positive impacts that came out of the pandemic: there is a greater degree of collaboration between airports and concessionaires, as well as a greater focus on the customer experience.

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Here are three takeaways:
 

• It’s the debt! As traffic has recovered, concessionaires are generating some cash, but they are still covering losses incurred at the depths of the pandemic. All took on “a ton of debt.” Many airports granted MAG relief – for which concessionaires are appreciative – but that didn’t pay the debt.
  
  Moreover, paying off the COVID debt drags on the industry’s recovery. Because of debt burdens, concessionaires must be more cautious and strategic about investments they’re making and investments they’re passing on. It’s a balancing act: balancing limited cash flow among paying COVID debt, meeting commitments, and taking advantage of new opportunities.

 

• Recovery is usually discussed from a financial perspective such as sales levels or paying off debt. But recovery also has a labor perspective: full recovery requires a stable labor market. Capacity to deliver a great guest experience will be a mark of recovery.
  
  Of course, the current labor market is anything but stable. Michael notes, “It’s the biggest shock.” The entire economy faces too few available workers, rising costs, and intense competition to recruit and retain good employees. Wages are up 20% to 40% from last year in some markets, and last year they were up as well. Even so, concessionaires are short 10% to 15% of desired employment levels.

 

• We cannot overlook the longer-term impacts of the pandemic. Higher construction costs, employee wages, and benefits costs are not going away. They are permanent changes in our business.

 
These are just three of Gregg and Michael’s observations. ARRA invites you to watch the whole conversation:

Forum Description

​Two years into the pandemic, passenger traffic is approaching 2019 pre-COVID levels and the airport restaurateurs and retailers are enjoying a recovery in progress. But … the key words are “in progress” for the concessions industry is definitely not recovered: it has come a long way since the depths of the pandemic, but there is still a long way to go to full recovery. 

For our May Forum, ARRA welcomes two industry CEOs, Gregg Paradies (Paradies Lagardère) and Michael Svagdis (SSP America). Gregg and Michael will discuss the impact of the pandemic on their companies and the industry, recovery, and the operating challenges of labor shortages, supply chains, and inflation. We will also talk about a “new normal” for airport concessions. We hope you can join us.
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​Gregg Paradies
President and CEO
Paradies Lagardère
 
Gregg is president and CEO of Paradies Lagardère, a leading airport travel retailer and restaurateur in North America with more than 950 stores and restaurants in approximately 100 airports. With expertise in international, national, and local brands such as SPANX, Starbucks, CNBC, Chick-fil-A, Brooks Brothers, Univision, Tropical Smoothie Cafe and others, Paradies Lagardère creates and delivers memorable and positive retail and dining experiences for today’s travelers. Gregg is responsible for the company’s overall business and ensuring Paradies Lagardère continues its strong tradition of providing industry-leading customer service, superior design, and award-winning operations.

Prior to his appointment as president and CEO in June 2004, Gregg held several roles within the organization. Upon earning a degree in Business Administration in Finance from the University of Texas, he entered the retail industry through the Executive Training Program at Macy’s. Shortly thereafter, he joined the family business that his father and uncle created as the manager of hotel properties. In 1991, he was elevated to regional vice president of operations and then eventually the chief operating officer in 2001. Gregg also strongly supports travel industry as a member, strong supporter, and ally of numerous industry associations.

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Michael Svagdis
Chief Executive Officer
SSP America
 
As the CEO of SSP America, Michael’s top priority is to ensure the entire SSP team is aligned to deliver a memorable culinary experience to each and every guest across the company’s North American operations. Michael and his team are driven by an unparalleled passion for bringing cool, authentic restaurants to airports that reflect a taste of place and deliver a world-class customer experience.
 
A recognized leader in the food service industry with a passion for leading corporate growth, Michael is dedicated to culinary innovation, operational improvements, driving standardizations and aligning strategies with the overarching business goals. Before joining SSP America, Michael served as Chief Executive Officer for Eurest Dining Services, a division of Compass Group and a leader in large-scale employee dining services for major global corporations.