PORT OF SEATTLE 
REVISED                        MEMORANDUM 
COMMISSION AGENDA               Item No.      6d 
ACTION ITEM 
Date of Meeting    September 11, 2014 
DATE:    September 8, 2014 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
Deanna Zachrisson, Business Leader, Airport Dining and Retail 
SUBJECT:  Amendment to Lease and Concession Agreement for Anton Airfoods dba
Anthony's Restaurant at Seattle-Tacoma International Airport 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute an amendment to
the lease and concession agreement with Anton Airfoods (operated by  HMSHost) for an
additional two years and three months under modified terms and conditions.  The draft lease
amendment is attached (Exhibit A). 
SYNOPSIS 
In order to facilitate a smooth transition of leases and concepts in the Central Terminal between
2015 and 2017, Airport staff proposes a two-year and three month extension of the lease and
concession agreement for Anthony's Restaurant, whichoccupies 7,000 square feet of space on
the north side of the Central Terminal and is operated under license agreement by HMSHost. 
The current lease length is 10 years from the start of operations in June 2005. Under the
proposed amendment, the agreement would terminate on September 30, 2017. The current
percentage rent would remain unchanged, along with all of the provisions of the current lease
agreement. This extended time of operation would assure: 1) the continued availability of food
service during the same time that other nearby food locations are impacted by construction and
2) an uninterrupted revenue stream to the Port. In addition, the percentage rent structure for
the extension period would be modified and result in increased revenue to the Port. In
2013, Anthony's generated nearly $1 million in revenue for the Port. Additionally, the extension
provides employment stability for approximately 140 employees. 
BACKGROUND 
In 2000, the Port conducted a request for qualifications (RFQ) process in order to lease a newly
constructed space on the north side of the Central Terminal. The RFQ sought a concept with "a
strong, positive identity in the Puget Sound area, offering a diverse menu with broad or universal
appeal, emphasizing local cuisine." Initially,there were three proposers that responded to the
RFQ. The opportunity was first awarded to locally owned Anthony's Restaurants. However,
before execution of the agreement, the first awardee withdrew from consideration. The second
candidate, Anton Airfoods, was chosen to operate a McCormick and Schmick's seafood

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 8, 2014 
Page 2 of 5 
restaurant under a license agreement. Shortly thereafter, McCormick and Schmick's withdrew
their interest in operating in airports.  Anton Airfoods proposed a new arrangement for the
operation as an Anthony's Restaurant under license agreement with the locally owned company.
The Port Commission approved the lease agreement in January 2003 and the restaurant opened
for business in June 2005. However, only a month before opening, Anton Airfoods was sold in
its entirety and the lease agreement was assigned to the purchaser, HMSHost. Since that time,
HMSHost has operated the restaurant.
The RFQ process sought an operator willing to make a significant investment in the Central
Terminal space for an initial term of 10 years. With uncertainty about the size of the investment
required, and due to the perceived risk of a location without close proximity to gates, the Port
also agreed to two 5-year lease options at the Port's sole discretion.  Anton Airfoods/HMSHost
invested $4.2 million in the initial build out of the restaurant, and another $400,000 in
refurbishment in 2010. The initial investment was the largest investment in a single restaurant in
any U.S. airport. All of the initial proposers offered the Port 8% percentage rent on all categories
of sales, and this became the negotiated rent in the lease and concession agreement. When the
lease agreement was approved in 2003, the Port's development consultant at the time predicted
that the Anthony's location would achieve sales of between $4.2 and $4.3 million annually, and
provide the Port with approximately $340-$360,000 in annual revenue. Anthony's has been a
success far beyond expectations as it achieved sales in 2013 of $12.5 million and generated
$997,000 in Port revenue. 
The current lease and concession agreement expires on June 30, 2015, and absent other action,
the lease becomes a month-to-month agreement with 30 days' notice to terminate in accordance
with the "hold over" provision in the lease. It is unlikely that HMSHost would cease operations
in the space; however, because of the large square footage, volume of business, and its revenue
importance, the Port should not risk the possibility of closure under the hold-over provision. It is
also important to be assured of continued operations during a period of anticipated construction
impacts to other parts of the Central Terminal. Therefore, staff is proposing an extension of the
agreement through the summer travel season of 2017. Staff recommends this action rather than
the exercise of the existing five-year option. In accordance with the program's phasing plan, the
location would be offered in a new competitive tender in 2017, to re-open with a possible new
concept or operator after completed renovations in 2018. 
