Thursday, March 2, 2017
The Struggle and Payoff of Setting Up Shop in an Airport
By TAMMY La GORCE
The New York (NY) Times
One of the shops at Chicago O’Hare International Airport is Sarah’s Candies, the original company of Sarah Levy Imberman, who runs a business that has partnerships with restaurants at four airports.
Before you open a business at the airport, consider whether a 30-minute commute from the parking lot to your storefront works for you.
Also consider whether you are willing to let predicaments like a flock of birds crashing into the nose of a jetliner determine the day’s sales tally. And maybe most important, if you’re allergic to bureaucracy, consider becoming a skycap instead of opening a boutique or restaurant.
“Getting into the airport can be pretty difficult,” said Ramon Lo, publisher of Airport Revenue News, an industry magazine. “You can’t just come in off the street and say, ‘Hey, I want to try my hand at selling in the airport. Let’s do it.’ You have to go through a lot of layers. Airports are quasi-governmental.”
Regardless, they are becoming magnets for small businesses willing to crack a complicated set of codes. The benefits are obvious, according to entrepreneurs like Keith Montoya, a partner in Steve’s Snappin’ Dogs, an offshoot of a popular Denver hot dog spot that recently opened at Denver International, the nation’s sixth-busiest airport (in 2016, 58 million passengers flew in and out of Denver).
“There’s money out there, which is why I did it, to be quite honest,” Mr. Montoya said. “You have hundreds of thousands of people walking by, and if a flight is delayed you’ve got a pretty captive audience. And the return is quick.”
For Mr. Montoya and almost everyone else whose brand lacks the national prominence of a Starbucks or a Subway, though, getting to those quick returns requires patience — and research.
Mr. Montoya navigated his way into the airport partly through the Department of Transportation’s Disadvantaged Business Enterprise Program; he is Mexican-American, and the part of the program he zeroed in on, known as A.C.D.B.E., helps minorities and women enter the aviation industry. He was also helped by a program introduced by Denver International in 2011 to help small businesses get a foothold.
The latter, Mr. Montoya said, “made it affordable for me to get in and get started.” Through savings and personal loans, he scraped together $5,000 to secure a one-year lease in 2013 on a kiosk selling Broncos and Nuggets gear. That was his entree to talking to larger operators and eventually setting up his restaurant partnership. Before the kiosk, Mr. Montoya had no real retail experience; he ran a document imaging and scanning service.
But he noticed that his city’s obsession with professional sports was not reflected at the airport, and he saw an opportunity. The sports kiosk, which was one of 40 small “merchandising units” now spread around Denver’s concourses, turned a profit but came with a learning curve.
“Even if you have experience selling on the street, the airport is a whole new world because of the hours of operation,” Mr. Montoya said. “You have to be open 365 days a year. You don’t get your weekends.”
Ms. Levy Imberman at Sarah’s Candies. She ran a Chicago chocolatier she started from her mother’s kitchen in 2004 that eventually grew to two downtown stores.
There are also staffing and logistical challenges.
“First it was just me,” he said. “Then I hired a couple people to help, because I had to go buy the inventory and do the payroll.”
Mr. Montoya continued, “But what you have to understand is, the airport is pretty far away from the city, so not that many people want to go out there to work. Then you have to be sure you hire people that can clear security, so background checks become really important. Then once you get them their badge, just getting from the parking lot to your stand can be literally 30 minutes. So you have to have people who can deal with that.”
Francine LeFrak ran into an especially onerous security issue when she set up a kiosk selling handmade jewelry at Newark Liberty International Airport in December. The two employees she hired for the venture — clients of Same Sky, a nonprofit she founded that teaches formerly incarcerated women in Jersey City to become entrepreneurs through jewelry-making — had criminal records.
“One of them was actually wearing an ankle bracelet from the county jail,” Ms. LeFrak said.
The Port Authority of New York and New Jersey has a partnership with a management company to bring small businesses into the airport’s Terminal B. When she brought them her business idea, “I never thought they’d say ‘yes’ to me in the first place,” Ms. LeFrak said.
“Then, once we got in, at every turn there was a headwind,” she said. Mostly, the problem was weather. (The kind that doesn’t cause flight delays.)
