Cedar Fair revenue up, attendance down on same-park basis

Posted | Contributed by Jeff

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced that combined 2007 revenues at its parks through July 1, 2007 were $355.3 million, on 7.8 million guest visits and average in-park per capita spending of $40.44. The 2007 results include the operations of the Paramount parks which the company acquired from CBS on June 30, 2006.

On a same-park basis, total revenues through the first six months of the year were up 2%, or $3.3 million. The increase in same-park revenues is the result of a 5% increase in average in-park guest per capita spending to $39.91, offset somewhat by a 3% decrease in attendance, or approximately 108,000 visits. Out-of-park revenues on a same-park basis also experienced a 2% decrease, or less than $1.0 million, during the first half of the year. The decrease in attendance and out-of-park revenues is attributable to 16 fewer operating days due to a change in the company’s seasonal operating calendar. The decrease in out-of-park revenues is expected to be offset by a reduction in seasonal operating expenses during this same period.

Read the press release from Cedar Fair.

Jeff's avatar
There's an ongoing trend here, and it's not good. I think the math is pretty obvious that you can't keep hiking up the cost of food and other stuff at the park and not expect attendance to keep going down. The food prices are completely out of control, and it's going to bite them in the ass in the long run. Every day that goes by they're turning people off from returning another day.
HeyIsntThatRob?'s avatar
Exactly what I was going to say Jeff. I was at the park yesterday (ZOMG I SAW U!!!!111) and I couldn't believe that the Johnsonville Brats & meal were selling for $6.59! Anybody else remember last year when it was $4.95 for the same meal? What on Earth would constitute a %25 increase for the price of that? Sure, gas and wages have gone up, but that is ridiculous!

Cedar Fair, please "take a good hard look at" your food prices, you are a regional amusement park, not a worldwide theme park! You're pricing yourselves out of the family market.

Jason Hammond's avatar
"What on Earth would constitute a %25 increase for the price of that?"

Exactly, especialy considering your only getting a 1oz bag of chips and an 8oz soda with the brat. I bought it at $4.95, but $6.59 doesn't seem worth it.

Lord Gonchar's avatar
Of course something like this comes up on a week that I can't do the podcast. :(

The food prices are completely out of control, and it's going to bite them in the ass in the long run.

I'm still not sure I entirely believe that.

I think it's safe to say park attendance has plateaued. These big CF and SF parks aren't going do more than the 3-to-3.5 million they've done. (and if they do it'll just be an overcorwded nuthouse that will bite them in the ass in the same way these prices could)

Assuming you want to achieve financial growth, it has to come from somewhere. You can grow the number of customer or you can grow the amount they spend.

Sticking with the theory that growing the customer base isn't feasible, then where do people spend money? At the gate or inside the park.

Right now I think these guys (CF & SF) are running on the idea that higher gate prices will keep people away altogether whereas reasonable gate prices and inflated 'inside' prices force people to spend to a degree.

At that point the long term effects are debatable. Is the answer to quit trying to show steady growth year after year or to find another way to show it?

I personally still don't think in-park food prices have become untolerable. Are they high? Yes. Unbearable? No.

We fed everyone at SFStL for $31. Meals at CF parks ranged from $20 to $35 depending on what we got.

Is that range really in the 'ridiculous zone' for a family of 4? I'd be hard pressed to do any comparable meal for the 4 of us for less.

I just have a hard time calling a $6.59 meal ridiculous. Outside of amusement parks, I can't think of one place I'd get a brat, a small bag of chips and a drink for under $7...unless I made it myself.

I also think we're in a turbulent phase where the changes are being made. People will become conditioned to the higher prices over time. Heck, look at the two posts above mine - there's complaining about the change in price as much (if not more) than the actual price itself. In a couple of years with modest increases that brat meal is $6.99 and has been for as long as people remember such things.

When SF started making pricing changes like this last year, I warned that this was the future of the amusement park experience...CF is only proving me right. (yet again ;) )

(It goes deeper than just those two chains as well, but those are the often cited examples)

I noticed at KD a couple weeks ago they are offering all-you-can-drink wristbands for $3. You must have a 2007 souvenir cup in order to use that option. I decided to try it out. You just go to any food location selling fountain drinks with your sourvenir cup, pay your $3 and they give you a wrist band with that days date on it. You attach the band it to your wrist (it is water proof). Then for the rest of that day, any time you wish for a refill, go to any food location with a fountain drink dispenser you; hand the attendant your cup and show the wristband. They fill it up and send you on your way. You can still get individual refills for $1.29 if you don't want to do the all day thing.

