"Free" DDP ???

[Baron Von Capybara]

Good Day good peoples of the interweb,
I have a slightly more serious question for you all today.Free DDP.How do Disney come out ahead on this deal ? I understand from the perspective of the customer (If on a 14 night holiday you would spend x dollars on food you have to have got food to the equivalent of Y per day to make the plan cost effective).I don't however see how Disney benefits from this deal.We all know that they are not going to give something away for nothing.
I know some of you are going to go with the "Free is Free" mantra but there has to be something in it for Disney to offer it whether it is increased occupancy rates or tying you in to being at Disney for all your food keeps you "in house" and spending on extras at the mouse rather than out of the mouse.
Thanks for all your informed and wizened replies in advance.

 

[Sweet Melissa]

Wizened! LOL.

It's both the things you mentioned. Discounts like free dining are offered at times when resorts would not reach full occupancy otherwise, so Disney gets the bonus if filling rooms that might have been empty.

There's also the fact that people who book packages with Disney are more likely to be a captive audience. That's not just limited to people who get free dining, though. I know that pretty much every dollar I've spent in Florida since maybe 2009 has been on Disney property, and I don't even book packages or dining plans.

Last, I think the regular dining plans that people purchase have a fairly high profit margin. Whatever it is that people pay per day for the dining plan now (and again, I don't use them so I'm not sure what the current price is), I wouldn't be surprised to learn that the restaurants are only being reimbursed about half the "retail price" of the credits that patrons spend there. The people who purchase dining plans probably carry some of the weight of free diners too.

 

[luv]

They aren't. They're losing tons of money because they're buying the food, paying people to prepare and serve all that food...and they are giving it all away!

1. Since they began the dining plans, they kept jacking up menu prices. Many people see that dinner would cost $60, so the plan "saves" them money. (They also make people pay their own tax or tip now, don't they? And I think they cut back on appetizer, entree and dessert for each person at the meals. I know they took away a lot of the menu items, since they were too good for the dining plans. )

2. They increase room rates for people who get free dining. The food is free, but the room costs a lot more. Wonder if any of that room revenue gets coded to F&B? I think so.

3. People who stay in Disney hotels on dining packages often don't leave the disney property. $$$$$

 

[englanddg]

They aren't. They're losing tons of money because they're buying the food, paying people to prepare and serve all that food...and they are giving it all away!

1. Since they began the dining plans, they kept jacking up menu prices. Many people see that dinner would cost $60, so the plan "saves" them money. (They also make people pay their own tax or tip now, don't they? And I think they cut back on appetizer, entree and dessert for each person at the meals. I know they took away a lot of the menu items, since they were too good for the dining plans. )

2. They increase room rates for people who get free dining. The food is free, but the room costs a lot more. Wonder if any of that room revenue gets coded to F&B? I think so.

3. People who stay in Disney hotels on dining packages often don't leave the disney property. $$$$$

Spot on. In no way is "free" dining free...and I wish they didn't have it.

And yes, they upped the prices. That does make it "seem"...no, it is still a deal.

Considering that is still what you'd have to pay regardless (no "coupons" at Disney eateries...).

So, while it's true that Dining Plans may (I think have) led to menu price hikes, it's not true that price hikes are artificial to the analysis of using a DP.

I take the room discount and buy the DLX plan each year. And you can make it a value. But, you MUST do it right and do it well.

This past trip I did a receipt by receipt detail and even put it on my trip report (which I still need to finish...argh!)...

I came out ahead. Not break even...ahead, a few hundred bucks actually on this last trip.

I suspect the first year I used it (2010) and had no idea what to do with it or how it worked, I came out at a severe loss (we did a lot of Quick Service places, etc...but, hey, it was my first trip planned by myself as an adult and parent, AND my first time back in six years, and in 2004 it was only a one day trip (the rest was Universal)...

That being said...here are some other concerns.

1) Will you WANT to eat that much food on your trip. For me and the kid, the answer is yes, because eating is part of the fun for us! But, this is not the case for everyone or every group.

2) Are you willing to plan your credit use smartly so that you get the most bang for your buck? For example, sometimes it's better to pay for that breakfast out of pocket and then use the breakfast DLX credit to eat at a VERY expensive signature dinner.

3) If not, are you willing to actually spend more than you would have otherwise spent simply so you don't have to count pennies (or dollars) each meal?

 

[luv]

Spot on. In no way is "free" dining free...and I wish they didn't have it.

And yes, they upped the prices. That does make it "seem"...no, it is still a deal.

