Institute of Concessions

Finance 101
LeMonica Hakeem
CEO/President | Conekt Hospitality

09.21.2023
Port Authority of NY/NJ
Agenda
Time Topic
2:00 – 2:10 Introduction and Objectives
Defining the ACDBE Program
• Understanding the Program
2:10 – 2:25 • How to get Certified and NAICS Codes
• Monitoring & Oversight
Airports 101
• Getting to Know Your Airport: Top Airline Carriers, Important Key Data Facts,
Researching Your Airport
2:25 – 2:30 • Airport Team Model for Concessions: Direct or Developer
• How Airports Plan for Concessions Programs
Institute of Concessions
• Revenue Mix Opportunities
2:30 – 2:45 • Common Concessions Program Goals/A Successful Program
• Your Participation
• The WOW Factor
• Menu and Merchandising Consideration
Agenda
Time Topic
Point of Entry
• How to Structure My Business at the Airport
2:45 – 3:00 • Joint Venture Partnerships
• Prime Airport Concessionaires
• Mechanics of Joint Venture
• Subtenant
• Sole Proprietor

3:00 – 3:10 Break

Finance 101
• Financial Evaluation of Opportunities
3:10 – 3:30 • Investment Costs
• Enplanement Data
• How to Finance the Deal
• Mid Term Refurbishments

3:30 – 3:35 Navigating Superior Customer Service

Agenda
Time Topic
The Procurement Process
• Identifying Next Steps
3:35 – 3:45 • ACDBE vs MWBE
• Resources

3:45 – 4:00 Break

4:00 – 4:45 Team Finance Exercise
4:45 – 4:50 Positioning You for the Win
4:50 – 5:00 Q&A
LeMonica Hakeem
CEO / President Conekt Hospitality
Non-Traditional Concessions and Franchise Developer

Strategic brand acceleration leader with proven success

identifying, promoting and retaining talent that designs
local, national and international programs that are
innovative, revenue generating and recognized as best-in-
class.

Founded in 2017
Experienced Airport Concessions Professional for
over 20 years
Assists Prime ConcessionAirs and ACDBEs win
airport contracts across the country (Atlanta,
Reagan, Dulles, Salt Lake City, Indianapolis, Dallas,
Denver, Nashville and more)
ACDBE certified in Georgia and Florida
New Airport Operator: Chick Fil A in the New South
Terminal at Orlando International Airport
Experience
Audit Background Airport Concessions
• Arthur Andersen, LLP • Concessions International
• Big 5 Accounting Firm at the time • VP of Strategic Development
• VP of Business Development
• Cabot Corporation • Led the efforts to win the busiest concourse in the
• International Audit (Worked in Hong
World’s busiest airport
Kong, Italy, France, England, Australia,
Shanghai, Germany and many other • Core competencies, experience, and expertise:
countries) • Traditional and Non-Traditional Concessions
• Proforma Assistance and Proposal Development
• HJ Russell & Company & • Business/Brand Development
Concessions International • ACDBE and JV Partnership Development
• Business Structure/Internal Infrastructure
• Franchise License Negotiation and Contracts
• Lease Negotiation and Administration
• Budgeting, Operating Policies and Procedures
• Strategic diversification ventures
• Airport Compliance Audits
Professional Affiliations
Georgia Restaurant Association Board of Directors
Les Dames d’Escoffier International Atlanta Chapter, Fundraising Chair
Women’s FoodService Forum
National Association of Black Accountants
International Franchise Association
Jack and Jill of America, Inc. – GMAC Chapter Treasurer
Alpha Kappa Alpha Sorority, Inc.
Alumni Emory Goizueta Business School – MBA
Alumni North Carolina A&T State University – BS Accounting
 Greetings from
The Port Authority
of NY / NJ
 Defining the
ACDBE Program
Plan for the End Before You Begin

Over the next 3 hours, listen carefully not just to what the instructor says but
what you can tell is important to them.

At the end of the class, you will be paired to complete an exercise on how you
incorporate what you have learned about the concepts.

