LA Times: A sinking feeling on 'Small World'

[PragmaticIdealist]

Re: LA Times: A sinking feeling on 'Small World'

Now, before I address your latest theory, is this the final one or after I make a response to this will you come back and just say it is George Bush or Al Qaeda's fault?

OK, let's see, we've addressed the higher quality/cost ingredient argument, the captive audience argument, OK, looks like we're now down to "different P&L's".

Let's take WDW for example - a property that constantly brags about its amount of culinary talent and the hotel restaurants around the property clearly demonstrate it and there is some exceptional food down there. So ability is clearly not an issue. WDW is under one president who has visibility to the entire P&L and performance of all food locations and there is a head of ops that the P&L's roll up under to one would assume (regardless of individual park P&L's) - so then why does the Magic Kingdom have even worse food selections than DL when they have access to all of that culinary talent and quality product that is being sold all over the resort?

Answer? See previous answers.

The point is that the effect bad food at high prices has on the main gate, the hotels, and the rest of the system is not being taken into account. The restaurants inside the parks are being operated as separate businesses when they should be subsidized by the main gate in the same way Disney's cost centers are. Walt Disney effectively said exactly that.

Certain guests are discriminating about the food they eat, and others are more price-sensitive. Disney should be serving the demands of both. Consumers need to be directed to differentiated menus with premium prices, though; the guests can't continue to assume that all Disney restaurants and menu items are alike.

As for the actual costs of healthy food, whole grain is potentially as inexpensive as refined grain, excepting for the fact that the latter may have economies of scale due to the higher consumption rates. Cheese and other dairy products can be expensive, as can meat and eggs, especially compared to vegetarian sources of protein and fat. And, instead of unhealthy oils, Disney can simply avoid relying on added oil, in general, to provide good flavor and mouthfeel. The challenges of healthy cooking are more a matter of a lack of will and creativity. Some of the best-tasting food in the world comes from the poorest countries.

Additionally, Disney has been formulating taste profiles based on averages meaning that no one is satisfied with the food; everyone merely finds it edible. Several years ago, Lee Iacoca rejected the same strategy and stated that Chrysler was going to, instead, build cars that people either love or hate. The company has been using that strategy ever since. Disney should assume the same mindset with regards to the park food and stop trying to have every menu item in every restaurant be all things to all people.

[Pressler69]

Re: LA Times: A sinking feeling on 'Small World'

maybe when he starts telling me ('me' as in a viewer of his essays, yes, essays) where he gets his information I'll start believing him.

You don't understand how a gossip column works do you?

[bloodnswash]

Re: LA Times: A sinking feeling on 'Small World'

OK, I've been putting off reading this thread, on purpose, for a while. But after this whole cremated ashes article, I thought I'd better check this one out. And, I admit, I have not read most of the posts here sine there are 11 pages.

I read Al's columns all the time. I look forward to those special Tuesdays. So many people don't believe what Al writes. Now, we all have our own opinions about anything and everything in this world, and that's perfectly fine with me. But I honestly believe that so many people don't like Al Lutz because he actually speaks the truth when it comes to DL. I guess many people don't want to hear the truth...even if it does mean a good majority of Americans are over weight. It's not like Al is telling us something we haven't heard before. Most definitely, sometimes the truth hurts.

DL is definitely not going to go around saying to the public, "Oh yes, we are getting new boats and new flumes because there are too many over weight people out there and this happens on a regular basis." DL will put out a politically correct statement.

[mousechild]

Re: LA Times: A sinking feeling on 'Small World'

The point is that the effect bad food at high prices has on the main gate, the hotels, and the rest of the system is not being taken into account. The restaurants inside the parks are being operated as separate businesses when they should be subsidized by the main gate in the same way Disney's cost centers are. Walt Disney effectively said exactly that.

Certain guests are discriminating about the food they eat, and others are more price-sensitive. Disney should be serving the demands of both. Consumers need to be directed to differentiated menus with premium prices, though; the guests can't continue to assume that all Disney restaurants and menu items are alike.

