Why doesn't Disney want to build and operate restaurants anymore?

[ptaylor]

If we look at all the recent restaurant openings, T-Rex, Paradiso 37, Via Napoli, Hacienda San Angel, Pollo Campero, one thing is clear - Disney no longer want to be involved in restaurants.

Why is this? The locations are prime, Disney control the land, they have the expertise in-house, and they have the staff to run them. We may say it's all down to money, but wouldn't it be a huge money maker for Disney to have 100% control over these locations? Using their economies of scale, and keeping 100% of the profits - sounds good to me. One can only imagine the type of revenue that something like Le Cellier or Boma brings in.

So why do you think Disney won't build and operate any new restaurants at WDW?

 

[Monty]

If you lease out the land to someone else and keep a level of creative control you get profit without initial cash layout while keeping the "Disney" look and feel. :shrug:

Possibly less profit in the long term, but earlier access to it.

 

[Pioneer Hall]

I think you are looking at restaurants at places where this is usually the model. Nearly all of Epcot's and Downtown Disney's restaurants have always been operated by outside companies. If you look at the other restaurant areas, things seem to be running normally. Sanna was recently opened and is a Disney operated restaurant, and from all we can see the Beauty and the Beast Restaurant will be Disney's as well. I think it all just depends on the place you are in.

 

[Optimus Mouse]

I'm not sure what Disney's strategic reason is for this, but I do know that California Grill and Victoria and Albert's are by far the best overall experiences I have had at Disney. Now whether this is because they are manged by Disney or because they serve high-end food is another debate entirely. The low-end casual-dining/formulaic restaurants that seem to be de-riguour in the parks now is disappointing to say the least.

 

[Dragonrider1227]

As a man who finds High End restaurants to be over priced and just plain boring, I'm perfectly happy with the "low-end casual-dining" formula. I don't want any fancy crap. Just gimmie my Cheeseburger!

 

[Duckberg]

I'm not sure what Disney's strategic reason is for this, but I do know that California Grill and Victoria and Albert's are by far the best overall experiences I have had at Disney. Now whether this is because they are manged by Disney or because they serve high-end food is another debate entirely. The low-end casual-dining/formulaic restaurants that seem to be de-riguour in the parks now is disappointing to say the least.

Its a BIG market out there & Disney has to cater to it. Not everyone can afford the high end food experience! Duckberg

 

[SOLISIMO]

As a man who finds High End restaurants to be over priced and just plain boring, I'm perfectly happy with the "low-end casual-dining" formula. I don't want any fancy crap. Just gimmie my Cheeseburger!

:ROFLOL:I was quite dissapointed when my wife said her famous words "you cant wear that" as I was getting dressed to go to the California Grill.

Honestly it is nice to go once in a while to a fancy place, she deserves it.

 

[Fuzz]

My take is they get to charge premiums for these companies to use the land, on top of that they can cut out the all the supply management needed to runs these places along with the janitors and support staff.

Assuming that these business have to use there own suppliers and hire there own people.

 

[SOLISIMO]

If you lease out the land to someone else and keep a level of creative control you get profit without initial cash layout while keeping the "Disney" look and feel. :shrug:

Possibly less profit in the long term, but earlier access to it.

Can you imagine what the rent/lease is for like T-rex or Planet Holloywood in Downtown Disney plus Im sure they make some profit off sales too.

Very good point!

 

[Optimus Mouse]

As a man who finds High End restaurants to be over priced and just plain boring, I'm perfectly happy with the "low-end casual-dining" formula. I don't want any fancy crap. Just gimmie my Cheeseburger!

I didn't mean they mean they need more ultra-high end places. I was just trying to point out how good I think the management of these places is.

However, a few Disney managed Friday's/Chili's/Red Robin equivalents sprinkled throughout the parks would be nice. Right now I feel like the World is inundated with what is basically counter-service and sit-down fast food.

 

[Grizzly Hall 71]

As a man who finds High End restaurants to be over priced and just plain boring, I'm perfectly happy with the "low-end casual-dining" formula. I don't want any fancy crap. Just gimmie my Cheeseburger!

Me I prefer a Royale With Cheese

But seriously it's more money for disney when they lease space and that's what they want right now, money so they can build Beastly Kingdomme:lookaroun

 

[Grizzly Hall 71]

I didn't mean they mean they need more ultra-high end places. I was just trying to point out how good I think the management of these places is.

However, a few Disney managed Friday's/Chili's/Red Robin equivalents sprinkled throughout the parks would be nice. Right now I feel like the World is inundated with what is basically counter-service and sit-down fast food.

People don't like to spend money anymore that's the most likely reason for Disney not investing. I saw a family who went into 50's Primetime and came out and said the place was "WAY TO EXPENSIVE." What? But hey, people buy what they want to buy.

