Major contractors experience boom in business by inking school, health care, multisite deals

Nation's Restaurant News, June 30, 2003 by Paul King

Almost all of Sodexho's business thus far involves mess hall feeding, with the exception of Miramar Air Naval Station in San Diego. There Sodexho soon will open a food court that will feature a mix of commercial brands, including Quiznos Sub, and proprietary Sodexho brands, such as Sky Ranch Grill.

One segment that is continuing to suffer from the ravages of the economy is airline feeding. The nation's two largest in-flight caterers, LSG Sky Chefs and Gate Gourmet, saw revenue drop again last year as passengers remained hesitant to return to the air in the aftermath of Sept. 11, 2001. Those who did fly found that more often than not airlines had cut costs by eliminating meal service, further eroding caterers' revenues.

Both Sky Chefs and Gate Gourmet began to see their skies brighten earlier this year, when several airlines began testing the idea of selling meals to passengers on board their flights. Partnering with such foodservice brands as T.G.I. Friday's, Eli's Cheesecake and Wolfgang Puck Worldwide, the two air caterers have created new programs to sell meals on board flights. With price points that are between $7 and $10 for complete meals, the programs could go a long way to salving the wounds Sky Chefs and Gate Gourmet have suffered over the past three years.

United, Delta, Northwest, American and US Airways are among the airlines that have experimented with a pay-as-you-eat program. US Airways recently announced that it would implement the Sky Chefs-developed In-Flight Cafe systemwide beginning July 1, except on US Airways Express flights.

In-Flight Cafe, a trademarked program, can be customized to suit different airlines, according to Sky Chefs' senior vice president of marketing, Stephan Egli.

"We believe the In-Flight Cafe program reflects the evolution of meal service for airline passengers," Egli says.

Inside the airports the picture also is becoming a little rosier, not necessarily because more people are flying but because they're spending more time inside the terminals, waiting for their planes. Increased security measures have provided an unexpected boon to airport concessionaires, such as HMSHost and Delaware North's CA One Services. Both companies report that average checks are up, with casual sit-down restaurants enjoying the best business.

In the meantime no one is shying away from airport business. Restaurant partners continue to be willing to invest in airport locations, hoping that a turnaround in Americans' flying habits is imminent.

Recently, HMSHost landed a 10-year deal at Houston's George Bush Intercontinental Airport to add several concepts, including Starbucks, Fox Sports Bar & Grill and a space-theme gift shop. The concession operator said the new outlets are expected to generate more than $60 million in revenue over the next 10 years.

In Florida HMSHost also garnered a 10-year contract commitment for Orlando International Airport that is expected to generate annual revenue of $42.5 million and include an Outback Steakhouse, a Fox Sports Bar and a Zyng Noodlery.