As for the actual costs of healthy food, whole grain is potentially as inexpensive as refined grain, excepting for the fact that the latter may have economies of scale due to the higher consumption rates. Cheese and other dairy products can be expensive, as can meat and eggs, especially compared to vegetarian sources of protein and fat. And, instead of unhealthy oils, Disney can simply avoid relying on added oil, in general, to provide good flavor and mouthfeel. The challenges of healthy cooking are more a matter of a lack of will and creativity. Some of the best-tasting food in the world comes from the poorest countries.

Additionally, Disney has been formulating taste profiles based on averages meaning that no one is satisfied with the food; everyone merely finds it edible. Several years ago, Lee Iacoca rejected the same strategy and stated that Chrysler was going to, instead, build cars that people either love or hate. The company has been using that strategy ever since. Disney should assume the same mindset with regards to the park food and stop trying to have every menu item in every restaurant be all things to all people.

So I guess that your supposition is that foods is sacrificing quality to increase profit because of competition with other departments.

None of your responses have ever stated that perhaps what you, or I, want to see for food at Disneyland is not what most the people want. In fact your argument implies IMO that you know what people want better than they themselves.

Your Lee Iaccoca example is great. At Ford he shepherded the Mustang through the design and build stage. A car that many people wanted, a car that was relatively inexpensive, a car that through every step of the design and build stage he ruthlessly worked to drive down cost of design and assembly as much as possible. At the end he gave us a beautiful car, that was difficult to maintain, used lots of gas even for its day, and was poorly built. It was great fun but not really practical. Sort of like the food at Disney. His turn around at Chrysler is even a better example. He begged and pleaded for a government bailout and then used the money to build a series of cars based on a common chassis that was at best a huge comprise.

You are right that some of the best tasting food in the US comes from some of the poorest countries, unfortunately for the most part none of it resembles what most of the people in the originating countries are eating. Ameal served at a decent Indian restaurant in CA has little in common with the same meal in Bombay or New Delhi. The quality of the food products used here is far better than what is available or at least affordable to the average person in India. i use India as an example because I have spent enough time there to feel confident using it as an example.

Could Disney do a better job, yes. Do most people care if it does, probably not. Would most people applaud the gate receipts subsidizing Foods, you bet, as they line up to buy $1.25 Churros.

[rgrant999]

Re: LA Times: A sinking feeling on 'Small World'

The point is that the effect bad food at high prices has on the main gate, the hotels, and the rest of the system is not being taken into account. The restaurants inside the parks are being operated as separate businesses when they should be subsidized by the main gate in the same way Disney's cost centers are.

I have no idea where you get this idea that theme parks are not run as interdependent financial systems, but that is not the case. In fact, you have it backwards, with the continuing erosion of actual admission gate revenue per click, these parks have to increase the margin on food, merchandise, parking, etc. to maintain profit levels as costs continue to rise. It is precisely the huge amount of AP and discounted clicks that makes sodas cost $3.

The restaurants would not run independently but be given financial targets by resort financial management based on all factors including the elasticity of gate revenue. As the margin per click at the entrance goes down, all other revenue generating areas must offset that decline - they absolutely work as part of an integrated marketing, financial, and planning system.

I'm sure they have modeled and tested hundreds of times, what would happen if they sold cokes for $1 and $2 hamburgers and have found that the gate does not increase nearly enough to be able to make up for the very margin that makes them money nor does today's AP/discount guest willing to accept an increase in gate fee. Just like they have modeled, what happens if over X% of the entire gate is now AP's and not guests spending money on two full meals and $X merchandise per person. It is all part of a system. Remember, this is the same division that runs a cruise line and hotels and is very familiar with other price/demand models.

If they could give high quality, fresh food away for free and it would drive enough incremental attendance to drive more total margin they would do it. But that is the rub, incremental attendance - with the parks at full capacity on peak days (weekends, holidays, summer, etc.) by very definition you couldn't increase the attendance enough or raise prices enough to offset the fact you're losing significant margin on every single click.

Vegas is a good example - they can have great food for virtually nothing and almost all of their restaurants, even fine dining, lose money but the economics of that model support it as it drives attendance into the casinos. The theme park business does not work that way (since everyone idolizes OLC company so much, at least in this regard, this is a universal phenomenon - try to find something good to eat at TDL - impossible and the park is packed).