To win a concessions opportunity, you not only have to have a great idea, but
convince evaluators that you have thought through all aspects of carrying it out,
and understand what they are looking for.
Benefit of Being an ACDBE

Program is meant to be an on-ramp to opportunities at the airport

• Bring local/regional flavor iconic business to airport environment
• Expand existing street-side operation to airport location

Participation can be a platform for expansion at the airport

• Growth within the airport environment
• Expand diversity of offerings
• Flexible points of entry - joint venture to 100% location or vice versa

Success can lead to expansions to other airport or commercial locations

• Growth potential to other transportation venues
• Application to other traditional commercial locations
ACDBE

Airport Concessions Disadvantaged Business Enterprise (ACDBE)

• A concession that is a for-profit small business concern (1) that is at least 51 percent
owned by one or more individuals who are both socially and economically disadvantaged
or, in the case of a corporation in which 51 percent of the stock is owned by one or more
such individuals; and (2) whose management and daily business operations are controlled
by one or more of the socially and economically disadvantaged individuals who own it.
Airports 101
Airport Teams Business Models

Determining The Selection Process

• Request for Proposals (RFPs)
• The solicitation and bid process in which airport concession operators are selected
• Direct Negotiation/Awarded
• Typically applies to a specific need (time, concept, technology, customer service enhancement, unique treatment)
the airport is looking to develop or achieve
• Developer Model
• A private contractor hired by the airport to develop and operate multiple locations, while subletting to other
operators
• Direct Model
• All business development is planned, developed and managed by the concessions management staff
Airports Planning for Concessions

Meeting and exceeding its travelers needs and desires

• Conduct customer segmentation and marketing surveys
• Enplanements, Demographics, Spending, Trends
• Business/Road warriors, Leisure Travelers, Vacationers
• Originating & Destination, Connecting
• Assess current situation analysis
• Identify appropriate mix (%) desired and customers’ menu of offerings, specific by terminal
• Food and beverage mix – Quick serve, Fast food, Full-service
• Retail – Specialty, Convenience, Travel essentials, Luxury
• Services – Technology, Advertising, Carts, Relaxation, Spas, Refresh (Napping), Business privacy areas/Pods),
Enhanced vending, RMUs
• Airport lounges
• Incorporate expansive differentiators
• Innovation, Digital Transformation, Sustainability, Design, Human Capital
Concessions 101
Revenue Mix Opportunities
How Can I Participate in the Share of Revenue Mix at JFK, EWR or LGA?

Food and Beverage Concessions

Specialty Retail

Convenience News

Duty Free

Car Rental

Services: Spa, Shoe Shine, Nail Salon

Vending
Airport Common Concessions
Program Goals

Provide Services and Offerings for the Traveling Passenger

Providing an Elevated Customer Experience for the Traveling Passenger

Providing Modern and Exciting Facilities that are Sustainable

Maximization of Revenues

Utilization of the Newest Technology

A Successful Program
A successful airport program comes with ensuring there is opportunity for anyone to
participate and to share in the Airport’s success. BNA is committed to doing just that,
which is why EACH of you are here today.

Opportunity Viable ACDBE Competition drives Revenues

Program and Passenger Satisfaction
 How can I
participate?
Define What You Bring to the Table
Services, Products, Operations

Spa Shoe Shine Barber Shop Covid Testing

The WOW Factor

Designs Convenience Technology Product Mix

Menu and Merchandising Considerations

Not all concepts translate to the airport environment

• Must be able to produce it or the passenger to take it/consume it

Menu Engineering
• Standard menu items may need to be modified to accommodate space and speed of service
requirements
'Street Pricing' is a concept in airports to offer customers prices similar to what
consumers/passengers would find for the same items at similar locations outside the airport.
• Street Pricing Plus 10% is very common / Some Airports are going up to Plus 15%
• Pricing is reviewed, established, and monitored for compliance by the Airport
• If the Brand is not in the Market then the Airport will look for a comparable brand
Point of Entry
How to Structure My Business at the Airport