I don't mind paying a little extra for in-park food. But, I would at least like my food to be hot and fresh and not sitting in a foil bag under a heat lamp for lord knows how long. My experience was on 07/03 and I went for a burger, fries, and drink. The burger was lukewarm and the fries cool. If I am going almost $10 for that, then I should at least get hot food.

I don't expect gourmet food at a theme park, but I think the parks can work harder on achieving a balance between food quality and the profit return. You cannot keep customers in the park if they have to go outside of the park to eat due to extremely high prices. With BGE just an hour drive from KD, you can't beat the food quality at a Busch park compared to KD. I don't mind paying a little extra for food of that quality.

As I have stated in other posts, Cedar Fair has their work cut out for them if they are going to compete in the mid-Atalntic region with Busch and Hershey. They have got to stay on top of KD. Paramount has left a sour taste in the mouths of a good number of possible customers for Cedar Fair. These people have the disposable income to spend ** IF ** they feel they are getting a high quality product and/or service for their money. Unfortunately, Paramount did not provide this experience and the patrons got tired of it and took their money elsewhere, namely BGE. You have to provide a well-rounded family experience for all, entertainment for all ages, decent food at a reasonable price, and the rides/attractions themselves that is enveloped in a clean, fun atmosphere. I don't think those with disposable income care for henna tattoos, game people yelling constantly in their microphones to play their game. To me that is annoying and distracts from my overall experience.

What is a brat?
I see something in Cedar Fair's future to increase in park spending(since their food is about as high as it can go,) and that is the introduction of the Q-Bot or Flashpass. Hmmmm. Wonder what they'd call it? ;)

Seriously it is getting pretty out of hand, and I agree with others that its going to turn the casual parkgoer from eating in the park or not visit the park at all. I know we won't be eating at their parks in the future. Not when all those decent chain places are so close to their parks. Guess they are banking on the fact that people won't want to go through that much trouble just to leave to eat elsewhere. :)

*** This post was edited by Coasterfantom2 7/5/2007 5:05:30 PM ***

Higher prices definitely turn me off from buying in-park food, I might still go, but I rarely buy food in the park, aside from at Knoebels. I guess that means I'm not most parks aim for cliente then, or who they really want in their gates.
Lord Gonchar's avatar

I couldn't believe that the Johnsonville Brats & meal were selling for $6.59!

What is a brat?

This :) (google, man, google)

Normally I'm the first to jump on the "food prices out of control" bandwagon. But last night at Kings Island, I went to Skyline Chili and purchased two cheese coneys and a Coke for seven dollars -- and those coneys were piled two inches high with cheese! At a non-park Skyline Chili, I would've expected to pay about five dollars for that meal, and that would've been without the mountain of cheese. So I feel like I got my money's worth last night.
Living in California for my entire life, I'm used to the high prices. Purchasing food at the midwest parks (I went to HW, KI, and CP) were about the same prices as fast food anywhere in CA.
Jeff's avatar
Did you even read my post, Gonch? ;) (Kidding... I'm just being a jerk.) Seriously though, attendance hasn't plateaued, it's been going down year after year. Cedar Point hasn't seen 3.4 million since, what, '94? They got close in 2000 with Millennium Force, and it has gone down every year since. That's seven years of decline.

And whether or not they're operating as a regional attraction or not, when your stuff costs more than Disney and Universal, and most of it is below quality, you're asking for a world of pain.

You could buy a cone of cotton candy for a quarter last year, now a bag costs three bucks. That's a kick in the nuts.

Seriously though, attendance hasn't plateaued, it's been going down year after year. Cedar Point hasn't seen 3.4 million since, what, '94? They got close in 2000 with Millennium Force, and it has gone down every year since. That's seven years of decline.

But how is attendence going to get back to that level?

Look how many people the Detriot and Cleveland regions have lost in the last 13 years. Look at the strength of their economies.

I'm sure the economic status of the area has a much larger affect on attendence than the price of food.

These areas aren't growing. So how can you experience growth? Raise the in-park spending.

