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10-1-1986

Evaluation of Food and Beverage Service Potentials at De Family Park- Analysis

Harrison Price Company

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Recommended Citation Harrison Price Company, "Evaluation of Food and Beverage Service Potentials at De Efteling Family Park- Analysis" (1986). Harrison "Buzz" Price Papers. 90. https://stars.library.ucf.edu/buzzprice/90 I I I I I

AN EVALUATION OF POOD AND I BEVERAGE SERVICE POTENTIALS AT DE EPTELING PAMILY PARK I Prepared for: Paailiepark de Efteling Kaatsbeavel, Tbe Netberlands I October 1986 I I I I Prepared by: I Harrison Price Company 876 Soutb Bronson Avenue I Los Angeles, California 90005 (213) 937-3457 I Copy I 1'3 I Client Confidential. Not to be Released or Duplicated. I Pile in Safe. I I I I

I TABLB OF CONTENTS I

Page I Section ~

I 1 INTRODUCTION ••••••••••••••••••••••••••••••••••••••••••• 1

2 ~ON()M:IC BACKGROUND •••••••••••••••••••••••••••••••••••• 4

I Attendance and Investment •••••.•..•••••••••..••• 4 Departmental Revenues ...... •...... 9 Per Capita Expenditures ..•.•.•...•.....•••...•• l3 I Capacity Analysis .•...... •...... •.•.•.. l? Profitability and Financial Condition ..•••••.•. 22

Industry Comparables ...... IO ••••••••••• 10 •••••••• 28 I 3 GUIDBLINES FOR A PARK MASTER PLAN ••••••••••••••••••••• 30

The Need for New Goals ...... 30 I Food and Merchandise Service .••••.•••.•••••.•.• 32 and Product Variety •....•..•.•..••..... 35 Ambience as a Goal ...... ••...... 36 I Capacity Constraints ••.•.•...•••...••.•••.• ~ .•• 37 The Need for In-Fillo ...... 38 I 4 SUMMARY AND RECOMMENDATIONS ••••••••••••••••••••••••••• 41 Summary ...... 41 Recommenda t i on s ...... 43 I Conclusion ...... 48 I I I I I I I I LIST OF TABLES I

I Page Table tm......

I 1 De Efteling Attendance During the Major Expansion of 1977-1986 .....•...... 5 I 2 New Investment and Attendance Gain •••••••••••.••..•••.• 6 3 New Investment in Food and Merchandise I F ac iIi tie s ...... 8 4 Revenues and Revenue Distribution For Park, Food and Merchandise I 1980-1986 ...... 10 5 Deflated Revenues 1980 to 1986 •••••••••.•.•••••••••••• 11

I 6 Revenues for Food and Merchandise ••••••••••••••••••••• 12

7 De Efte1ing Per Capita Expenditures I 1980-1986 ...... 14 I 8 Per Capitas for Restaurant Services ••••••.•••.•••••••• 16 9 Design Day Attendance .•••.••••••••••..••...•••.•••••.. 18 I 10 Average Peak Week ...... 19 11 Daily Attendance Distribution ••••••••..••.•••..•.•.••• 20 I 12 De Efteling Entertainment Capacity •••••••.•••••••••••• 21 I 13 Sit-Down Restaurant Space at De Efteling •••.••••••.••• 23 14 Profit Center Results 1980-1986 ••••••••••.•••••••••••• 24 I 15 Cash Flow Analysis ...... •...... 26 16 Balance Sheet Trends ...... •..•...... 27 I 17 Revenue Distribution in Other Parks ••••••••••••••••.•• 29 I I I I

I Section 1 I INTRODUCTION I Harrison Price Company was retained on September 30, 1986 in the last month of the 1986 season to investigate and prepare an analysis of the status and potentials of food and beverage I service at De Efteling Family Park. The task undertaken includes I the following elements: I 1. Observe operations at the park, 2. Examine operating and financial reports concerning I departmental operations with emphasis on food and beverage service, and with attention to related opera­ tions in merchandising, games, rides and other I entertainment.

I 3. Evaluate strengths and weaknesses of the s ervice of­ fered with an objective of expressing appropriate I objectives, goals, enhancements and improvements. I Harrison Price and Mr. Grady Larkins, a noted park designer with extensive background in attraction master planning with particular emphasis on food and beverage service, visited the I park during the period October 10 - 13 during a period o f good weather, the school fall holiday and a time of moderately good I attendance taking into account the season. Attendance o n I Saturday the 11th of October was 7,804; on Sunday 13,511. I De Efteling, which s tarted operation in July of 1951, is now 35 years old. It opened initially as a relatively modest public playground drawing an initial attendance of some 100,000 in its I first year. Pursuing a theme of storytelling in a

I -1- I I superbly landscaped setting and a policy of constant reinvest­ I ment, the park's founders over the years evolved a mass attraction with attendance in the range of 1.0 million to 1.3 I mill ion. In 1978, the con temporary history of the park was launched with the installation of the modern, highly themed and animated Spookslot which, in the tradition of the park, brought I out new crowds from a responsive public. Thereafter a steady succession of new investments--the corkscrew coaster and I the water ride in 1981, the swing in 1982, the Pirana white water rapids in 1983, the De Bob toboggan I coaster in 1985 and the superbly themed and animated water transported in 1986 and an extensive supporting I infrastructure--lifted the park to a new status as Europe's leading theme park with an attendance of 2.3 million.

I Consistent with its expansive mode of operation and its constantly enlarging customer base, the park corporate structure I was reorganized in 1985 from non-profit status to a for-profit form which will better enable its management to deal with its I fund ing and expans ion requ iremen ts over the long term. In th is context, the park's dominant position in a dynamically changing I marketplace can be maintained and enhanced.

As described by management, the main thrust of this analysis I is to review broadly and make suggestions as to what should be done this year and later in food and beverage service (and other I related areas of park operations) to support the short term (next year) and middle term (three to four years) strateg ic goals of I the company which are described informally as follows: I 1. Short Term Goals and Strategy

I • To maintain and increase profits. • To define next year's improvement program and its I selected entertainment and/or attractions.

I -2- I I • To tighten profit center control. I • To enhance and optimize attendance and per capita revenue generation. I 2. Middle Term Goals and Strategy

I • To keep De Efteling on top in the attraction business in Western Europe in the light of increasing competi­ I tion and changes in the marketplace. • Define an improvement and redevelopment program which I will optimize use of park real estate.

