HOUSTON – KPRC 2 is breaking down the timeline of last year’s heated food fight at Hobby Airport.
The conflict centered around Pappas, a Houston brand, and its replacement by Areas JV, a Miami-based company promising higher future revenues.
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The decision, which was pending a city council vote, sparked significant debate over financials, local loyalty, and procedural fairness, leading to Pappas filing a lawsuit against the City of Houston in April of 2023. By May, Pappas had vacated Hobby, making way for a mix of temporary and new dining options as the dispute continues to unfold in court.
Feb. 27, 2023: A food fight takes flight at Hobby Airport.
It’s all centered around a brand that has been a household name in the Houston region for decades, Pappas.
However, a competing company based in Miami with ties to Spain, promised tens of millions more in future revenue to the city in their bid to earn the concessions contract.
RELATED: City council to vote on replacing Pappas Restaurants in Hobby Airport with Miami-based company
In its last contractual run, Pappas over-delivered for the Houston Airport System, producing $25 million more than expected. The company’s founder attributed their performance and customer service to assisting the airport in achieving a coveted five-star rating.
The razor-thin decision to award the contract to the Miami-based company was handed down by five City of Houston employees. The result meant Pappas, pending a city council vote, would be out of Hobby in favor of a company called Areas JV.
So, what would potentially replace Pappas and their partners at Hobby? National chain brands with some regional options. One of them, according to then Mayor Sylvester Turner’s office in a statement, was Throughgood Coffee. However, the coffee shop closed its doors in September of 2022 in The Heights.
Feb. 28, 2023: Council debates begin
At the Feb. 28 city council meeting, some community members expressed support for Miami-based company “Areas JV” to take over the food and beverage contract at Hobby Airport.
“Diversity, equity and inclusion should be at the forefront of all our hearts and minds,” Rev. James Dixon, NAACP said.
MORE: Pappas restaurant group fires back at city of Houston over its future at Hobby Airport
The Pappas family had operated out of Hobby Airport for more than a decade. Community partners showed up to support them as well.
Councilmember Dave Martin said the way bids were structured, if Pappas was awarded the contract, it would be a $25 million loss for the city’s enterprise fund over 10 years. The fund goes back to the airport.
Christina Pappas fired back.
“Our current contract to what’s in the bid, they are not made the same way,” she said. “It’s not apples to apples.”
“No, it’s not,” Mayor Sylvester Turner countered. “I know apples to apples, and apples to oranges, and I know oranges to oranges okay, but since you are criticizing numbers and you are here, let’s deal with them.”
The CEO of Areas, JV Carlos Bernal, said the company was committed to using local, regional, and national restaurants for the contract.
March 1, 2023: “We need more time”
It took only seconds for Agenda Item #30 to be tagged at Houston’s City Hall on Wednesday morning.
The highly publicized fight over a lucrative concessions contract at Hobby Airport was tagged by multiple council members who indicated they want more time to come to a decision.
It’s the second week in a row the agenda item gets tagged.
At stake is a 10-year contract for the right for either the Pappas Restaurant Group or Areas JV, out of Miami, to operate concessions.
CEO of Pappas, Chris Pappas, did not answer any questions while walking out of chambers and Carlos Bernal, the CEO of Areas USA, said, “That’s the process, and we support the process.”
When KPRC 2 Investigates asked Bernal how his company specifically identified a revenue stream of $470,000,000 over the life of the deal, Bernal would not respond directly to the question.
The number had been highly speculated among council members and experts. “I find it questionable, and that is the reason I am tagging it, and that is why I did tag it,” said Councilmember Robert Gallegos.
One council member, who reviewed the scoring of Pappas and Areas, says it was the financials that did Pappas in.
“The four families were way ahead until it got to the financial part which was 10 points, and they rated them (Pappas) down to seven, and they gave the competitor 10,” said Councilmember Michael Kubosh.
March 8, 2023: The deciding vote
Houston Mayor Sylvester Turner and 10 other council members voted “yes” in favor of awarding the contract to Areas JV, with six voting “no.”
Areas, a Miami-based company, defeated Pappas by a razor-thin margin in the original presentations, but the formal approval process came under fire right up until the moment council members made the final vote.
