The high flying food machine

24 July 2011 | There are boxes of Twizzlers as far as the eye can see in Gate Gourmet’s Dulles kitchen. There are onions being chopped and steaks being grilled, too, but as airlines cut back on food service, it is containers of roasted almonds (which sell for $5 on U.S. Airways flights) and bags of cookies ($3 in air) that are taking center stage at this catering facility. 

Those packaged foods bring in lofty profits. 

Gate Gourmet, the largest independent airline and railway catering company in the world, provides much of the food served and sold in flight. At its giant facility next to Dulles International Airport, more than 650 employees prepare 18,000 meals daily for 17 airlines, including United Continental, Virgin Atlantic and Air France. 

Whereas the business of airline catering used to be synonymous with providing hot meals to all passengers, whether first-class or coach, it has evolved into an entirely different operation in the past decade. Now, companies like Gate Gourmet are finding that their operations are increasingly built around delivering and selling packaged items on board. 

“Instead of worrying about catering, airlines are focusing on more important things,” said Drew Niemeyer, interim president of Gate Gourmet. “So as a supplier to them, we’ve had to reorganize ourselves and take on some of that pressure. Buy-on-board is a big focus for us right now, and it’s a chance for our customers to generate revenue where they didn’t have it before.” 

Gate Gourmet, based in Reston, offers airlines a variety of options for delivering food, handling the chore entirely itself or selling the food wholesale. Business has been strong of late. Its parent company, Gategroup, which is based in Zurich, reported a 36 percent increase in earnings last year. Gategroup’s stock has more than doubled in the past two years, a period in which the airline industry has grappled with rising fuel costs and economic uncertainty. 

“Airline catering has been remarkably robust,” said Joseph Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University. “The idea that nobody will pay for food on a flight has been proven false. People have come to terms with the fact that they’ll have to pay for their sandwiches.” 

Stepping into a gap
The story behind Gategroup’s recent success is two-fold: As the company is cashing in on food-for-purchase domestically, it is also beefing up its service to international flights, where two or three meals are routinely served to all passengers. 

Not a single major U.S. carrier offers free food on domestic flights anymore, according to Raymond Kollau of airlinetrends.com. When Continental Airlines phased out its in-flight meals last year, the last carrier to do so, it said the change would save the company $35 million per year. 

That shift in cost from airline to passenger is part of a broader move by airlines to “unbundle” their services to regain their financial footing, said Charles Leocha, publisher of Consumer Traveler. “Airlines used to buy the meals and blankets themselves and incur the risks of having too much or too little,” he said. “But now they’re handing over the salads and sandwiches to third parties.” 

That handoff shifts the catering risk and potential profit over to vendors like Gategroup. As a result, Gategroup is increasingly becoming a “one-stop shop” for airlines by beefing up a variety of services, Niemeyer said. Subsidiary Gate Aviation provides cleaning and de-icing services for aircrafts, while Gate Safe oversees cargo screening and cabin inspections. 

Gategroup is continually reevaluating what sells and what does not. “We really try to get an idea of how many drinks, how many blankets each flight will need,” said Tony McMillon, general manager of the Dulles Gate gourmet facility, adding that every unnecessary item on the plane means higher fuel costs for the airline. “Flights going to Las Vegas will probably sell different items than flights going to Denver.” 

Although Gategroup has had financial success of late, it has weathered its share of other troubles. In April, the company’s chief executive resigned after news broke that a former manager had embezzled 22 million Swiss francs — roughly $26.8 million — over the course of three years. Six years earlier, Heathrow Airport came to a standstill when Gate Gourmet’s firing of nearly 700 workers there led to a 24-hour sympathy strike by British Airlines workers. Niemeyer says the company is now working hard to “put the focus on our people.” 

Menus that depend on seating class
In the 115,000-square-foot kitchen in Dulles, employees file in at 4 a.m. to prepare chicken and slice cases of pineapples. Later in the day, a woman arranges fruit on plates, while another makes omelets — five at a time — on a stovetop. In other sections of the facility, employees spot-check coffee mugs and load Thai chicken wraps onto carts. 

It’s a chaotic scene, and falling short of the kitchen’s strict deadlines can mean delayed flights and angry customers. “It’s an absolute symphony out there,” said Executive Chef Brian Amery said. “We have two people who grill, two people who sear, somebody else who sets up the trays. And then we put it all together.” 

This month, first-class passengers flying out of Dulles International Airport on Air France will be served lobster with mango coulis, flanked by seaweed salad and micro herbs. The business-class travelers will get lobster, but with mango salsa instead of the coulis and salads. 

And for the folks in coach, there’s something else entirely: a re-heated frozen meal of chicken and orzo. “Of course if you’re paying $15,000 to sit in first class, you don’t want to see the economy passengers eating the same thing as you,” said International Executive Chef Ravi Nage. 

The gulf between the classes is apparent throughout the Gate Gourmet facilities: cloth napkins vs. paper, ceramic plates vs. plastic trays. It’s all part of a very deliberate strategy, according to Schwieterman. “Catering has become a tool to reward customers,” he said. “You see a real dichotomy between the luxury of business class and the drabness of flying coach.” 

Each airline — and often, each flight — has its own menu that has been crafted and revised in a months-long process. The meals created in the kitchen in one day range from Middle Eastern sandwiches and chicken teriyaki to herb-crusted sea bass and tiramisu.

The food available for purchase is becoming increasingly up-scale too. United Airlines now offers a“tapas snackbox” that includes marinated olives and roasted red pepper bruschetta for $8.49, and Delta sells bags of toffee caramel popcorn for $2.

Although reviews have been mixed, Leocha of Consumer Traveler says “the general consensus seems to be that the food is overpriced but that it’s quite tasty.” And now that it’s clear that passengers are willing to pay, experts say that neither airlines nor their suppliers are likely to look back any time soon. “In fact,” Schwieterman said, “it’s just a matter of time before that free transatlantic flight breakfast disappears.” 

And Gategroup will be waiting.