I We would like to express our appreciation for the assistance of several members of the park management who toured the site and met with us in open discussion of the issues involved in this I analysis and who prepared much statistical and accounting infor­ I mation so that we could carry out our assignment, in particular: Mr. IR. R. G. De Clercs, Algemeen Direkteur I Mr. Marc I. M. Taminiau, Director Explotatie Mr. H. W. Muller Kobold, Horeca Manager I Mr. G. Vugts, Controller Mr. Jos. Lejeune, Non-Food and Food and Beverage Controller I Mr. , Head of Design and Development I I I I I

I -3- I I

I Section 2

I ECONOMIC BACKGROUND I This section of this memorandum report details pertinent park history in attendance, new investment, revenues by depart­ I ment with particular reference to food and merchandise, per capita revenue data by department, capacity analysis and depart­ I mental profitability data. I Attendance and Investment As shown in Table 1, Attendance During the Major Expansions I of 1977-1986, De Efteling has experienced a remarkably long term compounded growth rate of 9.4 percent per year in the 35 year I history of the park. In the decade since major park expansion began (1977-1986), the annual rate of attendance growth is a compounded 7.9 percent per year and in the more recent six year I period, 1980-1986, the expansion rate has reached 9.8 percent per I year driven by large investments in several of those years. New investmen t in add it ions to the park is compared to I annual attendance gains in Table 2, New Investment and Attendance Gain. New investment in the seven years 1980-1986 totals F89.6 I million, an average addition of F12.8 million per year. In recent years, attendance has generally been responsive to major I additions but in a declining mode as shown below: Attendance I Increase Cll Inyestment 1981 30.4% F14,400,000 1983 24.4 13 ,300 ,000 I 1985 11.1 13,800,000 1986 6.6 20,000,000 I

I -4- I I

I Table 1 DE EFTELING ATTENDANCE DURING THE I MAJOR EXPANSIONS OF 1977-1986

I Percent Year Attendance Gain ------I 1977 (estimat e fr orr. sruph) 1,160,000 19713 (es timate from g raph) 1,475,000 12 . 7% 197 9 (estimate fron" sraph) 1,365,000 (7 .5) 1980 (actual) 1,315,000 ( 3 .7) I 1981 (actual) 1,715,000 30 .4 1982 (actual) 1,590,000 ( 7 .3) 1983 (actual) 1,978,000 24.4 I 1984 (actual) 1,942 ,0 00 (1. 8) 1985 (actual) 2,157,000 11.1 I 1986 (estimate fr om graph) 2,300,000 6 .6 Compo unil Rat e o f Growth:

I 1951 - 1986 = 9.4% per year 1977 - 1986 = 7 .9% pe r year I 1980 - 1986 = 9.8% per year I I I I I I I I I -5- I

I Table 2 I NEW INVESTMENT AND ATTENDANCE GAIN I Attendance New Investment Gain I Year (FOOD) (percent) 1980 F3,600 (3. n) 1981 14,400 30.4 I 1982 5 ,300 ( 7 .2 ) 1983 13 ,300 2 4 • ~ 1984 19,200 (1. 9 ) I 1985 13,800 1 1 .} 1986 20,000 6.6 I F89,600 I

Av erage New Investment Per Year:

I 1980 - 1986 = F12,800,000 I Total New Investment: 1980 - 1986 = Fag,600,000 I I I I I I I I -6- I

I In 1981, the Python corkscrew coaster and the Gondoletta water ride were added; in 1983 the Wave Swing and Pirana white I water rapids; in 1985 the De Bob toboggan coaster and in 1986 Fata Morgana. Only in 1984--a year of major investment {F19.2 I million spent to build the , the railroad re­ route, and the old time auto ride)--was the system unresponsive. Attendance dropped 1.9 percent, inspite of the investment which I was the second largest in the history of the park, only exceeded I by the F20 million in 1986. The net effect of all this investment is to place the park I at a new kind of level, a new enviro'·liT,ent. It is now a large park with a newly developed major position in the West European I recreation market and is subject to a new set of economic influ­ ences appropriate to thi s status.

I The relative position of new investment in food and merchan­ dise facilities is shown in Table 3, New Investment in Food and I Merchandise Facilities. Over the seven years 1980-1986, restau­ rant investment has totaled F6.365 million or 7.1 percent of I total additions. Investment in Verkoop additions during this time have totaled F3.877 million or 4.3 percent of total invest­ ment. Thus total investment in food and merchandise facilities I has amounted to FIO.242 million or 11.4 percent of total I additions. Proper selection and positioning of new investments and I their impact on debt and leverage. the generation and regenera­ tion of attendance and the maximizing of per capita revenues and I profitability have become much more complex matters in this decade. Within this system, the positions taken with regard to I merchandise and food are of particular importance to overall economic results. That is the gist of this assignment. I

I -7- I I

I Table 3

NEW INVESTMENT IN FOOD AND MERCHANDISE FACILITIES I (FOOO) I Food and Horeca Verkoop Merchand ise Total I Year Investments Investments Total Investments ------1980 1,168 56 1,224 3,600 1981 1,046 1,164 2,210 14,400 I 1982 412 715 1 ,127 5,300 1983 575 33 608 13,300 1984 2,488 932 3,420 19,200 I 1985 524 124 648 13,800 1986 152 853 1,005 20,000 ------I 6,365 3,877 10,242 89,600

I Percent Distribution 7.1% 4.3% 11.4% 100.0% I I I I I I I I I I -8- I

I Departmental Revenues I Departmental revenues for the park, food and merchandise are shown in Table 4, Revenues and Revenue D istr ibu t ion for Park, Food and Merchand ise 1980-1986. Park operations have risen from I F12.2 million in 1980 to F37.9 million in 1986, a compounded growth rate of 20.9 percent per year. More significantly, they I now account for 60.7 percent of total revenue up from 54.1 per­ I cent in 1980. Food services have risen from F8.l million in 1980 to F20.4 I million in 1986--a compounded .,r-owth cate of 16.7 percent per year. This area now accounts for 32.6 percent of total revenues, I down from 35.5 percent in 1980. Merchandise revenues have risen from F2.3 million in 1980 to I F4.2 million in 1986, a compounded growth rate of 10.9 percent pel: year. This area now accounts for 6.8 percent of revenues, I down from 10.1 percent in 1980. I Revenues by department and deflated by an index for pr ice increases are shown in Table 5, Deflated Revenues 1980 to 1986. On this basis, the annual compounded growth rate in real revenues I in the park is 16.1 percent, food service 12.1 percent, and merchand ise 6.6 percent. Revenues in the latter operation have I not kept pace with increases in attendance.

I Food and merchandise revenue increases by category are shown in Table 6, Revenues for Food and Merchandise. The star perfor­ I mer is snack revenues, with an annual compounded increase of 35.8 percent. Restaurant and food sales have lagged behind at a gain of 13.7 percent per year. Merchandise lags farther behind at I 10.9 percent per year. The total revenue increase for food and merchandise is 15.5 percent per year well above attendance gains I of 9.8 percent per year. Data in this table are adjusted to

I -9- I I

I Table 4 REVENUES ANU REVENUE DISTRIBUTION FOR PARK, FOOD, AND MERCHANDISE I 1980 - 1986 (FOOO) I Park Food Merchand ise Total ------I Year FOOO Percent FOOO Percent FOOO Percent FOOO Percent ------1980 12,167 54 .1 8,061 35.8 2,276 10.1 22,504 100.0 1981 17,968 55.5 11,673 36.1 2,71 5 8.4 12,356 100.0 I 1982 18,217 55.8 11,356 34.8 3,089 9. 5 32,662 100 . 0 1983 2 5 ,234 57.6 15,080 34.4 3,505 8.0 43,819 100.0 1984 27 ,59 I. 58. 9 15,491 33.1 3,773 8.1 46,856 100.0 I 1985 32,548 59.3 18,510 33.7 3,820 7 .0 54 , 87 8 100 . 0 1986 17 ,908 60.7 20,355 3 2 .6 4, 2 32 6 .8 62,495 100.0 I Compound 20.9% 16.7% 1 0 .9% 18.6% Growth I Rate I I I I I I I I I I -10- I

