Food portion cuts to increase profits?

[Ayla]

Based on the current trajectory, I think Disney's version of the answer is "both".

My answer is "neither".

 

[el_super]

Based on the current trajectory, I think Disney's version of the answer is "both".

I still disagree. I think we have become accustomed to runaway price increases, in part because of the last ten years of increasing GDP results. If we do start to experience shrinking GDP, and inflation, the price increases will take a back seat to just keeping the parks filled with people.

Don't forget that the last couple years of price increases and upchrages were all being spurred by runaway attendance in the parks. They had more demand then they had supply. If that scenario flips, the price increases will stop.

 

[el_super]

Chapek isn't much better. I haven't even heard the call and just by the quotes I can tell talking about Genie+ and how successful it was (and how much money it made) was his favorite part. He doesn't even try to hide it.

He was on an investor call. Talking to investors who want to make sure the company is making money. He's literally paid to be excited about those things.

 

[VJ]

He was on an investor call. Talking to investors who want to make sure the company is making money. He's literally paid to be excited about those things.

It would be fine if he wasn't the exact same way outside of investor calls, but...

 

[UNCgolf]

I still disagree. I think we have become accustomed to runaway price increases, in part because of the last ten years of increasing GDP results. If we do start to experience shrinking GDP, and inflation, the price increases will take a back seat to just keeping the parks filled with people.

Don't forget that the last couple years of price increases and upchrages were all being spurred by runaway attendance in the parks. They had more demand then they had supply. If that scenario flips, the price increases will stop.

To be fair, I was really thinking price increases along the lines of things like Genie+, ILL purchase, special ticketed events, etc.

I expect to see a continual increase in extras that aren't required for a visit. People can still buy a ticket and get through the gate without spending the additional cash, but they will likely have a worse experience than people who are willing to buy some or all of the add-ons. They could stop increasing the price of park tickets (or even decrease them to get more people in the door) and still ramp up the add-ons.

The Starcruiser fits into this concept as well, although it's in a separate category and not really connected to regular park visits.

 

[el_super]

To be fair, I was really thinking price increases along the lines of things like Genie+, ILL purchase, special ticketed events, etc.

I expect to see a continual increase in extras that aren't required for a visit. People can still buy a ticket and get through the gate without spending the additional cash, but they will likely have a worse experience than people who are willing to buy some or all of the add-ons. They could stop increasing the price of park tickets (or even decrease them to get more people in the door) and still ramp up the add-ons.

The Starcruiser fits into this concept as well, although it's in a separate category and not really connected to regular park visits.

And that does make some sense... but the price of the add-ons, specifically Genie+ and Lightning Lane, are directly tied to how busy the park is. If inflation leads to a decrease in travel/leisure spending, and a corresponding drop in attendance, those up-charge services might have trouble reaching the same value. They probably wouldn't decrease the price outright, but might over them as grouped add-on packages or maybe even as a service available to some resort hotels.

The bigger point here though is that Disney's pricing is all basically maximized: calculated to make the biggest return for the amount of capacity/demand of the service or product. Disney's food prices are set to the maximum amount they think they can get back for a plate at a restaurant, based on the demand/reservations. It's not as tied to labor/raw consumables as some would think. So if inflation starts causing the price of noodles to increase, Disney doesn't really have room to just raise the price of dinner at Ohana. They already set it to the maximum they want to set it at.

 

[LittleBuford]

Still all you can eat, but bring smaller portions to reduce waste.

This would be a much better way for them to address the issue of waste. When I experienced Hoop-Dee-Doo Revue at the start of 2020, I couldn’t believe the amount of food being brought to the tables—it was an obscene quantity, and much of it (meat, to boot) was being sent back uneaten. Disney should be cutting down on such obvious waste rather than charging customers more for less.

 

[CaptainAmerica]

Let me show you the difference between Walt and someone like Chapek.

Genie+ makes Chapek's eyes light up, which is something that's evident in these investor calls. Money makes him happy and the prospect of making more excites him.

