PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6c 
ACTION ITEM 
Date of Meeting    September 11, 2014 

DATE:    September 3, 2014 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
Deanna Zachrisson, Business Leader, Airport Dining and Retail 
SUBJECT:  Lease and Concession Agreement for a full-service restaurant at Seattle-Tacoma
International Airport 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to negotiate and execute a
lease and concession agreement with the proposer selected in the Port's current third-party
Competitive Evaluation Process (CEP) to operate a full-service restaurant in the South Satellite
for a term of ten years. The draft lease (Exhibit A) is not necessarily the final version and is
subject to negotiation within the stated parameters in the memorandum. 
SYNOPSIS 
The Airport's South Satellite has inadequate food service capacity. Currently, there is only one
full-service restaurant, one coffee location and two quick service units to service more than 2
million annual passengers.  In recognition of this food service shortage, the Commission
approved the design (March 8, 2011) and construction (July 24, 2012) of a new full-service
restaurant shell space in the west end of the satellite (Exhibit B). The Port completed the
construction of this shell space in late 2012. In May 2013, Airport staff hosted an outreach event 
for this leasing opportunity. As a result of this outreach, the Port received five concept proposals
from three operators. At this time, Airport staff would like to move forward and negotiate a
lease agreement with the objective of starting operations before the summer travel season in
2015. 
BACKGROUND 
On May 27, 2014, Airport staff briefed the Commission on the ongoing work with the
development of the Airport Dining and Retail master plan. One point of emphasis with regard to
passenger demand  both current and future  was that the North and South Satellites lack
adequate capacity for food service and retail. With regard to the South Satellite, the available
square footage for restaurants has not increased notably since the facility was built 40 years ago. 
Existing restaurants have no available footprint for expansion. Food and beverage sales in 2013

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2014 
Page 2 of 6 
reached $4.10 per enplaned passenger, compared to the Airport average of $6.30. This metric
indicates that there is inadequate capacity to serve customers. Existing operators and the Port are
aware that business is lost during peak times due to long lines. On the positive side, the fullservice
restaurant, Dungeness Bay Seafood House, operated by HMSHost, was renovated and
expanded in 2011 and its performance has improved dramatically. However, without an
additional restaurant in the South Satellite, the Airport will continue to provide inadequate food
service and lose easily available revenue. 
The new South Satellite restaurant will mirror the configuration of the North Satellite with its
newer 1,774 square foot restaurant (Bigfoot Food & Spirits). In 2013, this North Satellite
restaurant achieved $3.2 million in sales on enplanements of 3.3 million without cannibalizing
sales at the other full-service restaurant. This suggests that the 1,500 square foot South Satellite
restaurant, with an appealing concept and skilled operator, should be able to achieve sales in the
neighborhood of $2 million - $2.5 million or approximately $1,500 per square foot in its first full
year on enplanements of approximately 2 million. This would provide about $200,000-$250,000
in new revenue to the Port. 
All three companies that have submitted concept proposals are firms that operate restaurants in
multiple U.S. airports. The firms have submitted multiple concept proposals, all of which meet
the Port's objective to reinforce a local 'sense of place' in the South Satellite. The concepts are
proposed in partnership with local 'celebrity-chefs' or are locally known concepts.  The local
partnerships are achieved either as licensing agreements or joint ventures. 