The five-member review panel that originally graded the proposals had two representatives from the Houston Airports System, one from the Health Department, another from Administration and Regulatory Affairs as well as the mayor’s office.
SEE ALSO: Hobby Airport food fight ends with vote pushing out Pappas
Pappas had been at Hobby for 20 years. One of their arguments to keep the contract was that they were a proven Houston brand that delivered $25 million more than expected at Hobby. The hometown connection generated questions about the Hire Houston First Ordinance, which was listed in the original bid proposal, but an 11th-hour letter sent by city attorney Arturo Michel informed council members the reference to Hire Houston First was incorrect.
The misprint came after other claims, like famed Houston Chef Chris Shepherd being listed as a “Culinary Consultant” for Areas. Shephard gave KPRC 2 Investigates a lengthy statement clearly detailing he was not a part of Areas’ team and that claims of his role as a “Culinary Consultant” were not true.
Yet, Areas was graded for this false claim and the city viewed it as a strength in their presentation, according to an executive summary.
At the end of the day, and with all the revelations that came to light, Pappas lost the lucrative airport contract by six-tenths of a point over financials. Areas promised a greater return than Pappas, even though Pappas officials and other concessionaires KPRC 2 Investigates spoke with said the projected revenues were “not possible” to achieve.
April 7, 2023: The legal battle begins
The dispute at Hobby Airport between the Pappas Family and the City of Houston will continue outside of city hall.
The new venue will be a Harris County courtroom after the family filed a 269-page lawsuit over the awarding of the recent concessions package at the airport.
Chris Pappas issued the following statement regarding the lawsuit:
“Today, Four Families of Hobby filed a lawsuit against the City of Houston. On Friday, April 7th, we received the City’s response to the post-award protest we filed with the Procurement Office. Unfortunately, the response was conclusory at best and clearly did not take seriously our concerns that the City failed to comply with state law, City Code, as well as the City’s own policies and procedures in this procurement.”
RELATED: Pappas files lawsuit against city following controversial awarding of Hobby concessions contract
In the lawsuit, Pappas said the city violated state law as well as city codes.
Pappas said there was inappropriate contact by the Houston mayor’s office during what was a designated “no contact period” in the bidding process. The Pappas family pointed to a voicemail allegedly left by William-Paul Thomas in November of 2019 to Chris Pappas saying, “Oh, Mr. Pappas, this is William-Paul Thomas, Mayor Sylvester Turner’s Office. I wanted to visit with you regarding the upcoming airport concession at Hobby Airport. I had a great meeting with a couple of folks, and I’m going to share with you some of the thoughts that we had going forward. Please, give me a call at your convenience,” the lawsuit states.
April 12, 2023: “Inappropriate contact” allegations involve convicted advisor to Turner
The lawsuit filed by the Pappas family on Tuesday has many talking and considering there are allegations that the City of Houston violated state law and city code during the recent awarding of a concessions contract. The process lasted for several years and required three rounds.
Many in and out of city hall are talking because the claims involve a name familiar to Houstonians, former Director of City Council Relations William-Paul Thomas. Thomas was convicted last summer in federal court of conspiracy tied to cash bribes. The admission of guilt by the longtime advisor to Houston Mayor Sylvester Turner caught city hall by surprise as Thomas is still awaiting federal sentencing in that case.
In the lawsuit, Pappas states there was inappropriate contact by the mayor’s office during what was a designated “no contact period” in the bidding process.
April 26, 2023: Airport dispute in holding pattern
The dispute at Hobby Airport between the Pappas family and City of Houston was set to continue, but the hearing was put on hold.
Attorneys representing Pappas withdrew their request for a temporary injunction after it was reported that their witnesses were not present, including Mayor Sylvester Turner’s Office.
Representatives from the city and Areas Group declined to comment after court. Pappas’ attorney Rachel Hooper explained why they wanted a temporary injunction hearing.
“The reason why we did that is because the necessary witnesses who made the decision on this government procurement are not in our city. In fact, they’re not in our country right now, and so we need these witnesses. We need access to them. We need testimony from them to make our case,” Hooper said.
Pappas maintained the right to file for a temporary injunction at a later date.
May 5, 2023: Temporary restraining order hearing
The food fight at Hobby Airport continued with an emergency Temporary Restraining Order (TRO) hearing in the 11th Civil Court inside of the Harris County Civil Courthouse.
