Two high-profile San Diego restaurants chosen for airport’s new Terminal 1

The opening of the new Terminal 1 at the San Diego airport is still a couple of years off, but two of the city’s better-known restaurants have already been chosen to serve food and drinks to airline passengers once the facility makes its debut.

Among the new food and beverage operators selected are Puesto, which now has nine California locations including the Headquarters at Seaport, and Kettner Exchange, which has had a longtime presence in Little Italy.

The first set of five concession venues were approved last week by the San Diego County Regional Airport Authority board, a first step before long-term leases can be negotiated. In all, there will be 17 new restaurants operating in the expanded terminal once it is completed in 2028. They will occupy about 32,000 square feet — a 250 percent increase in space compared to the concessions area in the existing Terminal 1.

A new lineup of food, beverage and retail concessions is a key component of what will be the San Diego International Airport’s single largest project ever undertaken. The $3.4 billion Terminal 1 overhaul, which also includes a new inbound roadway and taxiway, entails replacing the 1960s-era facility with a 30-gate state-of-the-art facility, a more efficient baggage handling system, and a 5,200-space parking garage.

The first 19 gates in the new terminal are expected to open in mid-2025, and demolition of the old terminal will follow. An additional 11 gates will be completed by early 2028.

By next month, the Airport Authority board is expected to consider the remaining concession selections to fill out the 17 new restaurant slots.

Overseeing the five spaces selected last week will be Sausalito-based High Flying Foods, which has been operating eight venues in Terminal 2, among them Stone Brewing, Phil’s BBQ, Saffron Thai, and Pannikin Coffee & Tea. For the overhaul of Terminal 2, completed a decade ago, there was an emphasis then, as now, on attracting well-known, popular restaurant and bar operators.

The airport’s solicitation for the first round of concessions attracted six bidders, who were required to address a number of criteria, including offering food appealing to a broad variety of tastes and that could be served as breakfast, lunch, dinner and snacks. For those venues that were local, one of the Airport Authority’s priorities was how well-known they were to the traveling public.

“We surveyed our employees and friends we know in the San Diego area, and then we spent months putting together a list of what we thought would be great concepts to bring in,” High Flying Foods president Kevin Westlye said of the early research the firm conducted. “Then we went into their places without letting them know who we are and we eat to make sure they’re as good as their reputation.

“We were also looking at partners who will be with us. It’s a 15-year lease so we are looking for a level of stability.”

Rendering of Kettner Exchange space

Both Puesto and Kettner Exchange are slated to open in 2028. The other planned venues, which will open in 2025, are:

Rendering of planned Cutwater Spirits venue

(Courtesy of San Diego County Regional Airport Authority)

— Cutwater Spirits and Lofty Coffee: Occupying nearly 3,000 square feet, the majority of the space will be Cutwater, which in addition to spirits, will offer wine and beer, plus a menu of salads, flatbreads, chicken wings and breakfast foods. The space is located near the east end of the terminal serving a cluster of gates expected to be reserved for Southwest Airlines. Lofty, which will take up about a quarter of the overall space, opened its first bakery, cafe and roastery in Encinitas in 2014 and has grown to five locations.

— Parakeet Cafe: Occupying just 800 square feet, it will offer a broad variety of fresh, healthy, and organic dishes and will include a kids’ menu. The cafe already has four existing San Diego locations.

— Better Buzz Coffee Roasters: Boasting a huge San Diego County presence, with locations from Coronado to San Marcos, it will be situated just opposite the air-side security checkpoint.

Puesto, which brought its Mexican cuisine to Petco Park two years ago, will have an especially large space — 2,734 square feet — and will be located in the western portion of the terminal. A portion of the space will be shared with San Diego-based Mostra Coffee, which first opened in Carmel Mountain Ranch in 2014.

Co-owners Eric and Alex Adler said they were excited when first asked about bringing their concept to the airport. The restaurant company already was skilled at quick turnarounds for food preparation given its experience at the ballpark, they pointed out.

“When we told the Padres we could do tortillas to order, they were surprised but we did it and we nailed it,” Alex said . “We’ll do that at the airport, too.”

Added Eric, “We want to be in the most important places in San Diego, and the airport is one of those key places for San Diego, maybe the most important place in the city. We open restaurants because we want people to be able to eat great food, and selfishly, we want great food when we are traveling.”

Puesto and the other High Flying venues planned for Terminal 1 will receive a share of the overall sales and will assist with training and menu development but their staff will not be operating the locations.

Still to be negotiated with High Flying is its lease with the airport. Given sharply escalating labor and building costs over the last several years, the percentage rent the airport can expect to realize is likely to be 10 to 12 percent of food and beverage sales, according to a staff report to the Airport Authority board.

That compares to the 15.6 percent rate for existing food and beverage outlets, a term that was set more than a decade ago when construction costs were half of what they are today, said Deanna Zachrisson, the airport’s director of revenue generation and partnership development. Buildout of the new concessions, she said, could reach $1,800 per square foot.

As an example of the kind of revenue the airport can realize, Zachrisson cited Stone Brewing, one of High Flying Foods’ best-performing San Diego airport locations. For calendar year 2022, it achieved $4.3 million in gross sales, 15.6 percent of which went to the airport.

Airport-wide, all concessions grossed $137 million last year, only a percentage of which goes to the airport, she said.