Funworld July 2008

With the economy affecting food prices worldwide, park food and beverage managers are watching the expense continue to increase. Several parks shared with FUNWORLD how the crunch is affecting their businesses and how they are managing the pain.

Within the United States, government-mandated ethanol production, bad weather in the planting fields, and sharply rising transportation fuel costs have contributed greatly to these price surges. The price of commodities grown in other parts of the world—like rice and cocoa— have also risen recently to historic highs.

Like any industry with a food service sector, amusement attractions have been affected by the price surges, and the increases haven’t just hit the commodities themselves, but products linked to those commodities. For instance, wheat prices have affected the cost of flour and products made with dough; corn prices have affected anything made with corn syrup sweetener; and soybean and corn prices have impacted the cost of vegetable oils.

Feeling the Effects
Most attractions parks contacted by FUNWORLD say during the past few years, they saw increases of 0 to 3 percent in the cost of commodities, but that all changed this year.

“With the increases in grains and flours, our bread prices have gone up about 7 percent [this year],” says Ed Payeskie, food services manager for Knoebels Amusement Park in Elysburg, Pennsylvania. “The worst increase has been with refined flour. Also rice, which is 80 percent more than last year.”

Roaring Springs Waterpark in Meridian, Idaho, has experienced similar increases. “We’ve seen a 6 to 8 percent increase in our food costs,” says Pat Morandi, one of the park’s managing partners. He also notes prices for anything with a petroleum base, such as plastic utensils and food service packaging, have increased significantly.

The same is true for Holiday World in Santa Claus, Indiana, according to Tonya-Marie Burt, director of foods. “Anything with wheat has increased in price,” she says. “Vegetable oil has gone up the most.”

Buddy Wilkes, general manager of Shipwreck Island Waterpark in Panama City Beach, Florida, also cites cooking oil as the product seeing the greatest increase. “Frying oil is up 20 percent in just two months,” he says.

Even larger increases have been seen by Ocean Park Hong Kong in China. “Taking the overall view, we have seen on average about a 15 to 20 percent increase in specific food products,” says Joseph Leung, the park’s executive director of revenue. He adds the most significant increases have been on meat products. This is one area where Ocean Park differs from what the U.S. parks reported, with Shipwreck Island, Holiday World, and Knoebels all reporting relatively stable prices for beef. It seems that meat and dairy prices would be severely impacted by the higher cost of the grains used to feed livestock, but the U.S. attractions contacted have not seen this.

One thing may have cushioned Ocean Park from even greater increases: The facility’s food purchases are made under contract. “During the contract term, prices and supply quantities are fixed, until a new contract is negotiated,” Leung says, and this is the case with many parks.

Though potential shortages in the supplies of certain commodities have been mentioned in recent news stories, parks reported no problems or concerns in this area, save one: “One distributor did tell us that flour may be tough to get at some point,” notes Payeskie.

Parks say their suppliers aren’t citing just commodity price increases as the reason for the higher cost of their products, but also transportation expenses. Wilkes observes that fuel charges of $5 or $6 are being tacked on to deliveries at his park. Burt reports the same at Holiday World, but says they purchase so much that the surcharge is waived, except in the early and late parts of their operating season.

Differing Responses to Increases
The response from parks to the price increases is varied. Some have switched brands to stave off price increases; Holiday World changed its ice cream vendor for this reason. “We also considered changing fudge vendors,” says Burt, “but in the end we stayed with our current vendor.” She observes that stiff competition keeps some of the costs in line. “Business is very competitive among food vendors,” she says, “and we’re not afraid to squeeze a bit—OK, a lot!”

Wilkes has also made a change. “We used to buy a really premium cooking oil,” he says, “and now we’re looking at a less-expensive alternative.”

But none of the parks say they’re discontinuing certain type of products or changing the portion sizes. “We try to maintain a certain quality, and we won’t drop down in quality,” says Payeskie. “Particular food items is one of the reasons that some people come to our park—that’s what we’re known for.”

However, it seems most parks will be passing on the price increases to guests, to one degree or another. Ocean Park officials say they will try to make the price increases easier on their guests by spreading them in small amounts over several food categories.

Holiday World must also increase its prices but doesn’t believe it will be a problem. “As a family park, we try very hard to keep our food prices down,” Burt asserts. “We have raised some of our food prices this year to cover the price increases we’re facing, but we don’t expect the prices to cause concern.”

Wilkes says much of the increase will have to be passed on to customers at Shipwreck Island, with the park absorbing about 25 percent of the increase and passing along the remaining 75 percent. But he notes the price increases have the park monitoring its costs closely. “We’ll reduce our labor if we have to, so people could see longer lines at the food stands,” he says, “and for the first time, we’re really closely monitoring when our [cooking] fires are turned on and off, not only for energy savings, but also to preserve the life of the cooking oil.”

Roaring Springs will also split the burden of the price increases with customers. Says Morandi, “It’s going to have to be a shared cost increase.”

According to Payeskie, Knoebels was able to hold firm on prices the past few years, and he says this will be the first time in four years they’ve had to raise prices. But he’s not worried: “Our [increases] are so minimal that I don’t think [guests] will even notice them.”

Of course, the food price increases also affect the concessionaires. Lenny Freund, managing member of Fruend Family Foods, says his company has been hit by higher prices, especially for funnel cake mix and cooking oils, but the business effect hasn’t been too negative. “The bad news is that we’ve had to increase prices across the board,” he says, “but the good news is that we’ve not seen any price resistance [from customers].”

In fact, none of the parks and concessionaires seem particularly concerned that increased commodity prices are going to cause a problem with guests this year. Says Morandi, “I think that everybody is aware of the increase in food costs because they’ve seen it at the grocery stores, so they’re prepared for it.”