When Audrey House was 21, she moved to Altus, bought 20 acres from Al Wiederkehr and set about starting her own vineyard and winery operation, which she called Chateau Aux Arc.

Nineteen years later, Chateau Aux Arc is still operating and House has become a relentless lobbying voice for the state’s wine industry. House’s efforts helped convince the Arkansas Legislature to name Cynthiana the state grape and to expand its wine-shipping laws. Chateau Aux Arc produces up to 4,000 cases of 100 percent Arkansas wine annually.

House was an Arkansas Business 40 Under 40 honoree in 2010.

Buying land to start a winery at age 21 seems bold. What made you think you could do it?

Luck is when preparation meets circumstance. People say I was lucky to get into a business that if you were not born into it, you could not be successful. I was told I wouldn’t last five years making dry wines in Arkansas in an industry that was 95 percent male dominated. I realized early in my life that something great happens when you test your comfort zone.

What have you learned about the political process during your advocacy for the wine industry?

Wine is liquid patience. I have learned it’s a lot easier to make a bottle of wine than to pass a bill through our state legislature. The problem is most people do not understand the many variables and hardships that one undertakes when you grow the vine into wine, much less how to pass a simple bill like wine shipping in the Land of Opportunity. This struggle over the past 19 years has taught me how to be a steward of the land, and at the same time a stateswoman for our industry.

How important is it to wineries such as yours that the face-to-face requirement for shipping wine orders is removed?

All of the surrounding states have increased their production up to 3,000 percent. Why does everyone know where Napa Valley is? It’s because they’ve had direct-consumer marketing for over two decades. The ability to service our loyal customers just within our great state of Arkansas has, until just last week, been but a dream!

What are the biggest opportunities and most daunting challenges for Arkansas wineries?

The biggest opportunity for future Arkansas winegrowers is that we have ideal soil, growing conditions and varietals that do very well for our state. There are great diversity, possibilities and culture across our state as well, when it comes to our valleys and mountains. Daunting is the fact that grape growers who own and live in dry counties cannot open a winery. I have proposed an on-premise dry county winery permit since 2009.

What does the state need to do to help its wine industry flourish?

We need more grape growers. But when you go to the county extension agency in your area you can find information on growing tomatoes, pumpkins, rice and soybeans, but there is nothing to recognize the grape varieties that can be grown here. We have a great asset with the University of Arkansas breeding program. Dr. John Clark has released many varieties over the past decades that thrive here.

Labor is a huge issue for us as this is a highly intensive hands-on industry. Creating a trained workforce has been one of my endeavors, working with Arkansas Tech in Ozark to offer an enology and viticulture program. Without community support, it’s a hard path to pave.

Why is it important to you that a Chateau Aux Arc wine is a completely Arkansas product?

I am a winegrower. It’s easy to just tanker in already made wine and slap your company’s name on it. The true reward is planting the vine, making it into a wine that defines our terroir and gives the world something that represents what we have to offer.

As we’re frequently reminded, everything is harder than it should be, but pleasing the public is hardest of all. Still, some stars in the hospitality industry generally and the restaurant sector specifically shine. A couple of state organizations recognized these stars last week.

The Arkansas Hospitality Association’s 2017 Stars of the Industry Awards recognized, among others:

• Michael Chaffin, COO of the Capital Hotel, with the Golden Key Award
• Kalene Griffith, CEO of Visit Bentonville, the Silver Cup Award
• Jim Rice, senior VP of operations at the Little Rock Convention & Visitors Bureau, Arkansas Hospitality Association Hall of Fame
• and David Stobaugh, owner of Stoby’s restaurants in Conway and Russellville, Salut au Restaurateur of the Year.

Meanwhile, the Department of Arkansas Heritage inducted the members of the 2017 class of the Arkansas Food Hall of Fame, which was launched in September to recognize great restaurants, proprietors and food-themed events across the state.

Inducted into the Food Hall of Fame were Jones Bar-B-Q Diner of Marianna, Lassis Inn of Little Rock and Rhoda’s Famous Hot Tamales of Lake Village.

Honored as Proprietors of the Year were Paul Bash, Ed Moore, Louis Petit and Denis Seyer for their Continental Cuisine partnership, a restaurant company affiliated with influential Arkansas restaurants, including Jacques & Suzanne.

The Cave City Watermelon Festival in Sharp County was recognized in the category of Food-Themed Events. And the People’s Choice Award went to Grotto Wood-Fired Grill & Wine Cave in Eureka Springs.

Tom Gordon, CEO and co-founder of homegrown fast-casual chain Slim Chickens, says the Fayetteville company’s revenue, on an annualized basis, will surpass $100 million by the end of the second quarter of 2017.

That’s double Slim Chickens’ revenue for 2015, which stood at $50 million, COO Sam Rothschild told Arkansas Business last year.

The happy revenue news came in an update from Gordon on the company’s first international outlet, in Kuwait City, which he expects to open in May. Slim Chickens has entered a franchising agreement with Alghanim Industries, a Kuwaiti company, to open locations in Kuwait, the United Arab Emirates and Saudi Arabia. Alghanim, a private company operating in 40 countries, represents a number of high-profile brands, including Chevrolet, Wendy’s and American Express.

Gordon said the company had had two other opportunities to open in the Middle East but had decided to focus on its business in the U.S. — that is, until Alghanim came calling. Alghanim wants to open five to 10 Slim Chickens a year, Gordon said. “Beyond that, we don’t have any other international deals signed yet, but the phones have been ringing,” he said.

“The cultural differences aren’t too problematic,” Gordon said of working internationally compared with working in the U.S. “You have to get over the time difference and then the development of the real estate and understanding how they see the consumer proposition. But for the most part, it’s been a very good, seamless process.”

Slim Chickens last week opened its 51st restaurant in the United States, in Irving, Texas, and Gordon said the company planned to launch 31 locations in 2017 and 55 in 2018. Slim Chickens, now in 12 states, has 22 company stores with the rest franchise outlets.

Asked what he knows now that he wishes he’d known in 2003, when Slim Chickens started, Gordon said, laughing, “Almost everything.

“We always wanted to have a large organization. That was never in question. It takes a lot of effort and a lot of people, the human capital side. You’ve really got to invest in people. And we’ve learned that lesson, not to our detriment.

“We’ve done a good job of building a team,” he said. “I wish I could have built the team a little sooner, but operating from a base of all organic capital and sales, we just had to take our time to build the team. But the team’s been wonderful, and we’re really growing now like I want us to be growing.”

A Texas podiatrist with a past that includes a federal conviction wants to buy the troubled Arkansas Convention Center & Holiday Inn out of bankruptcy — and that has some Texarkana officials on the Arkansas side concerned.

City officials say they haven’t heard from Dr. James J. Naples about his plans for the convention center. In December, Naples entered into a $6.6 million purchase agreement with Dr. Hiren Patel, who owns the property through his Texarkana Hotels LLC. The sale ultimately would have to be approved by the bankruptcy court.

“We are as much in the dark as you are,” Ruth Penney-Bell, mayor of Texarkana, Arkansas, told Arkansas Business. “I have never heard of his having any experience in this sort of thing, not even being a hotel or motel” operator.

She said the city has invested more than $9 million in the convention center project, which opened in 2013, about a year after a convention center opened on the Texas side of the city. Penney-Bell said the city has no voice in the convention center’s operation.

Several messages left at Naples’ medical office in Texarkana, Texas, drew no response. Messages and emails to the attorney representing Naples in the purchase, Kyle B. Davis of New Boston, Texas, also brought no response.