I understand why people buy the dining plans, even why they buy the free dining. I'm not against it. If I were traveling...well, I probably still wouldn't, but not because I'm anti-plans.

I dislike that the menu prices were artificially raised to make the plans seem like an awesome deal, because I pay the menu prices when I eat at Disney.

I dislike that they cut things from the menus, because they happened to cut a couple things a I liked a lot. They actually cut my favorite meal.

Otherwise, I don't mind the dining plans. If Disney can make money selling free dining, wish them well.

 

[Nero the dog]

Disney come out on top because of the HUGE profit margin on food. I know a little about the catering industry, I would imagine that on the prices Disney charge, they are making 80-90% profit on the cost of food. For a family of 4 on dining plan they are going to be still making at least 50% profit on the food costs.
Disney have to pay all the restaurant staff anyway. By selling the dining plan they are stopping the temptation for visitors to go offsite to eat.
The visitor numbers before DDP are much the same as now, yet it was so much easier to find somewhere to eat because a lot more people ate elsewhere.
Even with free DDP they make money, because they no longer need to offer large room discounts for the quiet times.

 

[englanddg]

Disney come out on top because of the HUGE profit margin on food. I know a little about the catering industry, I would imagine that on the prices Disney charge, they are making 80-90% profit on the cost of food. For a family of 4 on dining plan they are going to be still making at least 50% profit on the food costs.
Disney have to pay all the restaurant staff anyway. By selling the dining plan they are stopping the temptation for visitors to go offsite to eat.
The visitor numbers before DDP are much the same as now, yet it was so much easier to find somewhere to eat because a lot more people ate elsewhere.
Even with free DDP they make money, because they no longer need to offer large room discounts for the quiet times.

You grossly overestimate food cost. You aren't wrong, per se, but your numbers are far too high.

 

[Nero the dog]

You grossly overestimate food cost. You aren't wrong, per se, but your numbers are far too high.

I think I have underestimated if anything. I work for a large food retailer in the UK, we have a Cafe in store, they are expected to make 62% profit on food costs. We charge a lot less for meals than Disney does.
I am not talking about the total profit for the business, the food profit I am talking about takes out most of the costs like electricity, lighting, heating, labour. They will be fairly static no matter how busy the restaurant is.

 

[englanddg]

I think I have underestimated if anything. I work for a large food retailer in the UK, we have a Cafe in store, they are expected to make 62% profit on food costs. We charge a lot less for meals than Disney does.
I am not talking about the total profit for the business, the food profit I am talking about takes out most of the costs like electricity, lighting, heating, labour. They will be fairly static no matter how busy the restaurant is.

First, I took your comment to mean total profits (difference in language...we both speak English, but slightly different terms)...

Second, Food costs in the US for quick service should run around 11% - 17%, for table service, around 20% - 40%.

Toss on that a 25% - 35% labor cost (hourly labor plus salaried management, taxes and benefits, etc.), 3% - 5% controllable operations cost (maintenance, utilities, etc) and another 5% - 10% non controllable operations cost, and you have a decent looking P&L.

You can't really compare the profit margin of a cafe alone, unless their primary market is to sell food (not coffee / drinks). Beverage sales significantly impact F&B profitability. Drinks...are cheap and high profit. Hands down, always the case.

Quality meat and fresh veg, is not.

This is why menu planning is so important, and training wait staff to push certain dishes. Why is "risotto" considered "excellent"? Well...people rave about it! Oh...and it's a cheap appetizer for the operator to make, and one that can be easily added to the line. <grin>

 

[Pumbas Nakasak]

No such thing as a free lunch, or speech for that matter.

 

[real mad hatter]

Someone shout FREE this morning......Of course it's FREE... I'll explain in simple terms..Our 2010 vacation at WDW staying at PORS for 14 nights,in July cost us approx £ 4.300 .( that's the complete package flights,park tickets,transfers,) from our travel agent..Our 2012 vacation,identical to 2010 ( same resort,month,etc ) cost us £ 4.600. The only difference was in 2010 Disney weren't doing FREE dining in July from UK.However in 2012 they extended it throughout the year..Therefore the money we spent on food in 2010 we didn't have to in 2012..Simples

 

[Baron Von Capybara]

@real mad hatter and @englanddg ,I understand what you are saying you are not paying for your food therefore to you it's free.What i am asking is how Disney is doing this because that cost has to be absorbed somewhere else. There ain't no such thing as a free meal ..
Am i paying for it when i don't use the dining plan and subsidising you ?
If so i may well eat more off property next holiday .