Walt, well... is very different. I'll let him tell you himself:

“Money is something I understand only vaguely, and think about it only when I don’t have enough to finance my current enthusiasm, whatever it may be. All I know about money is that I have to have it to do things. I don’t want to bank my dividends, I’d rather keep my money working. I regard it as a moral obligation to pay back borrowed money. When I make a profit, I don’t squander it or hide it away; I immediately plow it back into a fresh project. I have little respect for money as such; I regard it merely as a medium for financing new ideas. I neither wish nor intend to amass a personal fortune. Money—or rather the lack of it to carry out my ideas—may worry me, but it does not excite me. Ideas excite me.” -Walt Disney

And a few more quotes while I'm here:

“Disneyland is a work of love. We didn’t go into Disneyland just with the idea of making money.” -Walt Disney

“Biggest problem? Well, I’d say it’s been my biggest problem all my life. MONEY. It takes a lot of money to make these dreams come true. From the very start it was a problem. Getting the money to open Disneyland. About seventeen million, it took. And we had everything mortgaged, including my family. But we were able to get it open and in the ten or eleven years now we have been pouring more money back in. In other words, like the old farmer, you have to pour it back into the ground if you want it to grow. That’s my brother’s philosophy and mine, too.” -Walt Disney

“I’ve always been bored with just making money. I’ve wanted to do things; I wanted to build things, to get something going. What money meant to me was that I was able to get money to do that for me.” -Walt Disney

“Some people forget that you can still do good work even though you work with dollar bills. We took almost nine years to make Fantasia, and if we had to do it again I’d take a long hard look at it, because today it would cost us fifteen million dollars. At some stage or other I have to walk in and tell the boys, ‘O.K. Start wrapping it up.’ If I didn’t, we’d never get the work finished. But that doesn’t mean we pull back on quality.” -Walt Disney

And finally, my favorite Walt quote (and one that excellently shows the contrast between Walt and a money guy like Chapek):

“Well, I think by this time my staff, my young group of executives, and everything else, are convinced that Walt is right. That quality will out. And so I think they’re going to stay with that policy because it’s proved that it’s a good business policy. Give the people everything you can give them. Keep the place as clean as you can keep it. Keep it friendly, you know. Make it a real fun place to be. I think they’re convinced and I think they’ll hang on after…as you say…well…after Disney.” -Walt Disney

Yes, Bob Chapek is different than the once-in-a-century creative genius who founded the company.

 

[castlecake2.0]

This would be a much better way for them to address the issue of waste. When I experienced Hoop-Dee-Doo Revue at the start of 2020, I couldn’t believe the amount of food being brought to the tables—it was an obscene quantity, and much of it (meat, to boot) was being sent back uneaten. Disney should be cutting down on such obvious waste rather than charging customers more for less.

Exactly, they can always bring more on request. I feel areas like this is what they’re addressing more than giving you 5 less fries with your meal.

 

[KaliSplash]

Why would they cut prices? The whole purpose of reducing portions is to increase profits.
The whole purpose of the company is to increase profits. The current management crowd has just found new ways to slice the pie thinner and increase the price of a slice.
That they have a desirable product just makes it easier to increase prices in ways previous leaders would not have considered doing.
The fact that we keep seeking out this product regardless of the price means they can continue to slice the pie thinner and increase the cost of a slice.
They don't OWE us anything. Their job is to take our money and turn it into their money. Their method is wrapped around the high value experiences and characters and details that we have appreciated.
It's much more fun to give Mickey our money than to give the grocer our money. So we go and give and complain about the smaller portions of the pie.

 

[ToTBellHop]

“Here at Walt Disney World Resort, we care about how fat you’ve all become, so we are proud to introduce a new offering at all of our buffet restaurants: The Lost Boys Pretend Meal Experience! Guests will be empowered to use the power of dreams come true to imagine that they are eating food when they actually are not, so they can lose 5 to 20 pounds on vacation when coupled with the lack of parking lot trams! How do you think Peter stays so skinny on a diet of Dole Whips and Gaston’s famous cinnamon rolls?!

All this for just $48 per adult and $29 per child!

It’s bangarang!”

