SR 01-25-2022 3A
City Council Report
City Council Meeting: January 25, 2022
Agenda Item: 3.A
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To: Mayor and City Council
From: Andy Agle, Director, Community Services Department, Cultural Affairs
Subject: Award Request for Proposal and enter into Agreement with Back on the
Beach Food Co., Inc. for Concessions at the Annenberg Community Beach
House
Recommended Action
Staff recommends that the City Council:
1. Award RFP# 291 to Back on the Beach Food Co., Inc., a California-based
company, for food and beach equipment rental services at the Annenberg
Community Beach House at Santa Monica State Beach; and
2. Authorize the City Manager to negotiate and execute an agreement with Back on
the Beach Food Co., Inc. for an initial term of ten (10) years with one (1) option
for renewal of five (5) years. The annual minimum rent is $200,000 or 8 percent
of gross sales, whichever is higher.
Summary
Back on the Beach Food Co., Inc. (Back on the Beach) has operated Back on the
Beach Café since January 1989. In 2008, Back on the Beach was awarded a ten-year
lease through a competitive process. Since that time, Back on the Beach has been
responsible for developing, operating, and providing food and beach equipment rental
services to visitors of the Annenberg Community Beach House. Since 2018, Back on
the Beach has operated under the hold-over terms of the lease agreement until a new
Request for Proposals (RFP) process could be completed. Due to the delay in receiving
State authorization and then by the COVID pandemic, the RFP process was completed
in 2021.
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Staff recommends Back on the Beach as the best qualified firm for beach café and
equipment rental concession beginning in March 2022 through February 2032, with an
option to extend for an additional five years. The minimum total revenue for ten years
with a three percent annual Consumer Price Index (CPI) increase is estimated at
$2,515,579.
Discussion
Since 1989, the existing restaurant at 445 Pacific Coast Highway, known as Back on
the Beach Café, has provided year-round, daily indoor and outdoor food service. In
addition, Back on the Beach equips and maintains beach-related equipment for rent
such as chairs, umbrellas, boogie boards, and various sundries that provide for the
health, enjoyment, and convenience of Annenberg Community Beach House (Beach
House) visitors.
The proposed ten (10) year concession agreement with one (1) option to renew the
agreement for five (5) years would provide for the operation of food and beach-
equipment rental services at the Beach House. The intent of the concession agreement
is to provide the public with high-quality, reasonably priced food service, as well as the
sale or rental of beach-related equipment and items in a manner and atmosphere that
enhances the visitor’s experience at Santa Monica State Beach.
Managed by the original owners, Frederick Deni and James Christel, the restaurant is
fully licensed and approved by the Los Angeles County Health Department, City of
Santa Monica, and California Alcoholic Beverage Control Board (ABC). Through a
permit approved by ABC and the Planning Commission in 2012, Back on the Beach
was able to expand its ability to serve beer and wine in its existing outdoor dining area.
To meet ABC requirements, a custom-designed 42-inch fence was added to delineate
the perimeter of the outdoor dining area.
The City’s current agreement with Back on the Beach to operate Beach House
concessions expired on December 1, 2018. Under the terms of the Operating
Agreement, State Parks must approve the issuance of a Request for Proposal (RFP),
which was initially delayed by the State’s extended process and then by the pandemic.
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Back on the Beach has been on a month-to-month lease pursuant to the holdover
provision of the agreement, pending the completion of the RFP process. The RFP was
released in September 2021 and closed in October 2021. Two proposals were received.
Vendor Selection
Bidder Recommendation
Best Qualified Person or
Firm
Back on the Beach Food Co., Inc.
Evaluation Criteria
Training, credentials and experience of the person or firm;
demonstrated competence, ability, capacity and skill of the person or
firm to perform the contract or provide the service promptly, within the
time specified, and without delay; capacity of the person or firm to
perform the contract or provide the service promptly, within the time
specified, and without delay; sufficiency of the person’s or firm’s
financial and other resources; character, integrity, reputation and
judgment of the person or firm; price which the person or firm proposes
to charge, including whether the price is fair, reasonable and
competitive.
Municipal Code SMMC 2.24.190
Bid Data
Date Posted Posted On
Advertise In
(City Charter & SMMC)
Vendors
Downloaded Date Publicly Opened
09/20/2021 City's Online
Bidding Site
Santa Monica Daily
Press
18 10/18/2021
Best Qualified Person or Firm Justification
Staff from the Community Services and Community Development Departments reviewed
both proposals and evaluated them based on experience with projects of comparable
complexity, qualifications of key personnel, financial resources and ability to finance tenant
improvements and operations as proposed, project understanding and approach,
compatibility of proposed operations with surrounding uses and local community, rental
bid, and overall quality and thoroughness of proposal. The evaluation committee
unanimously recommended Back on the Beach as the best fit for the Beach House in
Submittals Received
Back on the Beach Food Co., Inc. Made by Meg Catering
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terms of experience, stability and familiarity with the Santa Monica market. The other
proposer, Made by Meg Catering, is an enterprise relatively new as a full-service operator,
with their experience focusing mainly on catering private events.
Back on the Beach demonstrated its continued ability to provide concessionaire services
at the Beach House. Their years of extensive experience in the industry, working
successfully as partners with the City and Beach House staff, are clearly conveyed in the
thoroughness of their proposal and operations plan. Their management is actively
engaged in the Santa Monica community and supports a large number of nonprofits and
community organizations involved in environmental stewardship, youth development, and
human rights. Their proposal included all the RFP required documents and included
positive references from various community members they have worked with over the
years, highlighting their hospitality and service to the visitors of Santa Monica, and their
contributions to the Santa Monica community. They continuously adopted new technology
to improve customer service and rose to the challenges and new protocols brought about
by the pandemic.
Lease Terms
Staff recommends award to Back on the Beach for a ten-year (10) term with one (1)
five-year option. The annual rent requirement is the greater of eight percent of gross
sales or $200,000 base rent, with the base rent subject to an annual Consumer Price
Index (CPI) escalation. The proposed new rent requirement is different from the current
lease terms of ten percent of gross sales with a minimum annual rent of $100,000. In
preparing the RFP, staff sought the services of financial consultants Allan D. Kotin &
Associates (ADK&A) regarding appropriate financial terms, particularly given changes in
the restaurant market, including significant increases in labor costs. On behalf of the
City, ADK&A completed an evaluation of lease terms for beach-adjacent food and
related services in Southern California. ADK&A concluded that reducing the percentage
rent by two percentage points would make the opportunity competitive for prospective
restaurants, while doubling the guaranteed base rent would ensure that the City is
appropriately compensated.
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If awarded the new ten-year lease, Back on the Beach would invest $300,000 to include
replacement of the roof, exhaust fans and coolers, exterior doors and windows, and
walk-in cooler; addition of a retractable fabric canopy; and renovation of the dining room
floors. The improvements would be scheduled over a three-year period with minimal
impact on café and Beach House operations, and in compliance with applicable permits
and approvals.
Financial Impacts and Budget Actions
Staff seeks authority to award a contract with Back on the Beach Food Co. Inc. for
operation of food and beach equipment rental services at the Annenberg Community
Beach House, with a minimum annual rent of $200,000 or eight percent (8%) of gross
sales, whichever is greater. The FY 2021-23 Budget includes $200,000 each year in
revenue from the lease.
Prepared By: Joyce Perez, Sr. Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. Back on the Beach Oaks-111821
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3.A.aPacket Pg. 19Attachment: Back on the Beach Oaks-111821 (4863 : ACBH Concessions Award)