National brands and franchisees with the means to go through a long and arduous RFP, or request for proposal, process and are willing to put up with the many challenges that come with running a high-volume operation in tight airport spaces, said the rewards of are worth the effort.
GoTo Foods, the parent company of brands including Auntie Anne’s, Jamba and Cinnabon, has approximately 150 airport locations in 20 countries. Two-thirds of those locations, or about 100 of them, are in United States airports.
Matt Von Klemperer, director of non-traditional development for the restaurant platform company, wants to increase that number.
“We’ve been in airports for over 30 years and we were one of the first, if not the first of the national brands to go into airports. From a visibility standpoint alone, there’s no better venue to be in with millions of customers passing through every year,” Von Klemperer said.
Von Klemperer, who said he has a number of bids out to get into more airports, called those venues “the most competitive real estate market for franchises.” And for good reason. There are only so many retail food spots available in airport terminals. The competition is fierce and bidding wars are common.
National brands and franchisees with the means to go through a long and arduous RFP, or request for proposal, process and are willing to put up with the many challenges that come with running a high-volume operation in tight spaces, said the rewards are worth the effort.
HMSHost, which operates more than 1,000 restaurants in nearly 80 airports in North America, announced in May a 15-year contract to develop more than 32,100 square feet of concessions space in John Wayne Airport in Santa Ana, California. Part of that development plan includes adding 24/7 vending options for quick-service brands including Dunkin’, Panera Bread, Auntie Anne’s, Bonchon, The Habit Burger Grill and Earl of Sandwich.
LaTrelle’s Management, another large restaurant management company specializing in airport development, has a 10-year deal valued at a reported $334 million to open 10 food and beverage venues, including a Jersey Mike’s Subs, at William P. Hobby Airport in Houston.
Bryan Ketelhut, the national director of non-traditional and development services for Little Caesars, said the pizza chain is actively seeking its first retail spaces in airports and anticipates making an announcement in the coming months about securing sites at major travel hubs with its franchise partners.
“We feel that airports are a great fit for our value product, where you are seeing thousands of travelers a day and we can provide a great on-the-go meal,” he said. “We know airports will bring us good brand awareness and exposure, along with strong sales.”
Busy airports mean big business
QSRs want foot traffic, and airports certainly provide that. In 2023, airlines carried nearly 751.4 million passengers, a post-pandemic record, on domestic flights across the U.S., according to Statistica. The five busiest airports—Hartsfield-Jackson Atlanta, Dallas-Fort Worth, Denver, Los Angeles and Chicago O’Hare—each saw more than 73 million passengers last year.
Atlanta’s airport, the busiest in the world, saw more than 104.6 million people pass through its terminals in 2023. Not surprisingly, it also offers one of the largest choices of concessionary foods, with 100-plus restaurants listed in its directory.
Helping feed hungry travelers are some of the largest restaurant franchisors. A recent study by Upgraded Points, an online travel resource, found that McDonald’s and Chick-fil-A each had 35 locations in the 60 busiest U.S. airports, followed by Subway and Burger King with 24 each.
Matt Von Klemperer, director of non-traditional development at GoTo Foods
Like those chains, GoTo Foods has a long history of operating in airports. The company, which rebranded from Focus Brands in February, first opened a Cinnabon in Detroit Metropolitan Wayne County Airport in 1991 and an Auntie Anne’s in Philadelphia International Airport in 1995. The Detroit airport location has since closed, but the Philadelphia location is still open, said Von Klemperer.
“What we’ve always liked about our airport locations is they can operate effectively in spaces as small as 200 square feet with small staffs,” he said.
The performance of GoTo Foods stores in the busiest travel hubs speak volumes. Auntie Anne’s airport locations generated average net sales of $1,641,195 in 2023, compared with average net sales of $913,209 for outlet center franchises and $768,870 for enclosed mall locations, according to the company’s franchise disclosure document.
Chick-fil-A, which hit a record $21.6 billion in systemwide sales in 2023, reported average annual sales for 47 domestic licensed units located at hospitals, businesses, industries or airports was $3,278,264. That’s far below the average unit sales of $9.4 million for standalone franchise locations, but still impressive considering the small retail spaces its non-traditional stores operate in.
Related story: Chick-fil-A Tops $21 Billion in Systemwide Sales as Unit Volumes Hit $9.4 Million
The ability to co-brand in airports is a big advantage for GoTo Foods, says Matt Von Klemperer, director of non-traditional development for the restaurant platform company.
The ability to co-brand in airports is a big advantage for GoTo Foods, said Von Klemperer. The company often pairs Auntie Anne’s with Cinnabon. Schlotzsky’s, which specializes in sandwiches and pizza, is often co-branded with either Auntie Anne’s or Cinnabon.
“It helps us maximize and leverage the small space we’re operating in by co-branding them,” Von Klemperer said. “With two brands in the same space we can share some of the back-house operations and some other synergies to really punch above its weight.”
Challenges to consider
Staffing food locations in airports is another challenge for brands and their franchise operators. Because flights are departing and arriving throughout the day and night, stores need to schedule multiple employee shifts. Employees also need federal clearance to work in airports, which can be difficult considering how stringent the Transportation Security Administration guidelines have become.
Isabella Rhawie, director of concessions and business development at Minneapolis-Saint Paul International Airport
Then there is the cost to get into airports. Isabella Rhawie, director of concessions and business development at Minneapolis-Saint Paul International Airport, said retail leases are calculated based on food category, location, enplanements and potential sales. She said leases for retail space in MSP are typically 10 years in duration.
Tanya Pastorelle, an airport concessions consultant, said franchisors and restaurant groups will normally bid 14 to 20 percent of their projected sales in the RFP.
Rhawie said her office at MSP regulates the menu pricing at all food concessions, making sure brands are not charging more than 10 to 15 percent of the street prices at their traditional stores.
“Because we’re a municipality we try to strike a balance between placing local and national retailers in MSP. We want travelers coming through our airport to be able to experience the local fare, but we also recognize that they will always have an appetite for the legacy food brands,” Rhawie said.
Then franchisees have to factor in the astronomical buildout, equipment and leasehold improvement costs, which can reach $2,000 per square foot in the busiest airports, according to Daniel Halpern. He’s the CEO and co-founder of Jackmont Hospitality, which operates a number of restaurant concepts in major airports including TGI Fridays and Charleys Philly Steaks in Atlanta and Los Angeles.
Daniel Halpern is the CEO and co-founder of Jackmont Hospitality, which operates a number of restaurant concepts in major airports including TGI Fridays and Charleys Philly Steaks in Atlanta and Los Angeles.
“Operating restaurants in airports is not an easy thing because of all the complexities you don’t find in street locations, like living wage ordinances, really expensive capital investments and getting product there and finding labor,” said Halpern. “But we’ve been doing it for 28 years now and we’ve kind of figured it out. Running full-service restaurants in airports have become our sweet spot.”
Costs and the complex environment haven’t slowed the demand by food brands to get into the travel hubs with the most foot traffic.
“Along with college campuses and healthcare facilities, airports are very high on my priority list,” said Jeff Drake, CEO of Protein Bar & Kitchen which opened an airport location in Salt Lake City recently and has plans to open in Chicago’s O’Hare and New York’s LaGuardia airports this year.
“Airports are very high on a list of non-traditional locations,” he said. “We can execute on providing a healthy power meal or snack throughout the day. Basically, a nutritious and delicious drinkable meal that travels well.”