 

[fosse76]

I didn't mean they mean they need more ultra-high end places. I was just trying to point out how good I think the management of these places is.

However, a few Disney managed Friday's/Chili's/Red Robin equivalents sprinkled throughout the parks would be nice. Right now I feel like the World is inundated with what is basically counter-service and sit-down fast food.

Disney's sit down restaurants aren't quite as simplistic, but they certainly aren't any more sophisticated than those restaurants, either (with exceptions, of course).

 

[SOLISIMO]

Could another reason be bc of the dining plan:shrug: I just cant see how Disney can make money off of that, I mean atleast not with me:ROFLOL:they probally loose the way I eat

 

[SeaCastle]

I'm surprised nobody has brought up that McDonald's has left the resort as a whole, forcing Disney to assume control of many restaurants that were previously just selling food you could find at any Golden Arch you visit.

 

[mickey2008.1]

these restaurants make a fortune, the cost of food for them is around 20%, and cost of liquor/beer is lower. then add in wages for servers, say$3.65 / hr plus tips. Cooks, avg $12/hr and some mgrs, easily making 40% profit if disney owned. And when there is free dining, wdw is still making money bc you are paying full room rate, its a trade off and win for wdw.

 

[dreamfinder]

I don't think the current management wants to be associated with the risks and costs of running it themselves. And its not just the restaurants. Many things that can be outsourced, are outsourced. Much of what used to be done by WDI is now done by external companies. Disney can still say the vendor needs to meet certain standards, but then the vendor gets to deal with hassle of staffing, et al. If for some reason people suddenly decide that T-Rex is no longer a trendy/fun place to eat, and they can't fill their tables, it's not Disney's money on the line, but Landrys. They take the hit. Or if park attendance drops, and the sit downs aren't doing as much business, its the external vendor that loses money. Disney may not make as much, but they don't lose. It is the trend of the world right now. Disney gets to avoid having to pay out benefits, which may not be applicable to all the staff in these situations, but it's a big thing to not have to pay. Think about it. If you come into a management meeting and say "So and so will pay us 5 million up front, and 10% each year to run a restaurant" or "We need to spend 5 million up front to set it up, and then make 100% each year" most current boards will jump on the first. They care about short term profits with little regard to the long term effect. Yeah, over 10-20 years you may make out better running it internally, but in a world where stock prices are king, a quick bump to your bottom lines equals bonus. Long steady growth - not much.

Now this can turn back and bite you. Look at Pleasure Island. They initially assumed external vendors would be jumping over each other to open restaurants, but the economy tanked. So now it sits empty. If Disney ran it internally they could at least have something there, but since they committed to external vendors, it sits vacant.

 

[Sloan]

People don't like to spend money anymore that's the most likely reason for Disney not investing. I saw a family who went into 50's Primetime and came out and said the place was "WAY TO EXPENSIVE." What? But hey, people buy what they want to buy.

You may say that its all because of the 'free dining', but I can tell you that the best Signature Dining restaurants have still been incredibly busy during each of my recent visits, and they have not gotten less expensive. People certainly still seem to be spending money at the spots like California Grill, Citrico's, Jiko, etc.. Similarly, last year the very expensive special events at the Food & Wine Festival sold out - some in a matter of minutes. So, like the OP, I'm at a loss as to why Disney is passing on these opportunities to expand on its holdings of restaurants. I think that many of the responses here have been helpful in analyzing and understanding the issue, but I'm still not convinced that Disney will consistently make more money by having all of these great locations run by outside vendors. :shrug:

(And I agree totally with Optimus Mouse that Cali. Grill and Victoria & Albert's are consistently excellent, and prove that Disney can run a high-end restaurant very, very well, so that's not the issue .....)

 

[SOLISIMO]

You may say that its all because of the 'free dining', but I can tell you that the best Signature Dining restaurants have still been incredibly busy during each of my recent visits, and they have not gotten less expensive. People certainly still seem to be spending money at the spots like California Grill, Citrico's, Jiko, etc.. Similarly, last year the very expensive special events at the Food & Wine Festival sold out - some in a matter of minutes. So, like the OP, I'm at a loss as to why Disney is passing on these opportunities to expand on its holdings of restaurants. I think that many of the responses here have been helpful in analyzing and understanding the issue, but I'm still not convinced that Disney will consistently make more money by having all of these great locations run by outside vendors. :shrug:

(And I agree totally with Optimus Mouse that Cali. Grill and Victoria & Albert's are consistently excellent, and prove that Disney can run a high-end restaurant very, very well, so that's not the issue .....)

I dont know about that. A lease in Downtown Disney property is easily over $10,000 a month if not more plus a cut in sales :shrug: how can you go wrong?