I Table 5 I DEFLATED REVENUES 1980 TO 1986

I Deflated Revenues (FOOO) Price ------Year Index I Park Food Merchandise Total I ------1980 100 F12,167 F 8,061 F2,276 F22,504 1981 105 1982 114 I 1983 117 1984 119 1985 119 I 1986 127 29,849 16,028 3,13 ? 49,209 I Deflated Revenues Compounded Growth I Rate Per Year 16.1% 12.1% 6 .6% 13.9%

Attendance I Compounded Growth Rate Per Year From I Table 1 9.8% I I I I I This is a weighted index applicable to food and merchandise. The index was developed by the I controller~ office of the park and used to indicatv real revcnLl~ increases. I

I -11- I

I Table 6 REVENUES FOR FOOD AND MERCHANDISE I (FOOO)

I Total Total Food and Year Restaurants Snacks Food Food Merchandise Merchand ise I ------1980 4,646 76] 2,652 8,061 2,276 10,]]7

Percent I Distri. 44.9% 7.4% 25.n 78.0% 22.0% 100.0%

1981 7, °80 1,012 ] ,581 11 ,67] 2,715 14,]88 I 1982 7,106 1,065 ] ,185 11 ,] 56 ],089 14,445 1983 9,8]0 1,305 3,945 15, °80 ],505 18,585 1984 9,240 2,271 3,980 15 ,491 ],773 19,264 1985 10,000 3,650 4,860 18,510 ],820 22,3]0 I 1986 10,051 4,784 5,520 20,355 4,23 2 24,587

Percent I Distri. 40.9% 19.5% 22.5% 82 . 8~ 17.2% 100.0%

Conlpollnd I Gr owth Rate 1980-86 13.7% 35.8% 13 .0% 16.7% 10.9% 15. S'

-12- I segregate snack sales separately from Horeca and Verkoop revenues I and to segregate food and merchand ise sales in Verkoop as sepa­ rate items. I As shown in Table 6, within the food and merchandise total, considerable redistribution has occurred. Restaurant revenues I have dropped from 44.9 percent of the total in 1980 to 40.9 percent. Snacks have risen from 7.4 percent of the total in 1980 I to 19.5 percent in 1986. Food sales have dropped from 25.7 percent in 1980 to 22.5 percent. Merchandise sales have dropped I from 22.0 percent of the total in 1980 to 17.2 percent. The two dominant moves are snacks up and merchandise down.

I Per Capita Bxpenditures I As is well known to all concerned, a critically important measure of the health of a recreation enterprise is its evolving pattern of visitor expenditures. Visitor per capitas for the I park are shown by department in Table 7, De Efteling Per Capita Expenditures. Total per capita has grown from F17.07 in 1980 to I F27.l7 in 1986, a compounded annual growth rate of 8.1 percent; well above the 4.1 percent annual compounded rate of increase of I the price index for the park. The per capita increase is about 50 percent real and 50 percent from price increases. The rank I order of annual compounded growth rates by department is as follows: Park 10.0% I Food 6 .3 Merchand ise 1.1 I Price Index 4.1 All Revenues 8.1

I As to distribution of the aggregate per capita, Table 7 indicates that park per capitas (gates, rides and entertainment) I have risen from 54.1 percent of the total per capita in 1980 to 60.7 percent in 1986. Food has dropped slightly from 35.9 per- cent of the total to 32.6 percent, merchandise from 10.1 percent I to 6.8 percent.

I -13- I I

I Table 7 DE EFTELING PER CAPITA EXPENDITURES 1980 - 1986 I (Guilders)

I Total Total Park Food and Food and I Restau- Total Merchan- Merchan- Merchan- Year Park rants Snacks Food Food dise dise dise ------L980 F9.23 1'3.53 FO.58 F2.01 F6.] 2 "'1.72 F7.B4 FI7.07 I , 981 10.48 4. 13 0.59 2.09 6.81 1. 59 8.40 18.88 1982 11 .42 4.46 0.67 2 .01 7 .14 1. 94 9.08 20 .50 1983 12.74 4.96 0.66 1. 99 7.61 1.77 9.38 22 . 12 I 1984 14.21 4 .76 1.17 2.05 7.98 1. 94 9.92 24.13 1985 15.09 4 .63 1.69 2.25 8.57 1. 7 8 10.35 25.44 I 1986 16.4B 4.37 2.08 2 .40 8. 85 1. 84 10.69 27.17 Compound Growth Rate I 1980-1986 10.1% 5.5% 23.7% 3 .0% 6 .3 % 1.1% 5.3% 8.H I Compouno Growth Rate of Pr ic e I no ex (100 to 1. 27 in 6 years) 4 • It. Percen tage Distribution:

I J 980 54.1% 20.7% 3.4% 11.8% 35.9% 10.H 45.9'/. 100.0% I 1986 60.7% 16.1% 7.7% 8.8% 32.6"; 6.8% 39.3% 100.0% I I I I I I I -14- I Food per capita experience is detailed by sub-department in I Table 7 and in Table 8, Per Capitas for Restaurant Services, which is summarized as follows: Annual I Growth Department Rate I Sit Down Restaurants Cafe Restaurant 8.1% Witte Paerd (3 .4) Likkebaerd 19.5 I Carrousel ( 5 • 9) I Total 5.5 Snacks 23.7 I Verkoop Food .....l....Q. Total Food 6.3%

I As is apparent from the data, the shift in per capita dis- tribution within food service sub-departments is substantial as I follows: Percent of Total I!ill:: !::ilPitil I DilPutmilnt l..2Jl.Jl. llII.6. Sit Down Restaurants Cafe Restaurant 6.3% I Witte Paerd 13.6 15.8% Likkebaerd ~ I Carrousel -D...J!. -L..l Total 20.7% 16.1% I Snacks 3.4 7.7 Verkoop Food lL..a ..Jl...Jl. I Total Food 35.9% 32.6%

The cafe sit-down restaurant held on to a rising per capita I by adding a snack operation in 1984 without which its per capita increase 1980-1986 would be on the order of 2.1 percent per year. I Witte Paerd has declined markedly as has Likkebaerd in 1986 reflecting a strong shift to snack food service in the last three I years.

I -15- I I I Table 8 PER CAPITAS FOR RESTAURANT SERVICES' I

Cafe Witte I Year Rest Paerd Likkebaerd Total ------1980 Flo 08 F2.32 FO .13 r3.53 I 1981 1. 47 2.06 FO.48 o .1 2 4.13 1982 1. 3 2 2.21 1. 79 o .14 4.46 1903 1. 23 2.35 1. 24 o .U 4.96 1984 1. 6 5 2.02 1. 41 0.13 5.21 I 19l15 1. 72 2.02 1.64 0.12 5.50 1986 1. 7 2 I .89 1.17 0.09 4.87 I Compound Growth Rate I 1980-86 8.1% (3.4%) 19.5% (5. n) 5.5% I I I I I I I

Data is not corrected for Verkoop ~nd Horec~ sn~ck I and merchandise accounting inclusions 1984-1986 which ~mount to FO.45 in 1984, FO.87 in 1985, and I FO.50 in 1986. I I -16- I Capacity Analysis

I A key to understanding how the park functions is its design day profile. Data in Table 9, Top Ten Days Attendance, suggests I that a design day level of 30,000 has been r e ached. Maximum on­ site crowd for that level of daily attendance is approximately I 27,000 (90 percent) for an average stay of 5 1/2 hours. I Another approach to capacity analysis is to compute the average peak week shown in Table 10, Average Peak Week, which is at 155,000 and apply to it the peak day percentage shown in Table I 11, Daily Attendanc e Distribution, which is IB percent for Sunday. At IB percent of 155,000, the design day is then 2B,000. I The peak on-site crowd fo r that level of attendance is 25,000.

