love field concessions briefing february 21

8/3/2019 Love Field Concessions Briefing February 21

1/78


2/78


3/78

Purpose

ProvidebackgroundontheConcessionsprogram

DescribetheCouncilsapprovedplanfor

selectionof

new

contracts

and

implementation

PresentresultsoftheRequestforProposalprocess

Makerecommendationforawardsofcontracts

Presentnextsteps


4/78

3

Background Goal:MakeLoveFieldthefinestmidsizeairportinthe

nation

Someof

the

efforts

to

achieve

this

goal

include:

investingover$1billioninnewterminalandrunwayimprovements

havingconcessionsprovidehighestqualityandbestvalueproducts

and

services

to

the

traveling

public

expandingservicescurrentlyofferedpassengers

generatingmoreAirportrevenues

providingsmallandminoritybusinessesopportunities

3


5/78

4

Background

Recentchallenges

include

accommodating

significant

changes:

constructionofnewterminaloccurringfrom2010to2014

concessioncontracts,inplacesince1994,weresettoexpireduringthisdisruptiveconstructionperiod

Concernsexistedregardingdifficultyofattractingnew

concessionaires

Incumbentsprovidedhighqualityservicesandwereinagoodpositiontocontinuetheirserviceduringperiod

Considerablegoodwillexistedwiththeincumbentconcessionaires

4


6/78

5

Background

Therewasalsothedesireto:

havearobust

competitive

process

to

identify

concessionairesforthenewterminalareas,and

structureasolicitationwhichwouldpromotetheobjectives

in

our

Airport

Concession

DisadvantagedBusinessEnterprise (ACDBE)program

5


7/78


8/78

7

Background

March2010,plannotsupportedat Councilmeeting

June2010,Mayorformedadhoccommitteecompromiseplanwasdevelopedtoprovideforan

extensionof

existing

concessions

contracts

through

the

constructionperiodandprovidearightoffirstrefusalfor

27%ofconcessionsinthenewterminal

August2010,

compromise

plan

was

briefed

andapprovedbyCouncil

7


9/78

8

Background

As

a

compromise,

the

plan

included

a

number

ofadjustments,including:

Afirstrightofrefusalforincumbentsonacertainvalue

Specificcriteriaformatch

DirectAirport

management

control

of

all

individualspacesnecessitatinginventorystorage

and

delivery

coordinationAirportcontrolofseveralcommodities

8


10/78

9

Ifincumbents

chose

to

extend

current

contracts

throughconstructionperiod,theywouldbegrantedafirstrightofrefusalfor27%ofthebid

spacevalue

in

the

new

terminal

Selectionofthe27%valueistoberandomIfincumbentsexercisedtheirright,theywould

haveto

match

acompeting

high

score

proposal

onthebasisofRent,CapitalInvestment,OperationalCommitments,ComparableBrandsandMAG

Numerousotherprovisionsasdescribedbelow

CompromisePlanCoreElement

9


11/78

10

ImplementationObjective

Toimplementtheplankeepingtotheletter

an/orspirit

of

the

Council

approved

process,

creatingthebestpossibleoutcomeand

keepingthisprocesswithintheoverall

terminalconstructionschedule

10


12/78

11

PlanandImplementation

Planelements

Evaluationprocessandcriteria

Firstright

of

refusal

ACDBE

Generalterms

Ongoing

Contractmanagement

Implementation Selectionteamandscoring

process

Values,percentages,

lottery

VendorRecruitment

Contractdevelopment

Ongoing

Inventory&delivery

11

Results


13/78

12

Evaluation

process

andcriteria

12


14/78

13


ApprovedcriteriawasincludedintheRFPand

used

for

evaluation

:ScoringFactors: Brands 26%* Economics/Financialreturn 23% OperationalPlan 12% FinancialCapability 12% ACDBE 15%

Experience

12%

13

* As presented to Council on December 15, 2010


15/78

14


ThreeseparateevaluationprocesseswereusedforboththeFoodandBeverageRFPandtheRetailRFP Financial

Capability

&

Economics

were

evaluated

by

formulas

developed

by

OfficeofFinancialServicesandCityconsultant

OperationalPlans,Brands,&ExperiencewereevaluatedbystaffcommitteeandrepresentativefromSouthwestAirlines

ACDBEparticipationwasevaluatedbyOfficeofBusinessDevelopmentandProcurement

Services

using

the

Citys

BID

process

and

scoring

Nosinglegrouporindividualscoredallportionsofanyproposal

Formulaswere

used

wherever

possible

to

maintain

objectivityintheevaluationprocess.

