“Impossible. We don’t control our concessions. Our concessions operator will never agree to it.”
That’s what I heard from dozens of sports executives after my last column on how we sold 7,000 5-game plans for the Staten Island Yankees using All-You-Can-Eat as a value-added benefit. (Click here to read it if you missed it)
“Not true,” I responded to each call or email. “You can do it. You just have to show your partner what’s in it for them.”
First, we have to think about the mind-set of your concessions’ operator. Put yourself in their shoes. What are they constantly thinking about?
- Their concessions per cap. It’s as if they get paid huge bonuses based on their per cap and nothing else. That’s okay. We can show them how their per cap will go up.
- Reducing costs to improve margins. For a concessions’ operator, they have two types of costs.
- Cost of goods related to items sold such as their hotdogs, beer, popcorn, napkins. These costs are pretty much 100% related to the amount of food they sell and people in the building.
- Fixed costs such as labor, overhead and utilities. These costs are pretty much the same regardless of the number of people at the game. Sure, they might have a few less game day staffers preparing food for a poorly attended Tuesday night game compared to a big Saturday night crowd but it’s not a huge variance as that staff is typically paid minimum wage.
- How to make themselves look good to their bosses and move up the corporate ladder to a bigger property. This is normal for any employee anywhere so don’t act surprised.
WHAT’S IN IT FOR THEM
Considering these three factors, you have to think about your proposal from their viewpoint. What’s in it for them? It can’t just be, ‘Give me free food and we’ll draw more fans.’ That’s a risky proposition for any concessions manager and doesn’t really help them accomplish any of the above. You have to think about your approach to the concessions’ manager as the most important sales pitch you’ll ever make.
You have to show them:
1. How AYCE will increase per caps
2. How AYCE will improve margins
3. How AYCE will make them look like a hero to the home office.
First, let’s make some basic assumptions for our team. I’ll call them the Big City Kangaroos:
- Concessions per cap is $6.00 per game
- On a typical Saturday night, the team has 400 full season tickets, sells 100 mini-plans, 750 group tickets and 1000 single game tickets. That’s 2250 tickets distributed.
- Let’s assume all 2,250 show up. That means total concessions revenue of 2250 x 6 = $13,500
Let’s also make some basic assumptions about food costs. For example purposes, I’ll just the food costs we have at the Macon Bacon. Your costs may be higher or lower by a few cents but if they vary a lot from these, you need to re-negotiate.
- Hotdog - $.53. (Includes the bun and wrapper and basic condiments)
- Hamburger - $1.03
- Chicken sandwich - $1.04
- Can soda - $.32
- 16.9oz bottled water - $.30
- 16oz fountain soda - $.38 (cup, ice included)
- Cookies - $.20 (two prepackaged cookies)
Finally, we’ll use the Macon Bacon consumption history to calculate how much each fan might eat and drink. Keep in mind that we only offer AYCE to people who buy one of our ticket packages (full, 10 game or 5 game) or buy 20+ group tickets. We DO NOT sell AYCE to single game buyers.
Also, our AYCE tickets are $15 and $18 each. We don’t gouge the fan and charge $50 so they feel like they have to gorge themselves to get their money’s worth out of their ticket. Be fair and reasonable on pricing and the fan will be fair and reasonable on how much they eat.
Macon Bacon Consumption
- 1.75 sandwiches per person – 1 hotdog and 1 burger = $1.56
- 2 sodas per person - $.64
- 2 cookies - $.40
TOTAL FOOD COSTS PER PERSON - $2.60
TOTAL INCREASED LABOR COSTS PER PERSON - $0. I say zero because your concessions operator can cook and distribute the AYCE food out of the same locations they do for the paying customer, just like we do in Macon. No additional labor costs needed.
MAKING YOUR OFFER TO THE CONCESSIONS OPERATOR
- The team will pay all food costs for the AYCE customer. Assume it’s on average $2.60
- The team will pay a $1 ‘profit’ to the concessions’ operator for every AYCE customer. That means as a team, you’d pay roughly $3.60 per person. With the $1 'profit', the concessions operator gets at minimum a 40% profit on that customer assuming that they don’t spend a nickel on any other food and beverage.
- The team would receive no commission on that $3.60 payment to the concessions’ manager.
- No single game buyers would receive AYCE and the team would limit AYCE for only select games that they want to sell out. (Friday and Saturday nights). You can always expand this later as you start seeing huge increases in attendance. Your concessions’ operator will likely encourage you to expand it.
Now, show them some numbers with a few assumptions:
Assumption #1 - The per cap from the AYCE customer drops by 50%, from $6 to $3. Remember, they aren’t getting free beer, popcorn, ice cream, cotton candy and a lot of other staples. They will still spend some money. That means the concessions manager is receiving $6.60 from each AYCE customer ($3.60 from the team and $3 from the customer).
As an example, I’ve done this in 8-10 different markets with no decrease in concessions per cap and in a number of cases, an increase. The reason is, the fan still comes to the game with $x in their pocket to spend on food and beverage. They’ve essentially forgotten they already pre-paid for food when they bought their ticket package (see my last column two weeks ago by clicking here)
Assumption #2 – The Kangaroos don’t sell a single new season ticket, go from 100 to 600 mini-plans, go from 750 to 1500 group tickets for a big game and still sell 1000 single game tickets. These numbers are likely low projections. We sold 7,000 five game plans in Staten Island and sell nearly 2,000 ticket packages for the Macon Bacon.
BY THE NUMBERS:
| 400 full season
||400 full seasons receiving AYCE = ($6.61 x 400) = $2,644
600 minis receiving AYCE = ($6.61 x 600) = $3,966
|750 group tickets
||1500 group tickets receiving AYCE = ($6.61 x 1500) = $9,915
|1000 single game tickets
||1000 single game not receiving AYCE = ($6.00 x 1000) = $6,000
|2250 total x $6/per cap = $13,500
3500 total generating $22,525 in concessions revenue = $6.43 per cap
DOES IT HELP YOUR CONCESSIONS MANAGER?
Remember the three goals your concessions manager has:
- Increase per cap – You just did that by $.43 per person by the team paying for a share of each customer’s food. You must remind the concessions manager that your team, the Kangaroos, is now their largest customer.
- Reduce margins – Because you’ve increased revenue for the concessions operator and there is no or a very limited increase in game day staff and no increase in fixed costs for operating, you’ve in effect improved their margins for them.
- Looking like a hero – This plan provides the concessions operator a $9000 bump in revenues for a big game with no risk on the concessions operator’s part. If the team doesn’t sell any AYCE tickets, the concessions manager doesn’t lose a thing.
You can convince your third-party concessions operator to do All-You-Can-Eat. You just have to show them the numbers and what’s in it for them. If you have any questions on how to negotiate, give me a call at 702-493-2661 or send me an email at firstname.lastname@example.org
Also, congratulations to Jon Spoelstra for being named one of Sports Business Journal’s Champions of the Sports Business Industry. Click here to view the article.
My next column on March 16th will talk you through how at $1.50 hat and $.50 hotdog led to an 800% increase in group sales.