The Ilan's House of Coffee chain has won the Israel Airports authority tender, and its branches will replace the Si Espresso points in the Departures Hall and next to the fountain in the central area. The Ilan's chain, owned by Yaacov Luzon, announced yesterday that it had won the tender. Ilan's will operate its branches in the airport for seven years, starting in June, after winning out over Strauss Coffee and current operator Si Espresso, among others.
The high prices charged by chains for coffee at the airport have hit the headlines in recent months. These chains included Aroma and Arcafe, two of whose branches were recently replaced by the Cup o' Joe chain, owned by Delek Group Ltd. (TASE: DLEKG) (including a location in the middle of the hall near the fountain), and Cafe-Cafe-Go, which operates a counter in in the Check-in Hall.
Following the reports on inflated beverage prices at Ben Gurion Airport, the Airports Authority made coffee prices a part of the tender as a binding condition, insuring fair prices for four important products: cappuccino, espresso, butter croissants, and mineral water. The Airports Authority set maximum prices in advance for these products, and the prices in the bid by Ilan's were lower than these prices. Their prices will be NIS 11.80 for a cup of white coffee, NIS 7.90 for a cup of espresso coffee, NIS 11.50 for a butter croissant, and NIS 7.90 for a bottle of mineral water. Luzon told "Globes" that these price are expected to remain unchanged for at least two years.
The ownership changes in the cafes operating at Ben Gurion Airport are a result of abandonment by the large chains, which say they are losing money. Although the Airports Authority is owned by the state, the rents paid by the chains at Ben Gurion Airport are higher than those in the major shopping malls. It has been asserted more than once that the chains cannot earn a profit when they must operate the branches 24 hours a day, seven days a week. When asked whether he was afraid of losing money, Luzon answered, "The winner of the preceding tender undertook to pay more than NIS 9 million in rent, amounting to 50% of sales volume. The chains also realized that they could not exist with rent like that. This time, rents in the tender began at NIS 4.5 million. We obviously bid more, but nowhere near NIS 9 million."
Published by Globes [online], Israel business news - www.globes-online.com - on April 2, 2015
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