Denver International Airport does not have adequate oversight over its concessions, according to a Monday report from the auditor’s office.
The office found that the airport has allowed Etai’s Café is self-reporting revenue and calculating its own rent, and that its contract has not been reevaluated since 2012. The cafe’s parent company has called the report “misleading” and “false.”
Etai’s Café, located in Concourse B, is owned by Mission Yogurt, Inc., which operates nine concessions at the airport. The auditor’s office chose one of its contracts to review in assessing how DIA manages its concessions, and found “a continued lack of oversight,” according to a statement from city auditor Timothy O’Brien.
O’Brien says the audit is not about any one specific business or contract, but rather a broader lack of oversight and need for more competitive contracts from DIA, going back to the initial audit earlier this year.
“We’re not faulting Mission Yogurt for being part of that program,” he said. “It is about how the airport does business.”
The auditor’s office released a list of recommendations, including DIA reviewing revenue submissions, coming up with a formula to calculate utilities, developing criteria for discounts, ensuring rent payments come in on time and reviewing the contract for Etai’s Café for potential competitive bidding or renegotiation.
Mission Yogurt President Rod Tafoya said the company was not given the opportunity to reply to the audit, despite its requests to respond to what Mission Yogurt called “false allegations.” O’Brien said he could not show the report beforehand because the audit concerned the airport’s management of concessions, not specific businesses themselves.
The airport funds itself through its own revenue but is owned by the city. “Denver International Airport is the third-busiest airport in the world — making concessionaire contracts at the airport particularly valuable,” the auditor’s office said in a press release on the report. In 2021, concessions generated $69 million in revenue.
In a letter responding to the audit, the airport agreed to all recommendations except one requiring hiring certified accountants.
It’s not the first time issues have come up with DIA’s concessions.
In February, an audit of concessions management at the airport found “unfair and not transparent” business practices. The report said that some concessions did not have to undergo a competitive selection process at all, and that others were allowed to remain in their leases indefinitely after their contracts ended rather than go through a bidding process.
“This results in inequitable treatment of concessionaires at the airport,” wrote the auditor’s office in its findings.
The latest follow-up investigation says there are lingering problems.
At Etai’s Café, the audit found that DIA did not make sure the business paid rent on time or was charged for late rent, and did not approve discounts and other deductions from revenue, which decrease the cost of rent owed.
The auditor’s office also found that the airport had not reassessed the cafe’s contract since 2012, which prevents other businesses from competing for the space and “risks the airport not getting the best value from its longtime vendor,” wrote O’Brien in the report.
Tafoya disagreed, saying Mission Yogurt has always paid its rent in full on time, and that its contract is part of a program for vendors developed by the city that allowed for the extension.
In a letter responding to the recommendations, DIA CEO Phillip Washington agreed to all the recommendations except one requiring certified accountants to prepare and certify annual statements, citing feedback from businesses about the high cost of accountants. The auditor’s office estimates the cost at around $8,000 to $15,000 per vendor, and says this is a reasonable amount to pay for a large vendor like Mission Yogurt Inc.
Mission Yogurt considers the audit “inflammatory” and “quite simply false.”
“Mission Yogurt is a local and minority-owned concessionaire, and one of the most successful, reputable and financially stable companies at Denver International Airport,” wrote Tafoya in response.