Beverage pricing: They're still not listening

The only explanation for the food pricing is that people must still be buying it at levels that justify the pricing. I'm certain that they measure food service as a "profit center" in the park, and despite the higher prices (which theoretically would translate into lower volume) they show that overall profit dollars continue to increase with the higher prices. In other words the increased margin makes up for the lower sales. Let's say a drink costs the company 50 cents. Would you rather sell 10 drinks for $4.50 and make $40.00 or sell 20 drinks for $2.50 and make $40.00? I'd rather sell the 10 drinks all else equal. Obviously it's not that simple but my guess is that's what's going on. The problem is the intangible factors of lower overall guest satisfaction which may be a factor behind the lower year over year attendence. I have to believe that gets discussed. How else is it possible that with all the amazing new rides, overall attendence is lower than the mid-90s time period?

Terra - that's only part of the equation.

The other part is that Dick lives, breathes, eats, drinks, and everything else based on per cap spending.

So, they jack the prices this year. Some people say screw it and don't buy. Enough people (either due to lack of choice, or because they are Mr. Moneybags) continue to purchase the product. The per cap spending goes up a few pennies and Dick points to that to say that everything is A-OK and falsely believes that they can push the price up further.

You can only squeeze the customers so much, and at some point (hopefully sooner than later) they are going to fall off a cliff and per-cap is going to plummet.

I have no doubt that cutting prices would lead not only a rise in per-cap spending, as well as an overall profit increase. Of course, dropping the prices is going to pull more people into the food lines which is going to very quickly expose the inadequacies at those locations. But they have to start somewhere.

The margin on these drinks is unreal, and when people have little to no other choice the prices are going to be high. If the park lowered prices by a dollar they would have to increase sales by 20%+ to break even (not including staffing more man hours and maybe even building/installing a few more stands).

Per cap spending pretty much is everything, especially when the margin on the products your selling is at 90%+, from the food and drinks to the arcade and games.

^^Maybe. I'm not convinced.

Certainly they have an opportunity to improve the efficiency of serving food. Maybe if they could do that (ie minimize lines by serving more people faster) they could make up for the lower prices.

I have not made the trip in a couple of years, but as I recall the food places were always reasonably busy. Is that still the case or are people noticably not buying food? It's probably too early this season to tell.

It's a case of bending the ruler and seeing how far it can go before it breaks. But attendance is down...obviously something is broken.

I know Dick talks about per cap in the quarterlies but do you think he really believes that's more important than attendence?

Kyle, exactly right. Think of the operational efficiencies associated with the higher prices. Less labor, less supplies being used, less trash, etc, etc. I wonder if that's not a big factor in their thinking.

Which is flawed.

Who cares about minimizing supplies used.

If I sell 20 @ 4.50, but I can sell 60 @ 2.50. Figuring the cost of a drink (syrup, co2, soda, cup, lid, straw) at .15 cents, that gives us 4.35 profit or 2.35 profit.

At the amounts (again just guesses) above, that's $87 profit vs $141 profit.

Who cares how many supplies are being used in the end, the name of the game is profit. And if there is a lower price that would allow you to make more money, why wouldn't you go there?

You're right Jugg, if they triple sales, which will not happen.

So sales will go down? Stay the same?

Do you understand how price cutting works?

Has anyone here ever heard of supply and demand?

When the demand is high, the price goes up. :)

TerraCoaster you are right. Although some of the drop in attendence is related to the economy, it certaintly isn't the only factor. Sometimes while I'm waiting in line I start up a conversation with someone around me. Many coplain about the resorts, food and the money they spent for them. I have heard many times out in the "real world"/non-enthusiast community, complaints about Cedar Point and the sense of value given at the park. Some friends of mine even refuse to go to Cedar Point because they feel that the park is a rip off on everything besides the gate.

There is no need to have food prices this high. Sure some people will pay it, but they will more than likely tell friends/coworkers/the internet how they regret paying for that watered down pepsi and heatlamp burger. This leaves many feeling like they have been taken to the cleaners and often effects their choice on returning to the park.

New and shiney Intamins and B&Ms may hide this problem for a while but the problem is really starting to show. $4.50 for a pop, when Speedway has a huge cup for 80 cents. I know CP is not a gas station but really, how can this price be taken seriously. People will buy it, because they feel they need to. Cedar Point (Cedar Fair as a whole) lacks a sense of value for the consumer. Kennywood, Waldameer, Busch and even Disney charge less for their food/ drinks and I don't see any of them lacking in profits. You can only mask a problem for so long, and the mask is starting to dissolve.

