Why Do People Struggle So Much With Snack Prices?

[lazyboy97o]

well, gee...now I'm confused.....IS Disney World a charity? or do they make a profit? My bad...

So there is only one price structure that ensures profitability?

The number 1 responsibility of ANY publicly traded company is to maximize shareholder value. Period. The end.

Anyone investing in stocks (which we all do, hopefully) is happy that companies are fighting for every dollar. They are all doing it...you might not like it, but it's true. It's what gives us money to buy those $3 waters and $400 park tickets.

You're completely ignoring the point that there is more than one method to increase shareholder value. Disney's theme parks never operated at a loss eith their prior business model.

 

[Chef Mickey]

So there is only one price structure that ensures profitability?


You're completely ignoring the point that there is more than one method to increase shareholder value. Disney's theme parks never operated at a loss eith their prior business model.

I liked this because they aren't making more operating margin than in their prior business model.

Expenses have increased just as prices have increased over time. They aren't "gouging" customers any more than they ever were...there are just more people that go now. Total profit dollars are different than gross margin. Margins are the same.

 

[Lucky]

Expenses have increased just as prices have increased over time.

Their prices have been going up several times faster than the overall inflation rate. It's more about demand - charging closer to what the market will bear than they used to - than about expenses.

 

[lazyboy97o]

I liked this because they aren't making more operating margin than in their prior business model.

Expenses have increased just as prices have increased over time. They aren't "gouging" customers any more than they ever were...there are just more people that go now. Total profit dollars are different than gross margin. Margins are the same.

That is a micro assessment based on a macro analysis. You don't know where the costs have increased and how they correlate to food prices. That is not how Disney measures these metrics. Bottled water is pushed to its highest price because it is measured as its own individual unit. This would not happen under the old model of coordinated, experience driven decisions.

 

[YozhikRoth]

Share repurchases can be powerful in growing EPS. Most of Disney's share repurchases have been made below its current trading prices, making it a pretty good thing for shareholders. Share repurchases get messy when the stock continues to fall, something DIS hasn't done.

I've been highly critical of Iger's short-sightetdess and lack of park expansion, particularly at WDW. However, he's not blind to worldwide expansion (Hong Kong, Shanghai) and this has been a primary reason for molasses movement at our beloved WDW. I do think he's stood on the the shoulders of geniuses at WDW, but he has made some good acquisitions and the jury is still out on the additions to WDW.

The key is, we need MORE at WDW and I do think they'll ultimately be some "I told you so" when WDW experiences some pause in guest growth.

All that aside, water prices aren't coming down.

Just a finance aside-share repurchases, stock splits and stock dividends have zero impact on EPS, a public company is required to disclose "apples to apples" EPS in their quarterly and annual SEC filings. What a stock buyback (hopefully) shows is that management feels the Company is undervalued, thereby the investment in the Company. At an old employer, the Company was bullish on it's outlook, and combined with low debt cost, purchased several billions of stock back. Unfortunately, the core business was about to spring a leak, and shares would end up dropping 75% a year after the buyback.

 

[xdan0920]

Let the record show that someone on this board started a thread to argue about and "educate" the rest of us on Disney snack prices.

Not about the quality of Disney snacks. Nor their availability or selection. Or even whether they qualify for the dining plan. But the prices of snacks.

Just let that sink in for a moment.

This. Exactly this. One of the strangest threads in Magic history. Also the exact reason I started my thread.

 

[jloucks]

So there is only one price structure that ensures profitability?

There is only one that maximizes it.

What that is exactly, is the million dollar question. ....or billion dollar.

 

[jloucks]

Their prices have been going up several times faster than the overall inflation rate. It's more about demand - charging closer to what the market will bear than they used to - than about expenses.

 

[flynnibus]

And once again, thanks for bringing in your snide sarcastic remarks that have no bearing on the topic.

Thanks for the entirely unnecessary post. Here your badge.. you've earned it

 

[Chef Mickey]

Just a finance aside-share repurchases, stock splits and stock dividends have zero impact on EPS, a public company is required to disclose "apples to apples" EPS in their quarterly and annual SEC filings. What a stock buyback (hopefully) shows is that management feels the Company is undervalued, thereby the investment in the Company. At an old employer, the Company was bullish on it's outlook, and combined with low debt cost, purchased several billions of stock back. Unfortunately, the core business was about to spring a leak, and shares would end up dropping 75% a year after the buyback.

You're off base here. Fewer shares = higher EPS. Share repurchases DO increase shareholder value from an EPS perspective. If they didn't, investors wouldn't care about them and companies wouldn't do it.

Read this:

Repurchase Impact on EPS
Since a share repurchase reduces a company’s outstanding shares, its biggest impact is evident in per-share measures of profitability and cash flow such as earnings per share (EPS) and cash flow per share (CFPS). Assuming that the price/earnings (P/E) multiple at which the stock trades is unchanged, this should eventually result in a higher share price.

http://www.investopedia.com/articles/investing/112013/impact-share-repurchases.asp

 

[Chef Mickey]

That is a micro assessment based on a macro analysis. You don't know where the costs have increased and how they correlate to food prices. That is not how Disney measures these metrics. Bottled water is pushed to its highest price because it is measured as its own individual unit. This would not happen under the old model of coordinated, experience driven decisions.

I'm speaking overall and comparing their overall operating margin today versus 20 years ago. I really don't care what unit margins they make on individual items. I'm just saying from a high level, they are making the same operating margin and even less than some years prior.

 

[Chef Mickey]

Let the record show that someone on this board started a thread to argue about and "educate" the rest of us on Disney snack prices.

Not about the quality of Disney snacks. Nor their availability or selection. Or even whether they qualify for the dining plan. But the prices of snacks.