The solicitation process for this restaurant is consistent with the approach used with a single-unit
opportunity: a third-party Competitive Evaluation Process. In this process, a new business
opportunity is announced via public outreach and paid advertising. The opportunity is described
in detail on the program's leasing website (lease.seatacshops.com), and it is also via this website
that interested businesses can submit an application for initial evaluation of qualifications. The
Port's consultant evaluates these applications and assures that proposers meet the minimum
qualifications for the opportunity. The consultant then solicits additional information from
qualified proposers such as financial statements, concept information (including menus/planned
merchandise), space renderings and a pro forma for the entire term of the lease. The consultant
evaluates the proposals based on the operators' experience and qualifications (including
operations in other airports or high-volume facilities), the proposed concept (including menu
options and pricing), design implementation (including completed build-out quality in other
facilities) and the proposed rent offer to the Port. Upon conclusion of this evaluation, the
consultant provides the Port with its evaluation and rationale for the selection of a preferred
operator. This restaurant will dramatically improve the customer service experience in South
Satellite by adding much-needed food service capacity. It will reinforce a desired 'sense of
place' with a new locally-themed restaurant concept and will increase non-aeronautical revenues
with the addition of the new operation.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2014 
Page 3 of 6 
This particular opportunity was offered in an outreach effort in May 2013. It was at this time
that the leasing consultant website for the Airport Dining and Retail program was launched
(lease.seatacshops.com).  The leasing website provided detailed information about the location,
size, available infrastructure, anticipated enplanement traffic as well as the Airport's desired
concept. Restaurant operators interested in the opportunity first submitted an online application
with information to determine if they met the minimum criteria.
The Port's leasing consultant (AirProjects, Inc.) initiated a dialogue with the qualifying firms
about their proposals. The proposing companies submitted information to substantiate financial
capability, detailed concept information including sample menus, storefront renderings, and a
financial pro forma for the entire term of the lease. The Port's consultant received five complete
proposals by the deadline date and will evaluate the proposals in accordance with the criteria
outlined above for the Competitive Evaluation Process. The Port's consultant will provide 
Airport staff with its recommendation for a preferred tenant/concept. Airport and Port legal staff
are responsible for negotiating an agreement. Presuming that the Port is able to negotiate a lease
agreement in accordance with the timeline outlined below, the Airport will be able to add this
much-needed capacity before the summer travel season in 2015. 
REQUEST JUSTIFICATION AND DETAILS 
Approval of this lease will allow the Port to dramatically improve its food service offering in the
South Satellite. In addition, the new restaurant is likely to generate at least $200,000 annually in
new Port revenues. The restaurant operation will create approximately 40 management and nonmanagement
jobs. 
SCOPE OF WORK AND SCHEDULE 
Scope of Work and Schedule: 
Milestone                       Schedule 
Commission Approval               September 9, 2014 
Complete Evaluation                September 19, 2014 
Commence Negotiations             September 25, 2014 
Conclude Negotiations/Legal Review      October 15, 2014 
Execution of Agreement              November 1, 2014 
Initiate Design Review Process           November 10, 2014 
Design Approvals Complete/Permitting     February 28, 2015 
Begin Construction                  March 15, 2015 
Construction Complete/Open for Business   June 1, 2015

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2014 
Page 4 of 6 
FINANCIAL IMPLICATIONS 
The lease term will be ten years with no option to renew. The Minimum Annual Guarantee
(MAG) and rent will be negotiated with the winning proposer. Airport staff anticipates that the
Port will receive no less than 10% of gross sales. 
The Airport and its consultant are in the final stages of the proposal review as the proposers have
been asked to confirm their proposals and financial assumptions. However, the initial financial
offers by all of the proposers are very similar. This is indicative of the Airport restaurant
business where the variables such as investment costs and costs of operation are fairly consistent
regardless of operator. The restaurant business is a notoriously risk-filled endeavor, and it is no
different in an airport environment. Airport staff anticipates that there may be a reduction in
enplanement activity in the South Satellite when Delta Airlines relocates to Concourse A in
2018/2019 in conjunction with the opening of the new International Arrivals Facility (IAF).
Another air carrier will assume Delta's gates in the South Satellite, but it is uncertain what the
difference in passenger activity will be, largely dependent on the carrier and its fleet type. This
information has been provided to all of the proposers to take into account in their pro formas. 