14


16/78

15


Operational

Plan,

Brands,

and

Experience

were

evaluatedbystaffcommitteesMidmanagementlevel,diverse

F&

B

evaluated

by

Aviation,Parks,ConventionServices,Library,Equipment

andBuildingServices,andDWU

Retailevaluated

by

Aviation,Parks,EconomicDevelopment,Housing,and

PublicWorks

SouthwestAirlines,asamajorstakeholder,alsoevaluatedasonevoteoneachcommittee

15


17/78


18/78

17


Brands 26%Evaluationbasedonthefollowing: Concept,brands(local,regional,national)andtheme

development

Quality,varietyandcreativityofofferings

Visualpresentationofofferings

Creativeandinnovativedesign,designtheme,quality

of

finishes

and

graphics CompliancewiththeConcessionsDesignGuidelines

17


19/78

18


Economics/Financialreturn23%ProposalswerescoredbasedonhighestMinimum

AnnualGuarantee

(MAG),

Percentage

rent

and

Capitalinvestmentreceivingmaximumpoints

Proposalsforeachpackagewerecomparedtothe

highestscoring

proposal

for

each

package

and

awardedapercentageofthemaximumpointsbasedonthedifferentialbetweentheirfinancialoffersandthehighestscoringproposers

18


20/78

19


SalesprojectionsforeachproposerwerecomparedtotheCitysconsultantestimatesand

cappedat

no

more

than

10%

of

that

estimate

Temperedtherevenueprojectionspresentedinproposals

Percentage

rental

rates

applied

to

inflated

or

unreasonablesales

figures

would

give

such

proposalsanunfairadvantage

19


21/78

20


OperationalPlan 12%Evaluationbasedonthefollowing: Experience

of

proposed

on

site

management

staff

StaffingPlan

Customerserviceandemployeetrainingprograms

Deliveryandstockinglogistics,inventoryandcashcontrolmethods

Marketingefforts

Retentionplanforexistingemployees

20


22/78

21


FinancialCapability12%Evaluation

based

on

the

following

formulas: InvestmentCapacityRatio

deductionofpoints

forlackofplan,documentation,andcashinvestment

Ratioof

capital

on

hand

as

afactor

of

monthly

operatingexpense

Historyofprofitability pointsgivenforyearsof

demonstratedprofitability

Historyofnocanceledorforfeitedsurety

21


23/78

22


ACDBE 15%Evaluationbasedonthefollowing: ACDBE

Plan

or

Policy

submitted

by

the

Proposer

ProposersHistoricalUtilizationofDBEs/ACDBEsinpreviouscontracts

MeaningfulrolesandparticipationofACDBE/DBEfirmsintheoperation,structureofmanagement/ownership,

jointventuresandorsecuredcontractsforgoods

and/orservices,

both

existing

and

proposed

AcknowledgementofFederalACDBERequirements

22


24/78

23


Experience 12%Evaluationbasedonthefollowing: Experience

with

development,

operation

and

managementoffoodserviceestablishmentssimilartothosebeingproposed

Experience

with

the

development,

operation

and

managementofanairportconcession

Qualityofexistingfacilitiesoperatedbyrespondent Businessreferences

Experienceof

the

architectural/design

team

in

comparablefacilities

23


25/78

24

Right

of

First

Refusal

(ROFR)

24


26/78

25

RightofFirstRefusal

Inordertoimplementthisprovisionofthe

plan,it

was

necessary

to

develop:

Valuesofspacesthatwouldconstituteabasisforestablishingthe27%rightofrefusal

Aselectionprocessforrandomlyallocatingthe27%

25


27/78

26

RightofFirstRefusal

TheCity

worked

with

its

consultant

to

create

aformulatodeterminethevalueofeachpackage

(storelocation)ofconcessionsintheterminal

Theformula

was

based

on

weighted

factors

to

determinevaluesofeachpackage

Estimates

included

industry

averages

for

each

retail

conceptforeachpackage

Estimatestookintoaccountlocationsandexposure

topassenger

traffic

counts

26


28/78

27

RightofFirstRefusal

Aspresented

to

Council

on

December

15

th

2010,thevalueofthepackageswerebasedonthefollowingweightedcriteria:

Totalsquare

footage

10%

Salesestimates 40%

EBIT(EarningsBefore

Interest&

Taxes)

50%

Thisrepresentsearningsminusoperatingexpenseanddepreciation

Calculatedvalues

were

rounded

to

the

nearest

3%tohelpachievethe27%ROFR

27


29/78

28

RightofFirstRefusal

SincetheF&Bhad15packagesandtheretailhad10packages:

Packageshad

to

be

valued

in

away

that

would

allow

the

totalforROFRtoequal27%exactly

Whilenotallpackageshadequalvalue,byusingmultiples

of3,

the

various

combinations

could

add

to

27

exactly

However,ifpackageswereselectedindividually,thechancesofdrawingshortofordrawingoverthe27%were

possiblein

many

scenarios

LikethegameBlackJack,theincumbentscouldbust

and

beshortofthefull27%

28


30/78

29

RightofFirstRefusal

Toensurebothincumbentsreceivedanopportunity

for

the

full

27%,

City

engaged

a

mathematician

to

calculateallofthepossiblecombinationsof

packagesthattotaled27%

Thisprevented

either

incumbent

from

drawing

packagesinasequencethatcouldleavethemwith

lessthan27%withnoremainingpackagessmall

enoughto

get

to

27%

29


31/78

30

Allcombinationsthataddupto27%were

determined

mathematically

Theincumbentsthenselectedaspecificcombinationofpackages

SeeAppendix

for

specific

methodology

RightofFirstRefusal


32/78

31

RightofFirstRefusal

Allpossiblecombinationswerenumbered

F&Bhad769possiblecombinations

Retailhad

34

possible

combinations

Separate,equalsizedslipsforeachnumber

representing

a

specific

combination

were

printed

AccountingfirmofFrazierandGillswasengagedtoverifyallslipswereputintocontainerfor

drawing

31


33/78

32

RightofFirstRefusal

Lotterywas

held

January

12,

2012

publicly

and

on

thewebcast

Lotterycontainers

were

immediately

taken

by

securitytothePolicePropertyroomforprotective

custody

Incumbentswere

then

given

the

terms

of

the

highest

scoringproposalforeachofthepackagesthey

selected

Bothweregiven30daystomaketheirdecision

32


34/78

33

RightofFirstRefusal

Pertheamendment,theincumbentsmustmatchthetermsofthehighestscoring

proposal

Minimumannualguarantee

Percentagerental

rate

Minimumcapitalinvestment

Operational

commitmentsComparablebrands

33


35/78

34

ACDBE

34


36/78

ACDBE


37/78

36

ACDBE MajorOutreacheffortsweremadepriortosolicitation

Presolicitation

outreach

events;

notice

of

events

emailedtoentireCityvendordatabaseandadditional

vendorsprovidedbyLoveField,approximately350

vendorswere

notified

December9,2010attheDallasCityHallAuditoriumL1FN,

December16,2010attheDallasExecutiveAirport

January6,

2011

at

the

Frontiers

of

Flight

Museum,

January13,2011attheDallasFireRescueTraining

36

Note: during the outreach events, vendors were asked to register asvendors with the City and they were provided with the specificcommodity codes to be used for solicitation notifications.