Currently, nearly all of the leases for the Central Terminal food service locations expire in May-
June 2015, which is 10 years after they opened. While it is not a problem to open multiple
businesses in an airport on the same day, it is very problematic to transition their leases on the
same day 10 years later. It is also unwise to disturb business activity during the summer travel
season, when the Port and its dining and retail businesses do 30% of their annual sales.  As a
result, the phasing plan must result in some locations transitioning sooner than others and none
during peak travel periods.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 8, 2014 
Page 3 of 5 
The Airport Dining and Retail master plan phasing schedule entails the closing of two quick
serve units on the south side of the Central Terminal in September 2015. At that time, the
current grease duct venting system (which has been plagued with fire and leakage problems since
2005) will be removed from these units, and they will be reconfigured to serve both passengers
and future employees in the units more efficiently. The closure of these units will result in a
reduction in capacity until they re-open.  Upon the completion of those renovations, the
remaining quick serve units will be impacted by removal and replacement of the rest of the
grease duct venting system as well as by space reconfiguration. The Airport plans to have full
capacity of the south side of the Central Terminal restored before the summer of 2017. During
the time of the closure impacts, it is important to retain other food service wherever possible. 
The continued operation of Anthony's is not onlypossible; it is a preferred option and a logical
solution to food service capacity issues. 
Anthony's is a one-of-a-kindrestaurant in the Airport. It is the only restaurant that provides
customers with porcelain tableware, stainless cutlery (including a TSA-approved knife) and cloth
napkins. It also offers a full menu reflective of the menus offered at the local street-side
counterparts (Anthony's and Chinook's). Staff understands that the costs to operate Anthony's
to the quality standards customers expect are very high. Nonetheless, staff believes that a
competitive tender of the restaurant location is likely to generate higher percentage rent offers in
the future. For this reason, staff believes that it is in the best interest of the Port not to execute
one of the available five-year options, but rather undertake a new competitive process in 2017
when the Airport will be better situated operationally and with sufficient food service capacity to
transition the restaurant. Even if the incumbent operator were to retain the restaurant space as a
result of winning the competitive process, the Airport can expect that the restaurant will close for
some period of time for renovations in late 2017. 
REQUEST JUSTIFICATION AND DETAILS 
Approval of this lease amendment will allow the Port to sustain adequate food service in the
Central Terminal during periods of construction activity. A new competitive process for the
restaurant in 2017 will assure that the Port garners the highest possible rent for the 10-year
period following. The restaurant operation will sustain approximately 140 management and nonmanagement
jobs. 
FINANCIAL IMPLICATIONS 
As part of the negotiations with HMSHost for this proposed term extension, the company has
agreed to a modified rent structure, pending and contingent upon approval by the HMSHost
Board of Directors. Currently, as stated above, HMSHost pays 8% of all gross sales in rent to
the Port. The new proposed rent structure would be as follows: 
8% on sales up to $5,000,000 
10% on sales between $500,001 to $10,000,000 
12% on sales between $10,000,001 and greater

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 8, 2014 
Page 4 of 5 
To place this rent structure into context, below is the actual rent that HMSHost paid to the Port in
2013 (calendar year), and the rent HMSHost would have paid the Port in 2013 according to the
current proposal. The lease year for Anthony's under the extended term will begin July 1, 2015
and the new rent structure would commence on that date. 
2013 Actual Rent                     $1,093,834 
2013 Illustrative Rent (under new structure)    $1,410,870 
The proposed new rent structure will increase Port revenues for the term of the extension through
September 2017. 
STRATEGIES AND OBJECTIVES 
This project supports the Port's Century Agenda goal to "advance the region as a leading tourism
and business gateway" byproviding an extraordinary customer experience at the Airport. The
project also supports the Aviation Division's strategic goals to operate a world-class airport and
grow non-aeronautical revenues. 
TRIPLE BOTTOM LINE 
The Airport Dining and Retail program places a high value on the concurrent pursuit of positive
economic, community, customer service and environmental outcomes in management of the
program.  The proposed extended lease term for Anthony's is clearly consistent with these
values. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Allow the lease to move into hold-over status while an RFP process is
conducted. Issuance of an RFP for the Anthony's location has been unrealistic during 2014, due
to the uncertainty associated with the public discourse on minimum wages in SeaTac, Seattle, 
and at the Airport. If the Port issued an RFP before the end of 2014, the process would not be
complete in time for the expiration of the lease in June 2015. The lease would automatically
move into hold-over status. While it is unlikely that HMSHost would cease to operate the
restaurant with 30 days' notice as stipulated by the lease, the Port and the traveling public are
particularly vulnerable to business disruption due to the size and business volume of this
particular restaurant. This is not the recommended alternative. 
Alternative 2)  Execute one existing 5-year lease option. If the Port were to execute one of the
existing five-year options, the lease would expire on June 30, 2020.  This is beyond the
necessary time needed to address the infrastructure issues of the opposite side of the Central
Terminal. It also would delay the opportunity for the Port to determine if restaurant operators in
the marketplace might propose an even more successful concept and/or a more lucrative rent
offer. This is not the recommended alternative.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 8, 2014 
Page 5 of 5 
Alternative 3)  Extend the current lease agreement through September 2017. This alternative
will allow for continued operation of key restaurant capacity while there are construction impacts
to food service in other portions of the Central Terminal. An extension also provides stability in
employment at the restaurant for current employees. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Exhibit A: Draft Lease Amendment 
Exhibit B: Power Point Presentation 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 28, 2003  Approval of Lease and Concession Agreement with Anton Airfoods
to operate an Anthony's Restaurant in the Central Terminal.