Naples, who has practiced podiatry for more than four decades on the Texas side of Texarkana, also is known for buying properties in financial distress, according to an Arkansan who was in business relationships with Naples. The Arkansan asked that his name not be used because he had been involved in a lawsuit with Naples.

The 27,000-SF, $15 million convention center and 127-room Holiday Inn would seem to be the kind of property Naples finds attractive. It lost $381,000 on revenue of $2 million between April and January, according to financial reports in its bankruptcy. And Naples is familiar with Patel. In January, Naples bought the 81-room Country Inn & Suites in Texarkana, Texas, out of bankruptcy, paying $2.9 million to Patel’s Krishna Associates LLC.

Naples’ biggest deal, though, appears to be selling his AmiCare Behavioral Centers LLC of Fayetteville to publicly traded Acadia Healthcare Co. of Franklin, Tennessee, for $113 million in late 2012. AmiCare was the largest provider of behavioral health services in western Arkansas and did business as Vista Health, operating three inpatient psychiatric treatment facilities in Fayetteville, Fort Smith and Texarkana. It also operated the Piney Ridge Center, a residential treatment facility in Fayetteville, and eight outpatient treatment centers throughout western Arkansas.

More than a decade ago, Naples made headlines for legal troubles. In 2005, he pleaded guilty to one count of conspiracy to obstruct justice and was ordered to pay $2 million in restitution and sentenced to probation for two years. As a result of that conviction, the Texas State Board of Podiatric Medical Examiners suspended Naples’ medical license for three months in 2006 and fined him $75,000.

Hell’s Kitchen
Naples grew up in a part of New York known as Hell’s Kitchen. “This man was not born with a silver spoon,” his attorney, David Botsford of Austin, Texas, said at Naples’ April 2005 sentencing hearing. Naples “brought himself up by his own bootstraps from a tiny hovel of a family home in New York City.”

Naples received his podiatric medicine degree in 1974 from the Dr. William M. Scholl College of Podiatric Medicine at Rosalind Franklin University of Medicine & Science in North Chicago, Illinois, which has produced approximately a third of all practicing podiatric physicians in the United States. He moved to the Texas side of Texarkana in the early 1970s.

Botsford told the judge during the 2005 sentencing that Naples is “a man of his word, a man of integrity, a man that is devoted to his family.”

Naples owned and operated the 63-bed New Boston General Hospital in Texas.

“He made his first million at New Boston hospital. That’s where he got his start,” said the business associate. “He did a huge amount of surgeries there.”

The hospital activity caught the eye of state and federal investigators.

Fraud Allegations
In February 2004, Naples and eight others who worked at the hospital were indicted in U.S. District Court in Texas on charges that included racketeering and Medicare fraud. The 134-count indictment accused Naples of leading the “other doctors to overbill Medicare and persuaded an assistant to help him perform unauthorized cancer research,” according to an April 2004 article in the Houston Chronicle.

“We vehemently deny all the accusations and look forward to proving our innocence in court,” Keith Naples, son of Dr. Naples and the administrator of the hospital, told the newspaper.

Naples wasn’t under indictment for long. About three months later, in May 2004, a federal judge dropped the charges against Naples and his co-defendants. At the request of the defendants, the documents in that case were sealed, which is an unusual move.

But the dismissal of the charges against Naples didn’t end his dealings with the federal government.

In September 2004, Naples was charged with one count of obstruction of justice for causing “an employee to fail to produce airplane trip logs, … which were required to be produced” by a grand jury subpoena dated in August 2003, according to the information sheet filed in U.S. District Court in the Texarkana, Texas, Division.

Federal prosecutors considered Naples a flight risk and prevented him from using his Beechcraft King Air B100 Turboprop plane, according to the April 2004 Houston Chronicle article. Naples, however, did receive permission to use the plane to fly from Texarkana to Fayetteville and back to watch his son graduate from business school in December 2004.

Not long afterward, Naples pleaded guilty to the obstruction charge.

At his sentencing hearing in April 2005, Naples was given two years of probation and ordered to pay $2 million in restitution to the Department of Health & Human Services, the federal agency that oversees the Centers for Medicare & Medicaid Services. Naples also was sentenced to 250 hours of community service.

Naples apologized and told the judge, “I assure you I won’t be back.”

After being on probation for about 14 months, Naples asked U.S. District Judge David Folsom to end his probation early. The $2 million restitution had been paid, and “he has far exceeded his 250 hours of community service,” Botsford said in a pleading. “His attitude has been exceptional and he has done everything the Court required of him.”

Folsom granted the early termination of Naples’ probation on Nov. 3, 2006.

More Deals
Released from probation, Naples continued buying property.

Through an entity called Pinewood Healthcare Realty LP, Naples bought an On Deck batting cage in Fayetteville in September 2007 for $375,000 after it had been an asset in a bankruptcy. The 18,300-SF building on 1.4 acres now has an estimated market value of $2.2 million, according to the Washington County assessor’s record.

Other properties in bankruptcy also caught Naples’ attention.

Naples was one of six parties who submitted bids in November to buy the Country Inn & Suites on the Texas side of Texarkana out of bankruptcy from Hiren Patel and his father, Dineshchandra Patel, through their company, Krishna Associates LLC.

Krishna Associates had filed for Chapter 11 bankruptcy reorganization in November 2015 and listed $5.3 million in debts and $3.2 million in assets. The company’s bankruptcy attorney, Bill F. Payne of Paris, Texas, didn’t respond to calls or an email.

Naples was the winning bidder, and the $2.9 million in proceeds from the sale went to MidSouth Bank of Lafayette, Louisiana, which was the leading creditor.

Hiren Patel and his father also own the Arkansas Convention Center & Holiday Inn, through their company Texarkana Hotels, which filed for Chapter 11 reorganization last March. It listed $10.6 million in debts and $5.2 million in assets.

The convention center project has previously been a source of controversy.

Between 2009 and 2012, Harold Boldt, then city manager of Texarkana, Arkansas, persuaded city directors to approve several deals and incentives so Patel would develop the convention center project and a water park, which he operates under Holiday Springs Water Park LLC. That company is not in bankruptcy.

In 2014, a legislative audit found several violations of state law in the city’s handling of the development, but no criminal charges were brought.

Meanwhile, revenue was increasing at the convention center and hotel, growing from $1.85 million in 2014, its first full year of operation, to $2.46 million in 2015.

MidSouth Bank, though, said Patel’s company defaulted on $10 million worth of loans and wanted to foreclose. That triggered the trip to bankruptcy court to stop the foreclosure action.

(See: Midsouth Bank Accuses Arkansas Convention Center Owner of Fraud.)

The property went up for bid in January, with Naples winning the bid. But objections to the sale were filed, including one by the Advertising & Promotion Commission in Texarkana, Arkansas, which pays the company almost $235,000 annually as incentive for operating the property. The A&P Commision said it shouldn’t have to continue to make those payments to a new owner.

A&P Commission Chairman Buddy Allen said he hasn’t talked to Naples about the purchase of the property. Naples hasn’t requested that the A&P tax incentives continue under his ownership, Allen said.

“I do not know what his plans are if he is the successful bidder,” Allen told Arkansas Business.

A hearing on the sale is scheduled for March 17 in front of Bankruptcy Judge Brenda T. Rhoades in Plano, Texas.

Arkansas Convention Center & Holiday Inn
Texarkana, Arkansas

Source: Monthly Operating Reports filed in Texarkana Hotels LLC’s Chapter 11 Bankruptcy in U.S. Bankruptcy Court in Texas. The reports started being filed in April 2016.