“We kept praying for a snowstorm, but our prayers weren’t answered — there were no lingering passengers,” Ms. LeFrak said. The kiosk was not a financial success.
For her, however, quitting the airport was easy: Her lease lasted only one month.
Other airports, like San Francisco International Airport, also have ways to attract start-ups for test runs. A pop-up program started in 2014 allows two first-time airport vendors six-month or one-year leases on a pair of small storefronts in Terminal 3. The airport charges the businesses 8 percent of gross revenue, or a minimum annual guarantee. (The catch: Potential renters must submit a formal proposal to the Airport Commission and are subject to a monthslong vetting process.)
Michael Lindsay, an owner of elizabethW, a boutique that sells fragrances and candles in downtown San Francisco, landed a one-year lease on one of the pop-ups in 2015 and ended up paying more than $5,000 for it. “But it was worth it,” he said. “So many people discovered us. Thousands of people are passing by every day. And if there’s a delay, everybody’s shopping.”
In markets like Tampa, Fla., which does not have a short-term kiosk or pop-up program, the stakes for small business owners are higher. To open an offshoot of his local Irish pub, Four Green Fields, at Tampa International Airport last August, Colin Breen partnered with a “concessionaire,” one of a handful of big management companies that lease airport storefronts.
The hoops he had to jump through to secure the 10-year lease on his 1,500-square-foot space took him by surprise. “I didn’t realize how demanding and intense it was going to be,” he said. “There was at least a year of paperwork. And every business that wanted the space had to go before a panel to be judged by an airport board. They actually graded you on whether you made eye contact and spoke into the microphone.”
Offerings at Sarah’s Candies.
Once he was awarded a contract, his pub opened in the Delta terminal. That was fortunate, Mr. Breen said, because landing in Southwest’s terminal might have been bad for business. “Southwest’s fliers tend to be families, and they might stop for coffee and a doughnut but they’re probably not going to stop for a $7 pint of Guinness,” he said. “But we didn’t get to pick and choose where we wanted to be.”
According to Sarah Levy Imberman, a Chicago entrepreneur who heads S. Levy Foods, a company that has partnerships with mostly local restaurants in four airports — John F. Kennedy International, in New York; Sacramento International; Phoenix Sky Harbor International; and San Diego International — small businesses generally do not have the luxury of shopping for airport real estate. Often, because airports earmark space for specific types of sellers to prevent similar concepts from being too close to one another, entrepreneurs settle for what’s available.
But the exposure is generally worth the compromise, she said.
“All the passengers who might not have known you were there, in your city, find out about you at the airport,” she said.
That has been Mr. Breen’s experience in Tampa. “So far it’s been more of a billboard than a profit center,” he said. Customers who discovered Four Green Fields at the airport are trickling into the flagship.
Nat Stratton-Clarke, who will open a smaller version of his Seattle vegetarian restaurant, Cafe Flora, at Sea-Tac International Airport in September, is hoping for a similar migration of customers — from airport to flagship and vice versa. But he is counting on the profit center part to work out, too.
“It’s definitely more expensive to be in an airport than city-side,” he said. “We’re doing a mix of self-funding and a Small Business Administration loan to back it,” he said.
Business owners attracted to the airport but hoping to avoid the cost and commitment of working there should research alternative avenues to entry, according to Ms. Levy Imberman, of S. Levy Foods. “Where there’s a will there’s a way,” she said.
For her, success entering J.F.K., her first airport, in 2011 came through applying for the same Department of Transportation program that got Mr. Montoya into Denver International.
Before then, Ms. Levy Imberman ran Sarah’s Pastries & Candies, a Chicago chocolatier she started from her mother’s kitchen in 2004 that eventually grew to two downtown stores. Sarah’s Candies, as her original company is now called, has a single location now, at Chicago’s O’Hare Airport.
Her current job, running sit-down and quick-serve restaurants like Nocawich and Urban Crave at airports, doesn’t bear much resemblance to the business she envisioned growing into when she was whisking chocolate to glossy perfection in her mother’s double boiler. But she’s O.K. with that.
“I never would have thought in a million years when I started at my mom’s house that I’d end up in airports,” she said. “But there’s a huge push right now from the airport industry to keep things interesting. A lot of cool operators are finding their way in, and finding success. I wouldn’t want to be anywhere else.”