Joint Subtenant Sole

Venture Proprietorship
Joint Venture Partnerships
Forming a Joint Venture is a common Benefits of a Joint Venture
business venture used among companies • Experienced Lead Prime Operator
seeking to achieve a common goal or reach
• Pooling of Resources between Partners
a consumer market.
• Opening New Markets for One of the
• Prime ConcessionAir: Large Companies
Partners
with revenues exceeding the revenue
caps to qualify as an ACDBE • Ability to grow with the Prime
• ACDBEs Forming a Joint Venture ConcessionAir in other markets
Prime Airport Concessionaires
Prime F&B Operators Prime Retail Operators
• Master ConcessionAir • Paradies Lagardere
• HMS Host • Hudson
• SSP America • Marshall Retail
• Delaware North • Stellar Partners
• OTG • Newslink
Mechanics of a Joint Venture
Identify Potential Partners
• Ideal Business Philosophy
• Define RREs: Roles, Responsibilities and Expectations
• Meaningful Participation
Subtenant
Operate a store or restaurant within a larger package.
• The Proposal is completed by the Prime ConcessionAir
• Sources an Architect and General Contractor
• Pays for buildout
• Hires and Manages Staff
• Operates location 365 days per year
Sole Proprietor
Direct Lease: Propose Directly for a contract
• Propose on the Airport Bid Directly and Complete a RFP Solicitation
• Interview for Solicitation if Required
• Sources Architect and General Contractor
• Pays for buildout
• Hires and Manages Staff
• Operates location 365 days per year
Questions
Break
Finance 101
Financial Evaluation of a Deal

Always Do Your Research

Understand the Airport for which you are Seeking to Do Business
• Airlines
• Terminals
• Passenger Demographics
• Existing Concessions Map / Layout and Sales
• Are new locations coming
• Are new gates coming
• Revenues Per Enplanements is a key measurement
Passenger Demographics Are Important

Airlines: Are the Customer Preferences the Same?

Business vs Leisure vs Airport Employee: Do they Spend the Same?
Does the Airport Offer Passenger Segmentation Studies?
• Spend Patterns
• Existing Sales Data
• Types of Traveler
Initial Investment Costs

RFP Costs
• Costs for Compiling the Response
Organizational Costs
• Register the company with State & IRS
• Legal fees to review all agreements: lease/ Partnership/ Brands / Franchise Fees
ENPLANEMENT DATA

Enplanements is one of the most critical points of information when evaluating

an airport opportunity.

Enplanements consist of the people who are boarding a flight to depart

Revenues per Enplaned Passenger is a Critical Data Point

Investment Costs

A&E Fees Pre-Opening Costs

• Permit Fees • Travel costs
• Build Out Leasehold Costs • Initial Inventory
• Furniture Fixtures & • Supplies
Equipment Costs • Marketing / Promotional Costs
Investment Costs

Working Capital Storage Buildout Contingency

• Cash reserve used for • We might need • We often get a
• Safe funds additional storage quote from the GC,
(Determine what then we have to pay
• Initial payroll
brand requires for for change orders
• Loan interest payment equipment /
paper goods)
Investment Costs

Typical Investment Costs

• In the NY / NJ Area costs per sq ft are on the higher end $1,000 - $2,000 + per sq ft
• Costs are typically less expense for Retail locations vs Food & Beverage
How to Fund the Deal

Your Money
Funds from the existing business
Personal Loan
Bank Loans
Partner with someone with access to capital

Partner with a Prime

Grants
Return On Investment

Investment
• Build Costs
• Employee Costs
• Product Costs
Sales Projections
Return on Investment: EBITDA / Investment (Calculated Over Time)
*The longer the lease the more opportunity you have for a better ROI
Understanding the Mid-Term Refurbishment

Most Leases Require this

Understand what is required in the Request for Proposal

Create a reserve account and a plan for the mid-term refurbishment

Create a contribution plan (Amount & Frequency)

It is usually a challenge to get financing for mid-term refurbishment because

half of the lease term remains

Prepare a closure plan and maintain fixed cost obligation

The Main Categories that will make
a Significant Impact on Your Business

Prime Costs: Includes Costs of Understand the Difference

Sales & Payroll Costs Between Profit & Cash Flow
• These costs provide the best • Cash Flow: Add Back the
opportunity and the highest Interest and depreciation to
risk to improve or affect your profit
business. A reduction in food • Cash Flow: This is used to
costs & payroll costs can cover debt payments
create the biggest impact
• Once the debt is paid off,
within your operation.
your cash position
strengthens
The Main Categories that will make
a Significant Impact on Your Business