I know discussion boards are for "wouldn't be great if" and "it has always been my dream if they" and "the invisible boundaries of Frontierland really are" but sometimes it is valuable to understand how businesses actually work so that these ideas can be filtered through a prism of economic reality.

[mousechild]

Re: LA Times: A sinking feeling on 'Small World'

^^ One other thing worth mentioning with the AP ID card is that the discount on purchases probably has less to do with Disney being nice and more to do with wanting to collect data on purchase and use patterns inside the park as a basis for rate structuring. The whole AP program becomes an excellent metric for park usage planning.

[Bruce Bergman]

Re: LA Times: A sinking feeling on 'Small World'

I think that would be a great idea, they could bring in creative dining concepts that are known for creative, healthy ingredients, and ideas and let them set up shop in the parks - I know, let's get..um, Wolfgang Puck! Mondavi! Perhaps a market location or trattoria! The theme park guests will eat it up!

Gee, I wonder why you picked those two examples? The ones that were "Independent" but got so tired of being micromanaged by their landlord that they both bailed. (Insert "Gotta Go!" Smiley here.)

I was with a friend when he went to go use some "Puck Bucks" loyalty rewards scrip at Ariel's and was told that Disney wouldn't allow them to take it there. That was a big red flag... Wasn't long after when they said "See Ya!"

So, anyway, concerning the Small World issue and not how people stuff their face. I'd sooner believe Disney saying it's not solely because people are getting fatter, than Al Lutz who never cites where he gets his sources, like real journalists do. The article says Al has seen some people get escorted out...how convenient to support his claim. Did he ask the people, "Is it because you're too fat?" I've ridden Small World so many times and I've never seen boats get stuck or "bottom out", and for that fact, I've never heard anyone else say they've seen boats get stuck or people getting escorted off. He says there's a platform built right next to the "Mounties". I didn't see any platform. I rode Small World three times this past Monday. Maybe I didn't notice it, but all I ever noticed was the catwalk on the right side that has been there for years. So, I don't know what platform he's talking about, anyone have a picture of said platform? So, until I actually see someone get escorted off the ride or I actually see this platform, I'd rather believe what Disney actually says about it rather than Lutz.

I know everyone here is all "Lutz is a perfect angel, I'll believe anything he says", but not in my eyes; maybe when he starts telling me ('me' as in a viewer of his essays, yes, essays) where he gets his information I'll start believing him.

So you want to know where Al got his information, do you? I have been personally on a Small World boat many times with a batch of fellow news:Alt.Disney.Disneyland and DIG and MousePlanet (before they tossed Al overboard and split off) and MiceAge/MiceChat folks through the years. Several of those trips were with Al Lutz himself onboard the same boat, and neither of us qualifies as 'Svelte' by any means.

Our boats have gotten stuck several times, but we can usually get past the snag by grabbing the sides of the flume and pulling ourselves forward a few feet. But more than once we had a CM come escort a few of the riders out via the exits so the rest of the boat could continue.

Is first person eyewitness evidence of the problem satisfactory for you? Or do I need to go get my fingers notarized?

It's not that the riders are too fat, it's that the Loader CM at the Load station was a bad judge of weight and put too many heavy people on the same boat at the same time.

Now they could do something slick and subtle like put hidden scale plates at the turnstiles and quietly flag people by weight as they come through so they don't have any more overloaded boats...

But when word gets out that they are doing it, I can only imagine the screams of protest over Privacy Rights that would ensue. Or the CM that is caught selling a "Flash Mountain" style videotape of a famous celebrity coming through the turnstile, with an overlay of their real weight superimposed - TMZ would pay $10K for a really good one like Kirstie Alley.

--<< Bruce >>--

[techskip]

Re: LA Times: A sinking feeling on 'Small World'

It's not that the riders are too fat, it's that the Loader CM at the Load station was a bad judge of weight and put too many heavy people on the same boat at the same time.

Now they could do something slick and subtle like put hidden scale plates at the turnstiles and quietly flag people by weight as they come through so they don't have any more overloaded boats...