The 18th Amendment, effective starting in 1920, outlawed the manufacture, sale or transportation of “intoxicating liquors” within the United States of America. It was such a bad idea that the 21st Amendment, ratified 13 years later, didn’t just repeal Prohibition but essentially washed the federal government’s hands of booze and flung all regulation of it into the laps of the individual states forever.

“The transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited,” the repeal amendment says, giving no guidance at all on what those state laws should look like.

As a result, the states — now 50 of them — have a patchwork of laws that may delight or frustrate new residents depending on their attitudes and what they were accustomed to.

Arkansas’ liquor laws, long fairly static, started to relax a couple of decades ago, despite the liquor store owners’ powerful lobbying efforts. Dry counties got damper and then started to take the full plunge. Wine — first from Arkansas wineries, then from small wineries outside the state — crept into grocery stores.

The latest debate in the General Assembly, over Wal-Mart’s desire to expand its wine selection, is the latest reminder that piecemealing laws that must mesh together is a recipe for unintended consequences. It’s hard to feel too sorry for the liquor store owners — they protected themselves legislatively by making it ridiculously hard for customers in dry counties to get more convenient access to alcohol. But neither do they deserve to have the value of their investments undermined just because the biggest retailer in the world wants more of the action.

Like the U.S. Tax Code, Arkansas’ liquor laws need an overhaul that recognizes changing attitudes and shopping habits and economic realities of a product that, as the 18th Amendment taught us, will not be denied.

The controversy over the grocery wine bill illustrates the importance of convenience to the alcohol consumer, convenience is a quality-of-life issue, and quality-of-life issues are closely linked to tourism.

In other words, in the last few years Arkansans have begun to realize that a beer or a glass of wine with dinner enhances the tourist experience and have sought to make that beer or glass of wine more readily available.

Montine McNulty, who has been executive director of the Arkansas Hospitality Association for 20 years, says the past 10 to 15 years in particular have seen many changes to Arkansas’ alcohol laws. Act 1813 of 2003, for example, expanded the definition of a private club, allowing entities that existed for the purposes of “community hospitality, professional association, entertainment” to sell alcoholic beverages.

One of the highest-profile efforts to accommodate tipplers took place in 2012, when Wal-Mart heirs Tom and Steuart Walton led a campaign to allow package liquor sales in Benton County, home of Wal-Mart and of the then-newly opened Crystal Bridges Museum of American Art, a major tourist destination.

Kane Webb, an Arkansas native who left the state for several years and returned after being appointed executive director of the Arkansas Department of Parks & Tourism in 2015, said an increased interest in permitting alcohol sales is clear. “The evidence is there,” he said. “Benton County went wet. Clark County went wet. So increasingly you’re seeing more of it.”

Webb noted that the lodges at Mount Magazine State Park and DeGray Lake Resort State Park serve alcohol. “That’s been a good service and a good convenience for folks,” he said. “There hasn’t really been any backlash there at all or any problems.”

“I think that economic development is important to communities,” McNulty said. “And when they look at the factors that influence economic development, I think that restaurants and hotels and the ability to have a glass of wine or beer or whatever — all that plays into where people want to live. And I think that that has influenced and changed Arkansans’ thinking about alcohol.”

Nowhere is that more evident than in the growth of the craft beer brewing industry in Arkansas and in the advertising by the state’s Parks & Tourism Department of the burgeoning brewpub scene. The department also touts the Arkansas Wine Trail, which highlights the state’s various wineries. And the state Legislature has slowly worked to accommodate wine tourism by loosening restrictions on the shipment of wines out of state. Parks & Tourism even advertises Arkansas’ first legal distillery since Prohibition, Rock Town Distillery in Little Rock, which provides tours to visitors.

Millennials, with their interest in patronizing local businesses and in “authentically” experiencing a local destination, have been the impetus for some of this change. But McNulty thinks that for Arkansans, local control of alcohol laws will always remain important. Some communities might welcome an alcohol-serving restaurant but wouldn’t necessarily welcome a package store.

Nevertheless, McNulty said, “Change is coming and it’s still coming.”

Liquor store owners and others in Arkansas say a bill to let Wal-Mart and grocery stores sell a larger assortment of wine fundamentally changes their business model, will lead to the closure of hundreds of package stores in the state and will result in less choice for consumers.

“What I believe is unfair about what we’re doing is we have prevented the liquor stores from setting up a business model that can compete in a free market, so we have essentially set them up to fail,” said state Rep. Jana Della Rosa, R-Rogers, who opposed Senate Bill 284. “And they have done nothing wrong.”

“It’s going to be really tough for Arkansas small businesses to survive if this thing gets through,” said John Akins, owner of Legacy Wine & Spirits of Little Rock and president of the United Beverage Retailers of Arkansas, referring to independent package stores.

The measure, filed by state Sen. Bart Hester, R-Cave Springs, allows grocery stores to sell wines from any winery. Currently, grocery stores can sell wine only from “small-farm wineries,” those that don’t produce more than 250,000 gallons of wine per year. SB284 would greatly expand the wine selection that grocery stores, including Wal-Mart and Kroger, can offer.

That makes it convenient for consumers, but it changes the business landscape for package stores in Arkansas, which are heavily regulated by the state and are subject to a number of laws that grocery stores are not. Those laws include limiting liquor store permits to only one person or business and forbidding franchising, effectively preventing many package stores from being able to buy in bulk and so offer discounts. They also include requiring liquor stores to be at least 1,000 feet from a church or school.

Hester, who said Wal-Mart brought the legislation to him to sponsor, disagreed with the bill’s opponents.

“If this were an issue about allowing Wal-Mart to sell wine for the first time, I would have had a very different position on it,” Hester told Arkansas Business. “But since they’re allowed to sell wine — we’re just talking about allowing them to sell the brands that they want — I think that’s kind of a no-brainer, free-market position for me.”

As for the argument that the bill changes the rules of the liquor-selling game, Hester said: “If we were 50 years later, they would say we’re changing the rules in the middle of it. And they’re absolutely right. We are changing the rules. That’s what we do. We’re elected representatives of the people, and we come down and we change the rules to try to be more fitting of the day and the time and what’s best for the state of Arkansas.”

Akins knows that the market is changing and that big retailers like Wal-Mart have an advantage. “There’s nothing we can do to stop Wal-Mart,” he said. “But Wal-Mart also needs to be a little more compassionate toward small business and let us come up with some sort of way to adjust our business model before this happens.”

John Smykla owns the Little Brown Jug in Pine Bluff. “It’s not about fair competition,” he said of the measure. “It’s not David vs. Goliath. It’s David vs. a dozen Goliaths.”

The bill will immediately devalue his liquor store business by half, Smykla said. “We only have two protected classes of products we can sell. That’s hard liquor and wine over 6 percent [alcohol]. Everything else is available for sale at Wal-Mart and Kroger and everywhere else. You’re taking half of our products right there, half of the protected items that we sell and allowing anybody to get in that business without any of the same restrictions. And that’s what kills you.

“I’m totally for fair competition,” he said. “There’s nothing fair about this when they won’t play by the same rules we play by. They won’t play by the setback rule. They won’t play by the one-permit rule.

“The only concession they were willing to give us was allow us to sell food items that go with alcohol, so we can sell cheese and crackers. Nobody bought a cheese-and-cracker permit.”

(See Arkansas’ Arcane Liquor Laws Slowly Loosen.)

Roger Gildehaus is owner of the Macadoodles chain of liquor stores. Macadoodles is headquartered in Missouri, but has a store in Springdale, and Gildehaus worked 26 years at Wal-Mart. Speaking on Thursday, before final disposition of the bill, Gildehaus said that if it passed, in two years Wal-Mart would be seeking to change “the core of the liquor laws, which is one-package liquor license per person, company or entity.”

