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The Sinking Ship: (Un)Love Letters to Merlin
- Thread starter AstroDan
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Merlin answer to shareholders first, customers second, it's a vicious circle, it's not just Alton that is suffering cutbacks. As Roy says, be careful what you wish for, the last thing you want is someone like The National Trust or English Herritage taking over the site (because nobody in their right mind would take on Alton as a Theme Park in today's digital era).
venny
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Surely the only way it would stack up economically to any buyer would be to continue theme park operations. There’s no value in buying the place to bulldoze the rides and reduce the value of a day out thus entailing a lower entrance fee.
Plus, could it really get much worse than it is? Anyone buying the park can only make so many cuts before it erodes value to too great an extent. Plus, they would not be insulated by the Merlin umbrella. It’s more likely that a buyer would have a plan to do something different to the park’s current path otherwise why would they buy or Merlin sell?
Plus, could it really get much worse than it is? Anyone buying the park can only make so many cuts before it erodes value to too great an extent. Plus, they would not be insulated by the Merlin umbrella. It’s more likely that a buyer would have a plan to do something different to the park’s current path otherwise why would they buy or Merlin sell?
themeparkfan
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As do customers expectations each year surely. How do you get growth in such a business. Surely you need the same people to visit the next year PLUS new people . How when the offering is so poor are they going to achieve this?
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Matt N
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Due to this, it is also worth remembering that Merlin will not be leaving Alton Towers until at least 2042, as they operate Towers on a 35-year lease that started in 2007.
WickerManiac
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If Merlin were to sell AT it would no doubt be negotiated with the lease.
themeparkfan
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I'm just thinking after reading a news article shouting about MAPS the sale and their great value. Is this where merlin are going wrong? People spend the £109 to £160 on a pass and boy can they hammer it. Visit AT 4 to 6 times go to sealifes have a day in London and visit the south parks. Remembering we are savers so will do our eating before arriving and get some tea on the way home. So alot don't part with much cash when we visit. Therefore if I spent £140 on my pass I visited AT 5 times TP, chessington and legoland once, London once and a day out in Blackpool that's £14 for a day out and I buy my food and drinks elsewhere where do merlin make their money?
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Rick
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That doesn't mean anything at all, they'd just sell the lease - which would of course be worth a lot less than selling the property. That said, I think the selling of the park and using the leaseback option suggests they don't plan to short it and plan to keep Alton as part of their portfolio for a long time.
Selling one RTP park in the UK doesn't make any sense. Selling all their RTP properties in the UK makes even less sense when you look at their overall corporate strategy.
Plus, to reiterate - they don't really have a lot physical assets to sell and the fact that it's a mishmash between the RTP properties, would to me suggest that selling them has not even been considered in short - medium term. Alton Towers, Heide Park, Thorpe Park and Warwick Castle are all leased from the Prestbury. They own the freehold to Gardaland, Chessington and Legoland Windsor (bar the hotels, which are leased).
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Alex2020
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I really don't know why Merlin bothers with providing food outlets on site anymore. In fact, I think it was much better back in the day when they were let out to branded food companies like Pizza Hut and Burger King. With big name brands, you're more likely to encourage people to buy food on site rather than bringing food with them. They should for sure go back to this model, perhaps subletting the units to restaurants similar to Centre Parcs like Bella Italia or Starbucks. The revenue they could gain from subletting units and guaranteeing the footfall for restaurant companies would probably equate to more than Merlin selling their own food now.
(probably should post this in the Food & Beverage 2018 thread too)
(probably should post this in the Food & Beverage 2018 thread too)
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Katy
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I would have expected that they were just franchised rather than sublet when it was KFC etc, meaning they still had the same food and staff costs plus the franchise fees. Provided that footfall remains the same it would cost less to run as an in-house operation. Presumably they didn't think people would stop going now that they're not a popular chain but in-house.
Alex2020
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You're probably correct there, they would more likely be franchised out. People's perceptions of big multinational brands would be far greater than that of in-house catering so Merlin should have known that removing these franchises would see a drop in footfall and food being purchased on site. Especially if the quality decreased and the prices increased. Obviously, this all depends on how those franchised outlets were run and it's all probably the same staff running the current food offering anyways.