In its quest for rapid discovery, an attorney for Pappas requested immediate depositions from multiple city officials including Houston Airports System Director Mario Diaz and Houston Mayor Sylvester Turner.
In addition, the attorney claimed the city was harming Pappas by forcing them to leave items behind for Areas.
RELATED: Pappas loses latest battle in court over Hobby concessions contract dispute
Judge Hawkins denied the TRO in a hearing that lasted less than thirty minutes.
“We refiled our TRO against the City of Houston and Areas Group yesterday. The TRO was unfortunately denied. Our legal team is focused on our next legal steps. Our team at Hobby is working extremely hard to close our restaurants properly,” said Chris Pappas in a statement.
Pappas goes on to add, “In addition to the City of Houston’s egregiously flawed procurement process, the city continues to work directly on behalf of Areas Group. The city, on behalf of Areas, is disputing kitchen equipment items that are commonly known in the industry to be easily removable. They are attempting to force us to leave those items for Areas’ use without any compensation. In contrast, we completed our agreement with the Latrelle’s Group on the sale of equipment without any conflict.”
May 11. 2023: Pappas leaves Hobby
Four Families, the joint venture among Pappas Restaurants, LaTrelle’s Management, and Grover Jackson/GP Capital America LLC. that served as the airport’s food and beverage concessionaire since 2002, ceased operating inside Hobby Airport at 11:59 p.m. Eight temporary dining options will operate in their place. Between the two contracts, 20 new food and beverage concepts will open inside Hobby Airport between fall 2023 and winter 2024.
May 12, 2023: Hobby’s new food venues
Airport travelers were surprised to see new restaurants, like Gastrohub, at Hobby Airport on Friday. It’s where Pappas BBQ used to be.
Houston Airport System announced eight new temporary restaurants in place of Pappas. They include: Gastrohub Bistro & Bar, Gastrohub, Streat, Streat Bar, Latrelle’s Mexican Kitchen, Pink’s Pizza, Pick Up Stix and Hubcap Bar & Grill.
Pappas released this statement:
“Today, HAS and the City of Houston refused to allow us to vacate our spaces at Hobby Airport. We were working extraordinarily hard to take out all removable equipment when our team was met by the head of airport security and law enforcement who instructed them not to remove equipment that was purchased by Pappas Restaurants. The city is working on behalf of Areas to forcefully acquire expensive equipment without paying. The behavior of the city continues to be disgraceful. Houston deserves better.” - Christina Pappas
RELATED: New restaurants are in and Pappas is out at Houston Hobby Airport
City of Houston Legal responded saying a contract said otherwise.
“The contractual arrangement between the city and Pappas allows Pappas to take away “removable” fixtures at the end of the contract period, and Pappas is and has been free to do so. However, Pappas is also seeking to dismantle and take away other key fixtures, such as three compartment sinks, that are bolted or otherwise “permanently” affixed to Hobby Airport. Such removals are contractually impermissible, cause damage to the airport facilities and would inevitably cause customer service disruptions as the airport switches vendors. Pappas has been repeatedly reminded of its contractual obligation to leave these “permanent” fixtures in place and those reminders have been ignored. The city will continue to comply with its contractual obligations to ensure a smooth transition as the Areas takes over space formerly operated by Pappas.”- COH Legal.
A total of 20 permanent dining and retail concepts will be open by late 2024.
The permanent dining options include: Fat Cat Creamery, Dunkin’ Donuts, The Spot, The Spot Bar, Velvet Taco, The Rustic, Jersey Mike’s, Pei Wei, Chick-Fil-A (new location), Starbucks 1 (new location), Starbucks 2, ThroughGood Bistro, Common Bond Cafe, Yard House, Killen’s Barbeque, Spindletap Brewery, Dish Society, Longhorn Steakhouse, Pink’s Pizza (new location) and Wendy’s (updated concept).
June 25, 2024: Both sides back in appeals court
The Pappas family and City of Houston each presented arguments before a three-judge panel appeals court.
Each side spent about 20 minutes arguing their case.
The City of Houston is appealing a lower court ruling allowing Pappas to move forward with their case.
The appeals court justices will rule on the hearing at some point in the future.