I To evaluate required entertainment capacity we compute a required hourly and daily capacity which is computed in enter­ I tainment units per hour and per day. An entertainment unit can be a seat on a ride or in a show, or a position at a game--any I spectator or participation function. Requ ired da ily capac i ty in enter ta inment un its is compu ted I as the product of the average stay in hours multiplied by two activity units per hour multiplied by design day attendance as I follows: I Required Capacity = 2B,000 X 2 X 5.5 = 308,000 Units/Day

Required hourly capacity in entertainment units is computed I as the product of the on-site design day crowd multiplied by 1.5 I activities per hour as follows: I Required Capacity = 25,000 X 1.5 = 37,500 Units/Hour. In Table 12, De Eftel ing En ter ta inmen t Capac i ty, ava i lable I hourly and daily estimated entertainment capacity is presented

I -17- I I I Table 9 DESIGN DAY ATTENDANCE I

I 1985

14ay 16 28,426 July 17 25,619 I Ju ly 23 32,256 July 24 36,189 August 1 28,965 I August 7 34,480 August 8 29,308 August 1 26,993 I August 1 26,235 August 1 29,640 I Average 29,811 I 1986 July 21 26,617 July 28 25,245 I July /.9 27,374 Jul~ 30 28,970 August 2 29,922 Augus t 5 28,177 I August 6 26,940 August 8 30,015 I Augus t 9 37,947 Average 29,023 I I I I I I I -18- I I Table 10 AVERAGE PEAK WEEK I

I 1985

7/15 - 7/21 13 8,753 I 7/22 - 7/28 152,148 7 /29 - 8/ 04 148,136 Averag e 155,094 8/05 - 8/11 157,288 8/12 - BIl8 162,802 ~ I 8/19 - 8125 114,237

I 1986 7/14 - 7 120 115,660 7/21 - 7/27 131,961 I 7/28 - 8/03 154,357 Avecage ]43,537 B/04 - 8/10 150,699 8/11 - 8/17 137,132 ~ I 8/18 - B/24 113,736 I I I I I I I I I I -19- I

I Table 11 DAILY ATTENDANCE DISTRIBUTION I (1985 Data) I

Pel:cent I of Week ------I l·l o nd uy 277,498 13 .J~, Tu esday 289,375 13. "1 I \';e d nesd ay 276,271 1 3 .1 Tbursday 287,480 13.6

I Friday 262 ,627 12.4 I Saturday 340,J83 1h .1 Sunnay 381,284 18.0 ------I 2,114,718 100.0%

I P"ak Day i s 18% of Pe ak \\'e0k I I I I I I I I -20- I

I Table 12 I DE EFTELING ENTERTAINMENT CAPACITY I RIDES Hourly Daily Python (cyclone) 1,100 8,000 Halve Haen (wave) 1,000 7,000 Oude Tuffer (a uto ) 875 6,000 I Koggenmolen 1,300 9,000 Gondoletta (boat rin e ) 1,100 8,000 Fata ~Ioryana 1,750 )2,000 I Pirana (r iver raEt) 1,750 12,000 Swi ss Bob (tobaggan) 800 6,000 Spookslot (haunted castle) 1,200 9,000 I Carnival Fes tival 2,000 16,000 Stoorn Trein (train) 875 7,000 I 13,750 100,000 WALK THROUGH ENTERTAINMENT I Sprookjesbos 15,000 Indische Wa terlelies 9,000 Theater 4,000 Waterorgel 8,000 I 5,000 Speeltu in 40,000

I 11,500 81,000 I WATER ACTIVITIES Zivemhao (swimmin

Grand Total 27,450 197,250 I Available Capacity 37,500 108,000

Available Capacity as a I Percentaye of Required Capacity 73.2% 64.0% I I -21- I and compared to the foregoing computations of required capacity. I As is no secret to the park management, the numbers show a pres­ sing problem in available capacity to handle the crowds being I generated. The crowds are coming in larger and increasing num­ bers because of the glamorous new rides added to the park. Lines of 1 1/2 hours at the major rides dre not uncommon--one benefi- I c iary of wh ich is the snack per cap i ta revenue. Visitors buy I snacks to eat while stuck in the lines. The ambiguous effect of add ing new major attractions is I illustrated by Fata Morgana which added 1,750/25,700 to hourly capacity, an increase of 6.8 percent at a cost of F20 million. I The addition to daily capacity was 12,000/296,000 or 4.1 percent at a cost of Fll,400 per ride capacity unit. Meanwhile, under its strong influence attendance went from 2.157 million to 2.3 I million, a gain of 6.6 percent and revenues went from F54.9 million to F62.5 million, a gain of 13.9 percent. Obviously the I project, a beauty with great drawing power by its very great success, added to the stressed capacity situation at the park. I This is not meant to downplay the value of the project. I There is a pressing need to find an optimum sOlution to the capacity problem at De Efteling which is undoubtedly to be found I for a while in lower cost capacity additions.

Table 13, Sit-Down Restaurant Space at De Efteling, shows I space and seating available in the sit-down service restaurants of the park. Revenues generated on a space unit basis are rather I modest. There is no indicated need for expansion of the basic space in this area of operations. What to do with the space is I discussed later in this report. I Profitability and Financial Condition Table 14, Profit Center Results 1980-1986, shows the rela- I tive contribution to profit of Park, Horeca and Verkoop. Over the seven years 1980-1986 inclusive, 54.3 percent of the prof it

I -22- I I Table 13

I SIT-DOWN RESTAURANT SPACE AT DE EFTELING I

I Restaurant FACilities Space Seats

I Cafe Restaurant 1,790m' 1,410 I Witte Paerd 1,365 1,226 Likkebaerd 1,650 700 I Indoor 1,685 1,146 Terrace 3,120 2,190 I Revenues (1986) Fll ,201 ,000 F11,201,000 I Revenues F/Seat F3,358 Revenues F/m' F2,331 I Revenues US$/Sq. Ft. US$94.7 US$/Seat US$1,460 I I I I I I I I I -23- I Table 14 I PROFIT CENTER RESULTS 1980 - 1986 I (FOOOI

Net I Profit Net to After Revenue I Year Park Boreca Verkoop Overig Total Tcu:es Tcu: Revenues (ll ------1980 1,900 ( 200) 300 (400) 1,600 700 900 22.504 4.0% 1981 2,600 700 600 ( 200) 3,700 1,500 2,200 32.356 6.8 I 1982 1,700 900 1,100 ( 800) 2,900 1,000 1,900 32.662 5.8 1983 3,300 1,600 1,800 (400) 6,300 2,400 3,900 43.819 8.9 1984 2,000 1,200 500 (2,100) 1,600 1,600 46.856 3.4 I 1985 2,800 1,800 900 (300 ) 5,200 1,500 3,700 54.878 6.7 1986 1,300 750 1,200 ( 275) 2,975 375 2,600 62.495 4.2 I 1980 to 1986 I Total 15,600 6,750 6,400 I Distri. I (% ) 54.3% 23.5% 22.3% I I I I I I I I -24- I has COme from park, 23.5 percent from Horeca and 22.3 percent I from Verkoop, classifications of income. These are not exactly equivalent to park, food and merchandise classifications but they I approximate these values.

