Little Rock airport intends 2 new chain eateries

Chili’s recruited; Chick-fil-A, too

Posted: February 15, 2017 at 4:30 a.m.

Renderings of the proposed Chick-fil-A and Chili's locations inside Bill and Hillary Clinton National Airport/Adams Field in Little Rock.

The concessionaires for the state's largest airport say they will add two major chain restaurant outlets, Chili's and Chick-fil-A, spend more than $4 million to upgrade concession offerings and add other amenities under a proposal to extend their agreement to operate at the airport another 10 years.

Officials at Bill and Hillary Clinton National Airport/Adams Field say they elected to have Host International remain as the airport's prime concessionaire in part because Host International has an exclusive arrangement to provide Starbucks coffee at the 120 airports where Host has operations. Its current 10-year agreement with the Little Rock airport expires next year.

Clinton National has a Starbucks kiosk in the terminal and in the concourse, which have been popular with the airport's nearly 1 million annual visitors.

"I'm not a coffee drinker, but I know that's important to our passengers," said Bryan Malinowski, the airport's deputy executive director.

The addition of the Chili's and Chick-fil-A outlets will give the small-hub airport four national brands, which also include Burger King.

"It's very uncommon to see four major national brands at an airport of our size," said Shane Carter, a spokesman for Clinton National.

Revenue from food, beverages and retail operations yielded almost $1 million for the airport last year, equating to about 3 percent of total revenue of $32,758,848 in 2016.

Host International operates the food and beverage side of the concessions. It subleases the retail portion to the Hudson Group. Together, they had gross revenue totaling $8 million in 2016, with food and beverages delivering a sizable portion of that, $5.8 million.

The tentative agreement on the Chili's and Chick-fil-A offerings, which was recommended by the Little Rock Municipal Airport Commission's lease committee Tuesday, is expected to be finalized within the next two months, assuming the commission approves it at its monthly meeting Tuesday.

Construction will begin within six months and take about a year. The Chili's outlet will be first, then Chick-fil-A and then the other improvements, Malinowski said.

The work will coincide with some already underway on a $20 million upgrade of the airport's 12-gate concourse. The upgrade project includes replacement of several passenger boarding bridges and an estimated 800 gate seats with models equipped with charging stations.

That project is a follow-up to the $67 million makeover of the passenger terminal that was completed in 2013.

"We're excited about it because it's really a next step up for us along with the work we are doing down the concourse," said Ron Mathieu, the airport's executive director.

Jim Dailey, the commission chairman, attended the lease committee meeting and said afterward that he was pleased with the concessionaires' proposal.

"It's good news for the public, it's good news for the airport, it's good news for our flying passengers," he said.

To help attract the national brands, the airport agreed to provide $500,000 as its share of capital improvements, which in addition to the new eateries will include renovations of existing eateries -- new finishes and a new flooring in the food court, airport officials said.

Host International is contributing $3.5 million and Hudson Group $1.2 million. Hudson Group will add two additional retail locations, including one just past the passenger security checkpoint.

In annual passenger satisfaction surveys, the scores for food, beverages and retail have been slightly below the airport's other passenger satisfaction numbers.

"You'll see in the customer satisfaction surveys we did at the end of last year, our concession scores have actually increased," Mathieu said. The Chili's and Chick-fil-A additions will improve those scores, he said. "We're getting $4.7 million in investment in the terminal, and it's costing us a half a million."

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The plans will shuffle the current offerings at the airport. Chili's will go in the space on the concourse that's now used by Ouachita Landings restaurant. Chick-fil-A will replace two outlets in the food court -- Quiznos and Whole Hog Cafe outlets. Items currently on the Whole Hog Cafe menu will be offered at the River Bend restaurant, which is in an area before passengers pass through the security checkpoint.

The changes also represent a shift in the airport's long-held practice of promoting local brands. Little Rock-area-owned Andina Cafe and Coffee Roastery, for example, was once in the airport.

"There were efforts to bring in local vendors as much as you possibly could," Dailey said previously. "That may be very good, but at the same time when you are dealing with national and international travelers, they want to come into an airport and feel comfortable to eat at this place because they are comfortable with it and familiar with it."

The national brand offerings will cost the airport more in royalties. For instance, Chick-fil-A has an 8 percent royalty fee, Malinowski said, and the industry average is 4 percent to 5 percent.

He said he and other airport officials hope the new brands will pull in more revenue, which will make paying the extra royalty percentage a "wash." In Little Rock, Chick-fil-A's three outlets are among the city's top 10 restaurants in tax receipts, Malinowski said, and one of those outlets ranks first.

Under the proposed agreement, 30 percent of each Host International and Hudson Group concession agreement must involve minority-owned business partners, and half of that 30 percent must be local minority-owned business partners.

Also Tuesday, the lease committee recommended that two engineering firms -- Garver LLC and Michael Baker International Inc. -- be the airport engineering consultants for the next five years. A selection committee interviewed those two firms, as well as Grimes Consulting Engineers Inc., before making the recommendation that the lease committee adopted.

Under new Federal Aviation Administration rules, the engineering firms will be assigned to specific projects over the next five years. Under previous rules, the firms were on-call and were picked by the airport staff as projects were developed.

Garver will work on 23 projects scheduled over the next five years. Michael Baker will work on 12. Based on recent figures, the airport spends about $1.5 million annually on engineering services.

Business on 02/15/2017