This post is not meant to be a put down against Cedar Point/Cedar Fair. I am stating this because I have a deep love for the park/company and want it to be as successful as possible. I feel by stating this we can maybe discover that their is a problem and that this problem can be addressed. End Rant!

EvilChameleon09 said:
Has anyone here ever heard of supply and demand?

When the demand is high, the price goes up. :)

Agreed, and apparently the park management doesn't believe they are at the tipping point yet.

I respectfully disagree.

PointPerson - well said on the value aspect. The in park pricing is putting a sour taste in people's mouths.

pointperson said:
I feel by stating this we can maybe discover that their is a problem and that this problem can be addressed. End Rant!

The problem begins with a D and ends with an L

Just so you know, I think these prices are terrible too. I can get a large coke from the local theater for $2.00.

If the price goes down, demand goes up. How much is the question. I don't think they have the food service capacity or efficiency to serve 3x the people.

I do find it interesting looking at their annual report. Granted this is for Cedar Fair in total, but I'm sure it's applicable at the park level. Admission revenue dropped 5.8% from 08 to 09. Guess what food did. Dropped 11% in the same period. I don't know about you but that magnitude of a drop surprises me. Food revenues also dropped from 2007-2008. So since they are increasing prices, that tells you that food purchases have DRASTICALLY dropped. If you compare 2009 to 2007, admission revenue dropped 3.6% but food dropped 12%. Wow. I would at least think they would try to hold total food revenue flat. Pricing gives them the control to do that. Their food margins also decreased 1.2% (74.4% to 73.2%) from 2008. (This also includes merchandise and games for what it's worth.)

So I guess I'm back to square 1. Based on this data, I don't know how they are justifying the higher prices.

I wonder if Kinzel reads this site?

They are not justified. Its more like "we need more money." "how are we suppose to get it" "Lets raise food prices" "Oh, thats a good idea, but will people notice?" "Yes but their are people still buying it. So they must not care about prices"

I wish he really would read this site. We are some of the parks biggest fans, and all want a bright future for the park/company. Although some of what goes on this site is not very helpful (like 500ft looping woodies), many of the posters on this site offer valuable feelings about problems. We all have a love for Cedar Point and with this we are more critical about the park. Kind of like someone you love/loves you (Mom,dad) is more critical on you than a coworker, or acquaintance would be.

CPboy77 said:
I wonder if Kinzel reads this site?

Yes I'm sure he does. You have Tony & Tyler that probably keep on an eye on this site more though. :)

CPboy77 said:
I wonder if Kinzel reads this site?

I don't think he knows how to use a computer, so no.

Unless he's got a lackey printing off the pages and handing them so he can read hardcopy. Ugh.

I wonder if the lackey calls him Mr. The Plague?

JuggaLotus said:
I would.

But it's going to include a couple different liquors. ;)

Ha. You got that right!

pointperson said:
Although some of the drop in attendence is related to the economy, it certaintly isn't the only factor.

Not only that, but the right way to respond to the economy is adjust your pricing. Through the worst of it, Disney World's attendance went up, not down, and that's not a single-day leisure activity. They did it by keeping the in-park pricing under control, and discounting the crap out of rooms and dining packages. They did a great job demonstrating value, and that's with trips that last a week and probably cost well north of a grand for a family of three or more. What happened at Cedar Fair parks? Nothing. There was no adjustment anywhere until it was too late. In 12 years, I've never seen Breakers rooms available a week before closing weekend, until last year.

What I don't understand is why people continue to pay these outrageous prices for beverages. I mean, I haven't bought a drink at Cedar Point in years because of this, except for a couple of instances that included refills.

I did notice that some of the food prices seem to have come down slightly, and I wonder if that is part of the idea...that people see the almost reasonable price for food, buy the meal and automatically order the drink to go with it. But what they remember is the total cost, not how it was divided up, so I think the end result of trying to jack up total spend with the drink price is going to result in lower sales of *everything*, not just drinks.

But the question remains: Why do people continue to pay these kinds of prices? Especially for drinks. Especially for *non-alcoholic* drinks. If you really want them to listen, you have to shout at them in language that they can understand: BY NOT BUYING THE STUFF.

Incidentally...I don't know what the situation is now, but back when Dragster opened they had a souvenir drink bottle deal where you could buy the bottle and get cheap or free refills all season long. But guess what: the bottle would not fit into any locker in the park, and had no handle. It was a *FAIL* of epic proportions from the consumer perspective.

--Dave Althoff, Jr.