Net profit after taxes over the period ranges from a low of I 3.4 percent of revenues in 1984 to a high of 8.9 percent in 1983. The mean is 5.8 percent and the average is 5.7 percent, in gen­ I eral a fair result. What would appear to help net profitability is an apparently low taxation rate probably related to investment I credits and a low interest rate on borrowings. I The real strength of the enterprise is shown in ,.,,_"le 15, Cash Flow Analysis 1980-1986. Add ing back deprec ia t ion, cash flow ranges from F2.3 million in 1980, steadily upward to a I better than F12 million value in 1985 and 1986. The cash flow return on invested book value (net worth) has averaged 54 percent I over the last four years--a great rate of return and a solid base I for preparing the park for its next decade and beyond. Table 16, Balance Sheet Trends, shows the balance sheet for I the enterprise in abreviated format with particular reference to the state of leverage in the company after six years of expansion I in which F89.6 million was invested. Net worth has grown from F9.1 million to F25.0 million I during the period. Total borrowings have risen from F12.6 mil­ lion to F42.7 million in 1985 and dropped down to FJ6.1 million I in 1986. The total debt to equity ratio has held fairly steady (1.66 in 1980, 1.76 in 1986). Clearly, if it is able to maintain I its high level of cash flow, the park should be able to fund its required development of appropriately master planned improvements. One point of caution in that regard is the I diminishing response to high cost of attraction development shown I in the text table on page 4.

I -25- I I Table 15

I CASH PLOW ARALYSIS 1980-1986 I (P Millions) I Percent Ret Book Yield I Profit Value on After + Depre- z Casb (Net Casb I fiU Taxes dation nwr Worth) Flow 1980 0.9 1.4 2.3 9.1 25.3% I 1981 2.2 3.7 5.9 11.3 52.2 1982 1.9 4.0 5.9 13.2 4.5

I 1983 3.9 6.2 10.1 17.1 59.1 I 1984 1.6 8.4 10.0 18.7 53.5 1985 3.7 8.6 12.3 22.4 54.9 I 1986 2.6 9.5 12.1 25.0 48.4 I I I I I I I I I -26- I Table 16

I BALANCB SHBBT TRENDS 1980 - 1986 I (F Millions) I 1980 1981 1982 1983 1984 1985 1986 ------I Current Assets 10.7 5.2 15.9 19.6 23.0 25.5 10.0 Fixed Assets 11.3 13.5 24.2 25.5 32.6 43.3 48.5 Fixtures & Equipment 3.6 14.4 5.3 13.3 19.2 13.8 20.0 I ------Total Fixed/W. 14.9 27. 9 29.5 38.8 51. 8 57.1 68.5 Less Depreciation ( 1.4) (3.7) (4.0) (6 .2) ( 8 .4) (8.6) ( 9.5) ------I Net Fixed Assets 13.5 24.2 25.5 32.6 43.4 48.5 59.0 I Total Assets 24.2 29.4 41.4 52.2 66.4 74.0 69.0

Accounts Payable 2.5 3.5 4.6 5.9 7.0 8.9 7.9 I Debt: Short Term Bank Loans 6.0 7.2 9.8 8.8 6.3 9.3 5.0 Loans 3.3 3.1 7.8 13.5 25.9 24.4 22.9 Long Term Liabilities 3.3 4.3 6.0 6.9 8.5 9.0 8.2 I ------Total Borrowings 12.6 14.6 23.6 29.2 40.7 42.7 36.1 I Net Worth 9.1 11.3 13.2 17.1 18.7 22.4 25.0 I Total Liabilities 24.2 29.4 41.4 52.2 66.4 74.0 69.0 Debt/Equity Ratio 1.66 1.60 2.14 2.05 2.55 2.30 1.76 I I I I I I I -27- I I Industry Co~arable8 A typical Six Flags theme park (Trenton, Atlanta, Dallas, I St. Louis, Houston, Los Angeles) this season (1986) operated with per capitas in the range shown below:

I Food US$ 5.30 - $ 6.50 Merchandise 4.70 - 5.50 Entertainment & Gate 11.00 - 12.00

I Total US$21.00 - $24.00 I In the above tabulation, games contribute a large amount to merchand ise revenues, as much as US$2. 00 to US$2. 50. The park I has an attendance of 2.6 million. Knott's Berry Farm is a similar large, highly themed enter- I prise with total per capita of US$22.54 in 1986. Its distribution is 51.0 percent at the gate, 20.4 percent food and I beverage, 18.8 percent merchandise, 8.4 percent games, and 1.5 percent lease and sponsorships. I Table 17, Revenue Distr ibu tion in Other Parks, provides a spread of data on several parks including a composite study by I IAAPA on several theme parks. In this spread, De Efteling is relatively high in food service and park and relatively low in I merchandise and games. I I I I I

I -28- I I Table 17

I RBVBHOX DISTRIBUTION IN OTHER PARKS I Rides/Gate Merchan- Attendance Ad.issions Food Games dise Other I (Millions) (t) (t) (t) (t) (t) ------Six Flags, Dallas ------2.6 ------62.5% 25.0% 10.0% 12.5% 0.0% I Monterrey, Mexico Park N.A. 53.0 34.0 8.0 5.0 0.0 Lake Compounce, Conn. 0.7 65.0 18.0 4.8 6.1 6.0 Hershey, Pennsylvania 1.7 57.4 24.7 13.0 4.9 Marine World Africa USA 1.0 57.0 25.1 4.6 11. 4 1.8 I Disney World, Orlando 12.0 47.2 22.2 30.5 Circus World 0.9 58.0 18.9 7.0 14.1 Marineland 1.1 56.5 19.6 23.9 I lAAPA Study of US Parks N.A. 55.0 16.0 6.0 21.0 2.0 Knott's Berry Farm 3.5 51.0 20.4 8.4 18.8 1.5 I De Efteling 2.3 60.7 32.6 4.2 2.1 I I I I I I I I I I I -29- I I Section 3 GUIDBLINES FOR A PARK MAS'l'BR PLAN I

Management of De Efteling has discussed its plans for long I term strategic planning at the park. We concur that such plan­ ning is sorely needed to provide the total product improvement I that is needed in key product areas--entertainment, food service and merchandising. This section discusses the philosophy that I should control such an effort particularly in regard to the multi-disciplinary approach required of top management. it is a I form of guidance involving concepts and design, park operations, merchandising, food service, marketing and finance. In our experience real trouble, economic and/or functional, will result I if a single discipline controls the process. I The Need For Rev Goals This section discusses a problem that virtually every park I faces at one time or another--how to cope with an outmoded system I in a rapidly changing marketplace. The system, of course, is the park. In the case of many I European parks that system is an archaic design which evolved from a system that adequately met the needs of a local populace to one that now must compete on an international scale. Such is I the momentum and economic demand of De Efteling.

I The problem, also present in u. S. parks, is very compl i­ cated when viewed in Europe because of the proximity of an in­ I credibly diverse range of societies. The European society, in general, is rapidly becoming more mobile thus increasing the I radius of populace from which the park can draw its guests. The park must now be flexible enough to meet the needs of this di­ I verse attendance.