But when word gets out that they are doing it, I can only imagine the screams of protest over Privacy Rights that would ensue. Or the CM that is caught selling a "Flash Mountain" style videotape of a famous celebrity coming through the turnstile, with an overlay of their real weight superimposed - TMZ would pay $10K for a really good one like Kirstie Alley.

--<< Bruce >>--

Small World is so lucky... with them you can't even tell if the boat is overloaded...with the J.C. it's obvious... then again we used to do 10+ on logs at Splash... and 4 per row when it was kids on Thunder... ahhh the wonderful memories.

[PragmaticIdealist]

Re: LA Times: A sinking feeling on 'Small World'

I have no idea where you get this idea that theme parks are not run as interdependent financial systems, but that is not the case. In fact, you have it backwards, with the continuing erosion of actual admission gate revenue per click, these parks have to increase the margin on food, merchandise, parking, etc. to maintain profit levels as costs continue to rise. It is precisely the huge amount of AP and discounted clicks that makes sodas cost $3.

The restaurants would not run independently but be given financial targets by resort financial management based on all factors including the elasticity of gate revenue. As the margin per click at the entrance goes down, all other revenue generating areas must offset that decline - they absolutely work as part of an integrated marketing, financial, and planning system.

I'm sure they have modeled and tested hundreds of times, what would happen if they sold cokes for $1 and $2 hamburgers and have found that the gate does not increase nearly enough to be able to make up for the very margin that makes them money nor does today's AP/discount guest willing to accept an increase in gate fee. Just like they have modeled, what happens if over X% of the entire gate is now AP's and not guests spending money on two full meals and $X merchandise per person. It is all part of a system. Remember, this is the same division that runs a cruise line and hotels and is very familiar with other price/demand models.

If they could give high quality, fresh food away for free and it would drive enough incremental attendance to drive more total margin they would do it. But that is the rub, incremental attendance - with the parks at full capacity on peak days (weekends, holidays, summer, etc.) by very definition you couldn't increase the attendance enough or raise prices enough to offset the fact you're losing significant margin on every single click.

Vegas is a good example - they can have great food for virtually nothing and almost all of their restaurants, even fine dining, lose money but the economics of that model support it as it drives attendance into the casinos. The theme park business does not work that way (since everyone idolizes OLC company so much, at least in this regard, this is a universal phenomenon - try to find something good to eat at TDL - impossible and the park is packed).

I know discussion boards are for "wouldn't be great if" and "it has always been my dream if they" and "the invisible boundaries of Frontierland really are" but sometimes it is valuable to understand how businesses actually work so that these ideas can be filtered through a prism of economic reality.

You speak like a myopic middle manager, which I assume you are. You need to look at the situation as a strategic planner would.

Disney can re-define its business model to affect the elasticity of main-gate revenue. And, specifically, guests are factoring the price of food into their purchase decisions at the main gate. The expectation is that Disney is going to gouge the guest inside the gates, especially because the company has been doing so for so long. It's difficult, if not impossible, to forecast how exceeding expectations in this area is going to affect the long-term profitability of the enterprise, but Walt Disney believed, as I do, that the effect has the potential to be significant. Moreover, Disneyland operated this way for most of its early life.

Disney can still charge a premium at certain restaurants and on certain menu items for customers who are less price-sensitive. But, we are talking about Disney not taking advantage of its captive audience. Exceeding expectations and providing ever-increasing customer satisfaction is absolutely necessary to a differentiated-service company.

People prefer to pay the premium upfront at the main gate, as is evidenced by the price-elasticity of demand there. And, Disney needs to, of course, maneuver its way out of the annual-passport/discount-admission dilemma through smart reinvestment and the addition of more innovative admission media.

So many of Disney's problems are simply due to a lack of imagination.

[rgrant999]

Re: LA Times: A sinking feeling on 'Small World'

You need to look at the situation as a strategic planner. So many of Disney's problems are simply due to a lack of imagination.

Ooooh, so I just need to be "strategic" and use "imagination" - classic.

Again, don't address the specific arguments, just throw out meaningless pontifications like "smart reinvestment" and "the addition of more innovative admission media" - tremendous, why not "comprehensive immigration reform" while you're at it?

