In the recent Disney financial results earnings call, Disney revealed some losses in their overall earnings. When asked how they would combat these losses, Disney revealed some cost cutting measures Guests may not welcome. Do you think these savings measures will impact Guest experience?
Theme Park Profits
Disney’s fourth quarter of it’s fiscal year just ended, and in it’s earnings call, Disney revealed some substantial losses. Although the Parks were profitable for the first time since shutting down in March of 2020, the overall earnings fell short of Wall Street expectations.
Next Steps for Disney
When asked about combating inflation moving forward, Disney Chief Financial Officer Christine McCarthy shared some possible solutions.
I was talking to our Parks senior team about things that we could do there. There are lots of things that are worth talking about. We can adjust suppliers. We can substitute products.
Disney Chief Financial Officer Christine McCarthy
Adjusting suppliers for some of their products could certainly cause some substitutions in products, like the recent change in POG juice at many Disney restaurants.
Adjustments to portion sizes?
McCarthy went on to note additional changes that could be made in order to cut costs in the Disney Parks.
We can cut portion size which is probably good for some people’s waistlines.
Disney Chief Financial Officer Christine McCarthy
I’m not sure if she intended that to sound humorous or believed that people’s weight is affected heavily by visiting theme parks. That statement was not very popular with Disney fans. KtP
Pricing changes?
McCarthy also noted that Disney could combat inflation by adjusting pricing.
We can look at pricing where necessary. We aren’t going to go just straight across and increase prices. We’re going to try to get the algorithm right to cut where we can and not necessarily do things the same way.
Disney Chief Financial Officer Christine McCarthy
What do you think of Disney’s possible plan to reduce costs? Do you think this will impact Guest experience? Let us know in the comments below, or tell us on Facebook.
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Tlaw
Thursday 11th of November 2021
Kevin, I think you misunderstood my ultracheap, unhealthy carb comment. I agree that Disney has some good food choices if you look around (though easier to find junk food choices). I personally enjoy the fish and chips at Epcot, but they certainly are not healthy.
When a company looks to save on food budget, one can decrease portion size, or considered lower cost offerings. Typically perishable items, such as meat and veggies, are replaced by carbs -- flour and corn being roughly $0.10/lb versus $1.00+/lb for veggies and even more for meat, plus the extra refrigeration cost (Mickey waffles with maple flavored corn syrup must have an incredible profit margin).
Disney could kill the AYCE buffets, though no one would go (at the same price) for a prix fix single serve offering (not counting the next 6 months when Disney can put the Bidenflation to shame).
Your comment suggested that smaller portions sizes may come with lower costs. While I would love to see that happen, I really doubt that is part of Disney's profit improvement plan (since the other profit factor is how much profit can be generated by a serving person).
Kevin Helms
Thursday 11th of November 2021
I love Disney and it has been way too long since my last visit. I am a stock holder, DVC owner, and D24 member. Many things will have changed when I make it back, and that is not just because of Covid. Many of the changes I am not looking forward to and am disappointed by several decisions the company has made recently in parks and other arms of the company.
However, I do think it is wise to take a cost cutting approach compared to trying to enhance revenue. The key to making this work is that the cost cutting has to be well targeted to areas that don’t impact the overall experience.
Yes, management should share in the cuts just as other cast members, visitors, suppliers, and everyone else has. Especially new management that hasn’t proven they can even be successful at running the company yet. Many poor decisions have been made since Bob Iger stepped aside. Initially, I gave them the benefit of the doubt due to the unprecedented challenge of Covid, but that is wearing thin.
Identify the key things a person needs for an enjoyable visit and try to control those costs. This would be things like tickets, snacks, food, etc. Drop items in which the company has low profit margins as long as they don’t fall into the iconic Disney experience. Souvenirs are expensive and may become more so, but that isn’t a necessary item needed to enjoy a park visit. Maybe people have to be more selective on what and how much they buy.
I do think it is a fair point to evaluate portion sizes. In most cases, they are ridiculously large for one person at least at sit down restaurants. It would not hurt to scale these back and hold prices down. Also, I disagree with what one comment said with regard to unhealthy food being the only option. As someone who has to carefully manage their diet due to health issues, I have no trouble finding healthy choices at the parks. It is much different from when I was a kid and everything truly was junk food.
Inevitably it is a business and a balance has to be found between revenue and expenditures. However, the Magic should always be the top priority. As long as the park is overcrowded at the rates being charged there is no incentive to the company to not continue to raise costs. Only when attendance begins to drop due to costs and not Covid will the company double down on finding significant alternatives.
It is a simple matter of demand outstripping supply.
Ian Lamble
Thursday 11th of November 2021
Leave the parks alone. Just sell alcohol in MK. They’d make millions. Unpopular I know. But at this rate there will be nothing left
Tlaw
Wednesday 10th of November 2021
Disney's CFO McCarthy must have thought that saving $$ on the tram must have been better for our waistlines as well.
If she really cared about guest health - 1) they would have healthier food options versus the ultra-cheap fried carbs/processed foods, 2) they would not make us be glued to the stress producing cell phone for everything we do in the park, 3) they would not make overly tired parents carry their sleepy kids a mile to get to their car just they were being cheap by not running the tram.
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