OTG Management

How OTG’s innovative approach revolutionized travelers’ airport dining experience

By Marie Griffin

Photography by Mindy Best

In many ways, air travel has become more challenging in recent years, with long security lines, tightly-packed planes, and upcharges for everything from extra legroom to on-board snacks. In between security and the airplane, though, many travelers are discovering that the airport terminal experience is getting better.

Travelers who appreciate these improvements can thank OTG Management. Its innovative approach to creating an “experience” in airport terminals is delighting travelers and catching the attention of airlines and airport operators. Competitors have noticed, too, and many are trying to emulate OTG with better full-service restaurants and upgraded food-and-beverage (F&B) offerings.

But Rick Blatstein, founder and CEO of OTG Management, isn’t worrying about competition. “We only operate in airports, in locations where we can create a unique and special experience,” he says. While saying that the term innovator is overused, Blatstein allows that “we have done some unique things that have garnered attention for us within the industry. A byproduct of that attention was that we were given more opportunities.”

OTG is flying in the face of tradition in the airport concessions world. The big companies that have long dominated airport concessions had their model down pat: Line the corridors with fast-food outlets; intersperse an occasional newsstand, bar or retail shop. Don’t worry much about the décor or service. Once passengers have passed through security, where else can they go?

Even though OTG’s restaurants are located in areas where only ticketed passengers are allowed, Blatstein does not believe in charging “hostage” prices. “Street pricing is very important to us,” he says. “We charge the same prices diners would pay in a comparable restaurant outside the airport.”

Those “street” prices might shock travelers accustomed to typical airport fare. When an OTG chef creates a New York-style steakhouse, a fine French bistro or an elegant Italian restaurant, those comparable prices can be high. However, OTG strives to provide a range of prices and high-value options, ranging from elegant sit-down meals to more affordable burgers and grab-and-go salads. In fact, Blatstein says, OTG lowered prices compared to the previous concession companies at Newark Liberty International, where it took over late last year.

THE AIRPORT CONNECTION

Blatstein started his career as an owner and operator of trendy nightclubs, restaurants and bars in Philadelphia in the 1980s. “In the nightclub business, you have to reinvent yourself constantly,” he explains.

He was prodded into the airport business by a friend who asked him to take care of the bars and restaurants in Philadelphia International temporarily. “I did not want to do it. Little did I know that it would change my family’s life and my business forever,” Blatstein says.

The blizzard of 1996 rolled in during Blatstein’s first weekend at the Philadelphia airport, shutting down bars and restaurants in the city under more than 30 inches of snow, but the airport was full of stranded passengers. “I called my wife and said, ‘I’m going to put everything for sale and we’re going to just concentrate on airports,’” he says.

OTG Management has grown since then to be the second-largest privately held airport food operator in the U.S. Although Blatstein is tight-lipped about financial matters, he says OTG’s revenue per enplanement (RPE), an industry metric tied to the number of passengers boarding planes in an airport, is “more than 50 percent higher” than the average RPE of $10.36 for the top 50 airports in North America.

All told, OTG now operates more than 300 restaurant and retail locations at airports including New York’s LaGuardia and John F. Kennedy International Airport (JFK), Philadelphia International, Newark Liberty International, Ronald Reagan Washington National Airport, Minneapolis-St. Paul International, Toronto Pearson International, Orlando International, Chicago O’Hare, Boston Logan and Tucson International.

WHEELS UP

OTG, which stands for On The Go, was “miniscule,” as Blatstein puts it, in its early years, operating only in one airport. But, being an entrepreneur at heart, he grabbed the opportunity to expand into the neighboring New York City market in 2002, even though it was only a small deal in LaGuardia Airport.

In 2003, OTG got the chance to operate concessions, on a transitional basis, for a young upstart “value” airline called JetBlue at aging Terminal 6 at JFK. JetBlue was planning construction of a new 635,000-square-foot terminal that would cost north of $700 million. The F&B concessions would be awarded to just one company, but OTG worked with JetBlue at Terminal 6 for years before securing that contract.

