Have you ever wondered why that sandwich and coffee is so much more expensive at the airport? It’s not just ‘because they can’. There are several factors involved in the pricing including high rent prices, delivery costs, security checks and airport commissions. Here’s 10 reasons why airport food is so expensive and why it might be better to pack food from home when next heading to the airport.
With most passengers having to be at the airport a few hours before their flight, it’s easy to plan on grabbing a bite to eat when you get there, rather than eating before you go. Airports are designed to encourage us to SPEND! On fashion, books, magazines, bottled water and FOOD! But put down that expensive coffee, the sweet treats, and the ham and cheese croissant, before you blow what you saved on that cheap flight and let’s unpack why airport food is so expensive.
· Airports can be remote and restricted environments, which add to food vendor running costs
· Airports can be monopolies with limited price regulation
· Airport food vendors can pay higher rent and utilities, plus commission on sales
· Airport food vendors have legitimate higher running costs, such as parking, deliveries and staff turnover
When it comes to airport food, it’s no accident as to what’s on the menu. If an airport food vendor wants to run a business at an airport, they have to submit a proposal to the airport who give approval for what’s served in the terminal. This makes sure airport food vendor offerings match the airport’s business plan. This has a direct impact on customer choice and business competition. Who can forget the pre-COVID Sydney airport food price of $20 for a jar of vegemite!
Why is airport food so expensive? – 10 reasons:
Rent is high for airport food franchisees
Let’s face it, it’s usually a fair hike out to an airport, and once you’re there, you’re a captive audience for the businesses. It’s not like we can drive down the road to the next airport, if we don’t like the prices. Due to this monopoly, and lack of price regulation, airport food vendors can be made to pay double the rent of equivalent non-airport retail spaces.
Airport food vendors have low competition with high customer demand
Airport food vendors pay high rents for the privilege of serving because basically, the airport can charge it. Airports know business owners will pay for the virtual guarantee of business from the steady stream of travellers passing through. This low competition of dining options and high customer demand lead to increased prices, which are passed onto the customer.
Airport food business owners often need to pay commissions to the airport
Airport food retail outlets can be hit with a double whammy. Not only do they pay a hefty monthly rent, but they may also have to pay the airport a commission of the sales they make, anywhere up to 18%. With little competition and price regulation, airports are able to profit in many areas, and airport food is no exception.
Electricity is a fixed price and expensive for airport food vendors
Many non-airport businesses can look at different ways in reducing their operating costs to be more competitive, such as finding a cheaper electricity supplier. Unfortunately, airport food retail stores are restricted in this area as well, with electricity supply often at a fixed price. When it comes to airports, electricity forms a large chunk of their operating costs – heating, cooling, lighting – and that’s just inside the terminal before you get anywhere near a plane! Airport food vendors can find themselves obliged to pay more for these sorts of utilities, as part of their lease agreement.
Limited storage for airport food and equipment
While airport food vendor fridges can be costly to run due to higher electricity costs, the fact is, most food stalls have restricted space. This means limited space, and limited secure storage options for food and equipment. The upshot is airport food vendors may have to hold reduced inventory and increase their frequency of deliveries. This has a knock-on effect of increasing prices at the cash register. Smaller deliveries more often mean increased staff to handle the stock, which is another cost to the airport food vendor.
Higher delivery fees to the airport food vendor
It’s not just the airport taking potential profits from airport food vendors. Delivery companies can also charge more for dropping off stock at an airport compared to other areas. Delivery drivers have to travel out to the airport, face passenger drop-off and pick-up traffic congestion, spend time finding somewhere to park – at a fee, make their way to the terminal, go through security and then drop off their delivery. It’s time-consuming, and when it comes to deliveries, time is money. Factor in smaller deliveries, more often, and charges to the vendor really start to add up.
Airport food and equipment has to go through security checks
It’s not just the delivery driver that needs to be screened, any food or equipment being delivered also needs to be thoroughly checked. This process can be time-consuming, especially when other companies are making deliveries.
Airport food workers are more expensive because they need to go through security checks
As well as food and equipment deliveries going through security checks, airport food vendor staff also need to be security screened before their shift. Just like delivery drivers, airport food vendor staff have to travel out to the airport, wrestle with traffic congestion, find parking – at a fee, make their way to the terminal, and pass security screening, before even serving a customer.
Parking for workers at the airport is more expensive
Also like delivery drivers, there is a parking fee for airport food vendor staff. Vendors can pay around $75 a week for staff parking. Which, unlike passenger drop-off, this parking is not at the front door. Staff usually have to park further away and catch a shuttle to the terminal, adding extra time to the process of ‘getting to work’, that employees in other retail areas don’t face.
Airport food vendors have higher staff turnover
With all the hassles airport food vendor staff face before they even start their shift, it’s not surprising airport food vendors face high staff turnover. Just like other businesses, it is costly to recruit and train a parade of ever-changing workers. Issues with staff retention is yet another cost to the airport food vendor business, that is passed onto the consumer.
It definitely seems to be the Australian way – get to the airport early, peruse the great selection of food retail options, it’s the perfect place to chat with friends before your holiday or sit at the bar while keeping an eye on flight schedules. Whether you’re at the airport for short or long periods, there’s many shopping options, services, places to buy gifts, fashion stores, duty free shopping and of course, plenty of places to eat.
It’s easy to point the finger at the airport monopoly and lack of price regulation for the high cost of airport food. However, there are legitimate costs that go along with running a business in a remote and restricted area like an airport. With this in mind, perhaps it’s worth skipping the gourmet products, the extra coffee or that Krispy Kreme, and packing a cut lunch, as well as your travel essentials, on your next journey to the airport.