I -30- I I De Efteling is like some older European parke in that it is I rich in heritage and tradition and has established a pattern found to be satisfactory to both itself and its guests. The guests, finding that these patterns were agreeable, established a I loyalty of attendance and the reputation and sphere of influence of the park grew. Recently, through aggressive marketing and I some intelligent attraction strategy, the attendance exploded to create a park of major significance and impact. This impact, I however, has created a completely different demand on the park than that present even a few years ago. I There was a time when the park was able to serve the needs of each individual. Each individual guest had only to approach a I counter or a salesperson and he or she was accommodated. The park was designed for this individual and intimate service. It I is a highly personal system that was successful for almost half a I century. Then the park achieved major status. To both attract and I then accommodate the increased attendance, new rides and attrac- t ions were added. The spiral of increasing attendance then created different demands than those for which the park was I originally designed.

I There are many forces present in the business techniques of modern parks that were not present even a decade ago. All of I these forces--market ing, chang ing consumer ideaology, improved ride and show technology, a mobile society, and other forces have I compromised traditional methods of park operation and design and have forced the adaptation of new techniques to maintain a con­ sistency in the park program, a consistency that is designed not I only to meet the needs of each park guest but also to meet the I new demands of the financial carriage of the park. The financial demands of the large park sys terns place a I heavy burden on the efficiency of the park. Deb t load s are

I -31- I I unforgiving. But when efficiency is achieved a harmony emerges, I a harmony of both the fiscal and the presentational aspects of the park. When more individuals can be accommodated, not simply I admitted by the park, then there is obviously a greater finan­ cial return to the park and a greater enjoyment of the park by I its guests. The objective of good park presentation is to expose as many I guests as poss ible to the bes t presenta tion poss ible. This includes all aspects of the park--r ides, shows and attractions, I and food and merchandise service. When all this is presented with an efficient technique, the individual guest responds in a I positive manner--the guest participates. If any aspect is not presented with an efficient technique then the guest also I responds by not participating to a full extent. De Efteling is attempting now to clarify its goals and I devise a Master Plan, one that allows the park to emerge with an efficient and energetic program. This will be a difficult and I delicate task because of the existing structure that has a life of its own and which was built around an archaic system. There I is a complexity of choices that must be made to both balance that ex ist ing prog ram and place the park in a modern format. Wrong choices could isolate and thereby stifle the existing life and I poss ibly lose some of the rich her i tage of the park, or they might still not provide answers to the ultimate financial needs I of the park--it must be profitable. I Food and Merchandise Service A simple command lives with the park--make it profitable, I and one way of achieving that is to raise the per capita, par- ticularly in food and merchandise service. This does not mean I getting more guests into the park, it means that the park must be more effective in accessing guests already in the park. I

I -32- I I From the standpoint of design, we find some problems in I achieving that access with the existing food service and merchan­ dising system. The first problem is the counter-front system of selling and the second is the mix of merchandise. The counter­ I front system is a method found in carnivals--individual booths accommodating the approaching customer. In the carnival situa- I tion many booths are grouped together with identical merchandise to capitalize on a specific interest of the visitor and to obtain I adequate capacity. This grouping also creates cr i tical mass which serves to attract still more people. I The booth-system, with its individual salesperson/guest concept, will never be successful in generating high volume. I While it is highly attractive from the standpoint of individual attention and salesperson motivation, every guest desiring atten­ I tion cannot be accommodated (there are simply too many people) I and the required high volume can never be generated. Salespersons who have grown up in this system may be under­ I standably reluctant to change. The profit motive, notwithstand­ ing, these persons enjoy their public contact and are skillful in this pursuit. A technique can certainly be devised capitalizing I on these skills and benefitting the park.

I Oktoberfest in Munich is a classic example of the hooth­ system with contact by individual salespersons. Many booths, all I presen ting basically the same merchand ise, are presented to the guest. Because the length of stay is short, the guest will I probably only make one purchase and these booths all attempt to capitalize on that single purchase. There is little need for var iety of merchand ise--only for opportuni ty. And, because of I the limitation of the exposure of the individual booths, size of the attendance will support an abundance of booths. Each booth I is efficient and economical in its own presentation, each booth carries a low overhead and its cost per square meter is very low. I Consistent returns, not necessarily maximum volume, will guaran-

I -33- I I tee a profit for each booth. These booths also do not have to I support a larger organism--a park. I Consider what has happened to the booth concept in the park at De Efteling. The booth function, capacity and technique is essentially the same as in a carnival. But now they are under I the demand and usually the physical presence of theming. They have lost the cd tical mass of grouping because they are now I separated and they stand alone throughout the park. They are only able to mount a weak presentation and are therefore unable I to compete for attention with either the attraction or the zone, especially a heavily themed zone. I The impact of food service and merchandise must match and support the impact of the theme. Theme has now placed a new I demand on the booth-system and the cost of theme means that the booth can no longer enjoy a low overhead. The technique of theme I has placed a demand on the teChnique of retailing which, in turn, places yet another demand on the use of theme. Because using a I theme is more expens i ve than not us ing a theme, any use of it must generate, or help generate a sufficient return to pay for itself. The booth-system technique of retailing will never I accomplish this goal. It cannot generate sufficient volume. It I fails to entertain. This is what renders the present merchandising system obso­ I lete. While new shops have been added they have only slightly increased numbers of guests actually present at the sales counter I over those same actual numbers of ten years ago. Meanwhile attendance has increased dramatically. This means that the ratio I of guests exposed to merchandise, relative to attendance, has decreased instead of increased. A comparison of the ratios of counter-front merchandising available ten years ago and today is I shown as follows: I

I -34- I I Peak Instan­ Crowd taneous Basic I In-Park "'x/Merchandise Systea Capacity Ratio 1976 18,000 Normal mix of events, 120 1:150 I booth style units (20 units each with a 4m counter)

I 1986 27,000 Add three major themed add zones, each with two 36 booth-style units I (Attendance increased 50% and the merchandise pre- I sentation increased 30%) 156 1:173 Although merchandising capacity has increased by 30 percent I the actual presentation exposure decreased by 15 percent. While sales volume per unit would remain high, actual per capita spend­ I ing is decreased because of a lesser access. I Theming and Product Variety The merchandising and retailing mix should present an oppor­ tunity for the designer to establish a themed departure point for I a themed zone. It is difficult for the guest to be receptive to food and merchandise when the var iety is identical from zone to I zone. There is no incentive to explore and no var iety as the guest moves from zone to zone. The guest is only able to respond I to basic needs. The guest need not explore because there is no reason for exploration--the guest is aware of the standard offer­ I ing. Park shopping can be a series of opportunities presented to the guest. Few such opportuni ties are now offered in the park. There is no reason to stop at one facility over the other since I they are all the same.

I The success of a themed zone is in the harmony of effort of everything presented to the guest. A particular ride will gener­ I ate excitement and desire for a souvenir of that experience. A well designed zone instills that same excitement in the guest and I motivates the guest to experience everything in that zone, in-

I -35- I I cluding shopping and eating. There is very little exploitation I of these emotions in the major theme zones. I The park prog ram in merchand ise and food, Buff icient for a largely local crowd ten years ago does not have sufficient breadth to appeal to an increasingly diverse attendance or to I attain the excitement levels of a contemporary society. All visitors have come to the park for a variety of exper iences-­ I marketing has sold the park on this concept--and theming the rides alone does not take advantage of the guest's curiosity. I The park can tolerate a much more expansive themed program that needs to include the merchandise and food mix. This program will I stimulate the multiple purchases neceSf:ary to raise per capita because of the increased selections available.