Scrappy OTG took the opportunity to learn from JetBlue and build a strong relationship. “JetBlue pushed hard on innovation, on the customer experience. They really taught us how airlines operate and what they think about. It had a big effect on transforming our company,” Blatstein says.

OTG’s bid to create and operate Jet Blue’s new Terminal 5 (T5) food service wasn’t finalized until seven months before the scheduled opening, forcing OTG to build out its ambitious program in 115 days. The project cost OTG $45 million and the compressed timeline reportedly led to millions of dollars in cost overruns.

The facility opened just one month late in October 2008, and it was revolutionary. Gone were the familiar, but not beloved, fast-food outlets. Gone was the predictable, uninspiring walk to the gates.

OTG chose “experiential design firm” ICRAVE to create a unified, breathtaking environment for T5, which housed nine unique, full-service restaurants, bars and cafes — most conceived by New York celebrity chefs — as well as a gourmet food hall, upscale grab-and-go meal service, three coffee bars and six bars/lounges.

A Spanish tapas restaurant called Piquillo was an attention-getter; tucked under a curved wooden structure, it appeared as if the floor rose up to enclose it. Evoking the ocean, sushi and Asian-themed Deep Blue featured soft blue lighting, a three-dimensional swirl feature on the ceiling, and round tables and food bars.

By the departure gates, rather than sterile rows of uncomfortable seats filled with grumpy passengers and overflowing baggage, travelers found clusters of seats around gleaming counters, where they could order food on a touch-screen monitor and have it delivered in the gate area. Instead of being sprawled on the floor, passengers could sit comfortably while charging their electronic devices at a host of conveniently placed outlets.

Within T5, the seeds of OTG’s future distinctions were planted: A passion for customer service, the ability to transform air terminals in dramatically compressed timeframes, the involvement of F&B experts — chefs, sommeliers, cheesemongers, chocolatiers — to craft unique and diverse dining and lounge experiences, a wide range of quality food options that can satisfy business groups on expense accounts or a parent traveling alone with wiggling kids, and producing revenue at the gate by employing the latest technology.

CRUISING SPEED

Travelers inevitably gather in the areas surrounding the departure/arrival gates, called holding rooms in airport industry parlance, and, once there, many people are reluctant to go back to a restaurant or food court, even if they are hungry and thirsty. Blatstein saw immense opportunity for customer service and business in “the largest amount of airport terminal real estate that was not generating revenue.”

When Apple introduced its mobile iPad tablet in early 2010, many pundits declared it dead-on-arrival, seeing it as an expensive machine for consuming entertainment and not much more. Blatstein, though, saw the iPads as a revolutionary platform he could use to drive sales and reduce operating costs.

In November 2010, OTG tested iPads in three redesigned holding areas in two terminals at JFK operated by Delta Air Lines, which had just become OTG’s second airline partner.

“We spent millions of dollars putting in new tables and chairs, a center oasis, new lighting and places to charge devices,” Blatstein says. “We had a deal with Delta that if they didn’t like it, we would tear it out at our cost.”

While iPads connect consumers to OTG’s food service, passengers are not required to use them only to order food and beverages. Consumers in the terminals can surf the web, play games and check their email or social media pages for free.

“OTG really understands the meaning of hospitality,” explains Gail Grimmett, Delta’s SVP – New York, who oversees all commercial operations in the state for Delta. “Their solution of putting the iPads in holding areas, along with all the electrical outlets, makes customers more comfortable. Even if there’s bad weather or an equipment delay, when people have what they need, they’re calm. It’s a whole different vibe in the terminals where we have OTG on those days.”

As Delta and OTG cemented their partnership, OTG started rolling out its unique food-service options in areas under Delta’s control at LaGuardia, where OTG opened 13 units in Delta’s area in the main terminal in 2010.