 

[UNCgolf]

And that does make some sense... but the price of the add-ons, specifically Genie+ and Lightning Lane, are directly tied to how busy the park is. If inflation leads to a decrease in travel/leisure spending, and a corresponding drop in attendance, those up-charge services might have trouble reaching the same value. They probably wouldn't decrease the price outright, but might over them as grouped add-on packages or maybe even as a service available to some resort hotels.

The bigger point here though is that Disney's pricing is all basically maximized: calculated to make the biggest return for the amount of capacity/demand of the service or product. Disney's food prices are set to the maximum amount they think they can get back for a plate at a restaurant, based on the demand/reservations. It's not as tied to labor/raw consumables as some would think. So if inflation starts causing the price of noodles to increase, Disney doesn't really have room to just raise the price of dinner at Ohana. They already set it to the maximum they want to set it at.

I think that will be a bigger issue for Genie+ than the ILL purchases, since those are the biggest headline attractions. They'd likely have 90+ minute waits even on days where the parks aren't busy. However, the recent attendance has also shown that Genie+ can still work, since the parks haven't been especially busy the past couple of weeks and they still had enough users to run out of times pretty early in the day for all the major attractions.

I absolutely wouldn't be surprised to see Genie+ bundled in as part of your resort room at certain times, though.

 

[UNCgolf]

Exactly, they can always bring more on request. I feel areas like this is what they’re addressing more than giving you 5 less fries with your meal.

There aren't very many family style restaurants on property though, right? Aren't there only like 3 or 4 (not counting anything they temporarily switched to it for COVID)?

I have to think they're talking about more than just that small handful of restaurants.

 

[Tom P.]

Yes, Bob Chapek is different than the once-in-a-century creative genius who founded the company.

No one is expecting Chapek to be the next Walt Disney. And of course the company that exists today is going to be very different than the company that existed in Walt's time. I think the point being made is that Walt had a basic philosophy that guided the decisions he made. He also was convinced that it was a philosophy that was not only the right thing to do but led to business success as well. Walt, for example, did amass a personal fortune even though he explicitly stated that was not his goal. He expected that people would continue to follow his philosophy long after he was gone. And many, including myself, believe that philosophy has been lost.

Also, I do think that often overlooked in analysis of Disney's past is the importance of the Walt/Roy pairing in the early success of the company. Walt was the creative genius; Roy was the business genius. I'm not sure if Chapek is either. But you need both. And Disney doesn't currently have that.

 

[VJ]

No one is expecting Chapek to be the next Walt Disney. And of course the company that exists today is going to be very different than the company that existed in Walt's time. I think the point being made is that Walt had a basic philosophy that guided the decisions he made. He also was convinced that it was a philosophy that was not only the right thing to do but led to business success as well. Walt, for example, did amass a personal fortune even though he explicitly stated that was not his goal. He expected that people would continue to follow his philosophy long after he was gone. And many, including myself, believe that philosophy has been lost.

Also, I do think that often overlooked in analysis of Disney's past is the importance of the Walt/Roy pairing in the early success of the company. Walt was the creative genius; Roy was the business genius. I'm not sure if Chapek is either. But you need both. And Disney doesn't currently have that.

Exactly my point.

 

[Chi84]

That’s because that’s exactly how she meant it. The comments on here are beyond insane. She made a lighthearted joke that almost all of us can relate to. People are acting like she killed their first born. Lighten up people. Yeesh.

If that’s how it was intended she would have been better off saying it would probably be good for our waistlines instead of “for some people’s waistlines.” It came off as rude, not lighthearted.

 

[Ricky Spanish]

 

[Sith196]

It was an absolutely tone deaf comment, whether it was meant as a joke or not.

As I said in the other thread, I still want to go back because there's some stuff my wife and I missed we would like to do. I can even defend some of their cuts, but my enthusiasm has definitely waned.

 

[Lilofan]

View attachment 600042

The product is not in stock on the shelves due to supply chain issues or super expensive.

 

[Nubs70]

In response to Original question, smaller portions to maintain margin.

Prime Rib I had this week cost $44. 6 months ago it was $32.