Starbucks Loses Exclusivity Deal with Airport Restaurant Operator
Airport coffee may be going local, but Starbucks isn't worried.
As a former Philadelphian, I actually love long airport layovers... when they’re in Philadelphia. I’ve purposely booked extra time between flights to grab local favorites like a Tony Luke’s sandwich, Chickie’s and Pete’s Crabfries, and plenty of Yards Philadelphia Pale Ale, all of which can be tough to find outside of Philly but are available at PHL. My cravings are in good company: In recent years, airports have shifted towards offering more local options—a chance for visitors to quickly get a taste of the city and locals to get a taste of home. But this trend has created a shifting dynamic for national chains, too… like Starbucks.
Last week, Starbucks and HMSHost—a “leader in travel dining” located in over 120 airports worldwide—revealed it had ended a nearly 30-year-long exclusivity deal. As a result, Starbucks can now choose to open in airports without HMSHost, and, likewise, HMSHost can now bring other coffeehouses into the airports they work with. Though ending these kinds of exclusive arrangements isn’t uncommon, this story is particularly interesting because, according to multiple sources, HMSHost was the one who opted out of the deal—a telling sign in just how much airport dining has changed.
In announcing the move, HMSHost framed the changing partnership as a chance “to bring new, local coffee options to airports.” Meanwhile, speaking to CNBC, Starbucks CEO Kevin Johnson admitted, “The whole dynamic in airports is changed dramatically over the last five to seven years.”
According to Restaurant Business, though the three-decade-long deal had been very beneficial to both parties, recently, HMSHost was starting to see that its hands were tied. Since the company is often competing for multiple dining locations—such as entire terminals—at once, entire plans could be torpedoed if an airport only wanted a local coffee option. “We’re missing out on great opportunities… We were somewhat hindered in being able to bid competitively because of that,” CEO Steve Johnson told the site. “Airports are very interested in making sure their airport represents their local community… It can include some national brands. But they want to make sure that in Los Angeles, there’s a flavor of Los Angeles. Phoenix is the same.”
Of course, similar to how a resurgence in local coffee shops hasn’t been the downfall of Starbucks outside of airports, Starbucks won’t be disappearing from inside of airports anytime soon. In fact, both HMSHost and Starbucks commented that they are still partners, just not exclusive ones anymore. (Restaurant Business writes that HMSHost handles over 400 North American Starbucks locations, with the site Skift pointing out that some of these may be on long 10-year leases.)
And even Starbucks spun the end of this agreement as a positive. “The expansion to other operators will expand our presence at airports,” a Starbucks spokesperson reportedly told Fox Business. And in Starbucks’ defense, the global coffee leader certainly has more name recognition than HMSHost—meaning if flyers demand a Starbucks, now it should be easier for them to get one.
“[This] is going to give us more opportunity to innovate and try different things. For example, we’re working on some ideas, even with pop-ups, pop-up stores in airports that could move depending on time of day and where gate arrivals and gate departures are taking place,” Starbucks’ Johnson added speaking with Jim Cramer. “[We now have] a range of options to better serve our customers.”