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Ronald McDonald Beats Out Carl’s Jr. for Airport Space

Times Staff Writer

The Board of Supervisors chose Ronald McDonald over Orange County’s Carl’s Jr. for the right to sell fast food at the new John Wayne Airport terminal. And McDonald’s can expect to gobble more than a mouthful of profits.

That’s because the Board of Supervisors voted 4 to 0 Tuesday to approve McDonald’s as the exclusive fast-food nosh-ery for the new passenger terminal. So Ronald, the king of the fast-food chains, will get a restaurant on both sides of the terminal, which is scheduled to open in April, 1990.

For the record:
12:00 AM, Apr. 09, 1989 For the Record
Los Angeles Times Sunday April 9, 1989 Orange County Edition Business Part 4 Page 12 Column 1 Financial Desk 2 inches; 36 words Type of Material: Correction
In a March 29 story about McDonald’s winning a county contract to open two restaurants at John Wayne Airport, The Times incorrectly reported McDonald’s projected revenue in the first year at the airport. McDonald’s projected gross receipts of $2.2 million.

McDonald’s, according to the chain’s own projections, expects gross receipts of $1.75 million in the first year. By year five, the chain projects gross receipts of $2.9 million.

Of that, the county will digest at least $260,000 that is guaranteed during the first year, depending on how well McDonald’s performs.

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The decision “wasn’t strictly on financial issues,” said Jan Howard, chief of property management at John Wayne Airport. Carl’s Jr., for example, got some extra consideration because Karcher Enterprises is locally based. “One thing (the board) looked at was whether they had a local office and local involvement. That characteristic was taken into consideration,” Howard said.

Still, Karcher’s projected numbers did not match McDonald’s. The proposal to bring Carl’s Jr. to the airport projected first-year gross receipts of $1.75 million with $250,000 guaranteed to go to the county. Carl’s Jr. expected sales to climb to $2.6 million by the fifth year.

The announcement that McDonald’s won the fast-food contract ends months of lobbying in a competition that started with five contestants: McDonald’s, Anaheim-based Carl Karcher Enterprises, Burger King, Arby’s Roast Beef and Creative Croissants.

That list eventually was whittled down by a seven-member selection committee to the big three: McDonald’s, Carl’s Jr., and Burger King.

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Also on Tuesday, the board announced its selection of Host International to operate a 9,188-square-foot central food and beverage area, including a food court and a sit-down restaurant area.

The food court will be an area where “people can grab a piece of pizza, some fresh fruit or frozen yogurt,” said Courtney Wiercioch, executive assistant to Board Chairman Thomas F. Riley. Host has contracted with Pizza Hut to supply pizza for that area.

Host will also operate two cocktail bars at both ends of the new terminal.

Los Angeles-based Host predicts gross sales of $4.2 million during its first year, with a minimum annual guarantee of $760,000 going to the county. By the fifth year, Host expects gross sales of $7.2 million.

The third agreement announced by the board Tuesday was for the newsstand and gift concession. Los Angeles-based MBE Inc. will operate one newsstand, which should gross $2.8 million during its first year. The company has guaranteed the county at least $425,000 of that.

Paradies of Atlanta, Ga., will operate a second newsstand. The company, which operates in many hotels and airports, expects first-year receipts of $1.45 million, of which at least $450,000 will go to the county.

What all the companies were vying for was the chance to serve the 8.4 million airline passengers that John Wayne Airport expects will use the new facility each year.

In awarding all of the contracts, the board considered the companies’ marketing strategies, the cost of their food, the design of their restaurants, how much they planned to spend to put up their facilities, and whether they would be run by women or minorities.

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All of the three fast-food finalists proposed minority operations, but McDonald’s franchisee is a woman and a minority, Howard said.


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