Development and Acquisition of Airport Concessions

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Since 1989, RMD has provided “airport concession acquisition and proposal development” assistance to such major companies as McDonald’s, Burger King, Wendy’s, Subway, and Quizno’s.  Our Airport Briefing Package provides a detailed analysis and business model for investors who want to acquire or expand their airport concession business. We provide our clients with the financial and operational management insight they need to plan and execute sound acquisition or development strategies.  The best concession concept in the food service or retail industry will fail if it is located in an airport with a poorly administered and structured concession program.  The configuration of each concourse or terminal, passenger-profile, merchandising, point-of-sale structure, concession concept mix, and the FAA’s approval of landing privileges are all major elements in the success or failure of an airport concession.   Most concession rights are granted based upon a seven-to-ten-year lease with initial capital investments of $300,000 to $500,000.  Investing in the best concession program is critical to the long-term success of each concessionaire.  

There are only two ways one can become a "concessionaire" in an airport: 1.) Submitting a concession managing proposal to an airport authority and being selected as the wining proposal. and  2.) Acquiring an existing ongoing airport concession lease via the purchase of a concession (leasing rights, equipment and business assets) from the current owner of an airport concession.  The process of determining the "cost of developing a concession" compared to an "acquisition of a concession" is one of the first critical analyses one must complete as they start the process of becoming an airport concessionaire.

Airport Concession Proposal Development and Packaging

RMD Financial Corporation’s airport concession proposal development and packaging services includes; an in-depth “concession program analysis” of each airport; creation and implementation of an  “airport concession rollout strategy; and the design of an airport specific décor and menu plan; which will make you concession stand-out in the crowd and win.  The most critical stage in the concession development (new concession) process is the selection of each airport and concourse, based upon the “customer profile” of each firm.  For example; you would not want to develop a “Mont Blanc” store in a Southwest Airlines terminal.  Simply stated, the key to success as an international airport concessionaire is research and preparation.  Each new airport concession investor must fully understand the economic and financial dynamics of each airport’s concession program.  The quality and scope of an airport’s concession program can determine the success or failure of a concession concept.  Many airport concession managers “lease too much concession space” considering the passenger traffic history of their airport.  The process of securing a new airport concession could take from one to four months.  

Acquisition of Airport Concessions

There are only two ways to become an airport concessionaire; you either acquire (buyout) an existing concession or become the “selected vender” in an open “Request for Proposals Process.”  Both the buyout and RFP process require the approval of each airport’s property office.   RMD’s concession buyout (acquisition) services include an in-depth “concession program analysis” of selected airports.  In fact, we are the only firm which “ranks the top 30 US airports” based upon the performance of their concession programs.  Since September 11, 2001, the issue of “pre or post security” concession locations has become a major consideration for concessionaires.  The process of acquiring an airport concession could take from 4 to 8 months. 

Marketing of Airport Concessions

Airport concessionaires decide to sell their “concession” for a range of reasons. These include retirement, divorce, death, termination of a partnership, failure of a concession concept and others.   RMD is the industry leader in the marketing of airport concessions.  With 35 concession locations, in 16 major airports we set the standard for the buyout and re-sale of airport concessions.  We have the resources, and experience to establish the “market value” of each principal’s ownership interest in business assets and lease rights in their international airport concessions.  The market value of each concession depends upon whether it is a retail, service or food concept, the term of the lease and several other factors.  Business valuation methods fall into 13 major categories, depending on where the major focus of the analysis is centered. concession which is designated a Disadvantage Business Enterprise (dbe) location has a lower value compared to a non-designated location.  The value of a concession is also impacted by the term, and structure of the concession agreement; as well as other factors.  The process of selling an airport concession is complex and could take from 4 to 8 months.  

A review of our sample engagement agreement will provide details about the scope of services offered.

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