I Themed merchandise and an increasing variety in food service can be an invaluable aid to the designer as a source of "reality" I amidst the false fronts of the facades and buildings. It will lend a source of activity and animation to the area and will help I immeasurably in creating the street ambience so necessary for a successful theme zone. I The most successful themed areas are those that have a careful blend of the physical facade and the emotional ambience. I The designer can easily create the physical facade, the backdrop, for the area but must depend on the animation created by human I activity to fully realize the theme. There must be a complete coordination of effort between all elements of the park operation I to create a fully successful zone--one that is physically attrac­ tive, emotionally satisfying and, finally, financially viable to I the park. I A.bience As A Goa1 Sales will create that financial viability, and ambience will promote sales. The physical presence of facade is not I sufficient. Facade can only be background. There has to be LIFE

I -36- I I within the area. An area is alive for what happens within it, I not for the way it appears. All of the operative personnel of the park should target the spontaneity that is desired for the I area--then they should do everything possible to achieve that spontaneity.

I LIFE will come from the streets, not the buildings. Look at the human scale and experience and recreate that quality. It is I a var iety of events--the look, the food and vendors, and the laughter. The guest will respond as they do in real life--they I will participate. It all becomes a theatrical experience that is totally encompassing--the complete theater with the guest as I actor. It is the complete event that will accumulate the cr i t­ ical mass necessary to hold the guest in the area. Th is will I provide the exploration necessary to promote sales. Capacity Constraints

I The selection of rides and attractions has admirably raised the marketing draw and appeal of the park. But those same at­ I tractions, all very high in capacity, have created a sort of -grid-lock- (stopping of traffic) within the park that is having I an adverse effect on per capita sales except in snacks. I Because the attraction of the rides is so high and the waiting time is so long, vast amounts of people are kept off the walkways and out of the circulation of the park and consequently I away from purchasing opportunities. It is an hourglass effect where large groups are contained in a holding area while only a I relatively small amount of people are returned to the park. And I they usually quickly regroup in the next holding area. An instantaneous capacity picture on a peak day would show a I major ride, such as the River Rapids, in the following manner: Holding area 1,500 On the ride 120 I Leaving 6

I -37- I I Adding a large theater by itself could compound this effect, I depending on the time and type of presentation. Consider the circus style show under consideration:

I During the Show: Holding area 2,000 In the theater 2,000 I Leaving o At the Interval: Holding area o In the theater 2,000 I Leaving 2,000 This is the "feast or famine" concept. Either there are no I persons in the area or the area is flooded with a huge surge of people and everyone will be searching for toilet facilities, food I or drinks, or moving on to the next event. Only a fractior. of this surge can be captured in nearby facilities. I The use of this event as an expansion will certainly in­ crease park capacity (and probably attendance to some degree) but I it will do nothing to help per capita sales without in-fill I support discussed below. The Reed Por In-Pill

I Our quick review of the park ride and event program suggests tha t the park is missing a critical ingredient in its program I that is common to most major U. S. parks--it is program that is called in-fill. In-fill is the series of events and rides that I is not Number One on everyone' s 1 ist, not the dynamic g ian t. Usually med ium capac i ty events (500 to 1,000 per hour), these smaller rides and attractions serve to ease the strain on major I events, evenly disperse the crowd flow and basically keep the guest in the traffic pattern for a longer percentage of his visit I on site.

I These events are not just rides. They include street enter­ tainment, small theaters, exhibits--anything that might hold I people for 10 to 15 minutes. These events also greatly increase

I -38- I I the perception of entertainment and activity while providing a I more varied and available ·menu· for the guest. When carefully placed within the park, these events (which should include themed I shopping and dining) will promote increased per capita expend i­ ture while adding to the enjoyment of the park.

I It will be a major decision for the park to decide to pro­ mote an in-fill program rather than another dynamic attraction-­ I one with an investment in the multi-millions. These are not high-profile additions so the marketing department, for instance, I may not see an obvious or immediate advantage, but the guest reaction will be tremendous. It represents more value and selec­ I tion for the money.

The park is now in a Disney Attraction Syndrome--most events I are high capacity and high visibility But even Disney has recog­ nized and utilized the factor of in-fill. One need only observe I that the in-f ill is provided mostly in heavily themed shopping and dining areas--large merchandise complexes, each with special- I ty merchand ise themed to the area. And, as is usual with eyery park, there is tremendous var iety to the food and merchand ise, I all of which is reasonably priced. And Disney makes use of the smaller capac i ty rides, even the ord inary var iety such as Tea I Cups and Dumbo. The log ic of in-fill is not in drawing attendance but in I maximizing per capita expenditures through the program of the park. Invar iably what works best is a carefully selected agenda I of rides of all sizes, shows and attractions of various types and a variety of attractive shopping and dining experiences. The I target for the park should be to create experiences on all levels, not just rides, to keep the guest in a state of constant I stimulation. I

I -39- I I The park must offer that stimulation. De Efteling Park has I expanded far beyond the days of passive experience. Because of the huge investments now required to maintain the status of a I major park every event is in competition for the guest's atten­ tion. The park is in competition with itself for its survival. It must attain a maximum efficiency on all levels. This competi­ I tion can be heal thy and fru i tful if it is well balanced and orchestrated to create and then fulfill the needs of the guest in I order to meet the goals and objectives of the park. It is a concert of effort. I I I I I I I I I I I I

I -40- I I I Section 4 I SUMMARY AND RECOMMBNDATIONS I This report deals primarily with an evaluation of food service and merchandise offerings at De Efteling. However, of necessity we have viewed these specific operations in the context I of the whole enterprise. I Sum.ary The strong points of De Efteling Family Park assessed in I this report are numerous:

I • Attendance has increased in a long term trend (over 9 percent per year) to the point where the park has taken I hold as Western Europe's top attraction of its kind. The park generates a 10 percent market penetration in I its total market. • With increased attendance, park revenues have increased I in the 80s at an overall annual rate of 18.6 percent per year far ahead of price increases (13.9 percent of I the increase is real) • I • Total per capita expenditures have increased during the 80s at a compound rate of 8.1 percent, about half real, and hal f due to pr ice inc reases . The presen t level of I per capita, F27.17, is healthy in the Dutch market. It has an upside for continued increase in the years ahead I if the visitor experience is continually improved. Park per capita has been growing annually faster than I food and merchandise per capita (park 10.1 percent, food 6.3 percent, and merchandise 1.1 percent) Oppor­ I tunities for increased per capita in food (now F8. B5) and merchand ise (now Fl.84) are substantial, particu­ larly for the latter. I -41- I I

I • The park has graduated from its status as a local, quality recreation park serving its immediate market to I a mass attraction able and willing to adjust its format to serve a much broader and changing marketplace. The I park, a tradition in its loyal local market (86 percent Belgian and Dutch), can extend its reach in the years I ahead. • De Efteling's customers are pleased with the park. I They like its green gardens, water vistas and natura] beauty. It is clean and attractive and has somet.hing I for people of all ages. Nothi~~ has been done to mess up its fine image. I • The site is superb and spacious enough to allow for the large expansion that can corne to De Efteling in the I years ahead assuming that required improvements in access are forthcoming. The site is central in its I resident market. It couldn't be better located. Its market reach can grow substantially over the years I ahead. I • Cash flow of the park is high and provides a basis for financing park development needs.