Just let that sink in for a moment.

Not really at all. I'm just puzzled as to why Disney gets singled out as if people haven't seen this story before at so many other places.

I actually can't understand why people get so upset about snack prices and want to discuss it. This is not the grocery store and the only place you get prices you're comfortable with on any food, drink, snack item is at the grocery store.

Name a major "for profit" place you can go and get cheap snacks. I'll wait.

 

[Goofyernmost]

You are banging your head against a 9 foot thick, steel reinforced, kevlar coated cement wall. The other side is basically saying it's GOOD for Disney to price gouge captive customers. How can you possibly argue with that mindset?

Excuse me... when did we become a captive customer with no other options? Oh, yea, the ones that feel that the only way that anyone can experience the place is by taking the free bus in from the airport and reporting to their cell for the duration of their sentence. I buy the water, when I am thirsty. It is a quick hydration and as far as cost is concerned one of the least expensive things on property. Yet, this silly conversation goes on and on. If you don't want to buy it, don't. If I don't have a problem with it, then I will buy it. My business, no one else's. The talk as if we had any control of it is foolish. We either buy it or we don't. No conspiracy, plenty of other options and certainly within their rights to do so. I think all bottled water is a rip-off even at Costco discount. It's just water and a plastic bottle. But, when I'm thirsty it works quickly and neatly.

 

[flynnibus]

The number 1 responsibility of ANY publicly traded company is to maximize shareholder value. Period. The end.

And there is more than one way to achieve that 'value'. Your mindset of 'we are justified in efforts to extract every possible penny of profit' as the absolute rule for all business decisions is not true. If it were, company's would be lambasted for doing things like offering employee benefits, or contributing to charitable efforts, and every business would be pinching every possible penny. The reality is businesses can and do setup with Corporate Values and beliefs. Public Officers have a fiduciary duty to serve the shareholder's interests - that does not unilaterally mean extract maximum dollars in a finite view.

When Google pulled out of China, it was a decision that meant Google walked away from millions and millions of dollars. It was a move driven by long term corporate beliefs about what is RIGHT for the company to represent and take a stand over for the long term success of the company and as an essential citizen of the global internet. That is a simple example of how officers can make moves that serve the corporate interests without looking only at the short term dollars. The list of these kinds of examples can go on and on. Fiduciary duty is not simply "maximum profits NOW"

Anyone investing in stocks (which we all do, hopefully) is happy that companies are fighting for every dollar. They are all doing it...you might not like it, but it's true. It's what gives us money to buy those $3 waters and $400 park tickets.

No, that simplified view just makes you part of the problem when it comes to irresponsible behavior and leadership. Thank god there are many companies still that realize long term success comes from balancing the needs of employees, community, customers, and investors.. and not just the last one.

 

[flynnibus]

Does this make Disney good or evil, no, it simply shows they are a large corporation acting in the best interests of its shareholders.

The very idea that you think a company should be soulless and only driven by dollars is part of the problem. Chasing profits while closing your eyes to everything else tends to end in nice explosions.

 

[flynnibus]

Not really at all. I'm just puzzled as to why Disney gets singled out as if people haven't seen this story before at so many other places.

Singled out? I'm sure if you were hanging on a NYYankees fansite you'd hear people complaining about the prices in their stadium too.

You comment about people at WDW complaining about Disney prices... and you're puzzled why they weren't complaining about prices from somewhere else while at WDW?

And again.. just because everyone else is doing it, doesn't lessen the sting. The idea of 'everyone else is doing it' is simple lemming mentality.. just close your eyes and follow the other guy.

 

[Wdw62114]

Thanks for the entirely unnecessary post. Here your badge.. you've earned it

Ooh thanks! Can i get a bottle of water with my badge too or is that out of your price range?

 

[Pumbas Nakasak]

must be out of yours if you are begging for a freebe.

 

[Chef Mickey]

And there is more than one way to achieve that 'value'. Your mindset of 'we are justified in efforts to extract every possible penny of profit' as the absolute rule for all business decisions is not true. If it were, company's would be lambasted for doing things like offering employee benefits, or contributing to charitable efforts, and every business would be pinching every possible penny. The reality is businesses can and do setup with Corporate Values and beliefs. Public Officers have a fiduciary duty to serve the shareholder's interests - that does not unilaterally mean extract maximum dollars in a finite view.

When Google pulled out of China, it was a decision that meant Google walked away from millions and millions of dollars. It was a move driven by long term corporate beliefs about what is RIGHT for the company to represent and take a stand over for the long term success of the company and as an essential citizen of the global internet. That is a simple example of how officers can make moves that serve the corporate interests without looking only at the short term dollars. The list of these kinds of examples can go on and on. Fiduciary duty is not simply "maximum profits NOW"



No, that simplified view just makes you part of the problem when it comes to irresponsible behavior and leadership. Thank god there are many companies still that realize long term success comes from balancing the needs of employees, community, customers, and investors.. and not just the last one.

Employers constantly cut employee benefits and only offer them to remain competitive. They are shrinking more and more each day and eventually there will be few if any employee benefits.

 

[Chef Mickey]

Singled out? I'm sure if you were hanging on a NYYankees fansite you'd hear people complaining about the prices in their stadium too.

You comment about people at WDW complaining about Disney prices... and you're puzzled why they weren't complaining about prices from somewhere else while at WDW?

And again.. just because everyone else is doing it, doesn't lessen the sting. The idea of 'everyone else is doing it' is simple lemming mentality.. just close your eyes and follow the other guy.

Disney is getting singled out because people forget that everywhere they go, it's the same or worse. Countless examples given. The people complaining about Yankee games would be just as wrong as complaining about Disney.