Each of the three proposers are known within the airport dining industry for their comprehensive
pay, benefits and training programs for their employees, and can substantiate far below industryaverage
turnover among their staff. There is little concern that their standard pay and benefits
practices would fall below any standards expected by the Port. There is a risk of reversal of the
initial State Superior Court judgment on the applicability of the City of SeaTac's wage ordinance
at the Airport. This eventuality will be considered in proposed lease language (Exhibit A). 
STRATEGIES AND OBJECTIVES 
This project supports the Port's Century Agenda goal to "advance the region as a leading tourism
and business gateway" by providing 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 
Economic Development 
The Airport Dining and Retail program places a high value on the concurrent pursuit of positive
economic, community, customer service and environmental stewardship outcomes in the
selection of new operators. The pursuit of this opportunity is clearly consistent with these
values. 
This lease and concession agreement will contribute to the achievement of the Airport's business
plan objectives of "maximizing non-aeronautical net operating income" by generating new nonaeronautical
revenues. The Airport Dining and Retail budget will be built upon the assumption
of new revenue generation from this restaurant beginning in June 2015.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2014 
Page 5 of 6 
Environmental Responsibility and Community Benefits 
From the point of lease execution, this restaurant will begin generating benefit for the Airport
and the broader community.  The new operator will employ architects and engineers for the
design as well as contractors for its initial construction, and skilled laborers for ongoing
maintenance and repairs. Building materials will be procured locally in accordance with Port
environmental standards, and once the restaurant is operational, generate a benefit to the many
suppliers for the restaurant.
The restaurant is expected to require up to 40 employees. It will operate seven days a week, 365
days a year and likely 16 hours a day. Each of the firms currently have labor contracts at other
airports and are committed to respecting the rights of association of their future employees, if
they should choose to be represented by a labor union. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1) - Delay Approval: The Port will continue to forego the revenue generation from
this restaurant. There has already been a significant delay to tenancy due to circumstances of
business uncertainty in 2013. Also, as long as the restaurant shell space stands vacant, the Port's
investment in the shell construction and installation of utilities will not generate the planned
return on investment. Revenue budget assumptions for 2015 would need to revise downward. 
The need for food service is most critical in the summer months, and delay in approval now
would eliminate the possibility of opening the new food service before summer 2015. This is not
the recommended alternative. 
Alternative 2) - New Recruitment: The Port has invested time and resources in the outreach to
the business community for this opportunity. Three firms have invested similarly in the
preparation of their proposals. Failure to negotiate an agreement at this juncture may call the
Port's ability to manage its redevelopment into question. Additionally, there seems to be little
justification to begin a new recruitment process for this opportunity as the proposals received are
all top-tier local concepts proposed by experienced operators. This is not the recommended
alternative. 
Alternative 3) - Approve Lease and Concession Agreement: Approval will make it possible to
meet the schedule to open the restaurant in the South Satellite by June 1, 2015. This new
capacity is much needed for passengers and will provide relief for the existing operators who
have no ability to adequately serve passenger demand during peak times. Both existing
operators and the Port estimate that a significant amount of business is lost to long lines during
these times, which is reflected in the lower sales per enplanement compared to the main terminal. 
The Port also will begin to realize a new revenue stream if this alternative is selected. This is
the recommended alternative.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2014 
Page 6 of 6 
ATTACHMENTS TO THIS REQUEST 
Exhibit A: Draft Lease and Concession Agreement 
Exhibit B: Power Point Presentation 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
May 27, 2014  Staff Briefing: Airport Dining and Retail Master Plan 
July 24, 2012  Action Item: South Satellite Concessions Project (CIP#C800412)
authorization for additional funding and award of construction contract (combined with
CIP#C800466). 
June 5, 2012 Action Item: South Satellite Concessions Project (CIP#C800412)
authorization to advertise for construction bids (combined with CIP#C800466). 
March 27, 2012  Staff Briefing: Interim Concessions Leasing, 2012-2014. 
March 8, 2011  Action Item: South Satellite Concessions Project (CIP#C800412),
authorization to design.