I Problems of the park impacting food and merchandise services I are outlined as follows: • Internal distances are too long and the park layout I confusing. I • There is a great need for an improved internal trans­ portation system. The park is hard on older visitors. I

I -42- I I • Lines for major attractions are far beyond acceptable I limits on busy days when most people can come to the park. In the long run lines of th is duration will I erode customer loyalty. The long queues are impacting the traditional sit down restaurant service of the park I wh ich has dropped f rom a peak per cap ita of F 4.96 in 1983 to F4.37 in 1986. To deal with queues, the park visitor is shifting to fast food eaten while in line I (and to a certain extent packaged food). Per capita for snacks has risen from FO.66 In 1983 to F2.08 in I 1986.

I • Merchandis e offerings are sub-stanuacd and that fact is reflected in a very low per capita (Fl.84 which is only I 6.8 percent of the total per capita). The approach to merchandising, adequate for the early days of the park is obsolete for the De Efteling of today. Revenue is I being "left on the table."

I • Profitability of the park is somewhat low for this scale of operation. The park has a volume base which I should be large enough to obtain a normal profit of 10 percent of revenues before taxes. In the last seven I years the net profit percentage equalled or exceeded ten percent twice. In five of these years the percent­ age ranged from 3.5 percent to 9.0 percent. The park I carries a large debt load which funded its expansion. Nevertheless, the debt to equity ratio, a high 2.55 in I 1984 has been brought down to 1.76 in the last two years. A detailed evaluation of opportunities for I improving profitability is not within the scope of this survey.

I RecolllJllendat ions

I It is our collective opinion--that good as it is--De Efteling can be improved as it deals with its newly derived I -43- I I status as Europe's top theme park. We make the following recom­ I mendations with full knowledge of the fact that it is not a fixed list: I • This well conceived park grew naturally from simple I beginnings until it aChieved over time what we would call "big league" status. Its real upside lies ahead and we bel ieve tha t now is the time to under take the I multi-disciplined, master planning approach discussed I in the previous section. • Improvements in the layou t of the site must be dealt I wi th in the long run. Parking is off center. The double gate works against crowd dispersion on a con­ I trolled bas is. I t should be rna inta ined only for the group trade (which contributes 20 percent of the sit­ I down restaurant trade). • Long and shor t term steps should be taken to improve I in-park transportation, moving visitors from one key area to another. A shor t term poss ibi! ity is to add I one station and one or two trains to the steam train loop ride. The potential of in-park water transporta- I tion and aerial trams between areas should be examined in the master plan. Visitors would be grateful.

I • Examine all ava ilable al terna ti ves for ex tend ing park hours. Food and merchandise per capitas are heavily I constrained by the six 0 'clock curfew. Now everyone must leave at the best time for dining and browsing in I the stores. I • Exploit corporate party business as one device for developing the evening trade. This can be as much as I 10 percent of attendance in some U. S. parks.

I -44- I I • Attack the crowd and queue problem on the key rides and I attractions by launching an in-fill program as discus­ sed in Section 3. We see this as a critical priority I in the park and its supporting food and merchandise service. I • Meanwhile, suspend the blockbuster attraction approach for a while. Ride capacity is a critical problem not I economically str ic tly sol veable with only h ig h cost additions (see text table page 4) Add several smaller I custom and/or stock rides and entertainment venues as part of the in-fill program. Several thousand units of I entertainment and/or ride capacity should be added to the park at a cost in the range of FIOOO to F2000 per I hourly unit. • Expand enter ta inment and show developmen t with in the I park as a part of the in-fill program. Entertainment software can be less costly than park hardware. I Several venues of different size would help the capa­ city problem and add 1 ife to the park. A range of I sizes (600, 1,000, 2,000 seats) would add flexibility from the standpoint of show production. I • Add music and sound systems around the park.

I • Improve the area deployment of merchandising and in­ crease merchandise per capita by adding diverse mer­ I chandise in different locations. The park needs at least two good browsing stores with open counter access I and bet ter assor tmen ts of g if t merchand ise and they should be themed. I • Offer craft merchandise in one or more locations--craft goods from different locations around the world featur­ I ing leather, glass, jewelry, and like items.

I -45- I I

I • Feature a T-shirt and hat shop and/or a shirt shop. Offer merchandise the visitor can't get at home. I • Make greater use of carts for promotion of singular spec ial products around the park (in both food and I merchand ise) •

I • Get away from sameness in all the stores and stands.

I • Explore possibilities for developing a character mer­ chandising program appropriate for the I Dutch/German/Belgian market.. Snoopy creat.ed a very strong response at Knott's when introduced in 1984 as I the park's lead character. • Open up and extend window access in all food and mer­ I chandise stands. Too much of the access to selling is I like a ticket window in a railroad stat.ion. • Out of the master planning effort, enhance theming of I shops, stands and all merchandise and food serv ice. Examples could include a costumed craft merchant at Fata Morgana or carrying over a Brazilian theme from I Carnival Festival to Cafe Restaurant. The sit-down restaurants in particular should make use of enhanced I theming •

I • Wi thin management, seek a new focus on the food and merchand ising prog ram. For year s the park accoun t ing I system has never clearly zeroed in on food service by type of presentation (quick food versus sit-down I service). Food and merchandise categories are mixed up and dispersed in Horeca and Verkoop categories. A higher merchandising profile and goal is needed and I targets set for higher performance. Merchandise is

I -46- I I currently 6.B percent of total per capita and money is I being "left on the table." The long term (five years) merchand ise goal should be set at 20 percent of total I per capita with interim targets of progress in between. I • As part of the merchandise upgrade, the games operation could use a little expansion and reinforcement. This year it generated about Fl.32 million or FO .57 per I capita, 2.1 percent of total per capita. This could be driven upward to five or six percent of revenue by I add ing new games and expand ing the area. Th is will help the capacity problem on busy days and increase I merchandise per capita. • The sit-down restaurants are losing ground to quick I food. Menu improvements, theming, ethnic variety and entertainment should be employed to turn this tide. We I understand that Mexican tacos (as an illustration) didn't work out before but we think that this approach I could work if tied in with theme development, music and ambience. In th i s regard, the park in the year s ahead I must move beyond its conservative Dutch roots to reach the broader constituency which will be coming to the I park. • Do something with a German menu in a beer garden orien­ I tation. Beer enhances per capita and causes no social problems. Your German crowd is seven percent and I growing. Add music to this venue. This could be newly developed or redeveloped at Witte Paerd or Likkebaerd. I • Continue to experiment with ethnic foods in concert with theming. Your marketplace is slowly changing-­ I Lebanese, Greek, Mexican, Italian, etc. I

I -47- I I • Keep the snack boom rolling by add ing attractive spe­ I cialty food items around the park in quick food format but in pleasant places or in carts; for example, funnel I cakes with fruit or chocolate toppings, sophisticated, fine-grained snow cones made from real fruit juice, I something important with Dutch chocolate, a Dutch bakery and coffee shop, fresh cookies, pizza, the best hamburger in Holland, good cakes and pies. Upgrade I quality in these offerings. That is the winning trend I in raising a park per capita. • Enhancing food service at the park is recommended not I because the per capita is relatively low (its present position at 32.6 percent of total per capita is a strong figure). It is rather to reinforce the show and I entertainment content of the park.

I Conclusion

De Efteling is well positioned in its market and generates I the financial means to move forward with its future park develop­ ment. If it rides the tides of change and takes advantage of its I well earned leadership position in the marketplace, it can be Europe's premier park in the decades ahead. Upgrading and mod­ I ernizing food service and merchandising is a fundamental and necessary part of this process. I I I I I

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