“If they win this time on wine, then they’re going to want spirits,” he told Arkansas Business. “And when they want spirits, they overturn the core of the liquor laws in the state.”

Gildehaus predicted the grocery wine bill, if enacted, would put 200 to 300 liquor store owners in the state out of business, which would have a ripple effect of lost jobs and bankruptcies, particularly troubling for smaller towns.

In addition, he and others said, the eventual outcome of allowing big-box retailers to dominate the wine market is less choice for consumers.

“When there’s competition, Wal-Mart will carry the broader assortment because they have to to compete,” Gildehaus said. “But as soon as they put that little guy out of business, that assortment dwindles real quick like. That’s when the consumer loses … the consumer always loses when competition gets put out of business.”

Anne Hatfield, a Wal-Mart spokesman, said in an emailed response to questions that, for its part, the Bentonville retailer just wants to serve its customers: “Our customers want to select from a full range of wine when they shop for groceries.”

“The liquor stores have a controlled market on liquor and spirits,” Hester said. “They had already given up or lost the argument on wine in the past, so that’s not a huge concern of mine. I like to go back to what Sam Walton said in his book I remember reading many years ago. He said, ‘We at Wal-Mart cannot compete with the little guy that does his job right.’”

Restaurant industry sales nationwide were expected to reach almost $783 billion in 2016, while restaurant sales in Arkansas last year were projected at $4.3 billion, according to the National Restaurant Association.

The restaurant and food service industry employed 14.4 million people in the United States last year, about 10 percent of the nation’s workforce. In Arkansas, the sector employed 119,300 in 2016, about 11 percent of the jobs in the state, the association said.

In addition:

• Half of all adults have worked in the restaurant industry at some point during their lives.
• 1 in 3 Americans got their first job experience in a restaurant.
• 8 in 10 restaurant owners say their first job in the industry was an entry-level position.
• 9 in 10 restaurant managers started in entry-level positions.
• 56 percent of first-line supervisors/managers of food preparation and service workers in 2014 were women, 15 percent were black or African-American and 21 percent were of Hispanic origin.
• The number of women-owned restaurant businesses increased 40 percent between 2007 and 2012 — well above the 12 percent increase in all restaurant businesses.
• The number of Hispanic-owned restaurant businesses jumped 51 percent between 2007 and 2012. Black- or African-American-owned restaurants increased 49 percent.

A Clinton food distributor has started a fight over having to pay for nearly 2 million pounds of frozen mozzarella cheese sticks.

Global Performance Group Inc. in Van Buren County has sued the seller of the appetizer, McCain Foods USA Inc. of Lisle, Illinois, and said it shouldn’t have to pay the $1.1 million bill for the finger food, according to GPG’s lawsuit in U.S. District Court in Little Rock.

McCain, in a counterclaim, said GPG is responsible for the bill.

The problems that caused the lawsuit date back to 2015, GPG said. McCain is a producer of potato products and appetizers that it sells through distributors and restaurants. In 2015, McCain was one of the companies that supplied mozzarella sticks to McDonald’s Corp.

In late 2015 or early 2016, McDonald’s abruptly stopped selling the menu item after complaints surfaced that the mozzarella sticks contained no cheese, according to GPG. Postings on social media showed batter shells with no mozzarella inside, and a lawsuit against McDonald’s followed, according to GPG’s complaint.

That left McCain holding tons of unsold cheese sticks wrapped in McDonald’s packaging. McCain then started selling the frozen items to other distributors and wholesalers.

GPG said in the lawsuit that McCain kept it in the dark about the complaints and didn’t mention that the sticks were “defective.”

GPG bought 1.7 million pounds of cheese sticks, which, if you were wondering, was 47 tractor-trailer truckloads.

It is suing for unspecified damages.

In court filings, McCain denied knowing that the cheese sticks were defective “in any way.” And GPG never told McCain that there was anything wrong with the food, according to McCain.

“Even though GPG accepted the Products and the Invoices all are past-due, GPG has not made a single payment for the Products,” McCain said in the filing.

McCain is suing GPG for breach of contract for not paying the bill.

A post shared by Katie Wall (@_wellthisismyusername_) on Dec 19, 2015 at 12:17pm PST

A multifamily project in North Little Rock, apartment land, a restaurant and hotel land in west Little Rock and a Heights home in Little Rock form a five-piece of multimillion-dollar transactions in Pulaski County.

• Ridge Road Village Ltd. of Frisco, Texas, sold its namesake 80-unit apartment project at 4748 Ridge Road in North Little Rock for $7 million to an affiliate of New York’s Dwight Capital.

• An affiliate of Heritage Properties Inc. of Madison, Mississippi, bought a 20.1-acre apartment site near the southeast corner of Rahling and Kirk roads for $3.1 million from Deltic Timber Corp. of El Dorado.

• Centre Structured Trust 2 investors sold the 7,090-SF Romano’s Macaroni Grill at 11100 W. Markham St. for $2.5 million to an affiliate of Fortress Investment Group of New York.

• James and Terry Barnes and their Promenade Hospitality LLC purchased a 2.91-acre hotel site near the southeast corner of La Grande Drive and St. Vincent Way for nearly $2.3 million from Deltic Timber.

• Robert and Eliza Gaines acquired a 5,000-SF house near the Country Club of Little Rock from Clark and Katherine Raborn for $1.3 million.

A strain of bird flu has been detected in a chicken breeder flock on a Tennessee farm contracted to U.S. food giant Tyson Foods Inc., and the 73,500 birds will be culled to stop the virus from entering the food system, government and company officials said on Sunday.

The U.S. Department of Agriculture said this represented the first confirmed case of highly pathogenic H7 avian influenza (HPAI) in commercial poultry in the United States this year. It is the first time HPAI has been found in Tennessee, the state government said.

Tyson, the biggest chicken meat producer in the United States, said in a statement it was working with Tennessee and federal officials to contain the virus by euthanizing the birds on the contract farm.

In 2014 and 2015, during a widespread outbreak of HPAI, the United States killed nearly 50 million birds, mostly egg-laying hens. The losses pushed U.S. egg prices to record highs and prompted trading partners to ban imports of American poultry, even though there was little infection then in the broiler industry.

No people were affected in that outbreak, which was primarily of the H5N2 strain. The risk of human infection in poultry outbreaks is low, although in China people have died this winter amid an outbreak of the H7N9 virus in birds.

The facility in Tennessee's Lincoln County has been placed under quarantine, along with approximately 30 other poultry farms within a 6.2-mile (10 km) radius of the site, the state said. Other flocks in the quarantined area are being tested, it added.

Tyson, the USDA and the state did not name the facility involved. Tyson said that it did not expect disruptions to its chicken business.

The USDA should have more information by Monday evening about the particular strain of the virus involved, spokeswoman Donna Karlsons said by email.

HPAI bird flu was last found in a commercial turkey flock in Indiana in January 2016.

The USDA said it would inform the World Organization for Animal Health (OIE) and international trading partners of the outbreak.

The biggest traditional markets for U.S. chicken meat are Mexico and Canada, which introduced state or regional bans on U.S. broiler exports after the outbreak two years ago, and China, which imposed a national ban.

Tennessee's broiler production is too small to rank it in the top five U.S. producing states but it is the third-largest generator of cash receipts in agriculture for the state.

In January, the USDA detected bird flu in a wild duck in Montana that appeared to match one of the strains found during the 2014 and 2015 outbreak.

