|
Item 1.E.
|
| City Council Regular | |
| Date: | 12/13/2021 |
| Title: | Agreement with Sky Dine Billings, LLC to Operate the Airport's Restaurant/Lounge Concessions |
| Presented by: | Kevin Ploehn, Director of Aviation and Transit |
| Department: | Airport |
| Presentation: | No |
RECOMMENDATION
Staff recommends that the City Council approve a Restaurant/Lounge Concession Agreement with Sky Dine Billings, LLC to take over the existing restaurant and lounge facilities and to build out and operate the new restaurant, liquor bar, and coffee bar concession spaces in the new Terminal Concourse Expansion area.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
In 2019, the Airport entered into a short-term Agreement with current concessionaire, Air Host, to operate the Restaurant/Lounge Concession until the new concourse concession areas were built during the construction of the Terminal Concourse Expansion project. The concession areas on the new concourse are now completed to a level that they can be turned over to a concessionaire to build out and get ready for operating. Subsequently, the Airport advertised a Request for Proposals (RFP) for concessionaires to submit a proposal for the operation of the Airport's Restaurant/Lounge Concessions for the next 10 years. The RFP advertised on September 10, 17 and 24. On September 30, a pre-proposal meeting and walk through was held at the Airport and eight potential concessionaires were represented. The RFP submittal was due by Friday, November 5, and three proposals were received. A fourth was received the following Monday but was excluded since it did not arrive before the submittal deadline.
The RFP required that the successful proposer provide the finishes and equipment for the new concourse restaurant area, the equipment for the new coffee bar and liquor bar areas, all inventory, and furniture. Also, once the construction impacts to the existing pre-security restaurant space ends, the successful proposer would be required to remodel that restaurant's public space as well. The costs of the concession space build outs and remodels results in a significant investment into the Airport's facilities. Fortunately, as explained below, the Airport has the liquor license for the concessionaire to use so that no expense is required by the concessionaire to try to secure this expensive license to serve spirits at the Airport. The RFP also required each proposer to provide, in detail, the restaurant, coffee, and bar concepts for the spaces, a very important consideration for the selection process. Additional items from the RFP that the Airport staff wanted to see were proposed Disadvantaged Business Enterprise (DBE) participation, and the financial capabilities of the concessionaire. Proposals were received from:
While all proposals were good and would have been able to provide the Restaurant/Lounge Concessions, the Sky Dine Billings, LLC proposal really stood out and was the unanimous choice of the six-person selection team. The selection team consisted of four Airport staff members (Ploehn, Ketterling, Herold, and Evangeline) and two Aviation and Transit Board Members (Dan Farmer and Ron Spence). The strength of the proposal included the financial commitment for the build out and remodel, the proposed DBE participation, and the concept of teaming up with two local companies, "Mountain Mudd Expresso" and downtown's "Stacked - a Montana Grill." As a bonus, Sky Dine will also be teaming up with national franchise "Cinnabon."
As background information regarding the Airport's liquor license, in Montana, the State provides each of the commercial service airports with a convenience liquor license (Sec. 16-4-208, MCA) so that new airport concessionaires are not put in a position of trying to secure this valuable asset every time an airport concession changes, subsequently allowing for more competition for concession providers.
The RFP required that the successful proposer provide the finishes and equipment for the new concourse restaurant area, the equipment for the new coffee bar and liquor bar areas, all inventory, and furniture. Also, once the construction impacts to the existing pre-security restaurant space ends, the successful proposer would be required to remodel that restaurant's public space as well. The costs of the concession space build outs and remodels results in a significant investment into the Airport's facilities. Fortunately, as explained below, the Airport has the liquor license for the concessionaire to use so that no expense is required by the concessionaire to try to secure this expensive license to serve spirits at the Airport. The RFP also required each proposer to provide, in detail, the restaurant, coffee, and bar concepts for the spaces, a very important consideration for the selection process. Additional items from the RFP that the Airport staff wanted to see were proposed Disadvantaged Business Enterprise (DBE) participation, and the financial capabilities of the concessionaire. Proposals were received from:
| CONCESSIONAIRE | HEADQUARTERS |
| Sky Dine Billings, LLC | Sioux Falls, SD |
| Faber, Coe and Gregg of Florida, Inc. | Secaucus, NJ |
| Tailwind MC, LLC | Wilmington, NC |
While all proposals were good and would have been able to provide the Restaurant/Lounge Concessions, the Sky Dine Billings, LLC proposal really stood out and was the unanimous choice of the six-person selection team. The selection team consisted of four Airport staff members (Ploehn, Ketterling, Herold, and Evangeline) and two Aviation and Transit Board Members (Dan Farmer and Ron Spence). The strength of the proposal included the financial commitment for the build out and remodel, the proposed DBE participation, and the concept of teaming up with two local companies, "Mountain Mudd Expresso" and downtown's "Stacked - a Montana Grill." As a bonus, Sky Dine will also be teaming up with national franchise "Cinnabon."
As background information regarding the Airport's liquor license, in Montana, the State provides each of the commercial service airports with a convenience liquor license (Sec. 16-4-208, MCA) so that new airport concessionaires are not put in a position of trying to secure this valuable asset every time an airport concession changes, subsequently allowing for more competition for concession providers.
ALTERNATIVES
City Council may:
- Approve the 10-year Concession Agreement with Sky Dine Billings, LLC; or
- Not Approve the Concession Agreement and advise staff on how to proceed, at the risk of further delaying the opening of the food and bar services in the new concourse area.
FISCAL EFFECTS
Sky Dine's proposal offered to pay the City the greater of 8% of gross revenues or the Minimum Annual Guarantee (MAG) of $150,000 in the first year. The percentage of gross revenues remains at 8% through year five, increases to 9% for years six, seven, and eight, and 10% for years nine and 10. The MAG will increase to $165,000 for year two, $175,000 for year three, $200,000 for years four and five, and to $220,000 for the last five years. Additionally, Sky Dine's investment to build out or remodel and furnish the restaurant and bar spaces was between $1,203,000 and $1,461,000 depending on a variety of things going on regarding construction and equipment supplies at the moment. The Airport's pre-COVID revenues typically ranged between $152,000 and $158,000 annually.