 

[englanddg]

@real mad hatter and @englanddg ,I understand what you are saying you are not paying for your food therefore to you it's free.What i am asking is how Disney is doing this because that cost has to be absorbed somewhere else. There ain't no such thing as a free meal ..
Am i paying for it when i don't use the dining plan and subsidising you ?
If so i may well eat more off property next holiday .

Yes, you are. Hands down, no question.

Because @real mad hatter got a fantastic deal, and because I know how to use the system to make it profitable for me.

Mind you, there is a difference. I have NEVER used free Dining. I pay for it every time (DLX plan...quite a premium...it means the kid and I, as of the last trip a few weeks ago, needed to spend $127 a day or more on food to make it viable). I've done it as either a trip choice or a financial decision because I didn't want to feel the "oh crap, that was expensive" thought for every meal...which was 2010 and 2011, before I really understood the system and how to game it to be profitable.

As I said earlier, I'm quite sure on those trips I LOST money by getting the DLX plan. But, I paid for it anyway for the peace of mind, and again, not freaking out every meal over the per meal cost (which, meant I felt easier about spending money on merchandise...solid business plan!)...

The "free" dining which attracts people into it (which is the vast majority, not me)...is what breaks the system. These people are not making any sort of decision outside of "I want to go" and they see it as a perceived value, when it most likely is not. Especially since their plans are NOT the DLX plan (I couldn't make a limited DP offered with the "free" offers work out if I wanted to.

From a P&L perspective, BRILLIANT!

You also can't take @real mad hatter 's fiscal analysis to heart, as they have exchange rates to consider...which, for the past few years, have not been in our favor (in the US)...so, we are seen as a "cheaper" vacation choice (not saying UK to the US is cheap...but, our sticker shock is different than theirs after conversion).

What the Free Dining craze has done...as @luv pointed out...

It's what has flooded ADRs, cramped the parks, and made those who didn't "participate" feel as if they were missing out on something.

It's limited menu choice.

It's forced more exclusive restaurants onto it due to demand, which has limited quality.

Is it a win? Well...it can be. Is it best for the parks? I don't think so in the long run.

 

[Baron Von Capybara]

Yes, you are. Hands down, no question.

Because @real mad hatter got a fantastic deal, and because I know how to use the system to make it profitable for me.

Mind you, there is a difference. I have NEVER used free Dining. I pay for it every time (DLX plan...quite a premium...it means the kid and I, as of the last trip a few weeks ago, needed to spend $127 a day or more on food to make it viable). I've done it as either a trip choice or a financial decision because I didn't want to feel the "oh crap, that was expensive" thought for every meal...which was 2010 and 2011, before I really understood the system and how to game it to be profitable.

As I said earlier, I'm quite sure on those trips I LOST money by getting the DLX plan. But, I paid for it anyway for the peace of mind, and again, not freaking out every meal over the per meal cost (which, meant I felt easier about spending money on merchandise...solid business plan!)...

The "free" dining which attracts people into it (which is the vast majority, not me)...is what breaks the system. These people are not making any sort of decision outside of "I want to go" and they see it as a perceived value, when it most likely is not. Especially since their plans are NOT the DLX plan (I couldn't make a limited DP offered with the "free" offers work out if I wanted to.

From a P&L perspective, BRILLIANT!

You also can't take @real mad hatter 's fiscal analysis to heart, as they have exchange rates to consider...which, for the past few years, have not been in our favor (in the US)...so, we are seen as a "cheaper" vacation choice (not saying UK to the US is cheap...but, our sticker shock is different than theirs after conversion).

What the Free Dining craze has done...as @luv pointed out...

It's what has flooded ADRs, cramped the parks, and made those who didn't "participate" feel as if they were missing out on something.

It's limited menu choice.

It's forced more exclusive restaurants onto it due to demand, which has limited quality.

Is it a win? Well...it can be. Is it best for the parks? I don't think so in the long run.

Big meals off property and snacks and small ones at WDW next time me-thinks

 

[englanddg]

Big meals off property and snacks and small ones at WDW next time me-thinks

To each there own. Plenty of world class dining in Orlando.

The dining is part of the experience for me (though, in the past few trips, I've noticed it's not what it used to be at WDW...and that is further pushing me off property...)

In fact, the past 4 years I've noticed a decline at WDW...I'm not the first to notice it, and I surely won't be the last...

They need someone to kick them in the pants.