Based on that success, Delta deployed OTG for the first time outside the New York market — in Minneapolis-St. Paul’s freshly refurbished Concourse G terminal — and assigned it to a much larger job at LaGuardia, handling food service for inter-connected Terminals C and D.

“We were really looking for a partner. Putting in different restaurants or seating or providing innovative ways of delivering the customer experience wasn’t enough,” Grimmett says. “This partner had to understand everything we wanted to deliver to our customer. All the goals we have for our planes, we wanted to be met on the ground, as well. OTG provided all of that in one package.”

OTG put $75 million into its offerings at LaGuardia’s C and D terminals, and it continues to bring new innovations. “They’re never satisfied; they’re always thinking of new things,” Grimmett says.

FREE TO MOVE ABOUT

With iPads in its quiver, OTG continues to gain ground. It crossed the border into Canada in 2012, striking a deal with the Greater Toronto Airports Authority to operate concessions in two terminals at Toronto Pearson Airport, and 2,500 iPads were part of the package.

When Fast Company named OTG one of its Most Innovative Companies of 2014, it reported that OTG had already spent $50 million to put iPads at 80 percent of the seats at gate areas it controlled. The magazine also revealed that OTG’s iPad investment had yielded revenue growth of 71 percent.

Back at OTG headquarters, which moved from Philadelphia to Manhattan in January 2013, Blatstein started hiring developers to write proprietary software on Apple’s operating system. This system, called flo, provides one platform for OTG to handle the whole process of restaurant operations, from food ordering for each restaurant to the delivery of a single sandwich gate-side. It has been so effective for OTG that the company will begin licensing the software to non-airport restaurant groups later this year.

The data OTG receives through the iPads is transforming its operations and direct-to-consumer marketing programs. For example, OTG can predict how many orders it will get for a certain meal selection at a particular restaurant at any hour of the day, improving efficiency and shaving costs. In the customer’s hands, the iPad can make suggestions that might up the tab.

So far, OTG has processed over 5 million transactions on its iPads. By 2016, Blatstein expects to be analyzing more than 5 million transactions a year.

The iPads don’t replace people, though, Blatstein maintains. “The technology enables our crew members to take care of more customers, more accurately and faster — and it allows us to drive much higher sales per crew member,” he says. “We’re not cutting back on people. In fact, when we take over an airport [from another concession company], we roughly double the number of crew members. We increase sales dramatically, but our payroll percentage is less than it was before because of our technology.” CEO

Marie Griffin is a freelance writer based in the New York City area. Contact us at editorial@smartceo.com.

REACHING NEW HEIGHTS

Soon after celebrating its 20th anniversary in January 2016, OTG Management will complete a new $15 million installation at Ronald Reagan Washington National Airport’s Terminal A and a $120 million showplace at Newark Liberty International Airport’s Terminal C.

Newark’s Terminal C is OTG’s first partnership with United Airlines. OTG began operating the concessions there, turning over 49 restaurants in 42 days, in November 2014. It soon became OTG’s number-one airport in terms of revenue, says OTG Management founder and CEO Rick Blatstein.

Before selecting OTG as its F&B partner, United researched the company and its operations carefully, explains Kate Gebo, United’s vice president of corporate real estate.

“Rick [Blatstein] has really had an impact on the whole concessions industry in the U.S.,” she says. “OTG was a pioneer in bringing in great chefs to create restaurants in the airport, and no one else thought about bringing in iPads so that people sitting in the gate area could order food.”

Newark Terminal C will eventually have 55 restaurants, food halls and gourmet markets, with 24 chefs consulting on the creation of unique food and beverage experiences.

Alain Ducasse, whose London restaurant has earned three stars in gastronomy’s prestigious Michelin Guides, will oversee a classic French bistro called Saison. For those whose tastes run toward TV’s Top Chef, alumnus Dale Talde is rolling out a restaurant called Little Purse to showcase his famous dumplings.