Also, I love the "Walt Disney believed, as I do" - made me laugh out loud, when your arguments are exhausted go to the "I'm like Walt!" card - I'm sure Disney would love to hear about how it can "redefine its business model" - feel free to write that up and send it to Iger.

Hilarious.

[mousechild]

Re: LA Times: A sinking feeling on 'Small World'

You speak like a myopic middle manager, which I assume you are. You need to look at the situation as a strategic planner.

Disney can re-define its business model to affect the elasticity of main-gate revenue. And, specifically, guests are factoring the price of food into their purchase decisions at the main gate. The expectation is that Disney is going to gouge the guest inside the gates, especially because the company has been doing so for so long. It's difficult, if not impossible, to forecast how exceeding expectations in this area is going to affect the long-term profitability of the enterprise, but Walt Disney believed, as I do, that the effect has the potential to be significant. Moreover, Disneyland operated this way for most of its early life.

Disney can still charge a premium at certain restaurants and on certain menu items for customers who are less price-sensitive. But, we are talking about Disney not taking advantage of its captive audience. Exceeding expectations and providing ever-increasing customer satisfaction is absolutely necessary to a differentiated-service company.

People prefer to pay the premium upfront at the main gate, as is evidenced by the price-elasticity of demand there. And, Disney needs to, of course, maneuver its way out of the annual-passport/discount-admission dilemma through smart reinvestment and the addition of more innovative admission media.

So many of Disney's problems are simply due to a lack of imagination.

I don't think insulting the person you are debating increases your stature or the validity of your argument. You probably owe rgrant999 an apology. Although his last post let his rancor with you show.

For the moment lets accept the validity of the historical price structure at DL. One thing that you failed to account for is that the true cost of labor has risen dramatically since 1955, and I am not talking minimum wage corrected for inflation. I am talking about total cost including hiring training employer tax contributions ad infinitum. The real cost to deliver food at the park has risen dramatically, thus so has the cost of food.

It is almost impossible to compare and contrast pre-1980? admission/ food pricing structures with today's simply because Disney changed the model from a ticket per ride model to a admission covers all attractions model. Without access to all of Disney's ride utilization and food data we could never do this comparision justice.

Finally you fail to provide any data for your assertion that people prefer to pay up front.

As to AP discount ticketing I have no real insight except that as I said before the Ap barcode allows Disney to get a huge amount of data regarding AP usage. Although I cannot prove it I bet AP pricing is set over the population to almost break even on the entries per year. I could be naive in this regard since Disney publishes no data on this.

[PragmaticIdealist]

Re: LA Times: A sinking feeling on 'Small World'

Ooooh, so I just need to be "strategic" and use "imagination" - classic.

Again, don't address the specific arguments, just throw out meaningless pontifications like "smart reinvestment" and "the addition of more innovative admission media" - tremendous, why not "comprehensive immigration reform" while you're at it?

Also, I love the "Walt Disney believed, as I do" - made me laugh out loud, when your arguments are exhausted go to the "I'm like Walt!" card - I'm sure Disney would love to hear about how it can "redefine its business model" - feel free to write that up and send it to Iger.

Hilarious.

Walt Disney was one of the greatest strategic planners who ever lived, and that fact is the reason I cited his thoughts on the subject. He did found Disneyland, after all, and he did so with the intention that the establishment not take advantage of its monopoly on food inside the gates.

During the Pressler years, especially, the company strayed from this judicious strategy in order to seek short-term earnings growth at the expense of Disney's long-term profitability. And, now, the company is in an awkward and untenable position that has arisen from flawed assumptions regarding the maturity of Disneyland and from Burbank's expectations that all the divisions report 20%, even if some of them are valuable cash cows that drive growth in the other divisions and that have near-legendary market share, themselves. I don't blame you for that situation, but I am asking you to think of it from the standpoint of upper management.

The problems with the park restaurants stem, in large part, from the decisions of Pressler and Rasulo that have placed Disneyland, and the other Disney travel destinations, in the unenviable position of charging a premium for an increasingly undifferentiated experience. To obtain earnings growth, Disney travel destinations cannot depend on cutting costs and increasing prices, indiscriminately. Guest satisfaction is of paramount importance.

