Yesterday on the City Hall Blog, Rudy Bush noted that Love Field concessionaire Gilbert Aranza has sued the city in an effort to halt its efforts to find new food-and-beverage and retail concessionaires. As we noted last month, the city recently opened up the bidding process, and Aranza, who'd wanted to maintain control of the concessions following the city-owned airport's modernization wraps up in 2015 or close to, is asking instead for a temporary restraining order. You can read his complaint after the jump.
Coincidentally, only yesterday the city extended the deadline for bids -- from May 18 to June 1. Seems Aranza's not the only one with issues: Yesterday the city posted to its bids website an update filled with nine pages' worth of Q's and A's from prospective concessionaires in which several complain that the city's asking for too much from would-be food and beverage providers by setting the minimum annual guarantees -- and rent rates -- way too high for those who'd set up shop in the airport's food court and elsewhere and likely to keep would-be bidders away. Says one prospective tenant:
The MAG requirements set in the RFP for the Food Court locations are highly unrealistic and would be considered highest in the industry. The sales volume for each of the food court locations/categories would have top perform at a $2.4-$3.0 million dollar range to reach the MAGs the RFP is requiring. Please reconsider adjusting the Food Court MAGs to an industry standard level.The city's response: You're right.
Given feedback from the industry, the minimally acceptable MAGs will be adjusted in a subsequent Addendum.Then, a little further down, one "proud Dallas business" that is "excited about the prospect of partnering with Dallas Love Field to represent the brand" expresses this concern:
The projected sales seem to be over-estimated for the food court locations given the current enplanements and amount of F&B square footage that is being released. How was it valued?The response? See the answer to the first question. Further down is an even longer question about the minimum annual guarantees the city's demanding. One in particular asks how the city came up with its pricing plan in the first place.
DAL will have a "street" pricing model. Most (if not all) of the top 25 airports allow "premium" pricing (street plus 10%-15%) allowing operators a greater change to drive sales (and pay higher rent). Again, how can operators be expected to pay this high MAG rent with a street pricing model?To which the city responds:
The City has decided as a service to its customers that competitive affordable pricing is critical in continuing to drive use and enjoyment of Dallas Love Field.The nine-page addendum is beneath Aranza's request for a TRO. Aranza ComplaintLove Field RFP Addendum April 18