OTG turned to architect David Rockwell — along with three other design groups — to create an environment that is both dramatic and intimate. One featured area will have an onyx bar, silver chandeliers and seating areas evoking a fine hotel lobby; white steel-mesh curtains that look like flowing fabric will flank the towering windows.

Although Terminal C is not yet staged with the dynamic architectural and restaurant designs OTG has planned, customers can already get a “taste of what’s to come,” Blatstein explains. “We renovated to a certain extent and brought in our chef-driven menus.”

And, United has gotten a taste of what it’s like to work with OTG. “Rick came in and said, ‘Here are the things that are working in our other programs and here’s what we’re going to change,’” Gebo remembers. She was impressed with the way OTG listened to what United is trying to achieve — and then customized programs to reach its goals. “Adding value to our Mileage Plus frequent flyer program is important to us,” she adds. “So OTG came up with the idea of allowing members to pay for food and drinks with Mileage Plus miles using OTG’s iPads.”

OTG plans to install close to 6,000 iPads in Terminal C. Blatstein says the huge size and scope of the United terminal project enables OTG to implement its “larger vision of using technology to tie everything together and create something really special for customers.”

For example, as the landlords for the specialty retail and duty-free shops in the terminal, OTG can use its iPads to provide customized recommendations. “Let’s say a customer orders a Johnnie Walker Black on the rocks at our Vesper Tavern,” he says. “She might get an offer for a couple of bottles of Johnnie Walker Black in Duty-Free that she can pick up at her destination.”

At Reagan National Airport, OTG has been operating restaurants and its Cibo Express Gourmet Markets for years, but it is expanding its presence and vision in Terminal A, which airport operator Metropolitan Washington Airports Authority is renovating and expanding.

ICRAVE, the cutting-edge restaurant-design firm OTG has tapped for other projects, has produced a bright and modern design with a central feature structure that reaches up toward the ceiling and evokes the round shape of the nearby Capitol building. Among the concept chefs is Washington, DC, resident Carla Hall, co-host of ABC’s The Chew, who will bring her version of comfort food to a restaurant called Page. At almost every seat, of course, OTG will place an iPad.

ENTREPRENEUR UNIVERSITY

OTG founder and CEO Rick Blatstein attended college for a couple of weeks before returning to work in the family business with his late father Harry and older brother Bart Blatstein, who has since made a fortune as a real-estate developer in their home city of Philadelphia.

“I was anxious to get out and work,” says Rick Blatstein, noting that he had been apprenticing in his father’s various businesses since grade school.

Shortly after he turned 18, the family opened its first nightclub. “Ricky” Blatstein, who eventually bought out his father and brother, emerged as a wunderkind of the then-dynamic Philly nightlife scene. The club and restaurants turned over, but “at one time, I probably had five or six operating at once,” he says. Market forces shifted, though, and Blatstein tumbled, initiating bankruptcy proceedings in 1989 that took seven years to work through the courts. With related lawsuits and claims, Blatstein’s troubles were well documented in the local press.

“I had a nice dose of success and an even nicer dose of failure,” he relates. “Those times had a major impact on me. Failure was not something I wanted, nor did I plan for it. My dad said to me, ‘You had the most expensive graduate school I think anyone’s ever had.’”

Blatstein now values his early experience running nightclubs, bars and restaurants, and the positive and negative lessons it provided.

“I’m never very comfortable with success,” Blatstein notes. “We’re always working to reinvent ourselves.”

In the nightclub business, he explains, “you have to throw a party every single night and hope you can come up with the best ideas so that you can get thousands of people to come.”

That experience also gives Blatstein an uncommon appreciation for airport food service and the travelers who flow through the terminals, day in and day out, 365 days a year. “I don’t want people to feel like captured hostages. I’ve had businesses, at times, that didn’t have customers. Now we want to surprise and delight our customers,” he says, with emphasis.

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