Although, for CF parks in the South and West, things are a little different. Since CF doesn't breakdown attendence by park, I can't make a judgement. But, if these parks aren't gaining in attendence, then you have a fair point Jeff.*** This post was edited by Patrick Meyer 7/5/2007 8:01:14 PM ****** This post was edited by Patrick Meyer 7/5/2007 8:09:01 PM ***

Jeff's avatar
If the economy is in the crapper, then you have to respond to that. You don't do it by asking your customers for more money.
Exactly. Detroit's economy sucks. But it isn't going to magically come back to life this season, or next, or probably even in five seasons. So asking for more money for the same thing or in some cases less (see hours, declining operations, and food service worse than ever), isn't the best idea. The Tigers attendance is up this season and they are filling nearly 90% of their seats on average. It isn't cheap to go watch the game and have a couple beers, but they've put an exciting young team out on the field and they are winning, so people see some value in the experience of going to the game.

I don't know enough about the other parks in the chain (although I assume they are much the same), but Cedar Point in particular has been very simplistic and not creative with their ways of trying to increase or even maintain revenue. They've done one of two things.

Either raised prices or cut costs.

To date they haven't done anything really creative like offering in park or on-ride photos for sale online when you get back home, offering a way to charge in park items like food and merchandise to your room, debit on season passes, improving food choices, quality, and capacity, building nightlife on (or even off) the peninsula so that the money keeps coming in after the park closes. I think the problem is that all of these things are going to require up front investment.

I sort of feel like the next few years are critical for Cedar Fair. They can really take some of what they've learned from Paramount and hopefully some other places around the industry and really put it into practice, or they can continue with their old school ways. I feel like it could go either way honestly, but I fear if they don't adapt, they're going to fade into irrelevancy.

Lord Gonchar's avatar

Seriously though, attendance hasn't plateaued, it's been going down year after year. Cedar Point hasn't seen 3.4 million since, what, '94? They got close in 2000 with Millennium Force, and it has gone down every year since. That's seven years of decline.

Perhaps I should clarify. I'm thinking bigger picture, not specifics. Rather than attendance let me use 'attendance potential' - that has plateaued. They've done between 3 and 3.5 million guest for what? 12, 15, 20 years? That's all there is. It's never going to go higher. That park in that location will never put more people than that through the gate in one season. It may fluctuate year to year, but they're there.

I think the idea in the industry is that you increase the numbers through the gate and that's growth. More customers means more of everything else. But what happens when there are no more customers? That's what the biggest parks are facing now.

I tend to think that getting more from each guest is a good approach, but like I said, I do see the other side and understand how it could turn into nothing more than a band-aid on a critical wound. I guess it's how you go about getting more from each guest that matters.

You could buy a cone of cotton candy for a quarter last year, now a bag costs three bucks. That's a kick in the nuts.

How many times last year during the podcast did I say I thought the contrast in pricing approach between what SF did with massive raises across the board vs what CF did by dropping prices at the more prolific parks was the most interesting story to wait and watch play out? Too many times. :)

Well, it finally has played out and the CF parks not only put prices back where they were, but they seem to have gone even further...into SF range.

My guess is that the 2006 price drops were an attempt to boost attendance, but as I speculated a couple of paragraphs up - that's not going to happen on any meaningful level.

They seem to be struggling with how to handle the need to show growth.

That's where I love Shapiro's ideas. Q-bot, in-park prices, corporate advertising disguised as partnerships, media companies - he's finding new revenue streams in lots of new places. Remember this story from last fall:

"...Shapiro urged an estimated crowd of 22,000 at the IAAPA annual show to stop thinking about the industry as 'mature' and redefine the ways it entertains."

He's right...and this is what CF seems to be struggling with.

Jeff's avatar
A steady decline is not fluctuation in a plateau range, which is what I'm getting at. Fluctuation is you win some you lose some, not lose some every year.
Besides paying for a big admission to cedar fair parks and now food prices had skyrocket and effect less visitors seeing that Cedar Fair is getting the consequences by doing that.

So a better idea is bring your own food to a park that has high food prices. Don't waste your money on a park meal and you can have fun without going to buy expensive food that's not worth it.

Maybe less competition might be the problem or they like to rip you off. I don't know yet but soon i will.

*** This post was edited by Twistercoasterman 7/6/2007 12:48:02 AM ***

Pete's avatar

What is a brat?

The correct term is actually Bratwurst, which is a German term for Fried Sausage. Johnsonville, using the term Brat, is actually a bad abbreviation. Just some marketing to bring what is really a German food mainstream, though the Johnsonville product tastes a little different from an authentic German Bratwurst.*** This post was edited by Pete 7/6/2007 3:29:22 AM ***

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