Title
Terminal 4 Lobby New Concept Selection - New Concession Lease (Ordinance S-51086)
Description
Request to authorize the City Manager, or his designee, to enter into a Concession Lease Agreement with CASA Unlimited Enterprises, Inc. for the remaining term of the original lease with SSP America, Inc. (Contract 133475) to operate a concession in the vacant food and beverage spaces located in the Terminal 4 Lobby area of Phoenix Sky Harbor International Airport (Airport). Further request to authorize the City Treasurer to accept all funds related to this item.
Report
Summary
On May 16, 2012, the City Council awarded Contract 133475 with SSP America, Inc. (SSP) for Food and Beverage Concessions at Terminal 4 in the Airport. In April 2022, SSP requested to permanently close three of the awarded locations in the Terminal 4 Lobby pre-security area of the Airport. In September 2023, upon agreement with the Aviation Department (Aviation), SSP vacated the three spaces that totaled approximately 2,685 square feet of space.
The existing Terminal 4 food and beverage contract term with SSP expires on August 31, 2026. Allowing the space to remain vacant for the remainder of the term does not meet passenger needs and will result in a significant loss of revenue for the Airport. Aviation determined that re-concepting these spaces and selecting a new concessionaire for the remainder of the current term would provide a beneficial pre-security food and beverage option.
Procurement Information
Aviation utilized an internal solicitation process among existing concessionaires to select a new concessionaire to operate these vacated locations for the remaining contract term. On October 13, 2023, Aviation notified all current airport concessionaires in good standing of the opportunity to submit a proposal for these vacant spaces. Four existing airport concessionaires expressed interest in the vacant spaces. However, two concessionaires withdrew from the internal solicitation process after more closely reviewing projected build-out costs and the remaining lease term.
Two proposals were received from:
- CASA Unlimited Enterprises, Inc. for a Travel Treat & Coca-Cola Lounge
- TMG Services, LLC for a Garrett Popcorn Shop
The following criteria was utilized to evaluate these proposals:
- Proposed Concept, including how the concept fits in the Terminal 4 Lobby overall concessions.
- Proposed Merchandise Plan
- Design and Quality of Tenant Improvements
- Operations and Technology Plans
Rent will be based on percentage of gross sales as follows:
- Food and non-alcoholic beverages sales at 13%; and
- Concept-related merchandise sales at 16%, including souvenirs, gifts, and all other merchandise.
Based on the evaluation process, the contract award recommendation is CASA Unlimited Enterprises, Inc. for the Travel Treats & Coca-Cola Lounge. CASA Unlimited Enterprises, Inc. will partner with Swire Coca-Cola to create the proposed concept, providing amenities not currently available within the Terminal 4 Lobby. This concept maximizes the use of all three vacant spaces and features a 24-hour lounge setting and pre-packed meals to go with vegan, gluten-free, and kid-friendly foods; and Coca-Cola & Go coolers with over 30 varieties of beverages.
Contract Term
The lease term will remain unchanged, expiring August 31, 2026, with no options to extend.
Financial Impact
The estimated annual revenue to the City based on a percentage of gross sales is $400,000.
Concurrence/Previous Council Action
City Council approved:
- SSP America, Inc. Lease Agreement on May 16, 2012 (Ordinance S-38767);
- SSP America, Inc. Lease Agreement Amendment on April 22, 2015 (Ordinance S-41616);
- SSP America, Inc. Lease Agreement Amendment on June 8, 2020 (Ordinance S-46708);
- SSP America, Inc. Lease Agreement Amendment on July 1, 2020 (Ordinance S-46836); and
- SSPAmerica, Inc. Lease Agreement Amendment on Jan. 20, 2021 (Ordinance S-47259)
The Business and Development Subcommittee recommended this item for approval on May 2, 2024, by a vote of 3-0.
The full Phoenix Aviation Advisory Board recommended this items for approval on May 16, 2024, by a vote of 6-0.
The Transportation, Infrastructure, and Planning Subcommittee recommended this item for approval on June 20, 2024, by a vote of 4-0.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.