The United States stepped up biosecurity measures aimed at preventing the spread of bird flu after the outbreak two years ago.

Tyson said precautions being taken include disinfecting all vehicles entering farms and banning all nonessential visitor access to contract farms.

In recent months, different strains of bird flu have been confirmed across Asia and in Europe. Authorities have culled millions of birds in affected areas to control the outbreaks.

France, which has the largest poultry flock in the European Union, has reported outbreaks of the highly contagious H5N8 bird flu virus. In South Korea, the rapid spread of the H5N6 strain of the virus has led to the country's worst-ever outbreak of bird flu.

A New York attorney said he is coming to Washington County Circuit Court later this month to challenge a class-action settlement against the makers of Blue Diamond almond products that he said is unfair to class members.

The terms of the settlement call for Blue Diamond Growers of Sacramento, California, to set aside $9 million to cover claims that the company mislabeled Almond Breeze almond milk and Nut-Thins as being “all natural” when they weren’t, according to filings by plaintiffs’ attorneys in the case. In addition, the packaging claimed the almond milk was certified by the American Heart Association when it wasn’t, according to court filings.

Blue Diamond has denied any wrongdoing but has agreed to a settlement fund of $7.5 million for Almond Breeze consumers and $1.5 million for Nut-Thins claims.

The settlement fund also will be used to pay the plaintiffs’ attorneys and fees, which will be up to $2.4 million for the lawyers involved in the Almond Breeze claims and $492,000 for the Nut-Thins class counsel.

Blue Diamond has agreed not to object to the plaintiffs’ attorneys’ fees, which, along with the settlement, has to be approved by Washington County Circuit Court Judge Doug Martin. The settlement hearing is set for March 29.

The victims — the customers who bought the Blue Diamond products — could receive up to $5 if they don’t have a receipt and up to $10 if they have one and file a claim by April 13. Any money left from the settlement fund will return to Blue Diamond. Typically in class-action cases where the victims have to file a claim only about 10 percent — or less — actually do.

New York attorney James Kelly is challenging the settlement and told Arkansas Business that the pay to victims “seems a little too small. … Give them $20 a person at least.”

He also said that not enough was done to notify potential class members, such as posting the information on Blue Diamond’s Facebook page.

Kelly is not a party to the Washington County case, but he has an interest in the outcome. He is part of a group of attorneys who have a similar class-action case pending against Blue Diamond in federal court in New York.

If the settlement is approved in Washington County Circuit Court, the New York case and others pending in California state courts will be simultaneously resolved, and Kelly and his co-counsel won’t receive any attorney fees.

Kelly has asked Judge Martin to allow him to conduct discovery to determine why the case was filed in Washington County in 2014 and into the decision to settle the case there.

Arkansas state courts have been known to make it difficult for class members to object to settlements and to be less stringent in their review of class-action certifications and settlements, Ted Frank, director of the Competitive Enterprise Institute’s Center for Class Action Fairness in Washington, has said in court filings involving an unrelated class-action case.

Little Rock Attorney Thomas Thrash of Little Rock, one of the lead attorneys for the class members in the Washington County case, said Blue Diamond wanted to settle the outstanding litigation involving the misbranding claims so the company would save $400,000 on sending out notices to class members.

“They could have done it in New York,” Thrash said. “They could have done it anywhere, but they agreed to do it in Arkansas.”

Thrash also said that he and other attorneys were in mediation and settlement talks with Blue Diamond before Kelly filed his New York case in 2015.

“And so if they had been the ones that got it done, Blue Diamond would have settled with them,” Thrash said.

So far, 120,000 people have filed claims, Thrash said. Those claims would be worth a maximum of $1.2 million — half the attorneys’ fees — if every claimant could produce a receipt. The full amount paid to class members can’t be calculated until after the claims period ends; Thrash said that total would “probably” be made public in court filings.

He said the purpose of the case was to get Blue Diamond to stop misbranding its food products.

“The damage claim to individuals, because it is such a small amount, is not the main focus of these cases,” Thrash said. “It is the injunctive relief we got, and Blue Diamond has agreed to … remove all their misbranded representations.”

Disputes over recent state contracts have put Republican lawmakers at odds with the Republican governor, angered potential vendors and muddied understanding on what businesses can expect from the process of awarding state work.

Since December, procurement issues have embroiled the governor’s office and bedeviled state agencies and the Legislature, while scrutiny has grown for the Office of State Procurement.

That office, part of the state Department of Finance & Administration, oversees the competitive bidding meant to save taxpayer money and assure that public business isn’t steered to cronies or political favorites.

“This procurement stuff is not glamorous or pretty. Actually, it’s kind of boring, but it’s where the money is,” said state Sen. Jimmy Hickey, R-Texarkana, a leader in a movement to revise the system.

Hickey and Rep. Kim Hammer, R-Benton, filed a bill this month to make bottom-line pricing a greater factor in state bid solicitations and to make the judging system in competitive situations more transparent to those seeking state contracts.

The bill, to be considered in the waning weeks of the current legislative session, is being revised, Hickey said last week. But he is convinced that a new focus on pricing is essential to getting the best deal for taxpayers and for bolstering businesses’ confidence that the system is fair and bias-free.

Mary Scott Nabers, a former Texas railroad commissioner who now leads Strategic Partnerships Inc., a consulting firm that advises companies seeking government work, also sees pricing as an essential factor. “Politics should not play any part in state contract decisions,” she told Arkansas Business. “It should strictly be who’s got the best solutions at the best price.”

A 2014 amendment to the state Constitution was seen to give lawmakers greater power over executive branch contracts, but that conclusion hasn’t been tested in court and has drawn considerable pushback from Gov. Asa Hutchinson.

The procurement office handles a fraction of the state’s annual budget of well over $5 billion. State paychecks, health care expenses, many highway contracts do not fall under the procurement process. However, the billions of dollars in work awarded through the procurement law in recent years is “a monstrous number,” Hickey said, and well worth a look from taxpayers and businesses.

Businesses bid for procurement contracts by responding to bid solicitations. Written proposals are submitted to judges selected by the state agencies issuing the contracts. A bid solicitation known as an RFP (request for proposals) makes pricing a prime consideration. Another type, the RFQ (request for qualifications), has by law allowed price negotiations only after a vendor is chosen.

Traditionally, RFQs solicited highly technical services like engineering or architecture, but state agencies were allowed exceptions. A multimillion-dollar pact for marketing the Arkansas Department of Parks & Tourism, for example, was initially issued as an RFQ but was withdrawn and reissued as an RFP earlier this year. Clarifying the RFP-RFQ process and making pricing a major component of both are goals of Hickey’s legislation. (See Bill Seeks to Change Procurement Process; Businesses Want to Understand It.)

Regardless of method, state contracts face legislative review after a winner is selected. Since judging is by nature subjective and disappointment inevitable, losing bidders have always vented. But the rocky course of three recent contracts — one for running facilities for troubled youths and two for marketing services, for the state lottery and for Arkansas tourism — put the system under a microscope.

“If the perception is that the system is not fair, there’s a potential that some qualified businesses won’t bid on state work,” said Hickey, a businessman and longtime banker who called submitting bids a substantial commitment.

“If a qualified business thinks it’s not worth it, and they might have been the low bidder, that could cost the state a lot of money,” he said.

Billions in Contracts
The Arkansas Department of Finance & Administration, says estimated payments on contracts administered through the procurement office totaled more than $285 million for fiscal year 2016 alone. Costs ranged from more than $71 million for information technology augmentation to $200,000 for portable toilet rentals. But since many contracts are for more than one year, the full price is multiplied, and Hickey put the value of all state procurement contracts well into the billions.

