The 10-year contract, worth up to $470 million, was awarded in an 11-6 vote at the March 8 council meeting to HOU Areas, a subsidiary of international hospitality group Areas. The company recommended a series of 10 restaurants, including The Spot, Killen's BBQ, SpindleTap Brewery, Starbucks and Yard House. This would replace a group of Pappas Restaurants concepts at the airport, which includes Pappadeaux Seafood Kitchen, Pappasito's Cantina, Pappas Burgers and Pappas Bar-B-Q.
HOU Areas' bid included the company giving 22.2% of its monthly gross sales revenue to the city of Houston, to the tune of up to $104 million, compared to a bid of 15.5% or $71 million from Pappas.
"This ... equates to [a] $50 million difference over the course of this contract," Mayor Pro Tem Dave Martin said.
The bids collected in this process are scored and taken into account along with revenue projections made by consulting group AirProjects Inc. Pappas outranked Areas in every category but compensation.
Martin also noted Pappas' previous contract with the city was awarded in 2002 despite misgivings from the mayor at the time, Lee Brown. In similar circumstances, the 2002 bid saw Pappas ranking top in all categories of the bid except for compensation back to the city.
Many council members noted Pappas' ties to the community as a Houston-based operation with restaurants scattered across the Houston metropolitan area. Council Member Abbie Kamin said her first job was at a Pappas restaurant.
"You got to take the emotion out of this," Council Member Edward Pollard said to his fellow council members ahead of the vote. "You are business men and women. And in business, sometimes you have to be able to look at the numbers and take the emotions out of it, because the emotions can sometimes cloud your judgment."
Ahead of the vote, complaints ensued, including from Pappas CEO Chris Pappas, who appeared at the council's public session Feb. 28. Pappas also launched an online petition.
The process in which the city handles these bids was also called into question by at-large Council Member Mike Knox at the March 8 meeting.
"Last week I had a conversation with Mario Diaz, director of the [Houston] Airport System, and I was asking him about this, and essentially what he told me was that 'The Four Families have been there for nearly 20 years, and we need some new blood here,'" Knox said. "Now not being in a vacuum, I have to be concerned at this point that there was a predetermined outcome."
Houston Mayor Sylvester Turner responded to Knox's comments but declined to answer them.
"I'm gonna let your comments flow into the wind because it does not deserve a response from this mayor," Turner said to Knox.
It was noted at the meeting that this same process has been in place for decades and was used most recently to pass three other airport concessions contracts: two at George Bush Intercontinental Airport and one in January at Hobby Airport.
"There's no doubt that Pappadeaux's has been a great partner for us for 20 years, and change is hard. However, Areas took the opportunity to change and better their offer, and they landed in the top spot during a competitive bid," Vice Mayor Pro Tem Martha Castex-Tatum said. "And for me, this is about protecting the process."
It was also noted at the meeting that Hobby Airport was ranked a five-star airport by international airport rating organization Skytrax. Hobby is the only airport in the U.S. to hold such status, Martin said.
“We are excited to partner with the city of Houston and Houston Airports to bring a distinctive program that complements the city’s culinary virtues and ethnic diversity,” Areas CEO Carlos Bernal said in a March 8 news release from Houston Airports.
Areas plans to open its 10 concessions concepts by November 2024, according to the release.