Sales: Your objective is to increase sales

Cost of Sales: Your objective is to reduce the cost of this category
Payroll / Labor Costs: Your objective is to reduce costs in this category without jeopardizing
the customer experience
Rent: Make sure that you understand the impact (Break points / escalating rents)
• Percentage Rent and Minimum Annual Guarantee
Royalties: Negotiate this items before signing the franchise agreement
• Monthly % of Sales
• One Time License Fee
Navigating Superior
Customer Service
Navigating Superior Customer Service

Know your customer base

Understand airport and travel dynamics

Have and execute a plan

Take care of your employees

Know Your Customer Base

Understand the airport passenger customer

• Variety of transaction time considerations
• Limited time (due to late arrival or close connections)
vs
• Extended time (due to early arrival or long layover)
Varying familiarity with travel
• Leisure vs. Business vs. Bleisure travelers
Understand the employee customer
• Airport employees
• Airline crew and employees
• Contractors/subcontractors
• Employees are not only a big customer base but can be impactful referrals!
Understand Airport Travel Dynamics
Understand your location
• Merchandising is a component of store location
• There is a rhythm to the terminal where you are located
Understand your airport’s statistics that can impact sales
• Customer statistics
• Leisure vs. Business travelers
• International vs. Domestic travelers
• Origin/Destination vs. Connecting travelers
• Travelers who are alone vs those with companion(s)
• Age of travelers
• Dwell time (how long travelers are in the airport)
• Airline/airport statistics
• Schedule and gate changes
• Destination and connection city changes
• Additions and deletions
• TSA schedules and practices
Have A
Comprehensive Plan
Train all levels of staff on customer service
Develop/coordinate independent and joint
(with the airport) marketing/customer
engagement campaigns
• Don’t forget to include employee customers in these plans

Understand how to use available data

Use clear signage for customers
Consider customers with a disability or those
with Limited English Proficiency
Utilize feedback
• Don’t be afraid to ask for it
• Be prepared for unsolicited feedback
Have a Comprehensive Plan

Train Train all levels of staff on customer service

Develop / Develop/coordinate independent and joint (with the airport) marketing/customer
Coordinate engagement campaigns *Don't forget to include employee customers in these plans

Understand Understand how to use available data

Use Use clear signage for customers
Consider Consider customers with a disability or those with Limited English Proficiency

Utilize Utilize feedback

*Don't be afraid to ask for it *Be prepared for unsolicited feedback
Take Care of Your Employees

Hire quality employees with your commitment to customer service

Think about your employees’ current well-being

Employees are more than positions on a schedule

They have a dramatic effect on the success of your business

Have a plan for their development and advancement

Have a solid infrastructure to support all aspects of your business

Take Care of Your Employees

"...people will forget what you said,

people will forget what you did,
but people will never forget
how you made them feel…"
- Maya Angelou
Procurement
Process
The Procurement Process

Standard Request for Proposal

Minimal Qualifications

Evaluation Process

The Pre-Proposal Conference

Wow Factor

Review Proposal Requirements and Addenda

Submit on Time
Identifying Next Steps

RFP Evaluation Criteria Vary By Each Airport’s Needs

• Selection Committee – Airport leadership
• Advisory Team – Legal, Audit, Finance, Airline Relations
• Subject Matter Experts – Concessions Business Managers
Evaluation Criteria (Example A): Total – 100 Points
• Proposed Concept – 40
• Design and Capital Investment – 25
• Customer Service / Quality Control – 15
• Business Plan – 10
• Revenue (MAG/% Rent) – 10
• ACDBE Participation Goal – Pass through
Identifying Next Steps

Evaluation Criteria (Example B): Total – 100 Points

• Customer Service/Management & Operations Plans – 20
• Local Participation – 15
• Concept Development and Menu – 15
• Design and Innovation – 15
• Background and Experience – 15
• Compensation to City – 10
• Transition Plan – 10
Pass/Fail Qualifications Criteria (Airport unique)
• Responsiveness – (Pass/Fail)
• Responsible – (Pass/Fail)
• Financial Stability – (Pass/Fail)
• ACDBE Participation Goals – 40% (Pass/Fail)
Identifying Next Steps

