SR-308-002-02 (14)
RP:LCB:DTA:dvm
City Council Meeting: Sept. 8,1987
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SEP - 8 1987
Santa Monica, California
II
TO:
Mayor and City council
FROM:
City staff
SUBJECT:
Recommendation Regarding Award of Bid for Operation
of Beach Concession stands
INTRODUCTION
This report presents an evaluation of bids received for the beach
concession stands and a recommendation that the City Manager be
authorized to negotiate and execute a five year lease for future
operation of the stands with Pizza Works, Inc. subject to receipt
of necessary state approvals.
BACKGROUND
Pursuant to City Council approval on April 28, 1987, notices of
invitation for bids were placed in regular and minority
newspapers in Los Angeles, San Francisco, Sacramento and San
Diego. In addition, telephone contact was made with a number of
food
concessionaires
to
inform
them and
request
their
participation in the bidding process. Tours of the concession
buildings were conducted on May 18, 19 and 20.
A bidder's
conference was held on May 26.
City staff outlined criteria for the award of the contract in the
Request for Proposal. These included: a fixed annual rent for
each stand or a 16% percentage of the gross sales. The greater
of the two was considered as the minimum acceptable payment to
the City.
The Request for Proposal further specified that
bidding was allowed on one, all or any combination of the
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SfP - 8 1987
concession stands. The minimum annual fixed rent required in the
RFP for all five stands totaled $105,000 and was based on 16% of
the average prior three year gross generated by McDonald's at
each stand.
The RFP provided for the possibility of a five-year lease with a
five-year option if there was a significant amount of capital
investment proposed.
other criteria in the Request
applicants:
must have a minimum of five
for Proposal provided that
(5) years experience owning and
operating similar facilities;
must show evidence of ability to finance the construction or
installation of equipment as proposed by the concessionaire;
must be a business entity currently doing business as a food
and beverage concession;
not have had any previous defaults on a concession contract.
Four proposals (McDonald's, Pizza Works, Group Three, and Richard
Picha) were received by the Purchasing Agent and opened in public
at the appointed time, 3 p.m., June 5, 1987. A fifth proposal
from Fidler Enterprises was delivered to the Recreation and Parks
office. It was not marked as a bid nor did the messenger
indicate that it was a bid to the office secretary. According to
office personnel, the proposal was received prior to the 3 p.m.
deadline although it was not time stamped to indicate so.
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BID SUMMARY:
Company
Annual Fixed Rent
% Gross Sales
PIZZA WORKS, INC.
930 Pacific Coast Highway $18,600 22%
1100 Pacific Coast Highway 16,600 22%
1200 Pacific Coast Highway 39,000 22%
2400 Promenade 49,000 22%
2600 Promenade 36,400 22%
2400/2600 87,000 22%
1200/2400/2600 125,500 22%
All stands 160,700 22%
MC DONALDS
1200/2400/2600 $ 17,500 $0-800,000 5%
$801,000-1,000,000 6%
$1,000,000+ 7%
GROUP THREE
All stands -0- 16%
ROBERT S. PICHA
1100 Pacific Coast Highway $ 21,000 27%
FIDLER ENTERPRISES
All stands $ 105,000 18%
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ANALYSIS
Based on their presentation of the most attractive monetary
proposal as well as compliance with other requirements of the
RFP, staff pursued further evaluation of the Pizza Works bid.
The information and references submitted by Pizza Works, Inc.
have been carefully reviewed and found to be satisfactory. As
part of this review, a financial feasibility analysis was
performed by Peat Marwick and Mitchell.
Due to the amount of the bid; the City's previous experience with
and reference checks of the proposer; and the range of menu items
to be offered, Staff recommends awarding the five stands to Pizza
Works for a five year term. The City's settlement agreement with
McDonald's required continued operation of the stands by
McDonald's through the Summer, 1987 season so there will be no
break in service to the public. Subsequent to receipt of
necessary approvals from the City Council and State of
California, the transition will occur.
Budget/Fiscal Impact
The recommended bid award to Pizza Works, Inc. will result in
guaranteed annual income to the City of $160,700 for five years.
Further, there is an opportunity for additional revenue should
22% of the gross income exceed the minimum.
In addition, the City's settlement agreement with McDonald's
requires payment by McDonald's during 1987-88 to make up the
difference between Pizza Works' rental payment to the City and
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the $200,000 minimum annual paYment previously made by
McDonald's.
RECOMMENDATION
1) Authorize the city Manager to submit necessary documents to
the state of California for approval of the lease agreement.
2) Upon receipt of necessary state approvals, authorize the City
Manager to negotiate and execute an agreement with Pizza
Works, Inc. for operation of the 930, 1100, 1200 Pacific
Coast Highway and 2400 and 2600 Promenade Beach concession
stands for a five year term.
Attachment
Prepared by: Lynne C. Barrette, Assistant City Manager
Don Arnett, Director of Recreation & Parks
dtambcbl
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