2023 Q2 quarterly report

[brenthodge]

40 minutes ago, BoddaH1994 said:

This note was addressed on the call and is and will be very relevant. The next two years will very much be gearing up for it. In fact, I could see an argument that it’s already happening. They need to pay down in the short term to avoid revolving the full amount at an interest rate that cuts deeply into the bottom line. 

By the way, I don’t want you to think that I’m talking down to you or anything. It’s just that I say what I say for a reason. Trust me - I do not want doom and gloom for the park or the company. I’m just worried that people will look at the results and think, “oh good, not as bad as we thought” and get blindsided when the cuts continue. Believe me - I hope I’m wrong. 

 

Well stated, and I agree the end hasn’t come for cuts. Concerning is the statement about managing down fixed costs as well as variable costs and the “anticipated lift” from halloween and Winterfest activities. If that lift doesn’t come, I’m nervous about next season. 

[BoddaH1994]

4 minutes ago, brenthodge said:

Well stated, and I agree the end hasn’t come for cuts. Concerning is the statement about managing down fixed costs as well as variable costs and the “anticipated lift” from halloween and Winterfest activities. If that lift doesn’t come, I’m nervous about next season. 

Many have posted about getting surveys. They addressed that as well. Essentially they wanted to see what the pain points are (what can they cut without people caring). Please be mindful of this when filling one out. 

[brenthodge]

1 hour ago, BoddaH1994 said:

Many have posted about getting surveys. They addressed that as well. Essentially they wanted to see what the pain points are (what can they cut without people caring). Please be mindful of this when filling one out. 

I was very detailed about food quality and overall value as well as entertainment and experience as driving factors for me (and my family) so hopefully I’ve been a voice in support of keeping live E and event budgets as robust as possible. Honestly after last year and the way this one seemed to be heading, I can’t personally enjoy a slide back to the days of dog shows. But I guess dogscwork for kibble… literally. 

[Timchat2]

It will be interesting to see how this all manifests in Haunt and WinterFest this year. NyteWalkers appears to be returning but will the Bandstand have a show for Haunt? WinterFest is coming back but will something like the WinterFest Wonderland Parade still happen?

[Kenban]

The company has had opportunities to pay down their debt.  Between share buybacks and the dividend they paid $220 million to investors last year.  Cedar Fair is known for the dividend, so I understand wanting to keep it, and they likely should.  But the share buyback should not have happened with this much debt.  If you look at the history of the dividend there was a huge increase for a period of time.  For a few years it was paying close to a dollar per a share every quarter.  That increase should have been used to reduce debt.

Cedar Fair paid $148 million in interest last year, and $184 million in 2021.  Having this much debt is not cheap.  Reducing debt will long term give them a huge amount of addition cash flow that could be used to provide a large dividend, buy more parks, or build hotels.

The experiences the company provides is how they make money.  I understand wanting to reduce their expenses but I do not believe the parks have as much waste as some executives seem to think.  They need to make sure the experience does not suffer.

[jzarley]

4 hours ago, Kenban said:

The experiences the company provides is how they make money.  I understand wanting to reduce their expenses but I do not believe the parks have as much waste as some executives seem to think.  They need to make sure the experience does not suffer.

You sound like every park ops guy I’ve ever worked with   But, I completely agree with you on this point.

I’m all for using technology where possible to reduce overall costs—especially if it does not impact the guest experience. If you can save enough on process improvement and lean reengineering, maybe you can save enough to avoid closing attractions and outlets which definitely do negatively impact the guest. At a previous company I worked for, we did some pretty advanced things with employee scheduling/staff modeling that was designed to reduce cost but have positive guest experience—it had a good ROI, and was a good use of technology.

One of my big pet peeves at pretty much every park are the Coke Free Style machines. I love the concept and think they work well in most restaurants (and I love my customized Grape Sprite Zero), but they are just not designed to handle the volume they get in a theme park. Every park seems to think you can put some poor kid alone at a cash register with four or five of these machines and expect them to handle the volume of hundreds of guests an hour. Of course, they run out of ice (constantly), machines stop working, cups run out, etc. (not to mention the mess some guests make). It’s one of those ideas that sound like it will work great on paper, but you need to adjust for real-world experience once you see it in action.

[Imperial79]

Edit: didn't see there was another page.  

[MDMC01]

45 minutes ago, jzarley said:

One of my big pet peeves at pretty much every park are the Coke Free Style machines. I love the concept and think they work well in most restaurants (and I love my customized Grape Sprite Zero), but they are just not designed to handle the volume they get in a theme park. Every park seems to think you can put some poor kid alone at a cash register with four or five of these machines and expect them to handle the volume of hundreds of guests an hour. Of course, they run out of ice (constantly), machines stop working, cups run out, etc. (not to mention the mess some guests make). It’s one of those ideas that sound like it will work great on paper, but you need to adjust for real-world experience once you see it in action.

