Whilst the challenges of delivering growth in retail are well documented, F&B continues to be the star performer for many airports. Pragma has seen annual growth in spend per passenger of up to 15% in some locations.
In our opinion, there’s two key factors at play here. Firstly, the worldwide demand led increase in eating out. This contributes to a greater appetite for spending on food whilst travelling or in airports. In fact, F&B spend now constitutes a large share of overall airport spend in the US and globally.
Secondly, it’s supply-led with an improved width and depth of F&B propositions in airports, providing better choice, increasing penetration and average transaction values.
With a large proportion of the airport customer base engaging with their F&B offers, it’s an important and growing segment for operators. Figures show that on average 50% of passengers are eating and drinking at airports (IATA Consulting, 2017).
With this in mind, airport F&B becomes an exciting opportunity for operators looking to innovate, deliver new experience and provide true offer-driven propositions, putting customers at the heart. In this article, we’ll unpack how it is in fact, changing the face of airport retail.
The rise of the ‘new lounge’
There’s an inherent desire for consumers to find an area to relax and set-up a base within airports, often due to the pre-departure long waits. Traditionally, this meant going to airport lounges or ‘free’ waiting areas in basic common seating areas.
Today, increasingly, F&B outlets now play the role of lounges, with better quality – both in terms of offerings and décor/environment – increasing the likelihood of passengers opting to wait for flights in the Pret, Wagamamas, or locally themed concept bar.
This, in turn, has led to more F&B space at airports, in response to customer demand and operators looking at new ways to attract customers and meet their desires.
The rise of digital mobility has also been significant. With smartphones and airport Wi-Fi connection, passengers can multi-task – catch up with emails, watch Netflix, plan travel, or browse retail websites, all from the comfort of their preferred F&B outlet, with the company of a good quality flat white.
Responding to new consumer trends
Evolving consumer priorities have given rise to a range of F&B initiatives as passengers expect a seamless engagement with an airport outlet, as with their high street counterpart.
We’re seeing a significant focus on experiences within airports with adding local foodservice brands, making airport dining an extension of the vacation and offering travellers that distinct sense of place.
Local brands can account for around 40% of dining options at the average airport, with many trying to create an appropriate balance across local, regional, and global brands.
With more conscious consumers focused on sustainability, particularly within the millennial age bracket, localisation has become part of a wider focus on immersive cultural experience. Travellers care about locally sourced produce and regional supply chains as much as they care about local brands – certainly their ethics aren’t left at the check-in desk, so more operators are responding to this.
This ties into health too. Again, millennials want to know what is going into their body and where food comes from. Historically airport pizza was made from frozen dough, now it can be wheat flour, procured locally, made and cooked on the same day.
This has added complexity to process and the supply chain, but improved the customer experience; Dublin Airport is looking at how it creates a localised, experiential F&B offer – seeking new concessionaires recently, they specifically stated that the offer must showcase “the best of Ireland’s local food scene”.
Convenience is another major driver for F&B to consider. The increased streamlining of the passenger journey has seen a corresponding demand for time efficiency and convenience. So, F&B has to speed up the ordering process, through technological innovations such as mobile ordering.
Starbucks has led on this one, testing mobile order and pay in 2018. Passengers order their Frappuccino as they come through security – ready for you to walk up, grab your drink and go.
The desire for variety is integral to the increased demand for experiences, and therefore incorporates factors such as healthy eating and personalisation, both of which F&B outlets have caught on to. Dubai International Airport’s T3 features the Daily DXB food hall – a bespoke concept that aims “to guide travellers on a culinary journey” offering street food from across the globe. Moreover, they have a broad mix of healthy, customisable offers, such as Hawaiian Poke.
Elsewhere, the Prime Tavern in New York’s LaGuardia airport offers specials every night, with chefs’ sourcing produce from the local farmers market.
We’ve also seen a farm-to-terminal movement. Examples include the iconic farmers market at LAX which features grab and go meals and drinks from the restaurants and stalls located at the original Market at Third and Fairfax.
San Francisco International Airport has been at the forefront of this (combined with personalisation), recently opening the Napa Farms Market, offering locally sourced gourmet food items for plane bound travellers to assemble their own ‘picnic basket’ before boarding.
Digital disruption in airport F&B
As is the case with F&B in general, technology is increasingly being utilised to improve the airport F&B experience, with a large proportion of innovations hitting on the convenience factor. Examples include:
– Delivery services allow airports to increase F&B spend from ‘gate huggers’ and passengers who worry they might not have time for a sit-down meal. We have seen this being introduced at airports such as Amsterdam Schiphol with Deliveroo, and Toronto Pearson with Uber Eats.
– Pre-order apps such as Level Up and Grab enable passengers to order from airport F&B outlets in advance and pick up their order directly, skipping the queue. They can increase F&B spending from passengers with short dwell times, for example those travelling for business.
– Apps such as Gate Guru provide passengers with F&B unit reviews and can improve footfall to units located away from the main passenger flow.
A key component to ensure success of the delivery propositions will firstly be to ensure widespread awareness of the facility amongst passengers, which can be a challenge when the proportion of infrequent or first-time users of many airports is high; and secondly to match customer expectations with the reality of fulfilment.
On the high street we are seeing more innovations with tech-enabled operations; Café X is a robotic café bar with three locations in San Francisco, with a fully automated robotic barista; potentially a feature which could be introduced in airports to address the queues during the morning peak.
The future of airport F&B
Success of F&B in airports is down to putting customers at the heart, understanding different passenger segments and how their needs differ (short vs long dwell time, travelling alone vs in a group, seeking comfort food vs seeking authentic experiences etc).
F&B has made it work by providing quick and simple grab and go solutions in prime locations (en route to gates) while also introducing more experiential dining options which create a sense of place.
In some ways, it’s more challenging for retail because (a) different customer needs don’t translate as naturally into retail concepts, and (b) with eating and drinking being a fundamental need-state, people will actively seek out an F&B concept which reflects their requirements whereas retail concepts have to work harder to encourage customers to visit their stores.
F&B in airports has seen fantastic innovation recently, which has helped drive customer penetration and spend, but with this, comes rising expectations. As a word of caution, there have been many well-documented closures for once-popular casual dining brands on the high-street, demonstrating the speed with which customers vote with their feet and take their spend to the newest, most popular concept.
Whilst customers are less able to switch within the captive space of airport F&B, the ability to adapt quickly to new trends and emerging concepts will be fundamental to driving continued growth in the market.