Rick
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It's another grass is always greener situation. The BK, KFC and Pizza Hut franchises were not well run, had questionable food hygiene and charged motorway service station prices. I'm not the biggest fan of some of Merlin's food options (some are good, some not so good...) but let's remember what they replaced.
Alex2020
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Totally agree with you, I can't say there's ever been a time where the food at Alton or any Merlin park for that matter has been anything great. But in regards to making more revenue and getting more people to purchase food on-site, I reckon if it were possible to sub-let the outlets to restaurants with their own staff and practices it might help a bit.
It's got to be a similar model to that of recent times that various Shopping Centre's across the country are using to increase footfall in high streets. Providing more leisure in the form of high-end restaurants and other branded food outlets. (I know it's a completely different sector with different challenges)
Rick
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It may do - I don't know enough about revenue splits in terms of the franchises being offered in the marketplace, which is crucial when you discuss revenue because it's not the revenue that counts. If you can make an extra 25% revenue in a BK vs. a Burger Kitchen but 30% of your takings disappear to the Burger King Corporation, you lose... Plus, you lose a lot more than that - control of your supply chain (which is shared between parks, hotels and midways) vanishes and freedom to adjust offerings and price according to demand is reduced, as well.
There are pros and cons when it comes to outside factors too. On the plus side, brand recognition does provide some reassurance to someone who isn't sure they want to eat at the park but it also works the opposite way around, if someone doesn't like McDonalds or has had a bad experience at another outlet and that's what you're offering, they'll likely not buy because you are branded. Another con is of course that if people know their favourite meal at their local McDonalds is £4.99, there is often some resentment if it costs more in the park (and if it costs the same - chances are, your ability to increase revenue will be harmed)*
There is also the argument that if people are visiting Alton Towers, they want Alton Towers food because the food, music and the like affirm the park's identity.
I am not convinced that the % of guests purchasing food on site is as low as the % of enthusiasts. I've been in some pretty horrendous queues at Alton for Explorers - that place was not struggling the couple of times I went in there this season, nor were a lot of the walk up locations I passed, either.
I think that's a different argument, although there are similar themes, the fact that it's free to enter a shopping centre where you will plan to go to eat and shop vs. paying to go into a theme park for a period of time that dictates that you probably need/want to eat make it a slightly different discussion.
I never look at food options before I go to a park, I don't know how common it is that people do. The thought of carrying a picnic/bag of any kind around with me fills me with utter dread. I'll eat wherever and probably pay what they're asking for it.
* the same Subway meal costs an additional $7 inside Ceder Point as it does at the Subway at the top of the causeway.
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Rick
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Matt.GC
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I've often heard the rumour that the brands exited the park due to being "poorly run". Yet I don't understand how this argument can be made when no one seems to know who the franchisees where! So pardon me if I'm being ignorant, but isn't it possible that Merlin themselves where the franchisee of these restaurants? In which case, the reason given for the brands leaving the park is therefor false as Merlin continue to operate them anyway?
I would also like to point out that it's pretty obvious why Merlin would want to operate their own food offering rather than franchising. The brands, especially McDonald's, have notoriously high franchise charges so it makes perfect sense for Merlin to want to cut out the expensive middle man and keep the huge margin for themselves.
In terms of Merlin flogging the park, well I'm afraid we're going to see Alton limping on as a mere accessory to sell MAP for the foreseeable future. To be viable on it's own outside of a wider group, the park needs an awful lot of investment and we've discussed on here at length in the past that we can't think of any other operator that would have the deep pockets or appetite for that.
I would also like to point out that it's pretty obvious why Merlin would want to operate their own food offering rather than franchising. The brands, especially McDonald's, have notoriously high franchise charges so it makes perfect sense for Merlin to want to cut out the expensive middle man and keep the huge margin for themselves.
In terms of Merlin flogging the park, well I'm afraid we're going to see Alton limping on as a mere accessory to sell MAP for the foreseeable future. To be viable on it's own outside of a wider group, the park needs an awful lot of investment and we've discussed on here at length in the past that we can't think of any other operator that would have the deep pockets or appetite for that.
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