You make a good point. When I went almost a month ago, they were out of Vanilla Coke all day at the AP Freestyle (which was the only one open as the Rivertown location was closed and the Juke Box one no longer exists. While that was a major bummer, I do appreciate that Coke Freestyle drinks are not the only option at KI (as they seem to be in some restaurants outside the park). I love fountain Sprite and prefer to get it from an older-style (individual) machine than from a Freestyle machine. I say this because fountain Sprite was literally one of the best parts of this past Sunday’s trip 

[super7]

Don’t just look at the quarter look at the year to date numbers.  They have decreased drastically from  last year. Columns 3 and 4

 

It’s obvious Cedar Fair has no plan to actually increase attendance. Instead, they’re going to try to milk everything they can out of the current customers.  Including all these budget cutting measures that take away from the customer experience. 
 

They’ve chased away, traveling customers from several parks with their policy of closing early if there’s low attendance.  People are not going to spend money traveling to these parks if there’s any chance of rain when this is the policy. in doing this Cedar Fair is relying on perfect weather for attendance, which is a bad business plan.

Now there’s the budget cuts, which translates to less operating hours, right time, live entertainment, and in general just in when it isn’t cleaned as much. This definitely isn’t going to increase attendance.  

And let’s not forget their bait and switch way of doing business   Advertising fake online prices (processing fee not included) and taking away perks for upcharge memberships. In addition to the already false advertising of operating hours at some parks.  That definitely does not drive attendance  

Cedar Fair is debt ridden and they  do not have a good business plan to increase attendance with new customers.  The customers that they do have they rely too much on cheap season passes and meal plans which don’t generate great profits.  
 

All of this cost cutting for short term profits will eventually bring down long term profits. 
 

Unfortunately , stock buybacks have destroyed companies in the past when the stock price plummeted after the buyback.   This is absolutely possible with Cedar Fair given they are huge debt, and their lack of future growth possibilities with current policies.   

[jzarley]

I think it’s also important to remember that while CF’s numbers are definitely troubling, there still seems to be larger macro forces in play on the industry as a whole. Orange County’s tourism tax revenue has seen consecutive declines over the past three months, and hotel occupancy gives a very clear view into park attendance in Orlando:

https://www.fox35orlando.com/news/orange-countys-tourism-tax-collections-down-for-3-months-in-a-row

I work for a theme park company (although, not currently in a park division) and I’ve worked for two previous ones prior to my current company—all three of those companies are struggling with attendance right now.

BoddaH1994 makes an excellent point about CF’s amount of leveraged debt and the stress that is putting on the balance sheet. It’s been a lurking issue for them ever since the $1.24B acquisition of Paramount Parks, but when combined with the significant lost revenue from the COVID year(s), it raises the concern significantly.

[Captain Nemo]

I should mention I rarely see any advertising for any of the CF parks outside local shopping grocery stores. I’d be interested to hear from Ryan (BoodaH1994) his take if he thinks some of this could be in result to poor corporate marketing.

I’ve seen billboards and ads for Dollywood as far as Dayton and ads for Dollywood are littered all over my socials.

[BoddaH1994]

On 8/5/2023 at 5:15 PM, Captain Nemo said:

I should mention I rarely see any advertising for any of the CF parks outside local shopping grocery stores. I’d be interested to hear from Ryan (BoodaH1994) his take if he thinks some of this could be in result to poor corporate marketing.

I’ve seen billboards and ads for Dollywood as far as Dayton and ads for Dollywood are littered all over my socials.

Advertising is expensive. 

PR and Social are cheap.

Which one do you think they’re leaning on right now?

Expect to see much more of this moving forward. You can pay for your entire social and PR budgets with the cost of one good billboard. 
 

And no, this is not supposed to be a sideways referendum on anyone. This is just the facts. 

[DispatchMaster]

On 8/5/2023 at 7:28 AM, jzarley said:

I think it’s also important to remember that while CF’s numbers are definitely troubling, there still seems to be larger macro forces in play on the industry as a whole. Orange County’s tourism tax revenue has seen consecutive declines over the past three months, and hotel occupancy gives a very clear view into park attendance in Orlando:

Everyone criticizing perceived "moves" by CF parks (short staffing, etc.) should read this closely. They read it again. And for good measure read it a third time, because it's correct - the entire industry is having a down year. The 9PM closing of certain rides at CP or firing Don from KI didn't negatively affect attendance in Orlando, so it stands to reason those issues aren't driving down attendance at the Cedar Fair parks that actually have higher attendance through July this year compared to last.

The complaints around here sure are many, but they are rarely rooted in reality.

[brenthodge]

10 hours ago, DispatchMaster said:

Everyone criticizing perceived "moves" by CF parks (short staffing, etc.) should read this closely. They read it again. And for good measure read it a third time, because it's correct - the entire industry is having a down year. The 9PM closing of certain rides at CP or firing Don from KI didn't negatively affect attendance in Orlando, so it stands to reason those issues aren't driving down attendance at the Cedar Fair parks that actually have higher attendance through July this year compared to last.

The complaints around here sure are many, but they are rarely rooted in reality.

Well stated. I think sometimes passion around here clouds the forest and people can’t see the logic through the trees.