Instructor Notes Total time allotted for this course: 90 minutes

Instructor Notes Total time allotted for this course: 90 minutes
The purpose of this course is to define and explain the function and operating characteristics of the three major non-gate revenue sources in a typical amusement park or attraction: food, retail, and games. Total time allotted for this course: 90 minutes Supplies needed: White board easel and pads of paper Marker pens (one for each group) Table surface for writing

Contents Industry Overview: What Is Revenue Operations?
Revenue Theory: Why Is Revenue Operations Important? FunWorld Park’s Revenue Operation Revenue Operations in Practice Skills Exercise – Case Study Instructor Notes Course Content Objectives (Slide 3) – Recommended time: Approx. 3 minutes Industry Overview (Slides 4-7) – Recommended time: Approx. 7minutes Theory (Slides 8-13) – Recommended time: Approx. 15 minutes FunWorld Park (Slides 14-20) – Recommended time: Approx. 20 minutes Practice (Slides 21-25) – Recommended time: Approx. 15 minutes Skills Exercise (Slide 26) – Recommended time: Approx. 30 minutes Each Emerging Leaders Institute course covers the five areas noted above.

Objectives Upon completion of this course, attendees will be able to:
Describe the ways in which attraction revenue operations differ from traditional retail Discuss the importance of revenue operations to an attraction’s total revenue and customer experience Definition of terms: per capita, penetration, cost of goods, etc. Review the three major types of revenue operations Identify the key operational challenges and opportunities for each area Describe pricing, layout and merchandising strategies to improve revenue operations results Information to help you establish operational/financial benchmarks Instructor Notes Course Objectives Recommended time for this segment: Approx. 3 minutes Resources and Suggestions Read through each objective aloud, to enable attendees to know what to expect in this course.

Industry Overview What do we mean by revenue operations?
All the non-gate revenue sources in a typical attraction Revenue types: Food & Beverage-In-park options, catering opportunities Merchandise Games of skill, videos, redemption Other ( parking, lockers, rental [strollers, wheelchairs, etc.]) Revenue partners ( leased or concession operations) – Opportunity to diversify offerings and increase bottom line by leasing to established brand outlet for food or retail services Instructor Notes Industry Overview Recommended time for this segment: Approx. 7 minutes Resources and Suggestions What Do We Mean By Revenue Operations? List the revenue types, including revenue partners. Provide any examples from your experience of other revenue sources.

Industry Overview (cont’d)
What are the operating characteristics of these revenue areas in the attractions industry? Limited park season – Approx. Memorial Day to Labor Day( Operating Days) Impulse purchases – One chance to capitalize; need to have right product available at the right time in the right location… Limited repeat business – Many guests come only once a season Dealing with Season pass holders, who do not spend much per visit (no need to “bring home a memory”) Effects on buying/pricing Instructor Notes Resources and Suggestions What Are the Operating Characteristics of These Revenue Areas? Other points to mention: The profile of the guest at an attraction can vary dramatically at different times of the year, based on the individual park’s marketing strategy. Each change can have a profound impact on guest spending habits. In general, per capita guest spending is strongest in the transient, outer market visitor (i.e., tourist), and weakest with season pass holders and repeat seasonal groups.

Industry Overview (cont.)
What does Funworld’s Patron Stats Tell You? Point of Origin Within 50 miles 65% mi. 20% 100+ mi. 15% Ticket Type Ala Carte % Promotions 62% Groups 10% Season Pass 21%

What makes park merchandise ops different from traditional retail? Seasonality (limited opportunity for business)- Attractions have one opportunity to make sale Majority of merchandise sales are at day’s end making it difficult shift to staff -Also competes with guests’ desire to get home or to reserve last of disposable income Inventory commitments must be made months in advance of opening (difficult to change, limited time to re-work, trends must be established early) Merchandise Planning-Categories/Pricing/Quantities/Imports v Domestic Need to turn inventory quickly -2X Goal (traditional retail 3+) Many items are difficult to hold from one season to the next Controlling Mark-Downs Keys …POS-Item (SKU) sales systems/Sales Projections/Open-to-Buy Plan Instructor Notes Resources and Suggestions What Makes Park Retail Different From the High Street? Other challenges and complexities of retail in parks and attractions include: Late day weather can empty a park at key selling time, before retail has had an opportunity to make sales. Of all the revenue departments, retail is the most susceptible to the timing of weather impact due to the late spending patterns of guests. Because of the advance inventory commitments required, inventories are usually front-loaded. The money tied up in inventory is very high compared to other businesses that can work on just-in-time inventory supply. Purchasing mistakes can be very unforgiving – especially in imports, which often have high minimums and long lead times. The number of SKUs that need to be tracked on a per park basis can easily be in the thousands of SKUs. The work associated with managing this breadth of assortment requires good systems, decisive managers, and a commitment on the part of all involved to ensure the proper initial supply, effective replenishment, and accounting for the inventory. A merchandise plan that outlines open-to-buys by category, price points and location is very important The average inventory turn in the attractions industry is probably in the 2.0 range. Traditional retail is closer to 3-4 turns. So mistakes in buying are amplified.