38/78

37

ACDBE

Advertised

in

the

Dallas

Morning

News

February17&24,2011

March8,2011 PreproposalMeeting

322vendors

noticed

by

Advantage

Financial

procurement

system

81vendorsattended

RFPwas

open

for

17

weeks

for

many

questions

and

enoughtimetopreparequalityproposals

City

answered

268

vendor

questionsCityissued8addenda

37


39/78


40/78

39

Plancalledforvariouscontracttermstobeincluded

ContractLengths

Termwill

be

7to

9years, plus2oneyearextensionsattheCitysoptionfortheF&B

Termwillbe7years,plus2oneyearextensionsatthe

Citysoption

for

the

Retail

Dependsonconcessionstartdates

Productstobesoldatstreetpricingwithemphasison

brand

names

GeneralTerms

39


41/78

40

GeneralTerms

KeepWiFi/BroadbandrightsfortheCityofDallas

Establishprocedures

to

ensure

good

customer

serviceSecretShopperprogram

Establish

strong

customer

satisfaction

measurementsShortcureperiod(timeallowedtofixproblem)NonalcoholicbeveragescanbesoldatbothRetailand

FoodandBeveragelocations

Evaluationof

performance

to

include

peer

airport

and

vendorcomparisontobeaddedtoothercriteria

40


42/78

41

Generalterms

Reserverightsregardingcertainproductstobeofferedintheterminal

Waterbrand

(except

National

franchise

accounts)

Pouringbrandrights(exceptNationalfranchiseaccounts)

Coffeebrand

(except

National

franchise

accounts)

Maintainalcoholicbeveragesalesrightswithintheterminalcommonareas(notattheF&B

locations)

41


43/78

42

GeneralTerms

Miscellaneous

Cancellationfor

convenience/compensation

terms

Providingforpropertransitiontermsatendofcontract

Vendingrights

remain

with

the

City

of

Dallas

FutureproductdeterminationrightsremainwithCityofDallas

42


44/78

43

Ongoing

Contract

Management

43


45/78

44

OngoingContractManagement

Ateamhasbeenassembledtofacilitatethebuildoutoftheconcessionspaces

Citystaff,HenselPhelps,Corgan,andProjectManagementgroupwillworkwithconcessionaires

tocoordinate

all

aspects

of

finishing

spaces

AllactivitieswillbecloselymonitoredtoensureconcessionspacesopenandoperatingbySpring

2013opening

of

first

11

gates

in

new

terminal

44


46/78

45

OngoingContractManagement

Willconductemployee/contractorscreening

Implementsecret

shopper

program

Citywillfinalizeinventorystorageanddelivery

coordinationCentralizedreceiving/inspectionpointtobe

constructedaspartofLFMP

Ongoingaudit

and

contract

compliance

45


47/78

46

Results

46

R lt


48/78

47

Results

Proposalsclosed

July

22,

2011

110proposalswerereceived

85F&B

25Retail

Oct.31 Nov.16 Allvendorsweregiventheopportunityto

giveapresentationtoevaluationcommitteemembers

NeitherIncumbent,DallasLoveFieldJointVentureLtdnorHudsonRetailDallasJoint

Venturesubmitted

proposals

47


49/78

48

Results

Perthecontractamendmentswitheach

incumbentfor

an

extension

of

operation

into

theconstructionperiod,bothexercisedtheir

RightofFirstRefusal

48


50/78

49

Results

DallasLoveFieldJointVentureSelectedFood

andBeverage

Packages

2a,

3,

10,

and

11

Offeredmatchforallfourpackages

HudsonRetailDallasJointVentureselected

RetailPackages4,6,7,9,and10

Offeredmatchforallfivepackages

49


51/78

50

Results

Afterright

of

first

refusal

decisions

were

made,

theevaluationprocesswascompletedandthe

highestscoring

proposals

finalized

Processyieldedstrongproposalsandmetfinancialgoals

CitySalesProjection $57.5millionVendorSalesProjection

$57.7million

Proposalsrepresent

both

local

vendors

as

well

as

Nationalfirms

50


52/78


53/78

52

Recommendation

Staffrecommends

the

following

awards

for

Food&BeverageConcessions:

52

Concessionaire Package(s)

