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Offering self-serve sodas lets your
facility speed up delivery for what could
otherwise be a time-consuming item.
Photo courtesy of Lindsay Hanson.
By
Allen Johnson
There appear to be only three ways to improve a venue’s financial
situation: generating more revenue, cutting expenses or a combination of
both of these actions. We’d like to offer some suggestions of things
that have worked for us in the past — and hopefully will again in the
future — to help improve your financial situation.
Some of the most innovative ways to generate more
revenue have been ideas borrowed from others. This includes shopping or
visiting other venues. It doesn’t have to be the exact same venue type
as yours. In fact, some of the best ideas may come from a different
venue type; something that worked in a theatre may work in your arena,
and vice versa. It’s important that when you visit other venues, you try
to imagine that you’re a regular customer, not a trained venue
professional.
Saving and
Generating
Money When exploring ideas for improving concessions, some of the best
research is to visit a busy McDonald’s during lunch hour. They have a
limited time to make a large part of their daily revenue during this
peak time period, so they put a lot of effort and money into researching
how to accomplish this goal.
One technique is the packaging of food items such as a
hamburger, fries and a drink, none of which might be discounted if
purchased separately. The benefit of this practice is to speed up the
line or drive through by allowing the customer to order a No. 3 (burger,
fries, soda) — “and a bigger size, please.” They serve more customers
faster, thus increasing sales.
This is the concept behind self-serve sodas, taking a
time-consuming item with a high profit margin and speeding up the
process by getting customers through the line quicker. This has yet to
become popular in our industry, but some have tried it with success —
and here’s why. Our profit margin on a 16 oz. or 22 oz. fountain drink
is $.17 and $.24, respectively — on a product for which we charge at
least $2 in most venues.
A customer could come back 10 times to refill at the
self-serve fountain and you’d still be ahead because of the labor
savings and the ability to serve more customers. Concessionaires are
concerned about lowering profits by allowing free refills, but the
reality is that the loss is less than $.25 — and having a customer leave
the concession stand line because a long slow moving lane is more costly
than that. This is an example of improving your financial situation by
generating more revenue and by saving money.
Saving Money
There are many simple ways to save money, include raising the
temperature one degree in the administrative office area. Many staff
members will thank you, but this will also minimize or eliminate the
need for those famous energy hogs — space heaters. It’s cheaper to use
fans for those more warm-blooded employees and raise the temperature one
degree than to have all of those space heaters humming.
Installing motion detectors in the offices and break
areas will help decrease energy usage as well. They’re cheap ($35) and
easy to install. Also, mandating that employees turn off electronic
devices at the end of their day is a small step that will pay dividends
at the end of the year — and extend the life of the systems as well.
Another great way to learn new ideas is from your IAAM
colleagues by networking with them at the Annual Conference & Trade
Show, District meetings, Chapter meetings or venue specific conferences.
As a member of the Florida Facility Managers Association, we take
advantage of what our sister venues have to offer.
During the annual FFMA meeting, one of the more popular
sessions in years past was the one where each member venue brought an
idea that made money, saved money or both. Ideas from those sessions
include graduation flowers (and the contact info), graduation
videos/DVD’s, reserved seating at graduations, facility fees, VIP
parking and perks. Again, someone else has already tried and perfected
these ideas — and they may work in your market.
Generating Revenue
A good way to generate new revenue is to stay on top of current trends
in food and drink. A currently popular item is the Martini including
flavored ones. Our theatre added a martini separate from our regular bar
at a cost of less than $1,000. The return on the investment occurred in
less than five events.
We charge $9.50 to $10 per martini, and our costs are
69 percent, giving us a healthy profit while generating excitement in
the lobby. We also allow drinks to be taken into the theatre seating
area for most events. In some cases to get permission to do so, we share
profits with our arts groups to help them overcome their normal
objections. This has raised our per caps by 20 percent because of
increased sales. We also added credit card capabilities, and we pre-sell
intermission drinks — all to drive per caps.
Another way to increase revenues is by adding value to
the customer. Each and every market has a customer who is looking for
special treatment — and is willing to pay for it. We sell VIP parking
located next to an entrance that gets little use but is in a
high-profile area. Our normal parking fee is $8 per vehicle but we get
$50 for these 25 spaces, all of which sell out for Orlando Magic games
and most concerts. Valet parking, special VIP entrances, backstage
tours, all-inclusive seating areas and advance e-mail notification of
on-sales all add value to their event experience and can generate
significant new revenues.
Sharing Ideas
Many venue operators have been resistant to the concept of sharing
ancillary revenue sources due to tradition, policy or rules. We believe
that any idea that will increase our return should be reviewed and
evaluated. You don’t have to implement all of them but if there’s
something you could do that would encourage a promoter to bring you 10
shows instead of five — and you’d make more money at the end of the year
— then we believe it’s worth looking into.
Many times our governing organizations, whether it’s a
government, pro sports team or private management firm, will only look
to cut costs instead of this winning combination of all three — make
more money, spend less money or do both. It has been said that smart
companies increase their marketing/sales budget during trying times.
It’s the exact opposite in our industry when we asked to make cuts that
may limit our ability to increase business — the exact opposite of what
smart companies may do.
The one thing that’s certain is the industry has
changed more in the past three years than in the previous 10. We have
more competition, not only from the number of new venues including amphi-theaters
but from iPods, movies on demand, iTunes, portable DVD players, DVRs and
Tivos, and anything else that takes money out of the consumers’ pockets
or diverts their attention from our product.
We need to remember we’re in the experience business —
and learning how to survive and thrive in this competitive environment
requires creative and innovative thinking, as well as the courage to
take action.
fm
Allen Johnson is executive director, Orlando
Venues (Amway Arena, Bob Carr Performing Arts Centre, Florida Citrus
Bowl, Tinker Field, Leu Gardens, Mennello Museum and Public Art) |
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