Can We Treat Our Captive Customers Better?

“Trapped in a world they didn’t create…” That’s a good description of consumers when they  are in airports.

Glass of wine? $19. Hot dog with fries? $15. In a lot of airports, people are charged 100 percent more for a product than would be reasonable in the outside world.

Even though most airport leases require businesses to charge prices that are competitive with nearby areas, it sure doesn’t seem that way. I took the time to look at many items for sale at an airport, and the typical markup was 100 to 300 percent over industry standards.

As a consumer, I’m sure you have experienced high prices at the airports in this country. I’m sure you have felt ripped off, but you make your purchase because you and your family are hungry.

Part of the problem is airport economics.

The rent per square foot can be more than double from what a restaurant owner would pay a half-mile down the road. They have to pay a percentage of sales or a minimum annual guarantee to the airport authority. They have to pay a lot to build out their spaces, and they likely are paying for their employees’ parking as well. Established national brands may be able to negotiate more favorable rates because of their name recognition, but smaller or local operations may not have that kind of leverage.

Captive consumers make up a segment of the restaurant/hospitality/retail industry, which  applies to stadiums, casinos, cruise ships, resorts, convention centers and amusement parks, in addition to airports.

A restaurant’s delivery fees may be higher because distributors have to go into the airport and through security. Wholesalers, figuring an airport restaurant must be making huge profits, might jack up their prices, too. On top of all that, restaurants in high-traffic areas, such as near gates or security checkpoints, often pay higher fees due to increased visibility and customer flow. 

We can also think of restaurants as captives, too. Once a restaurant signs an airport contract, it’s in it for the long haul, usually five to 10 years. 

Restaurants are an integral element of the whole financial ecosystem of an airport, generating not only fees, but also sales taxes. While factors like weather delays can negatively impact airport and airline revenue, when travelers have to spend more time in an airport, that can result in improved sales for airport businesses, including restaurants.

Captive consumers make up a segment of the restaurant/hospitality/retail industry, which  applies to stadiums, casinos, cruise ships, resorts, convention centers and amusement parks, in addition to airports.

What all of these have in common is that the guest has no other options for food and beverages when they are there. A glass of beer that would cost $6 at a local bar costs $10 to $15 at an arena, and if it’s a major game, it could be more.

A hot dog that costs $3 to $5 might cost $8 to $10 at a ballpark. This means if the consumer takes their family of four to a professional baseball game, the price for a meal (hot dog, soda, fries) will run about $20 x 4 = $80! 

Here’s why I’m writing about this.

I had been at four airports in the previous 10 days, but an experience at Midway in Chicago broke the camel’s back for me. A tuna sandwich and a Vitamin Water cost me over $18! At a local grocery store this would at most be $8. 

The quality was lousy. I received a sandwich on very dry bread with no more than three ounces of tuna and a 12-ounce drink. The total cost to the operator was probably around $3. 

I tell travelers who want to avoid high prices to pack their own food for the airport – solid snacks like sandwiches, granola bars, fruit and veggies. While they can’t take liquids through security, they can easily fill a water bottle afterward.

But that does nothing for the restaurants operating at the airport. For them to be successful serving a range of customers, from budget-conscious travelers to affluent flyers and business travelers, careful planning is required.

Overpriced menus can discourage spending, while too many low-margin offerings may undercut profitability. Restaurant pricing should reflect costs, but – out of respect for our customers — the sky shouldn’t be the limit. (Does that glass of wine really need to be $19?)

In addition, it’s important to train staff well – kitchen as well as front-of-house — so that the consumer, who knows they’re paying more for an airport meal, has a positive and pleasant experience with good food and customer service.