GinaPuenteVentures,Inc. 1

DallasLoveFieldJointVenture,Ltd 2a,3,10,11

HostInternational,

Inc. 4,

6,

8,

9

PopFourLoveField,JV 2b,

HGMultiplexRegaliDallasJV 5,7

TheGrove 12,

13

DickeysBarbecueRestaurants,Inc. 14


54/78

53

ACDBEParticipation

FoodandBeverage

53

Package(s) Concessionaire ACDBEParticipation1 GinaPuenteVentures,Inc. 100%

2a,3,

10,

11 Dallas

Love

Field

Joint

Venture,

Ltd 100%

4,6,8,9 HostInternational,Inc. 49%

2b, PopFourLoveField,JV 23.5%

5,7 HGMultiplexRegaliDallasJV 25%

12,13 TheGrove 100%

14 DickeysBarbecueRestaurants,Inc. 40%

Brands/Concepts Food and Beverage


55/78

54

Brands/Concepts FoodandBeverage

54

Package(s) Concessionaire Brand/Concept

1 GinaPuente

Ventures,

Inc. Sky

Ranch

2a,3,10,11 DallasLoveFieldJointVenture,Ltd ChilisToo,CantinaLaredo,

CampisisPizzaandSonic

4,

6,

8,

9

Host

International,

Inc. Cool

River,

La

Madeleine,

PaciugoGelato,Starbucks

andChickFilA

2b, PopFourLoveField,JV CruWineBarandBrueggers

Bagels5,7 HGMultiplexRegaliDallasJV Jasonsdeli,BaskinRobbins,

TexpressGourmetand

DunkinDonuts

12,13 The

Grove Moes

Southwest

Grill

and

ManchuWok

14 DickeysBarbecueRestaurants,Inc. DickeysBarbecue


56/78


57/78

56


58/78

57

Recommendation

Staffrecommendsthefollowingawardsfor

RetailConcessions:

57

Concessionaire Package(s)

HostInternational,Inc. 1

HGMultiplexRegaliDallasJV 2,3,8

HudsonRetailDallasJV 4,6,7,9,10

TwoPodnersTPS,LLC 5


59/78

58

ACDBEParticipation

Retail

58

Package(s) Concessionaire ACDBEParticipation1 Host

International,

Inc. 49%

2,3,8 HGMultiplexRegaliDallasJV 25%

4,6,7,9,10 HudsonRetailDallasJV 25%

5 TwoPodners

TPS,

LLC 51%


60/78

5959

Package(s) Concessionaire Brand/Concept

1 HostInternational,Inc. DMagazineNews,TexasMonthly

Newsand

Creative

Kidstuff

2,3,8 HGMultiplexRegaliDallasJV HudsonNews,FairParkTx,Billy

BobsTexasandFireCZ

4,

6,

7,

9,

10 Hudson

Retail

Dallas

JV CNN

Newsstand

Dallas,

Mallasadi

MensBoutique,TechOnTheGo,

Spectacles,Travel&LeisureTravel

StoreandTheCowboyShop

FamousTexasBoots

5 TwoPodnersTPS,LLC EASports

Brands/Concepts

Retail


61/78

60


62/78

61

N S


63/78

62

NextSteps

Afteraward

by

City

Council,

staff

will:

Issuenoticetoproceedtoapprovedvendorsto

completeand

submit

design

and

architectural

planstoCityforreviewandapproval

MeetwithManagementteamtomoveforwardwith

finish

out

Coordinatereceivinganddeliveryprocess

Assistin

design

and

construction

activity

62


64/78

63

Appendix


65/78

Option4

AsbriefedtoCityCouncilAugust2010

64


66/78


67/78


68/78

67


69/78


70/78


71/78

70


72/78

71


73/78

MemberCompositionof

EvaluationCommittees

72

Food and Beverage Concept Committee


74/78

73

FoodandBeverageConceptCommittee Member

CompositionDepartment Position

Aviation RealEstateManager

Aviation ContractComplianceManager

Equipment&BuildingService AssistantDirector

Park&Recreation CapitalFinancialManager

DallasWaterUtilities AssistantDirector

ConventionCenter AssistantDirector

Library AssistantDirector

SouthwestAirlines ManagerProperties

Retail Concept Committee


75/78

74

RetailConceptCommittee Member

CompositionDepartment Position

Aviation AssistantDirector

Aviation FacilitiesSuperintendent

EconomicDevelopment AssistantDirector

PublicWorks

&

Transportation Assistant

Director

Housing AssistantDirector

Park&Recreation SeniorParkManager

SouthwestAirlines Manager

Properties


76/78


77/78

LotteryCombinations

CalculationHelp

76


78/78

love field concessions briefing february 21

Documents