The economics of airport shoe shines come under scrutiny

Habitués of the Lindbergh Terminal at MSP will have to hoof it a bit further to get their shoes spit-polished if the Metropolitan Airports Commission makes good on its plan to oust long-time tenant Zeno Shoe Shine.

The MAC has said the business will need to vacate its space no later than Jan. 31 after more than 47 years at the airport.

The controversy both highlights the intense competition for retail space in the high-traffic airport terminal and drops some tantalizing hints about small-business operations at the facility.

Named for founder Royal Zeno, who died last year, the business was threatened with ouster a decade ago, but a public outcry gave the stand a reprieve. Presumably sensitive to the possible public outcry again, the MAC issued a detailed press release outlining their case, which it says is economic.

The dispute has focused on how much revenue the stand generates, compared with similar businesses. Current owner Rosemary Zeno, daughter of the founder, is making her case in the press.

Based on Zeno’s self-reported revenue for 2008, “it clearly is providing minimal service to travelers and a living wage to no one,” said Patrick Hogan, MAC spokesman. While the MAC audits most of the businesses at the airport, according to Hogan, it relies on self-reporting for shoe shine stands, which are all cash businesses. “There are some challenges to auditing a cash business if there is no record of a transaction, there is nothing to audit,” Hogan said.

In announcing the change, the MAC said that the late nonagenarian “had a unique opportunity to transfer the business to his daughter Rosemary during the 1999-2004 lease period. He did not do so. Consequently, Rosemary Zeno, the current proprietor, has never had a lease with the Metropolitan Airports Commission.”

With a competing shoe-shine stand just yards away in the Mall at the Lindbergh terminal and several stands throughout the airport, the demand for retail space within the shopping environment at MSP is intense. And Zeno’s prime location in the Mall is deemed attractive for a tech-oriented retail outlet.

The MAC said it is seeking vendors to sell “cell phones, smart phones and accessories as well as phone plans. The proposer could also sell or rent hand-held games and digital media and provide training for use of the equipment.”

According to the MAC, the Zeno stand has reported declining revenues every year since 2003, when it grossed a reported $40,385. “By 2008, the shop generated even less,” the MAC press release continued.

“According to the shop’s revenue reports, it grossed only $14,890 last year (2008), suggesting the shop provided less than 7 shines per day, on average, at an airport through which an average of 93,000 travelers per day passed. Based on Zeno Shoe Shine’s revenue reports, after paying the minimum rent, the business netted less than $6,500 for the year – or less than $18 per day, on average. If you divide that evenly between the shop’s five shiners and Rosemary Zeno, it equates to $3 per day per person.”

A competing shoeshine operation with four stands throughout the airport reported a total of $225,744 in 2008, Hogan said. And the MAC press release goes further in raising questions of transparency on the part of the shoe shine operator: “If (the stand) has not accurately reported its revenues, that would be very troubling as well because the rent it owes is based, in part, on the revenues it generates,” Hogan said. “The shop has been at the airport more than 30 years, so by now one would hope it has in place a process for accurately reporting its revenues.”

The Pioneer Press report focused on the disputed revenue figures saying that Zeno and her attorney, Jay Benanav, supplied the MAC with proper figures earlier this year. Through August of this year, the shop had $42,388 in gross revenue, on pace for about $63,000 this year, they say.

“While $63,000 a year may not be much by your standards,” Benanav wrote in a November letter to the MAC, “it is crucial to the people who work at the business.”

The earlier revenue figures may have been inaccurate, Zeno told the Pioneer Press, because she was reporting revenue based on what ended up in the till. Her shoe shiners receive half of whatever they bring in, plus tips. That other half may have been the issue, she says.

Rosemary Zeno told the Star Tribune that she just wants to keep working and keep paying the five men she employs. Her attorney speculated in the Strib whether MAC staff has simply grown uncomfortable with an outdated stereotypical image of black people shining shoes, a suspicion quickly dismissed by a commission official, according to the newspaper report.

In 2010, the MAC plans to solicit competitive bids for all MSP shoe-shine operations except those on Lindbergh Terminal Concourse G, which is controlled by Northwest Airlines. “Like other shoe-shine operators, Rosemary Zeno can compete for a lease at MSP during the bidding process,” said Hogan, “but it’s time to open the opportunity to all shoe-shine operators, the majority of which, like Zeno Shoe Shine, are owned and operated by women or minorities.”

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Comments (2)

  1. Submitted by Bernice Vetsch on 12/15/2009 - 01:32 pm.

    If, as it seems, $63,000 will be the Zeno stand’s gross income for this year, it is bringing in the same money PER STAND as the company with four stands.

  2. Submitted by Paul Udstrand on 12/15/2009 - 04:39 pm.

    I say booshwa to the MAC. Are we really to believe that MAC actually believed the stand was only making $18.00 a day and still managing to make rent? If they were only making $18.00 a day I doubt they would be fighting to stay in business. MAC was obviously looking for a way to pounce here and cherry picked some numbers do to it. This woman has only had the business for a year, accounting can be tricky. Anyone with common sense would have asked some questions about the numbers before issuing a eviction notice.

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