Hayden airport restaurant loses money in 1st winter

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The new Three Wire Bar & Grill at Yampa Valley Regional Airport operated at a loss during the six ski season months of 2011-12. The restaurant was created during the last phase of improvements to the terminal at the Hayden airport.

— The new Three Wire Bar & Grill operated by Routt County at Yampa Valley Regional Airport lost about $30,000 during the six ski season months if one-time startup costs and county overhead charges aren’t considered, Airport Manager Dave Ruppel said Tuesday.

“It would be great to have operated at a profit, but it’s really not realistic for a startup restaurant,” Ruppel told the Routt County Board of Commissioners. “I feel very positive about what we were able to do. It’s frustrating to not be able to operate at a profit, but we will.”

The new restaurant was created near the passenger security line between baggage check-in and retrieval during the last phase of improvements to the terminal at YVRA. The county put out requests for proposals in June 2011 to 50 restaurant operators and received no interest, leading the airport administration to enter the restaurant business and hire a staff before ski season.

“The bottom line is this year, we had no choice,” Commissioner Nancy Stahoviak said.

Commissioner Doug Monger pointed out that YVRA is fiscally self-sufficient and losses do not come out of the county’s general fund.

Ruppel said the restaurant wasn’t the only aspect of airport operations that didn’t operate in the black this year.

“We have other operations that don’t pay for themselves, like snowplowing, for example,” he said.

Ruppel presented five years of gross revenue numbers for airport food service — including Paradise Bar & Grill and Charlie’s Chuck Wagon, which were run by previous operators — showing that Three Wire and a related snack bar in the passenger holding area succeeded this season in realizing the second-best sales volume month after month when compared with ski seasons from 2007 to 2011. Despite disappointing passenger traffic at the airport this winter, Ruppel said, he thought it was a good start that needs to be improved on.

After a slow start in December, the restaurant grossed $113,751 in January, $122,870 in February and $125,038 in March. Paradise Bar & Grill did more than $130,000 in monthly business in January, February and March of 2008, when the airport had more arriving ski season airplane seats.

However, Three Wire’s balance sheet looks worse when one-time startup costs of $76,000 are factored into the mix. And because the county finance department also uses a formula to assign a prorated share of county overhead and administrative costs to each of its departments, add another $71,000 to Three Wire’s loss on paper.

The financials for Three Wire show operators spent substantially more on personnel than on the food and alcohol that was sold.

Of the $444,335 in gross revenue, $398,346 was attributable to food and $39,652 to alcohol sales with the balance made up by incidentals and tax service fees.

The costs of goods and services for the ski season were $173,136, and personnel costs were $247,930.

“Our personnel costs were too high,” Ruppel said. “We staffed on the high side, not being sure of what we’d need. We now have a better idea with what we need.”

He added that he thinks the restaurant comfortably can raise prices in the coming season.

Ruppel acknowledged that the airport restaurant now is in the quiet time of its annual cycle, and Stahoviak asked him whether he envisions a time when he would return to the private sector to find a restaurant operator.

“I prefer to keep it in house,” Ruppel said. “It gives us a much greater opportunity to make revenue off it in the future. The other thing is we can control the product, and we found this year that’s really important. We received a lot of compliments, and I don’t want to give that up. You can’t control what (concessionaires) are providing or not providing. If they cut way back on customer service, we’re stuck. We live with it. We need to be able to provide people with that service.”

To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com

Comments

Scott Wedel 2 years, 4 months ago

Ruppel said the restaurant wasn’t the only aspect of airport operations that didn’t operate in the black this year.

“We have other operations that don’t pay for themselves, like snowplowing, for example,” he said.


Let me try to explain this as clearly as I can. Snowplowing is required for safe operations. A restaurant is optional.

So maybe start up costs can be ignored as a one time charge, but the $71K for administrative and finance dept is either real costs for accounting and other services being provided, or county ripping off YVRA.

So ongoing losses of $101,000 on $444K of gross revenues is acceptable?

Well, pretty clearly answers the question of why there won't be any bids from private operators.

And: “I prefer to keep it in house,” Ruppel said. “It gives us a much greater opportunity to make revenue off it in the future. The other thing is we can control the product, and we found this year that’s really important. We received a lot of compliments, and I don’t want to give that up.

Looks like someone truly believes in the wisdom of government operated restaurants over the creativity of the private sector.

If county and YVRA say a restaurant is as essential as snowplowing then the far better model would be to say then paying an operator $50K a ski season would still halve the current costs. So then ask a private operator to operate it with a $50K or so subsidy.

Only a government operated restaurant would have allowed excess personnel costs approaching 65% of sales to continue past a few days. Or tolerated food costs at 40% of revenues. Or could think they could raise prices next year without leading to fewer customers.

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Brian Kotowski 2 years, 4 months ago

Three Wire's food is quite good, but the service is abysmal. And that despite "staff[ing] on the high side." Can't imagine it'll improve with reduced personell. This doesn't bode well.

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Brian Kotowski 2 years, 4 months ago

According to the Pilot's 11/24/11 article, Three Wire has two full-timers, each of whom “make a little more than $38,400 annually plus benefits, and the possibility for a raise after six months. They are eligible for a profit sharing bonus.” http://www.steamboattoday.com/news/2011/nov/24/new-restaurant-poised-open-yampa-valley-regional-a/ Factor in the benefits, and that's a 6-figure commitment to those two people alone – to say nothing of the other operating expenses. Even if the restaurant's performance could match December's revenues during every month of ski season, I'm skeptical that it'll ever find itself in the black. Color me dubious.

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Richard Hagins 2 years, 4 months ago

Agreed, the service was abysmal. Patrons were stuck in the restaurant and had to rush to get to their flights. The Hanger Gift Shop (which is not owned by the county) suffered from the terrible service at the restaurant, travelers couldn't browse for that last minute gift to take home, since they were held hostage waiting for their food.

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Scott Wedel 2 years, 4 months ago

Well, those issues do not excuse an operating loss of $101K. And rent for a space that cost many hundreds of thousands to build, equip and remodel should not be free, but should at least be a reasonable return on investment.

This article and these pictures raise questions about the management of YVRA.

I also see plenty here to wonder if this restaurant is hurting downtown Hayden restaurants. Hungry people in the area can now go to a heavily subsidized restaurant and pay $5 to $10 less per meal than a privately run business for comparable food ingredients and service (labor).

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Brian Kotowski 2 years, 4 months ago

The price tags at Three Wire, if anything, are north of anything you'll pay at Wolf Mountain, which is really the only game in town. Haven't been to the Highway since she's resumed food service, but they were always pretty reasonable. Double Barrel is a disaster; I'm surprised it's still open.

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