Wouldn't Disney be losing money??

Discussion in 'Disney Dining Plan' started by FoxwithEars, May 28, 2010.

  1. FoxwithEars

    FoxwithEars Mouseketeer

    Jul 4, 2009
    So I was just wondering, if we were to go to Le Cellier Steakhouse in EPCOT, and I get a New York Strip Steak ($30), plus a dessert ($7), plus a fountain drink ($2), the total is around $40 and the Disney Dining plan is $42 a night. Wouldn't Disney be losing money??
  2. squirrel

    squirrel DIS Veteran<font color=deeppink>

    Aug 19, 1999
    Yes, it looks like they are loosing money.

    They have people purchase the dining plans and they are guarenteed that you are spending money for food at their restaurants and not leaving property to buy food. Some people leave without using all their credits-Disney then makes money. I'm sure they have it all figured out so they aren't loosing money.
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  4. Cafeen

    Cafeen DIS Veteran

    Jul 24, 2009
    They do and they don't. It's basically a volume discount. Like Squirrel said, they are insuring that more people will visit the TS restaurants more often on the trip.

    It's a matter of selling more dinners at a lower price vs fewer dinners at a higher price.

    Besides, they aren't actually losing money, they're just not making quite as much should you be paying oop (at least in most cases), but they're making up for it in more tables.
  5. dvcmember98

    dvcmember98 Earning My Ears

    Nov 9, 2004
    I thought that Le Cellier Steakhouse cost the use of 2 Table Service Credits?

    Is that not correct?

  6. mickeysgirl17

    mickeysgirl17 Wish I was at Disney

    Aug 16, 2006
    No, as of now, it is 1 TS credit. There is talk that could change soon to a 2 TS credit restaurant.
  7. dvcmember98

    dvcmember98 Earning My Ears

    Nov 9, 2004
  8. mrsltg

    mrsltg Guest

    Plus, they make the prices in the first place. Some of the pricing is going to be for perceived value. The meal the OP quoted for $42 is not actually $42 worth of food - no where near it. Disney is definitely not loosing money on the proposition or they would change it...
  9. CathieArms

    CathieArms DIS Veteran

    Apr 25, 2008
    A couple of thoughts.

    First, the food at most restaurants is wayyyyyyyyyy overpriced to begin with. Especially at WDW, it would be very hard for them to "lose money" since their markup is so tremendously high.

    Secondly, I'm sure they're planning on an average amount spent by the total people on the DDPs each day. So, for instance, if someone does the DxDP and ends up grabbing one or two of those meals at a CS restaurant, then it's likely that they won't use all of that $70/day.

    Thirdly, there are people who will go home without using all of their meal and snack credits.

    So yes - while YOU might use all of that average money at your one meal, there will be a lot of people who don't, and that's why it's not losing them money.
  10. atmail35

    atmail35 Mouseketeer

    Apr 30, 2010
    I don't think they are losing money, I think they are just making less money on the scenario you posted. ;)
  11. ratlenhum

    ratlenhum DIS Veteran

    Feb 22, 2010
    They are not losing money. The prices on the menu are soooo far above cost, that a $40 meal probably costs them them 1/3 of that to make.

    My brother owned a pizzeria. For the heck of it one day we figured out how much it cost to make a batch of dough, a bucket of pizza sauce, and how much cheese was used on a pie and the cost of it all then figured out how much it cost to make each pizza. For a large cheese pie that we charged $10 for, it cost about $2 to make!!
  12. kaytieeldr

    kaytieeldr Post hoc, ergo propter hoc

    Jun 11, 2005
    I just wanted to point out that, while the posters who've stated that the menu prices are well above the cost of the food - and especially the above poster with the brother with the pizza shop - menu price covers MUCH more than just the cost of ingredients.

    You've got supplies, you've got wages, you've got taxes, you've got rent, you've got utilities, you've got many more expenses I can't even recall in the middle of the night... and ideally, after all the expenses, just maybe, if you did everything right and the economy picked up and people actually ate out... you've maybe, possibly, got a little (dare I say it?) profit.
  13. Faldred

    Faldred DIS Veteran

    Dec 18, 2008
    It's simple economics, really.

    I disagree with the posters who make the case that Disney only "wins" because people use the plan inefficiently. On of the main points of the dining plan is to ensure that restaurants are filled to capacity as much as possible. They'll gladly take a lower profit per table if they fill more tables. It still works out for them in the end.

    The participating 3rd party restaurants make the same calculation -- they get reimbursed $X per credit. Will a Y% increase in patrons at $X make them more money or less money than not going on the plan and likely filling fewer tables? If the answer is "less", then it doesn't make sense for them to sign on to the plan. Yet most of them do. That means they believe they will make more money accepting DDP than not.

