New venture flying high: Concessions International looking to branch out in airports across the country

Black Enterprise, Sept, 1996 by Paula M. White

About half of the civilized world recently descended on Atlanta, thanks to the Olympic Games. Those who came via the Hartsfield-Atlanta International Airport, with grumbling stomachs, soon discovered they had no problem when it came to grabbing a quick meal once on the ground.

That nobody went hungry is the result of an enterprising partnership between Herman J. Russell of H.J. Russell & Co. (No. 4 on the BE INDUSTRIAL/SERVICE 100); Jesse Hill Jr., former chief executive of the Atlanta Life Insurance Co.; and Felker W. Ward, an attorney who owns his own investment banking firm in the Atlanta area. These men were awarded a contract at the airport earlier this year to expand its concession outlets.

Their company, Concessions International (CI), bills itself as the third largest food and beverage airport concessions company in the U.S. The firm operates 26 facilities in the Atlanta airport, including Houlihan's, Wendy's, the Buckhead Marketplace, Domino's and Wall St. It also runs facilities at 11 other airports, including ones in Denver, Orlando and St. Thomas.

Founded in 1979, CI was formed when Russell invited longtime friends Hill and Felker to join him in a joint venture supplying eateries to Los Angeles International Airport. Each investor now owns a third of the venture. "It attracted my interest when I realized this was a business that African Americans had not engaged in a significant way," says Hill. "Usually when blacks are working in airports, we're relegated to shoe shine stands."

Hill recalls the months that CI spent trying to crack Sea-Tac International Airport in Seattle. "The first offer they came to us with was for a shoe shine stand, which we declined. Then they came back and offered an ice-cream parlor. We turned that down too." After repeated attempts at larger, high-profile shops at the airport, CI finally broke through, ending up with approximately 30% of the airport's concessions, including an array of retail operations and eating establishments. "We pride ourselves on creating managerial and executive positions in airports that could not have been achieved if we were restricted to shoe shine stands and ice-cream parlors," Hill says.

According to Hill, most airport contracts are granted in five-, 10- or 15-year blocks. CI is constantly looking for airport contracts across the country that are expiring, giving the company an opportunity to move in. In fact, CI has grown so large, with roughly 1,200 employees, that it now goes after bids as a prime contractor rather than looking for minority set-aside business. According to Hill, CI's major competition is Host Marriott Services, a leading international concessions company controlling roughly 70% of airport concession contracts.

There are drawbacks to opening an airport eatery, explains Hill. Just responding to a request for a proposal, the first step in securing a contract, can easily exceed $100,000. Secondly, many airports are leaning toward requiring well-established franchises, such as a Wendy's or a McDonald's, which have to be paid royalties for the use of their names. Lastly, airport rents can run extremely high.

But if you're at the right place at the right time, the business can also be extremely lucrative. According to Ruth Davis, CI's senior vice president of business development, the company expects a 20%-30% spike in revenues this summer. This is due largely to the Olympics and Paralympics in Atlanta. The company's unaudited revenues for 1995 were $45.9 million.

And its plans for the future? CI has its sights set on airports in New York, Philadelphia, Chicago and Miami, where new contracts will be coming up. "The goal is to expand. Host Marriott has contracts that will carry them into the 21st century. So we have to wait for those to expire. But then it's a bidding situation," says Hill. And let the games begin.