Travellers spend $2b on fast food at Express airport counters
Published:Monday | October 1, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter
Express Catering Limited, which operates various food franchises at Sangster International Airport, tripled its annual profit even without much help from the latest addition to its portfolio, that of Starbucks coffee.
Express Catering has "exclusivity" for all food and beverage operations in the post-security zone of the Montego Bay-based airport, and significant operations in the pre-security areas. It operates international franchises such as Jimmy Buffet's Margaritaville, Moe's Southwest Grill, International Dairy Queen, Quiznos, Auntie Anne's, Nathans Hot Dogs, Cinnabon, Wendys, Starbucks and Dominos. Those are complimented by a number of proprietary and Jamaican food and beverage brands, including Bobsled CafÈ, Tastee Patties, Viva Gourmet Grab N Go, and Groovy Grouper.
For year ending May 2018, the food business headed by Ian Dear generated sales of US$15.7 million which is equivalent to $2 billion at its various franchises, up 10.5 per cent year on year. It netted US$3.4 million as profit, or US$0.0021 per share. That up's from $0.0006 the previous year.
During the year, Express Catering invested US$971,000 that was mainly attributed to the build-out of Starbucks locations within the airport, of which there are three. The first store was opened in the last quarter of the financial year.
"The first Starbucks Coffee outlet was introduced late during the last quarter of fiscal 2018. However, 2019 is expected to reflect close to a full year's amount of revenue from Starbucks," CEO Ian Dear said.
He adds that the company expects incremental revenue growth from the other existing offerings, and a positive outlook, amid projections of increased passenger flows for 2019 by the Jamaica Tourist Board as well as Sangster Airport operator MBJ Airports Limited.
Dear said the company also plans "aggressive" management of cost of sales and administrative expenses.
"However, the one-time savings experienced during fiscal 2018 that was related to group charges will not be a feature in 2019," he said, but noted that Express expects to maintain its expenses to revenue ratio this year.
The company's newly released annual report describes group charges as an agreement with related company Margaritaville Limited to provide management services for the day-to-day operations of the company. The charge amounted to US$1.4 million in 2017, but was nil in 2018.
Express Catering operates under a concession licence granted to it in December 2011 by MBJ Airports. The concession agreement permits the company to develop and use 31,570.70 square feet of space for food and beverage concessions at the post-security screening area.
Dear said Express paid US$4.9 million to secure the agreement at the time, inclusive infrastructure costs, and spent an additional US$1.1 million to acquire additional franchises. The company grew post-security revenue from US$9.3 million in 2011 to US$14.2 million in 2018.
The exclusivity agreement for post security ends 2022, but is subject to extension by another 10 years from that date if the company meets certain financial and customer number targets. Its pre-security food and beverage licence, which was originally granted in 2007, has been extended to March 2022.
The company holds US$12.4 million in total assets. Its book value or equity base has expanded over the year from $4.5 million to US$6.5 million.
Express Catering listed on the junior market of the Jamaica Stock Exchange in July 2017, and trades under the symbol ECL. The stock has since quintupled in value and was trading at $8.45 at the top of this week.