    Next, you have to consider the spending habits of the guests. They may save some significant percentage over the out-of-pocket price, but is that how they would have eaten without being on plan? For many guests, probably not. They'd more likely to have fewer table service meals, or order from the lower ends of the menus. Possibly even dine off-site. Disney gets these guests to spend more money at Disney than they otherwise might, and as a bonus, they'll be able to predict revene easier because DDP is booked in advance.

    The flip side for the customer is that while they may spend more than they would otherwise, they get a different (and hopefully better) overall vacation experience for it.
  14. domesticking

    domesticking Mouseketeer

    Oct 6, 2009
    No way. No how. Disney is an expert on making $$$.

    I think it's a matter of shaving their profit a bit, but marketing it in such a way that people believe they're getting a HUGE discount.
  15. MichaelColey

    MichaelColey Mouseketeer

    Feb 12, 2009
    Faldred makes some of the best points in the thread. A few additional points:

    1) People staying on the dining plan MUST stay on site, which generates even more revenue and profit for Disney.

    2) By getting people to pay for their dining in advance, I suspect that most people will spend more money on souvenirs and other items in the parks.

    3) I would disagree with those who imply that Disney works on averages and that even the most extreme uses generate a profit (especially with Free Dining). For instance, my family of four went the last three years during free dining. Our typical stay was two weeks in a Value resort for about $2500. About $1000 of that was park tickets, so let's look at the other $1500 as covering the hotel and food. The hotel is worth perhaps $40/night (that's about what it costs for a compable hotel through Priceline), so that's $560. The 14 TS meals would have cost about $20 per adult and $5 per kid if we ate off-site, so that's $700. The 14 CS meals would have cost about $8 per adult and $4 per kid if we ate off-site, so that's $336. The 56 snacks are worth perhaps a buck each, so $56. Those are all very low estimates, but even at that we got $1652 in value from the extra $1500 we spent to stay on dining and take advantage of the free dining promo. It's very questionable that Disney broken even with us. We're pretty close to the most extreme savings potential with free dining though (families with two kids 10-17 could do even better). I suspect that's why Values only get QSDP free this year.

    It STILL worked out for Disney for us, though. We wouldn't have gone at all if they didn't have that promotion. And this year (even though we had a bounceback in a Value booked from last year and could have got the great deal one last time), we're moving up to a Moderate (at a total cost of about $3500). Plus we've been to Disneyland a few times and Disneyland Paris once. And we've told tons of friends and even brought some (who didn't get as much benefit out of the plan) with us.

    No, Disney isn't losing money with this. Quite the opposite. It's a brilliant marketing technique.
  16. DisneyHardin

    DisneyHardin DIS Veteran

    Jan 20, 2010
    I defintely agree with the person who said when people pre-pay they will then spend more once they are there. We haven't even gone on our trip yet and I know that will be true for us. If at the end of a TS dinner, I had to actually pony up the cash to pay for us, we would not order bar drinks, appetizers, etc. But, since those "extras" and the tip are all I will have to actually give money for at the end of the meal, sure, we will order them.
  17. sunset30

    sunset30 Mouseketeer

    Jul 11, 2009
    We're doing free dining which is great for us as we will be able to have so many more Disney Experience Meals. We have booked numerous character meals, and experience meals. We would DEFINITELY not have done anything like even half of the TS meals. BUT this way, we will be eating every meal on site, which means if we add ANY extras It's money Disney wouuld not have got from us but now are.

    AND we will then have more disposable $$$ for souvenirs and we will feel much more positively inclined to spend them with Disney. Hopefully also we will have a more special and better time for having tried the dining experiences. That means we will be more inclined to make return visits, duringg which we might pay ticket price for meals as well as repeat accoms etc.
  18. texasgirl73

    texasgirl73 Obsessive Trip Planner

    Apr 6, 2008
    One other thing....it's not easy to get an ADR at Le Cellier, so it's a small percentage of people getting that meal. Most everyone else is eating burgers and chicken or a buffet meal, somewhere else.
  19. bytheblood

    bytheblood Guest

    Feb 21, 2004
    I assure you that Disney is not losing anything.

    1 - The meals are very over-priced.
    2 - While a TS meal may be $50 on the menu, another may only be $21.
  20. caroline1851

    caroline1851 DIS Veteran

    Jul 16, 2007
    Do you really think Disney spends $30 on a steak, $7 on a dessert and $2 on a soda? Of course not.....
  21. sndral

    sndral DIS Veteran

    Feb 3, 2008
    It does work, marketing wise. One trip w/ free dinning caused us to pay for the DP the next trip and for the one coming up. I never would have tried the DP w/out the free dinning that first time. And like others, we order appetizers/salads/soups on top of the DP.

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