A key firm in proposed KCI concessions contract got pushed out of smaller airport

The principal food and beverage company included in Kansas City International Airport’s preferred concession bid was recently pushed out of a much smaller airport after experiencing financial and operational challenges.

Last week, city officials announced Canada’s Vantage Airport Group as the leading contender to run food, beverage and retail at the city’s new $1.5 billion airport terminal. A city council committee discussed the company’s proposal Wednesday morning but held off on making a decision.

While most of the discussion has so far centered on the local brands that Vantage plans to bring into the airport, the company also plans to bring in other outside firms to help manage operations. Those include Marshall Retail Group, RMD Holdings and OHM Concession Group.

Based in St. Louis, OHM was identified by Vantage officials as the principal food and beverage operator in their presentation to city council. OHM, which stands for Outstanding Hospitality Management, got started in 1998 when brothers Vinod and Ghanshyam Patel opened a Great American Bagel store at Lambert International Airport in St. Louis.

Now the company operates concessions at airports across the country, including in Boston, Indianapolis and Baltimore.

But the company recently struggled to meet its commitments running restaurants at the much smaller Greenville-Spartanburg Airport in South Carolina. In January 2019, the airport commission there directed staff to replace OHM with another company or negotiate a buyout after it “experienced financial and operational challenges.”

Minutes from airport commission meetings show OHM owed the airport for unfinished construction, past due fees and lost revenues. But those documents say the company did not have the cash to satisfy existing and future obligations.

Tom Tyra, spokesman for the airport, said OHM Concession Group managed five restaurants at the airport from January 2016 to July 2020 — Chick-fil-A, The Kitchen by Wolfgang Puck, DC-3 Hot Dogs, the Thomas Creek Grill and RJ Rockers Flight Roo.

The Greenville News reported that OHM came onto the scene as part of a “comprehensive concessions redevelopment” at the airport, which is known as GSP by locals.

“This fully completes the vision in the delivery of food and beverage services at GSP, as a part of our overall terminal renovation project,” airport district president and CEO David Edwards said in 2016.

Tyra did not respond to The Star’s follow-up questions about OHM’s tenure at Greenville-Spartanburg Airport.

That operation is much smaller than Kansas City’s commercial airport. Before the pandemic, GSP recorded about 2.6 million passengers in 2019. By comparison, Kansas City saw nearly 13 million passengers that year.

By May 2020, according to meeting minutes, airport leaders had decided to buy out OHM’s remaining contract. GSP airport commissioners unanimously voted to terminate their agreement with OHM and spend $1.2 million purchasing the company’s local assets.

“The alternative is to issue a default letter to OHM outlining all of the open and unresolved contractual issues which could result in protracted litigation and an impact on customer service,” read minutes of the commission’s May 26, 2020, meeting.

In an email to The Star, OHM’s Richard Chinsammy blamed the problems in South Carolina on the pandemic, though airport documents show the board began considering changing vendors in 2019, well before the coronavirus upended the industry.

“In May 2020, every operator in the industry was experiencing financial & operational challenges due to the impact of COVID-19,” wrote Chinsammy, the company’s executive vice president and business development officer. “At Greenville Spartanburg Airport, OHM accepted a buyout offer by the airport authority.”

OHM has a variety of involvement in different American airports. In St. Louis, for example, the company operated nine restaurants before the pandemic. Eight of those restaurants, which included Jamba Juice, Dunkin’ and Great American Bagels, were subleases with the airport’s main concessionaire HMS Host, which was also a bidder for KCI’s new terminal.

But in the Florida Panhandle, OHM operates all foodservice operations at Pensacola International Airport. Those include a Chick-fil-A, two Einstein Bros. Bagels, a Freshëns and two Pensacola Beach House restaurants.

Lewis Garvin, spokesman for the Pensacola airport, said that facility had experienced no problems with OHM.

“That’s our only food and beverage contractor,” he said. “We have a good relationship with OHM.”

Still, OHM and other pieces of Vantage’s proposal will likely face more scrutiny from the council. OHM’s history in South Carolina was briefly mentioned at Wednesday’s meeting.

City officials have not released any of the five bids to the public that they received to run the concession program at the new airport terminal. But last week, city staff said they could make them available to council members who wanted to see Vantage’s proposal or any of the others that were not recommended by a city selection committee.

Councilwoman Katheryn Shields said she hasn’t had time in her schedule since then to go to the airport to look at the other bids, but that part of what the committee does is rely on the selection committee.

“Now that doesn’t mean I won’t have a lot of questions,” Shields said, adding that the process would be slower if everyone had to sit in on every screening.

“I’m just open to hearing what the presentation is and having our questions answered,” she said.

On Wednesday, she urged for more transparency in not only the concession contract, but in all city bids.

Councilman Eric Bunch, Shields’ counterpart in District 4, hadn’t heard of the problems OHM had in South Carolina. But he said he assumed the selection committee had discussed it. While the bidding process for the lucrative contract has occurred largely outside the public eye, Bunch defended the city’s process as a standard procurement process.

While he expects plenty of questions from city council members over the proposed agreement, he doesn’t see any reason why Vantage and its partners won’t ultimately win council support.

“I don’t anticipate any sort of controversy over it,” Bunch said. “Short of some crazy catastrophe, I don’t see why this shouldn’t go over smoothly without any issue.”

Because the bids have not been released, it’s unclear exactly what restaurants OHM will operate at KCI’s new terminal. City officials did not say whether they were aware of OHM’s issues in South Carolina, but said their contract would be with Vantage, not OHM.

“Vantage would be ultimately responsible for the success of the concessions program at Kansas City International Airport,” said aviation department spokesman Joe McBride.

At Wednesday’s committee meeting, aviation director Pat Klein said airlines vetted various companies vying for the airport contract on behalf of the city.

Chinsammy, with OHM, described the company’s relationship as a subtenant under Vantage’s proposal. He said the firm would build and operate local Kansas City restaurants through licensing agreements. He said the company has experience operating airport restaurants under a variety of models.

Vantage officials said their company would maintain responsibility for the development, operation and management of the concession program while OHM works as a subtenant.

“OHM does not have sole responsibly for the food and beverage operations, and is one of many subtenant operators in our program,” said Vantage spokeswoman Kate Donegani. “Vantage is ultimately responsible for the success of all of our subtenants.”

Vantage was aware of the issue in South Carolina, Donegani said, “and we have done due diligence on all our prospective subtenants before including them in the program.”

In Kansas City, Vantage proposes using the developer model, in which that firm would not operate any concessions directly.

Rather, they plan to develop and build out the terminal space and enter into subleases with other operators and tenants. The other four bidders proposed a master concessionaire model, in which one firm can run all or some of the food service operations in the airport.

That distinction was already scrutinized by council members at last week’s presentation.

“The developer model is not as commonplace,” said Carol Ward, editor-in-chief of Airport Experience News, which covers the industry. “But it’s certainly been around for some time and has been used by some of the bigger airports across the country.”

These contracts are oftentimes hotly debated and sometimes lead to litigation from losing bidders. Kansas City’s is one of the most high-profile airport contracts to hit the U.S. market since the pandemic, Ward said.

“It’s a big prize. This is a brand new terminal so it’s a big deal,” she said.

Millions are at stake for the companies involved that hope to capitalize on a captive audience. But the city also has a vested interest in getting the contract right.

As has been the trend in almost every recent American airport project, Kansas City leaders want the airport to feature local brand names and provide travelers with a sense of place.

“Ultimately, it’s the first impression of the city to many visitors,” Ward said, “and they want to make sure they reflect the character of the community.”

The Star’s Cortlynn Stark contributed to this story.