R U Truly Ready For Business…

• Discovery Methodology 101
• Due diligence (obtaining/understanding information)
• Attend the outreach meetings
• Learn airport/industry lingo, Best practices, Rules of engagement
• Key milestones
• Meet the airport (business unit manager) before RFP release / COS
• “Appropriate Certifications” secured
• Identify your business partners (if applicable)
• Review the sample lease
• Visit the property
• Identify what the airport is requesting and your realistic capability to meet
and sustain criteria (SWAT analysis)
• Prepare to “Tell Your Story”
EVERY AIRPORT
DEAL IS NOT A
GOOD DEAL
ACDBE vs MWBE

There is a distinct and specific difference between ACDBE and MWBE participation.
• An ACDBE is a company that aspires to have equity ownership participation that meets the
specific criteria and has been certified under guidelines outlined in 49 CFR Part 23 which
references 49 CFR Part 26.
• As an example, at PHL, a M/WBE is a minority or woman owned business that has registered
with the City. Essentially, D/M/WBE companies participate from a sub-contracting/supplier
standpoint.
• However, despite the City of Philadelphia being the owner and operator of PHL, being a
M/WBE does not automatically make an entity/individual eligible to participate on airport
contracts to accomplish the ACDBE goal commitment. It is important to note that M/WBE and
ACDBE designations fall under different programs as the funding sources are different and
have different criteria for eligibility. You must do your homework!
Facts for ACDBEs

In some cases, there is reciprocity among various states regarding ACDBE certification.
• Several airports will accept ACDBE certification from a U.S. Department of Transportation-
approved Unified Certification Program (UCP) from other states. However, there are some
airports that do not have a set process they utilize.
Questions have been raised whether JV Agreements have to be executed prior to submittal of
the proposal.
• This varies by airport. Some airports do in fact require the JV Agreement be executed prior to
the execution of the lease/license agreement for the location. This should be verified by the
prospective airport.
Facts for ACDBEs
& Resources
Questions have also been raised whether the
ACDBE has to be certified prior to the
submission of the RFP bid to receive the credit
as an ACDBE or can a showing of a good faith
filing suffice.
• Again, it varies by airport and can be confirmed by
contacting the airport’s business diversity department,
concessions department or concessions’
development/management company.

There are a multiplicity of resources/methods

available to assist with your success in the
airport business environment.
• Concessionaire Forums, Community Outreach Programs,
Customer Service Training, Marketing Assistance
including signage and electronic media advertisement.
Resources Available
Below are some key resource contacts for additional information to assist in
achieving your objectives:
• AMAC: Airport Minority Advisory Council www.amac-org.com
• AAAE: American Association of Airport Executives www.aaae.org/
• ACI: Airports Council International www.airports.org
• COMTO: Conference Of Minority Transportation Officials www.comto.org
• NMSDC: National Minority Supplier Diversity Council www.nmsdc.org
• OSDBU: Office Small Disadvantaged Business Utilization
http://osdbu.dot.gov/DBEProgram/StateDOTDBESites.cfm
• (Excellent first reference that explains the ACDBE & DBE program state by state)
• WBENC: Women's Business Enterprise National Council www.wbenc.org
Questions
Break
Team Finance
Exercise
Positioning You
for the Wim
Plan for your
Pitch Assignment
Groups will be paired off
• Step 1 is to Answer the Questions Provided
and Present Your Responses.
• Step 2 is The concept challenge:

• Develop a pitch for a new

hamburger quick-serve
concept.
Pitch
Planning
Your pitch should cover the following items:
• Select a Hamburger Brand
• The wow factor - Why your concept is unique and fills
a need at the airport that customers will want
• Your financial proposition
• How you will excel at customer service
• Pick a spokesperson(s) to deliver your responses
• Answer the questions based on what you learned in
the training today
Questions
for Pitch
What are the key factors to determine if your
Hamburger Concept will be profitable for you?

How did you calculate your sales projections?

What are some key expenses that you have to

consider in your P&L Statement?

If the Airport gave a range of percentage rent

from 15- 18% and you had to stay in the range,
why would choose a high rent or why would
you choose a lower rent?
Q&A
Contact
Information