I will add, I've NEVER had a meal at WDW at a TS that I couldn't eat because it was so bad...or that I thought wasn't worth the money...until the past trip.

Lobster mac and cheese that is made with dehydrated pasta that the line couldn't even prepare and season well enough to pass as "quality food" and markets for nearly $30 a plate?

Yeah...I'm losing faith.

And I have a LOT of WDW "faith"...they have a very large emotional bank account with me. This isn't me getting older (in fact, as I get further from working restaurants, that skill set is leaving me...so I actually become less critical...I don't walk into restaurants like I used to and immediately spot surroundings, cleanliness, staff behaviors, etc...)

But, that doesn't mean I don't stop...

 

[Baron Von Capybara]

To each there own. Plenty of world class dining in Orlando.

The dining is part of the experience for me (though, in the past few trips, I've noticed it's not what it used to be at WDW...and that is further pushing me off property...)

In fact, the past 4 years I've noticed a decline at WDW...I'm not the first to notice it, and I surely won't be the last...

They need someone to kick them in the pants.

I will add, I've NEVER had a meal at WDW at a TS that I couldn't eat because it was so bad...or that I thought wasn't worth the money...until the past trip.

Lobster mac and cheese that is made with dehydrated pasta that the line couldn't even prepare and season well enough to pass as "quality food" and markets for nearly $30 a plate?

Yeah...I'm losing faith.

And I have a LOT of WDW "faith"...they have a very large emotional bank account with me. This isn't me getting older (in fact, as I get further from working restaurants, that skill set is leaving me...so I actually become less critical...I don't walk into restaurants like I used to and immediately spot surroundings, cleanliness, staff behaviors, etc...)

But, that doesn't mean I don't stop...

Agreed.We used to regularly go to 2 of the restaraunts at WS for T/S meals and now don't go back as quality seems to have declined.All in though we are not big T/S eaters so DDP probably wouldn't work for us (plus we eat outside the world at least 4-5 days per trip minimum )

 

[real mad hatter]

Agreed.We used to regularly go to 2 of the restaraunts at WS for T/S meals and now don't go back as quality seems to have declined.All in though we are not big T/S eaters so DDP probably wouldn't work for us (plus we eat outside the world at least 4-5 days per trip minimum )

"It's a small world after all".....What a true statement..What a wonderful statement..I live in a small fishing village and there is not one decent British restaurant in it..My nearest decent restaurant is 36 miles away..So when I go to WDW on vacation it's a paradise of good places to dine.( by the way,I don't go to WDW for a gastronomic holiday ) So here's my ( favourite word coming up ) scenario ...All going well in 2015 we will be staying at AKL on FREE Dining..So I'am sitting at Yachtsmen Steak House stuffed after eating a 28 oz porterhouse and my DW and DS also having steaks,and my server brings me my bill..$230 ..So I give her a $35 for a tip...Thats what my signature dining experience for a family of 3 cost me tonight.....

 

[flynnibus]

I don't however see how Disney benefits from this deal.We all know that they are not going to give something away for nothing.

1 - It gets people to pay Disney's full rack rate...
2 - The food is industrialized as the locations narrow their menus and choices...
3 - The lure of the program is to attract guests into booking. The trade off of the rates paid help subsidize the loss leader of offering free DDP.

 

[jkl2000]

Also (sorry if it's been said already) I think a lot of people don't manage to fit in all the meals.

 

[Baron Von Capybara]

"It's a small world after all".....What a true statement..What a wonderful statement..I live in a small fishing village and there is not one decent British restaurant in it..My nearest decent restaurant is 36 miles away..So when I go to WDW on vacation it's a paradise of good places to dine.( by the way,I don't go to WDW for a gastronomic holiday ) So here's my ( favourite word coming up ) scenario ...All going well in 2015 we will be staying at AKL on FREE Dining..So I'am sitting at Yachtsmen Steak House stuffed after eating a 28 oz porterhouse and my DW and DS also having steaks,and my server brings me my bill..$230 ..So I give her a $35 for a tip...Thats what my signature dining experience for a family of 3 cost me tonight.....

$230 for 3 steaks /i would expect the whole dang cow for that price

 

[real mad hatter]

$230 for 3 steaks /i would expect the whole dang cow for that price

That is the whole dang cow..Horns removed and butt wiped clean....I'll never forget going to Birmingham on a telecommunications course many moons ago..Myself and another buddy booked into this small B & B owned by this little Irish woman..She said " Your in luck boys,tonight I'am cooking steaks,how do you like them." And my mate said to her." One next to the other."