Tivoli/Smashburger Wins DIA Contract, But Bidders and Councilmembers Have Questions About the Deal
Jonathan Shikes | March 2, 2016 | 10:57am
Burgers and beer are big business in Denver, and plenty of the 54 million travelers who passed through Denver International Airport last year have probably tried plenty of both.
Burgers and beer will be even bigger business at the airport next year, though, after a Denver City Council committee approved a contract Tuesday for a joint venture between Denver's Consumer Concept Group, owners of the Smashburger chain and Tom's Urban Diner; Tivoli Brewing and Michigan's Midfield Concession Enterprises, which runs 45 outlets in nine airports across the country — but none in Denver.
The contract still needs to be approved by the full city council and Mayor Michael Hancock, but it could be worth $18.5 million in its first year, with $3.2 million of that going to the city. The deal includes a restaurant and brewery, which will be called Tom's Urban Kitchen and Brewery, that will go in the airport's Westin Hotel; Smashburger locations in concourses B and C; and a Roasting Plant coffee shop between the hotel and the airport.
But several city councilmembers, as well of a few of the other breweries that bid — and lost — on the airport award have raised some questions about the bidding process and qualifications of the winning group. The losing breweries that responded to DIA's Request for Proposal (RFP) on the project include some of the oldest and most respected in the state: Great Divide Brewing, Oskar Blues, Boulder Beer Company and Wynkoop Brewing, the company that got its start when now-governor John Hickenlooper and partners opened Denver's first brewpub in 1988.
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"We are interested in continuing to look into this because we don't think [the winning bidders] met the minimum requirements for the RFP," says Ed Cerkovnik, a principal with the company that owns Wynkoop Brewing. The Wynkoop had teamed up with the Cherry Cricket (which it also owns), Park Burger and Peet's Coffee & Tea on a bid.
"Another question that needs to be asked is, does this pass the common-sense test?" Cerkovnik adds. "There are irregularities in the judging and scoring process, and this has been anything but transparent, as far as I can tell."
For instance, Cerkovnik points out that DIA's RFP had specifically asked that the winner have "a minimum of eight (8) years of experience within the past ten (10) years in the ownership, management and operation of a multi-unit food and beverage business of the same type... ." While MCE, which has a 75 percent ownership stake in the combined group, has been in operation for that long, it doesn't appear to have any experience owning or operating a brewery, according to its website. Tivoli, meanwhile, has only been running its own brewery for a few months.
Other questions arose at the meeting as well. Councilmembers Debbie Ortega and Paul Lopez, for example, questioned whether Smashburger met the airport's requirement for a "gourmet" burger place – especially since some of the other bidders had included more upscale locales, like Highland Tap & Burger and Park Burger. "That makes me scratch my head about this choice," Lopez said at the committee meeting.
Councilwoman Mary Beth Susman asked about Tivoli's experience, while Lopez questioned whether DIA had whiffed by not going with a bidder connected to some of the other breweries, which are among Colorado's oldest and most renowned, when Tivoli is one of its youngest. "Compared to Great Divide and Wynkoop?" Lopez asked. "I would think those would be frontrunners."
Councilman Paul Kashmann said he thinks DIA missed an opportunity to "dig more deeply into the fabric of the community" by not selecting one of the other groups, which would have brought popular local spots like Highland Tap & Burger or the Cherry Cricket to DIA.
Three airport officials — Neil Maxfield, Bhavesh Patel and George Merrit — responded to all of these questions and more. Smashburger and Tom's are bringing a brand-new, upscale concept to this project, they said, adding that Smashburger is one of the ten most requested businesses at the airport. And while Tivoli hasn't been around very long, MCE, which is the majority stakeholder in the partnership, has been in business since 2002 and operates 45 locations. And Smashburger, though a national chain now, was founded as a small company in Denver in 2007, they pointed out.
Marshall and Smashburger co-founder Tom Ryan declined to comment for this story, saying they both agreed to refer all questions to Samir Mashni, the vice-president and general counsel for MCE. Although Mashni was at the meeting Tuesday, he didn't return a phone call from Westword.
Great Divide Brewing founder Brian Dunn, who also attended the meeting, says he has nothing against Tivoli or Smashburger. The contract is "a great opportunity to showcase what Denver and Colorado are all about. To have a brewery at the airport — it's an incredible opportunity," he says.
But Dunn also thinks the winning group didn't meet the minimum qualifications set forth by DIA. "We spent a lot of time on this, so it was surprising," Dunn says of the decision. His brewery had teamed up with Host Marriott, Highland Tap & Burger, Ophelia's, Bad Daddy's and Starbucks on its bid.
Both Dunn and Cerkovnik asked to see the scorecards that a DIA committee used to rate the five bids, but the airport has thus far turned down their requests. DIA spokesman Heath Montgomery tells Westword that "in accordance with our procurement guidelines, score sheets are not retained to protect the confidentiality of the selection panel." Cerkovnik says he would still like to see them, though.
In Addition to the Great Divide group and the Wynkoop team, the two other losing bidders were the Areas USA group, with Oskar Blues, The Tavern, CHUBurger (also owned by Oskar Blues) and Coffee Bean & Tea Leaf; and the team of Delaware North, Boulder Beer, TAG Burger Bar, Red Robin and Harvest & Grounds Bakery & Coffee. Oskar Blues spokesman Chad Melis says the DIA opportunity would have been great, but that the company has already moved on to other things. A spokeswoman for Boulder Beer didn't return a phone call seeking comment.
In the end, the councilmembers congratulated MCE and its partners on winning the bid – and on retaining 85 union employees who had worked at the two airport restaurants that were vacated to make room for the two incoming Smashburgers. Ortega pointed out that this is the largest food-and-beverage contract that DIA has ever awarded.
DIA has set aside 9,500 square feet on the fifth floor of the hotel for the brewpub, which includes space for a kitchen, brewing equipment and 3,000 square feet of outdoor seating that will overlook the light-rail trains and public artwork, and have a view of the Front Range, as well. The winning bidders must brew at least one regular beer on site – a beer that will be served in multiple locations throughout the airport. The brewpub itself will be required to serve a total of 25 beers, at least fifteen of which "must represent Colorado-produced craft beers, with five of the fifteen used on a seasonal rotation.... At least two taps must be representative of destinations served to and from Denver International Airport."
At Tuesday's meeting, Mashni said that Tivoli will brew an IPA for use throughout DIA. He also said that Tivoli will extend its partnership with Metropolitan State University, which uses the brewery's main location on the Auraria campus to train students in brewery operations and management.
The contract now moves on to the full council and the mayor.