“If there’s a change in the level of scrutiny, it’s not attributable to anything we’ve done differently at Procurement,” state Procurement Director Edward Armstrong told Arkansas Business. “Ninety-five percent of the contracts go straight through review. Procurement processes haven’t changed. It’s the level of legislative review that’s changed, but we are doing just as we have since I’ve been in procurement, and as laid down by our procurement law.”

The scrutiny seemed to have an effect last month when bidding for the state’s largest advertising contract, for tourism promotion worth more than $14 million a year, was suspended on the last business day before proposals were due. DF&A issued a new solicitation five days later, adding cost considerations to the mix.

In December, a clearly annoyed Hutchinson announced that a contract for running a half-dozen facilities for troubled youths would be voided and the state would take over the lockups for six months. Lawmakers had refused to approve a contract awarded to an out-of-state company over two Arkansas firms that had run the facilities for years.

Legislators, including Hickey, agreed with the rejected Arkansas companies — South Arkansas Youth Services of Magnolia and Consolidated Youth Services of Jonesboro — in objecting to the higher costs in the new contract. The deal would have paid Youth Opportunity Investments LLC of Carmel, Indiana, $22 million a year, up from the previous $13 million. Hutchinson said the state needed additional services and suggested that lawmakers had been swayed by lobbyists.

“I was disappointed by the lack of legislative support today,” Hutchinson said in a Dec. 16 news conference. “We’re unable to issue a contract that has been appropriately through the bidding process.”

In fact, he said, it had been through twice. The procurement office had thrown out its first evaluation, which also favored Youth Opportunity Investments, and assembled new evaluators after irregularities were noted, including the fact that some judges’ score sheets couldn’t be located for review.

Admitting no wrongdoing, DHS Chief Procurement Officer Misty Eubanks acknowledged “incomplete documentation” and concluded that it was “in the best interest of the agency, the vendors and the state to re-score the previously submitted technical packets.” Again, the Indiana company was selected. But lawmakers weren’t satisfied, and their refusal to review the contract triggered the state takeover.

“We have to have quicker action if we’re going to run the government, avoid shutdowns, issue contracts in a timely fashion and manage the state,” Hutchinson said at the time. The Department of Human Services is now running the youth lockups with state managers overseeing staffs largely inherited from the previous contractors. The budget is coming from the money that would have been disbursed under the voided contract. Another bid process to outsource the youth lockups is likely this spring or summer.

Hutchinson said his goal is “not just renew contracts to incumbents for decades and decades,” but to “have an open bidding process” attractive to all businesses.

Separated Powers
The governor also addressed the oversight powers granted to lawmakers by the 2014 constitutional amendment, insisting that the law requires only that lawmakers review the contracts, not that they approve.

“The law ... says that the Legislature reviews a contract,” he said. “It doesn’t say they have to review and agree with; it just says they review. I have questions about whether that law is even constitutional, and we reserve the right to challenge it.”

Describing a separation-of-powers issue, Hutchinson said the “Legislature appropriates; we execute. We have to run a business. And the legislative review process ... is cumbersome, and then you have lobbyists working the system to say, ‘We want this person to get it; we want somebody else to get it.’ ”

One Arkansas executive with government contract experience suggested the governor was wise to be wary of lobbyists.

“The lawmakers are engaging the OSP because they are being lobbied, and the lobbyists will say or do just about anything that’s legal to influence that elected official,” the executive said, speaking on the condition of anonymity. “After having all this whispered in their ears, lawmakers are ready to fight these contracts and scream that something’s not right.”

Legislators have sought common ground with the governor since the December confrontation, and Hickey now says legislators do not have the right of contract approval. But if the Legislature can only look at contracts without real ability to stop faulty ones, what is the purpose of legislative review?

“I’ve asked myself that same question,” said Sen. Gary Stubblefield, R-Branch, who sharply questioned Armstrong on procurement procedures in several legislative hearings.

State Senate President Pro Tempore Jonathan Dismang, R-Searcy, says legislators should certify that legal processes are followed and that contracting is fair. “We shouldn’t have approval authority,” he said. “If we were to find anything unjust or improper, I don’t think the governor and the executive branch would just ignore it. I believe they would listen and make adjustments.”

Dismang cut short the lengthy debate over the five-year, $34.5 million lottery marketing contract, which eventually went to Little Rock advertising agency CJRW. That contract endured official protests by two rival agencies and an initial negative vote by the Joint Budget Committee’s Performance Evaluation & Expenditure Review subcommittee.

Dismang said that the two protesting bidders, Mangan Holcomb Partners and the joint venture Ghidotti-Vines, should have had better legal advice on the bid solicitation language they later objected to.

That drew a sharp response from Natalie Ghidotti of Ghidotti Communications, whose partnership with Brooke Vines finished second to CJRW in the bidding process.

“I disagree with Sen. Dismang’s comments,” she said. “He seems to think that small businesses, like those of us who participated in the lottery RFQ, should hire attorneys on the front end to question bid solicitation documents.”

Small businesses shouldn’t bear that burden, she said.

Ghidotti and Sharon Tallach Vogelpohl, president of Mangan Holcomb, pointed out that the language Armstrong relied on in rejecting their protests was not included in the original RFQ, but was in an addendum answering bidders’ questions. The crucial language required the “successful vendor” to reveal any associations with other clients that might pose a conflict in promoting the lottery “within 15 days.”

The specific issue was CJRW’s longtime relationship with Oaklawn Park, the Hot Springs thoroughbred track and casino that consultants had branded as a lottery competitor.

Lottery Director Bishop Woosley did not consider CJRW’s relationship with Oaklawn to be a problem, nor did Oaklawn object to their marketing firm also serving the lottery.

Armstrong, who rejected the protests by ruling that the conflict disclosure requirement applied only to future relationships, told lawmakers it was silly to think that the Oaklawn-CJRW connection was a secret requiring disclosure.

“The truth of the matter is we’re all talking about it,” he told the subcommittee. Nevertheless, Hickey’s pending bill would require companies competing for state contracts to disclose all potential conflicts.

Scoring and Relationships
The scoring of bid submissions, as well as ties to the judges themselves, also became an issue in the lottery pact dispute. One of the three judges, Esperanza Massana of the Arkansas Economic Development Commission, worked for several years at CJRW. Several lawmakers said the state should seek out less-connected judges.

Hickey also took issue with a scoring procedure that brings judges together to form a consensus after tabulating their scores separately. His new legislation would require evaluators who change their scores after a consensus meeting to justify the changes in writing. He also wants procurement judges to be identified to bidders earlier, and even to be paid for their work.

Hickey’s legislation would weight pricing considerations at 30 percent of the bid evaluation process in cases that aren’t decided by simple competitive bids.

“Sometimes you’re not always going to go with the lowest bidder, because there are other considerations,” he said. “But we believe that price always has to be a part of the decision.”

Top Procurements of Fiscal 2016^*

*Procurements managed by Office of State Procurement in fiscal 2016,  with projected value of contracts estimated for one year. Items noted as estimated potential use do not represent any actual commitment to spend.

The blue-padded seats at the gates of the Bill & Hillary Clinton National Airport are the ones that were there when the airport opened in 1972 and Bill and Hillary were still in law school.

Other throwbacks include the concourse’s worn carpet, which pictures the former airport logo, a jet with contrails.

But that’s all about to change.

