At one point in early August, Jedediah’s Catering and Concessions owner Mike Gierau had already made up his mind that he wasn’t going to exercise an option to renew the lease for his longtime restaurant at Jackson Hole Airport.
Business was hit hard during 2020, the result of the COVID-19 pandemic collapsing air travel. While interest in flying into Jackson Hole has since rebounded and then some (see story, 10C), another major hit to revenue is on the horizon: The total closure of the airport runway and renovation to the restaurant, which will largely keep Jedediah’s out of commission between April and early December of 2022.
“We lost over $1 million in revenue because of COVID and stand to lose $1 to $2 million in revenue while the airport is closed,” Gierau told the News&Guide. “We had already decided that we weren’t going to exercise the two years [contract extension], which meant that we would have been done come April 1 next year.”
But Jackson Hole Airport’s board of directors were willing to negotiate with Gierau, and they came up with some contract terms that kept the restaurateur, who’s also a state senator, on board. Specifically, they tacked on two additional years to Jedediah’s operating agreement, adding parts of 2024, 2025 and 2026 and extending its tenure to 7 years, two more years than the Federal Aviation Administration allows between federally required competitive bidding opportunities for exclusive restaurant concessions at commercial airports.
“We are in agreement on this lease,” Erika Nash, an attorney for Gierau, told the airport board on Aug. 18.
Jackson Hole Airport officials are in the process of applying to the FAA for an exemption to the ordinary 5-year lease cap. As of Tuesday, the outcome of the request was uncertain.
“We have not heard back,” Airport Communications Manager Meg Jenkins said. “It will probably take a significant amount of time because the FAA is not really speedy with anything.”
Gierau disagrees with the airport’s assessment that his lease extension requires FAA approval. The five year-limit on concession contracts only applies to businesses that provide exclusive services, and he argues that Jedediah’s at Jackson Hole Airport is not that.
“It says in my contract 21 times I don’t have an exclusive contract,” Gierau said. “There are other businesses. There’s the national park gift store and there are vending machine operators, and so I don’t have an exclusive contract.”
Restaurants in commercial airport terminal buildings have had a rough go of it as a result of worker shortages and suppressed air travel during the pandemic. Across the country, according to Gierau, roughly 30% of airport eateries have closed during COVID times.
Jedediah’s longer-term operation wouldn’t have penciled out, he said, without the guaranteed two additional years.
“Unless the airport would have granted us an extension, we did not feel that we could continue with the contract,” he said. “The last two years of our contract were option years, and if we couldn’t get any relief from the board — which we got, and we’re gratified for — we could not have continued.”
Jedediah’s also agreed to a rent hike while amending its contract. Previously, the business paid the airport 10% of its revenue up to $3 million, 11% between $3 and $3.5 million, 12% between $3.5 and $5 million and 13% for revenues in excess of $5 million.
Starting on April 1, they’ll pay a flat fee: 13% on all food, alcoholic and non-alcoholic beverages and merchandise of any kind.
“This year we’ll pay over $600,000 in rent,” Gierau said. “I’m paying $40 a square foot for rent.”
Margins are tight, he said, in a business that’s saturated with uncertainty right now. Gierau’s holding onto his employees “like gold” and trying to keep as many workers on through the coming off-season as possible, but he’s unsure whether he’ll be able to dig himself out of a financial hole.
“I understand how busy it was this summer,” Gierau said. “But I watched my business go down 85% in four days. I didn’t think I’d ever see that happen, and I watched it. I don’t know what’s going to happen, and anybody who tells you they do know doesn’t know what they’re talking about.”
“Unless the airport would have granted us an extension, we did not feel that we could continue with the contract.” —Mike Gierau Jedediah’s Owner