Smart reinvestment is a key to finding earnings growth in ways that enhance guest satisfaction. And, innovative admission media is requred to do the same. Namely, most of the annual-passport holders need to migrate to instruments that require something like a health-insurance co-payment. More pay-per-play options, too, are necessary.

(By the way, "middle manager" is not intended as an insult. I gleaned from your comments that you are in middle management, and my estimation is that myopia just comes with the job. I do resent the heirarchical, top-down organizational structure at Disney that stratifies people into superiors who micromanage and underlings whose specializations are not accorded appropriate decision-making power. That operating philosophy is partly responsible for creating Disney's toxic organizational culture in which people in lower echelons are treated with such little respect, and I certainly don't believe in that way of thinking, myself.)

[mousechild]

Re: LA Times: A sinking feeling on 'Small World'

Walt Disney was one of the greatest strategic planners who ever lived, and that fact is the reason I cited his thoughts on the subject. He did found Disneyland, after all, and he did so with the intention that the establishment not take advantage of its monopoly on food inside the gates.

Prag do you have some verifiable reference on Walt's thoughts on the food issue or are you just channeling the man in the frozen bucket?

Disney's food prices have always been high in the 30+ years I can remember. Walt never seemed shy about getting as much money as possible from his crowd. In 1970 the Icon Mickey inside the balloon sold for $1.50 in current dollars that is somewhere around $10.00. I don't know what the exact food prices were in 1970 or whenever but when you start adjusting for inflation things look a bit different.

Walt never was shy about high profits, he managed to pay for the park in only a few months because of high profit margins. No matter how high the attendance was if not for the high profit margin model he could not have paid off the park in less than a year.

[rgrant999]

Re: LA Times: A sinking feeling on 'Small World'

(By the way, "middle manager" is not intended as an insult. I gleaned from your comments that you are in middle management, and my estimation is that myopia just comes with the job. I do resent the heirarchical, top-down organizational structure at Disney that stratifies people into superiors who micromanage and underlings whose specializations are not accorded appropriate decision-making power. That operating philosophy is partly responsible for creating Disney's toxic organizational culture in which people in lower echelons are treated with such little respect, and I certainly don't believe in that way of thinking, myself.)

Your posts tell the entire story - middle management is not an insult at all (although that was about ten years ago in my career), just another level of experience that you clearly do not understand.

As I tell people just entering the corporate world who have your point of view of upper management and how they mistreat the lower levels, not according them decision-making power, etc, etc.: Listen and learn.

I find more and more entry level people in the companies I've run (managerial and below) who spend more time throwing around their theories of strategy and how corporations should be run when they, of course, have never begun to run a corporation nor do anything strategic.

My advice to these people, and what I offer to you, is actually listen to what people who do these jobs say, learn from the reality of how business works, and contribute vs. lecture and maybe you can move up to senior management and actually create change vs. talk about it. Those that don't tend to end up bitter, angry at the "suits", say it is too "political", "they don't want the truth", "they don't get it", etc. and more than willing to tell everyone what they're doing wrong while they go about their tactical jobs.

When I came out of grad school with a masters in economics, I thought I knew everything - I knew absolutely nothing. Only after 25 years of actually doing it in both private and public companies at all levels do you know how it works - this is why senior management may appear to "not listen to feedback" - it is often just random thoughts that are not grounded in reality.

I'll continue to share with the discussion group my experiences of how large corporations and business works and what dynamics are at play and try to relate it to what may be happening at the parks, but listening and learning are up to the reader.

[MikeChat]

Re: LA Times: A sinking feeling on 'Small World'

I think all of you have overlooked one possibility: maybe aquatic technology has improved so the boats just float better than the current ones ever did, so might simply be an upgrade.

[mousechild]

Re: LA Times: A sinking feeling on 'Small World'

I think all of you have overlooked one possibility: maybe aquatic technology has improved so the boats just float better than the current ones ever did, so might simply be an upgrade.

And that was considered, we have now moved on to what responsibility, if any, Disney has to sell healthier food, could they get people to buy it, and how it should be priced.