In October, the airport announced a $20.6 million concourse renovation project, and new gate seating and carpet are just the start. As that project is under construction, the airport also is shaking up its restaurant and retail offerings. The airport is adding two national restaurant chains, Chick-fil-A and Chili’s, and retail locations as part of a renovation package worth $4.7 million. All the renovations are expected to be completed about a year from now.

The renovations come at a time when other airports are starting to look more like shopping malls.

“Today we are seeing airports continue to expand, adopting the trend of infusing more shopping and upscale dining into the terminals and balancing that effort with continuing to offer traveler favorites,” said Sean Matthews, a spokesman for HMSHost of Bethesda, Maryland, which operates the food and beverage locations at the Little Rock airport.

“Larger airports have been spearheading this activity for a few years now, and smaller airports are beginning to follow suit as an operating model with more focus on non-aeronautical revenue is becoming an increasingly important factor for airport success.”

The airport’s commission revenues on food, beverage and retail sales increased 2.9 percent in 2016 to $993,246. The airport’s total revenue was $32.76 million in 2016, up 2.1 percent from the previous year.

Customers Change
Around 2009, the airport commission had a choice: It could either open a Chili’s or the full-service restaurant called Ouachita Landing, said Ron Mathieu, executive director of the Little Rock airport.

The commission wanted to go with an Arkansas theme down the 60,000-SF concourse, he said.

It approved opening Ouachita Landing near Gate 6 toward the back of the concourse.

“I think that was the right decision at the time,” Mathieu said. “But as time goes on, … we have different customers now than we did back then.”

He said the customer satisfaction scores have since shown that travelers want different eating options. “We really try and look at that [survey] and say, ‘OK, time for something to change,’” Mathieu said.

Yarnell’s Premium Ice Cream closed its airport outlet in 2011, and Whole Hog Cafe opened in the airport’s food court in April 2012, replacing the Pizza Hut that had closed. And even more changes were on the way.

Concourse Renovation
The $20.6 million renovation project that the airport announced in October includes overhauling the waiting area at the airport’s 12 gates. Airport spokesman Shane Carter said last week that the airport is about halfway through the concourse renovation.

“One to two gates at a time are being closed off, and you’re seeing new finishes being rolled out,” he said. Once the gates are completed, the new chairs with ports for USB and AC plugs will be added — not something travelers were demanding back in 1972.

After that project started, the airport found itself “in a perfect situation” to work on its retail and food offerings, Mathieu said. The contracts with the operators of the food and beverage company, HMSHost, and the retailers, Hudson Group of East Rutherford, New Jersey, were set to expire at the end of 2017.

“So now we have a motivated concessionaire that wants to convince us that it’s better to negotiate with them and extend their agreement” rather than seeking out another operator, Mathieu said.

The negotiations resulted in a contract extension that will run through 2028. It also calls for HMSHost to spend $3 million renovating the restaurants and the Hudson Group to spend $1.2 million on the retail locations; the airport will put in $500,000 toward the project.

The architect for the project is Alliance of Minneapolis. The contractor is Flynco Inc. of Little Rock.

The airport wanted to remain with HMSHost because it has the exclusive rights to Starbucks, which has been popular with travelers, said Bryan Malinowski, deputy executive director at the airport. “Think about what would happen … if we were to announce that we would no longer have Starbucks at the airport,” he said.

HMSHost operates in 44 of the busiest 50 airports in North America, according to the company.

The two national restaurant brands that the Little Rock airport wanted to land were Chick-fil-A and Chili’s, which they thought would satisfy passengers and boost sales.

Travelers tend to eat at the restaurants that they know, said Matthews, of HMSHost. “These restaurants provide a sense of comfort and convenience that is important to travelers,” he said in an email to Arkansas Business. “They also have the unique ability to provide desirable meal choices to a broad audience in airports where limited concession space is available.”

Mathieu said he’d noticed the trend in Little Rock too. So going after Chick-fil-A was a “no-brainer,” he said. The fast-food restaurant is closed on Sundays, and that tradition will continue at the Little Rock airport location. Despite operating only six days a week, a Chick-fil-A had the highest gross receipts in Little Rock in 2014, the last full year that restaurant receipts in Arkansas were available to the public.

Chili’s was also on the airport wish list. When passengers saw Ouachita Landing, Mathieu said, they didn’t know what to expect, although its menu includes items similar to Chili’s — like buffalo wings and chicken strips.

During the negotiations to secure the restaurants, the airport agreed to an 8 percent commission on the gross revenue of both Chili’s and Chick-fil-A. Most of the other restaurants at the airport pay 12 percent to the airport. The airport, however, is guaranteed to receive at least $597,000 in rent from HMSHost.

(Yes, restaurant chains charge more at their locations inside airports than they do elsewhere. While most mark up their menu items by 10 percent, Chili’s prices will be 12.5 percent higher inside the airport, according to the terms of the contract provided by the airport.)

Malinowski, the deputy executive director, said the airport was more concerned with the brands than the commission, which is why it took the lower percentage from Chili’s and Chick-fil-A.

“It’s important for us to get the concepts that we believe the passengers want — the Starbucks, the Chili’s, the Chick-fil-A, the Burger King,” he said. “The revenue is secondary to that.” And, Malinowski said, he thinks Chick-fil-A and Chili’s will generate higher sales that will offset the lower percentage that the restaurants pay.

Gross revenue sales for food and beverages were up 5 percent in 2016 to $5.9 million, according to figures provided by the airport.

To make room for the Chili’s and Chick-fil-A, however, other restaurants had to leave.

Ouachita Landing will close and its space next to Gate 6 will be renovated and slightly expanded for Chili’s.

After the food court is renovated, Chick-fil-A will move in, next to the Burger King.

The Quiznos now there will close. And the Whole Hog will close its location next to Burger King, but diners can still eat Whole Hog menu items if they go to the River Bend Grill, which is located before the area where customers go through the Transportation Security Administration’s screening.

The renovations to the restaurants will be done one at a time. Construction on the restaurants is expected to start in the middle of this year.

Retail Revenue Slips
Unlike food and beverage sales, retail revenue inside the airport has been slipping. In 2016, gross retail sales had fallen 8 percent from the previous year to $2.04 million. During that period, however, the total number of passengers at the airport rose very slight to to 1.99 million.

The sales numbers “tell you that the customers aren’t necessarily tuned into what it is that you have,” Mathieu said. “And it’s time to do a refresh of some new and different concepts.”

About 65 to 70 percent of Little Rock airport customers are leisure travelers, Malinowski said. And most are intent on getting through security and finding their gate.

The main retail location after a passenger exits security is near the end of the concourse, across from Gate 6. “But a lot of times people don’t want to go too far from that gate because they just don’t want to miss that flight,” Malinowski said. “So if your retail is not close by, you’ll miss that sale.”

The airport will use about 800 SF just inside the security checkpoint for new retail space, an area now available for passengers to charge electronic devices or work on laptop computers.

In addition, a retail kiosk will be added between Gates 4 and 6. Shelving will be added along the wall of the concourse, so as passengers walk past, they will be able to grab items and pay for them without having to enter a store.

A smaller retail location, River Bend Book Store at Gate 4, will close as part of the renovation.

The airport will continue to focus on departing customers because that’s where the money is. The passengers who arrive at the Little Rock airport will most likely use the restroom and then leave without making a purchase, Mathieu said.

“They’ll walk right out the concourse,” he said. “It doesn’t matter what you’ve got lined up.”

Tuscany Square, a nearly 7-acre shopping center on Pleasant Grove Road in Rogers, sold for approximately $13 million.

Tuscany Square @ Pleasant Grove LLC, led by Charles Palmer of Fort Smith, sold the property to Hillcrest Holdings LLC, led by Gary Nichols of Fayetteville.

