Portland International Airport ups the ante with 14 new Portland brands, Hollywood Theatre and Blue Star Donuts included.
Becoming a concessioner at PDX was a no-brainer for artisanal gift store/record label Tender Loving Empire.
Already a success, the retailer grew from concept to three brick-and-mortar locations plus a thriving online business in 10 years. But a spot on PDX’s Concourse D — the international concourse — offered a tantalizing opportunity to introduce TLE’s stable of artists, makers and musicians to a wider audience and lend more cachet to an already loved brand.
“This is the logical next step,” says TLE’s director of finance, Terry St. Marie, of the outpost. “It puts a cap on our Portland presence while exporting the handmade movement to a wider audience.”
Running a concession at PDX, where the rhythms and norms of a successful in-town business flip on their head, isn’t easy. Hours of operation are longer, busy and slow periods invert, and enticing staff to a location where you have to park and take a shuttle bus is hard.
Yet, in the past year, 14 new brands opened an outpost at PDX, including Kenny & Zuke’s, House Spirits Distillery and Timberline Lodge. Four more concession spaces will be announced as leases turn over by summer’s end. In all, about 35 of the 54 unique brands at the airport are Portland, or Oregon-based.
Ironically, the arrangement is challenging for the Port of Portland, too. Their nine-member concessions team scours the Northwest for companies proven enough to shoulder a seven-to-10 year lease yet still quirky enough to represent the Portland brand.
Of course, most airports bypass the hassle and just lease concessions to a third party.
That’s not an option here. The airport’s program is just too valuable. Travelers love it, spending an average of $12.97 per person per visit. Brands love it, generating $120 million in revenue annually. And, because they are ultimately responsible for operating costs, the airlines love it too. PDX’s robust program drives $16 million back as rent, making operating here less expensive and more attractive.
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“Concessions keeps operating costs down so airlines can add more flights,” explains COO Vince Granato. “More flights mean more revenue for concessions. It’s a great circle to be in.”
It’s been pretty good for Tender Loving Empire, too. In the month since TLE opened on Concourse D, the company has seen a significant revenue boost as a whole, says St. Marie, although he declines to quantify that further. Far from cannibalizing other locations there’s been a multiplier effect as visitors seek stores in town and visit individual vendors online.
The Hollywood Theatre hopes to deliver the same multiplier effect to local filmmakers with their 17-seat microcinema on Concourse C. Envisioned as an art installation, the Hollywood shows a continuous loop of locally made short films.
“Showcasing Oregon filmmakers is part of our mission,” says Doug Whyte, executive director. “Seeing their work beautifully projected with great sound is good for them and not bad marketing for us.”
About 500 travelers a day visit the microcinema, spending between 10 and 45 minutes per visit. The Hollywood raised about $500,000 in grants from Oregon Community Foundation, the Oregon Cultural Trust, Travel Portland and others to build the space. Viewing is free, and costs to the Hollywood include about $1,000 per month for insurance and janitorial services.
“It’s not much more than what we’d pay for a newspaper ad, and this is much more interesting,” says Whyte.
The sheer volume of foot traffic that passes through PDX, about 18 million per year, rivals any location that Blue Star Donuts could have chosen for a new store. Since opening in December 2016, they project to sell between 25,000 and 30,000 donuts a month, about the same as their busiest in-town store.
Not bad, considering their pre-security, Oregon Market location.
“I’ve heard that figures can be double post-security,” says Katie Poppe, co-founder and CEO, via email. While it’s true that travelers tend to rush through security and spend more time and money on the other side, the Port argues that there is no one best spot. Rent is a based on a percentage of sales, not location.
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The volume of airport sales is similar for Blue Star’s other high-performing locations, but the rhythms differ. Doughnut season in town is April through October, with the weekends bringing the highest volume. The airport is “the exact opposite,” according to Poppe. Weekdays are busier, and the winter holiday travel season delivers the biggest bump.
“This balances out our production and staffing amazingly well and makes our whole operation more efficient,” she says.
PDX traffic flows are making Erik Mitchell, owner of Cackalack’s Hot Chicken Shack, rethink the menu. His Belmont food cart and Bethany micro restaurant serve lunch and dinner starting at 11. But with one-third of passengers boarding planes between 5 and 8 a.m. daily, Mitchell is adding breakfast options.
“I have to extend my hours because the fixed costs are highest at this location,” he says.
As is the case in town, PDX’s food-cart program functions as an incubator. Terms are looser, with leases that run only 18 months with the option for either side to cancel after six. Unlike a true food cart pod, costs at the airport are high, more than Mitchell’s brick-and-mortar Bethany location. As such, he expects the revenue to be higher too.
Along with adding breakfast, Mitchell has tweaked vendors for this location. Even though he’s located pre-security, all of his incoming product must be screened.
“Not all of my suppliers are big enough to carry the insurance required to drive behind security,” he says.
The Port tries to simplify the process by providing a pilot driver and vehicle to guide suppliers to the airside loading dock, but requires them to carry business standard $1 million liability insurance coverage.
Open since May, Mitchell reports a blockbuster first two weeks. More than half of his customers are airport workers; over 10,000 baggage handlers, TSA agents, car-rental staff and the like who need a meal but don’t want to leave the building.
Interesting food choices are a perk of working at PDX. Another is a single, online job board hosted by the Port which lists any position available at the airport. If a worker leaves one business for another, and stays six months, the Port pays an incentive to both parties.
“A badged employee is a valuable asset,” explains Granato. “We’re trying to keep them here.”
The symbiotic relationship makes sense. PDX relies on its unique concessioners to keep travelers happy and offer a better bottom line to airlines. Companies see a PDX location as a business builder.
“The Portland business philosophy has always been collaborative,” says St. Marie. “The Port captures that. You see it the minute you walk off the plane.”
This article is part of a larger story on Portland International Airport that appears in the July/August issue of Oregon Business.