Business

Airport Food Concessions pricing outside contract limits

June 15, 2015

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Most people expect to pay more for food and drink at an airport, but what is a reasonable mark-up? Is more than double the street price fair?

Inweekly checked out the pre-security prices of OHM Food Concessions at the Pensacola International Airport. Pre-security is the area where Pensacola families wait for their loved ones to arrive. When we made our purchases, those eating at Einstein Bagels and drinking at Pensacola Beach House were all locals waiting on friends and family to arrive.

Two weeks ago, the mayor’s office announced that the airport’s food and beverage concessions revenues have increased substantially.

Gross food and beverage concessions sales are up by 15.4 percent over last year, and sales per enplaned passenger have increased from an FY14 average of $3.19 to $4.60 in April 2015. OHM’s gross sales of $326,143.67 in April 2015 exceeded the previous concessionaire’s highest-grossing month ($278,578.67 in July 2008) by more than $45,000.

With food and drink mark-ups ranging from 18 to 134 percent, those statistics aren’t as remarkable as they may appear, and the prices appear to be in violation of OHM’s contract with the airport. 

We also found that OHM is charging sales tax on bottled water. Bottled water is not taxable in Florida.

The city has a clause in its airport food concessions agreement to protect the public from price gouging. Section 3.4 of the OHM contract sets the prices at “street + 10%.”

“Tenant’s prices for food and beverage comprising the Permitted Use shall be the same or comparable to prices found in Tenant’s other food and beverage facilities, if any, or as determined by Director to be comparable, and shall otherwise comply with the Airport’s ‘street + 10% pricing program.'”

OHM has no other Einstein Bagels or Pensacola Beach House locations in the Pensacola area.  Inweekly is unaware of any other restaurant charging $7.63 for one regular Miller Lite Draft. For that price to be within the contract limits, the street price for a Miller Lite Draft would have to be $6.94.

It would appear that OHM’s pricing is in violation of its contract. The company also needs to stop charging sales tax on bottled water.

 

Bagel & Coffee
Bagelheads $4.95
Einstein Bagel $5.83 Airport
Difference $0.88
Mark-up 18%
Miller Lite Draft
Hurricane Grill $3.50
Beach House $7.63 Airport
Difference $4.13
Mark-up 118%
Water – 20 oz Price Difference Mark-up
Einstein Bagel $2.79
Raceway $1.19 $1.60 134%
Circle K $1.49 $1.30 87%
CVS $1.77 $1.02 58%

Note: The comparison on the coffee and bagel isn’t exactly equal. Bagelheads has a flat price for its coffee regardless size of the cup. The Einstein order was for a medium coffee, their smallest size. The Airport bottled water includes sales tax, which it should not.

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