Palmer, you’ll recall, sold the Planet Fitness building just off Wedington Drive in Fayetteville in late February for $3.45 million.

Jordan Jeter of Flake & Kelley Northwest Commercial represented Nichols in the transaction. He was one of Palmer’s brokers in the Planet Fitness deal.

Tuscany Square is anchored by Chick-fil-A.

The Shipley’s Donuts in south Little Rock is going to U.S. Bankruptcy Court to buy its building.

Shipley’s, under its legal name, Geyer Springs Investments LLC, wants Bankruptcy Judge Richard D. Taylor to help force the sale from the building’s owner, RWL Investments LLC of Little Rock, which filed for Chapter 11 bankruptcy reorganization a year ago.

Before the bankruptcy, Geyer Springs and RWL signed an agreement in December 2012 that called for RWL to sell the building for $250,000. Geyer Springs put down $100,000 and has since paid a little less than $3,000 a month.

Problems developed, though, when RWL filed for Chapter 11 and listed $8.6 million in debt and $11.1 million in assets. RWL’s bankruptcy filing shows it had 25 pieces of property, and most of those are in Little Rock and available for rent. One of RWL’s more famous properties is the historic Villa Marre in downtown Little Rock.

In a filing earlier this month, Geyer Springs said it wants to finish the payments for the property and obtain the deed, but RWL won’t take the steps in bankruptcy to make that happen.

Geyer Springs has asked Judge Taylor to require RWL to file the paperwork in bankruptcy court to complete the sale. Or if that doesn’t happen, Geyer Springs wants its money back.

RWL hasn’t answered the complaint as of Thursday, and its attorney Kevin Keech didn’t return a call for comment.

Since filing for bankruptcy on March 8 and through the end of January, RWL has lost $137,000.

The battle has been lost but not the war. So says Francois Guilloux, managing partner of There Performance Group of Little Rock, a liquor store industry consultancy.

He’s referring to Senate Bill 284, which expands the selection of wine big retailers like Wal-Mart and Kroger can sell in “wet” counties in Arkansas.

The bill cleared the Senate last week in a 18-14 vote and was headed to Gov. Asa Hutchinson for his signature, despite predictions from liquor store owners that it will lead to the closure of hundreds of package stores in the state and will ultimately result in less choice for consumers.

The measure, filed by state Sen. Bart Hester, R-Cave Springs, allows grocery stores to sell wines from any winery. Currently, grocery stores can sell wine only from “small-farm wineries,” those that don’t produce more than 250,000 gallons per year.

Hester told the Arkansas Democrat-Gazette he was confident Hutchinson would sign the bill.

“The one thing that came out from this is a much stronger unity across the state, and we’re not going to just sit back and come back to our old busy lives,” Guilloux told Whispers. “We’re actually going to go and fight. This is just the first battle that we have lost. We have certainly not lost the war.”

A number of liquor store owners in general and the United Beverage Retailers of Arkansas in particular are considering measures that would help the industry make the playing field fairer, he said. Owners complain that SB284 changes the business landscape for package stores in Arkansas, which are heavily regulated by the state and are subject to a number of laws that grocery stores are not.

Wal-Mart and other big-box retailers, including Target, have been engaged recently in fierce political battles in Colorado and Florida in an effort to expand beyond beer and wine and sell spirits. Asked whether that was a possibility in Arkansas, Guilloux said, “The answer is not ‘if.’ It’s only a question of ‘when.’

“That is for sure,” he said. “There’s no doubt about it. These big box retailers and the No. 1 leader, Wal-Mart, have made it pretty clear, if you look at their strategy across the United States — and I would even argue across the world — of trying to become the No. 1 leader in alcohol distribution.”

Wal-Mart had not responded to a Whispers request for comment as of press time.

For the 24rd consecutive year, Arkansas Business is seeking nominations for its 40 Under 40 program, which recognizes 40 professionals under the age of 40 who excel in their profession and are leaving their mark on the Arkansas business and nonprofit community.

"This program provides Arkansas Business with the opportunity to not only honor our state's up-and-coming professionals, but identify those individuals who are helping shape Arkansas’ business, political and civic landscape," Arkansas Business Publisher Mitch Bettis said.

The 2017 class of 40 Under 40 honorees will be profiled in a future issue of Arkansas Business. Included in this issue will be a listing of their accomplishments within their businesses, organizations and/or community.

The deadline to nominate is Friday. Nominations can be made at ArkansasBusiness.com/40. For more information, contact Alex Howland at (501) 372-1443 ext. 314 or at ahowland@abpg.com.

LITTLE ROCK — Arkansas' governor has signed into law a measure expanding the types of wine that grocery stores in the state can sell.

A spokesman for Gov. Asa Hutchinson said Wednesday the governor signed the bill changing the state law which currently only allows grocery stores to sell wines from small wineries. More expansive selections of wine are currently only available at liquor stores. The proposal had the support of Bentonville-based Wal-Mart. Opponents of the measure included many liquor store owners, who argued that the legislation could put them out of business.

The legislation also allows liquor stores to sell "consumables and edible products" that complement beverages.

The expanded wine sales under the new law will take effect in October.

(Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

STILLWATER, Okla. — Hideaway Pizza general manager Kevin Taylor has met several new faces at the company's first non-Oklahoma store.

He said people are always surprised to hear the company is celebrating its 60th anniversary this year and there are 16 locations in the Sooner State, The Journal Record reported.

"I hear a lot of 'We thought this was a little jump-start place,'" he said.

The company opened its first Arkansas store in October. He said the business has been slower than he expected. Crossing state lines meant the Stillwater nostalgia was gone.

"When we open one in Oklahoma, everyone knows who we are," he said. "We were really busy around the holidays, but it's slowed down."

Co-owner Brett Murphy said the company has to look for high-traffic locations since there's no name recognition. In North Little Rock, the store is near McCain Mall and faces US-67/167. A Conway store will open this fall in a shopping center along Interstate 40. The center's other tenants are a Sam's Club and Academy Sports + Outdoors.

"We need a place with a high population during lunch and a good demographic in the evening to support our pickup business," Murphy said. "We want a good family neighborhood. We'll even look at restaurant rows in certain centers."

Murphy said about four years ago, he and co-owner Darren Lister started traveling to neighboring states, trying to figure out where to open more Hideaway stores. They visited Arkansas, Texas, and Kansas, and the Razorback State was their favorite.

"Right now, it's considered an Oklahoma brand, and we're proud of that," he said. "We have to prove it will work outside Oklahoma. So far, North Little Rock has come through."

Murphy said he and Lister aren't ready to think about franchising.

"I doubt very seriously that we'll ever franchise," he said. "We would be running our own stores and serving a franchise. We're big believers of doing one thing right."

But it's a little easier to operate stores in Oklahoma than it is to oversee a store about five hours from the office. Murphy said the company has taken a better-safe-than-sorry approach. Hideaway moved three managers to North Little Rock and hired three Arkansans. Taylor will eventually serve as the district manager once the Conway and other central Arkansas stores open.

The food part was almost the easiest component in moving outside Oklahoma. Hideaway uses Ben E. Keith Foods, and from the Oklahoma City office, the distributor also travels to Arkansas, Texas, and Kansas.

With more territory to cover, Hideaway is increasing its growth plan from two new stores annually to three stores. Those restaurants will be in Arkansas, Oklahoma, west Texas or Kansas.

Murphy said the growth plan can be scaled back if needed.

"There are two things we pay attention to — cash flow and staying within our management abilities," he said. "If we ever get too thin on our management, we'll slow down our growth."

(Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)