Arena Concession Sales Climb

March 23, 2007
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GRAND RAPIDS — One reason the surplus coming from Van Andel Arena may top $1.5 million this fiscal year is revenue from food and beverage sales is up by nearly 30 percent.

Another reason is catering revenue is up by more than half.

And both figures could rise even higher during the next fiscal year with the arena's new VIP Sports Lounge, as it is now called, set to open for business in a little over a month.

At the end of February, net food and beverage revenue to the arena was $949,130. That number was $216,551 higher than for the same eight-month figure last year, an increase of 29.6 percent. Net catering revenue to the arena was $80,784 at the end of February. That number was $27,807 higher than last year, for an increase of 52.5 percent.

And the concessions and catering revenue figures were both reached with two fewer events being held this year than last year.

The Convention and Arena Authority receives both incomes, which together now total $1.03 million. At the same time last year, that figure stood at $785,556.

The CAA is getting a bigger share of both revenue sources this year because the board changed management of the concessions and catering businesses at the arena on July 1. That is when SMG, which operates the arena and

DeVos Place
, replaced Centerplate in the food-and-beverage office.

The new contract with SMG gives the CAA three more points on the net receipts from concessions and two more on net catering revenue. But if the contracted increases are set aside, net concessions revenue was still up by 26.9 percent and income from catering was up by 50.5 percent. So the new pact doesn't cover the increases, at least not directly.

SMG General Manager Rich MacKeigan credited the higher revenues to the building's second quarter. He said it may have been the best three-month period the arena has had in its 10-plus-year history.

"A big part of that was the food and beverage spending," he said.

The concessions' take in October was $156,000 from 19 events; $237,100 from 13 events in November; and $141,565 from 13 events in December. Those figures add up to $534,600 from 45 events, for an event average of $11,880 for the quarter.

"It probably skewed the entire year, more heavily focused into that quarter. Once you take a look at the whole year, you'll get a truer representation, once the year is completed, on where we are. That being said, I do think we're going to be up food-and-beverage-wise in terms of the revenue stream for the venue," said MacKeigan.

MacKeigan said SMG hasn't raised prices at the concession stands. But he said his firm has increased the portion-size of some items, such as a bigger and better hot dog, and added more choices to a menu that now has four types of pizza instead of the two offered last year.

Plus, he said, concession workers are working harder and faster.

"I think we've got staff and management that are a lot more aggressive in terms of getting points of sales out and available, and getting turn times through the lines quicker. The other thing to remember is prices did not go up. Some of the sizes went up, but prices did not go up," he said.

The concessions and catering revenue streams could get a late fiscal year boost when the VIP Sports Lounge opens in May in a former banquet room on the arena's lower level. The lounge replaces what was largely a storage room, except for a handful of events that were held in it each year.

The lounge will have a different menu than the concession stands, serving entrees usually found at better restaurants. Wines and cocktails will be the featured drinks, as the lounge will only offer two types of draft beers — probably an import and a premium domestic brand.

Access to the lounge will be limited to premium-seat holders. But the lounge, which can be expanded into an adjacent banquet room to host a dinner for 200, will be available to the public for banquets and parties on non-event nights.

"I hope so," said MacKeigan of the lounge adding to the revenue stream.

"There definitely is going to be some cannibalization on the concession side and the suite-ordering side. But we feel that the total number will grow, absolutely. Otherwise, it doesn't make sense for us to do it."

MacKeigan said he was close to selling the lounge's naming rights and that deal could be announced as early as this week.

An interesting fact regarding the higher concession revenue is that per-capita sales have fallen slightly this fiscal year from last year.

Per-capita sales at sporting events were down by 11 percent through February and down by 3 percent at concerts. Only family shows recorded a hike: 17 percent. But those sales were at $3.92 per person, while sports and concerts were both higher at $4.41 and $5.21, respectively.

Those numbers show that more paying customers have gone through the turnstiles this year than last.

"It's a function of the industry where people look at the prices at concession stands, whether here or at a movie theater or wherever, and say they're awfully high," he added.

"I'll acknowledge that they're higher than what you get at home. By the same token, prices did not go up from last year and that has not played a factor in why we've increased our bottom line on the food and beverage side."    

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