Food and Beverage in a Park Setting- Opportunities: Captive audience, reasonable length of stay, receptive clientele, traffic/demand projectable, simple menus, specialty items with low costs, beverage driven, limited need for highly skilled food prep/servers Challenges: Season pass- multiple visits/low purchases, wide range of attendance levels, special events/caterings, cleanliness, quality control, warehousing/storage

Characteristics of midway games or games of skill Important to entice guests’ interest through employee salesmanship, flash (merchandise display), and excitement of the area Play encourages play… When one guest plays, more are drawn in Prizes drive play… guests will play based on prize assortment, size and price Cash handling procedures & systems are different than traditional retail and must be managed carefully Trends: Redemption games are continuing to be more popular Instant gratification…another form of retail (Tickets v Cash) Videos are becoming more difficult Instructor Notes Resources and Suggestions Characteristics of Midway Games In the midway games area, key points to remember are: What sells: Interest, excitement, fun, “flash”-color, lights, action…think “casino” Employee salesmanship/appeal is critical-Hiring practices are very important Importance of prizes – Popular, desirable, attractive, seen by guests as having value-size counts and licensed items are very effective Set-up (gaffe) extremely important. As much an art as a science. Give (cost of sales) should range between 20-25% Cash handling procedures need close attention-use of “change bubbles”, “give” counts, operator audits, and meter counts (competition games) show vigilance and set expectations Redemption games like Skeeball have long history of success. Today “Deal or No Deal” and “Big Bass Wheel” have been very successful. Cost of goods should be in the 20%-23% range. Videos very difficult for the average attraction due to high investment and obsolescence. Many times videos are a concession deal with a 50/50 split of revenues.

Revenue Theory Why is revenue operations important?
All three types (F&B, Merchandise, and Games) are very profitable operations and contribute significantly to a facility’s bottom line F&B/Merch/Games revenues are critical to success – The revenues generated at Funworld makes up 26% of its total vs. all USA Parks at 48% and all European parks at 42%* Revenue outlets are needed at the facility to meet guest demand – For food/drink, gifts/souvenirs, entertainment, variety A key part of the park experience *IAAPA 2010 State of the Industry Survey Instructor Notes Revenue Theory Recommended time for this segment: Approx. 15 minutes Resources and Suggestions Why Is Revenue Operations Important? Revenue operations make a significant contribution to the facility’s bottom line. Many parks cover operating expenses via the gate revenue and generate all of their profit via in-park revenue operations. The services and goods supplied by revenue operations venues also satisfy guest demand for food, entertainment other than rides, diversions, souvenirs, gifts, etc.

Revenue Theory (cont’d)
Operations revenue and expense figures Potential revenue opportunities from the key revenue areas – Proportion of total income (All reporting amusement parks-worldwide) *43.2% – Total % of income from three major revenue types: Food & beverage: 17.5% Retail: 7.7% Games: 7.3% Parking: 2.0% Concessions: 3.7% *IAAPA 2010 State of the Industry Survey Instructor Notes Resources and Suggestions Operations Revenue and Expense Figures REVIEW HANDOUT Go through the figures provided and explain the financial and operations concepts involved. Note: The Finance course covers more detailed discussion of financial concepts.

Key terms in revenue operations Per capita (per caps) – Revenue divided by the number of visitors; Calculated for an individual location/facility, or sold item, and for the park as a whole, for a period (day, week, etc.) Importance: “Levels the playing field”; enables comparison of the sales on any item, or sales outlet, with any other Instructor Notes Resources and Suggestions Key Terms in Revenue Operations: Per Caps You use the per caps calculation to measure the sales of any item for, say, one day against the total attendance at the park during that day. This makes per caps a very useful yardstick that can be used to compare the sales of any item with the sales of any other item. It enables you to “compare apples to apples.” (by location, item, category) For example, you might discover that you have a higher per caps on park T-shirts than on the new jackets that just came in. That allows you to investigate further to find out what might be the problem – it might be the weather, which you can’t do anything about; or it might by ineffective product placement, which you can do something about. Cost of Goods Cost of goods is a critical number for all revenue operations. If you can sell a mug for $5, there is a huge difference in your profit based on whether you paid $4 for the mug, or $1. In the first case, your markup is 25%; in the second, it’s 400%. The cost you paid for the mug is a direct expense that decreases your bottom line profit. Labor Cost Labor cost is a percent of sales. This cost must be watched very closely, because it can directly affect the amount you are selling. If you don’t have enough labor, maybe guests are leaving because the line is too long; if you have too much labor, you are paying people to hang around and it is eating into your margin.

IN PARK—PER CAPITA SPENDING COMPARISON Funworld USA Ave. Europe (500-1M) F/B $3.42 $4.91 $8.39 Merch Games Concess Sponsors Attractions TOTAL $7.12 $9.36 $13.24 % of Total P/C % % %

Other effective management tools Sales per square foot….. Funworld $229.44 USA Ave. $300.00 US Regional Mall $341.00 Specialty Retail $400.00 Sales per Transaction-(Average Check) =Sales/number of transactions Sales per Employee-(Convert to Fulltime Equivalant) Sales per Lineal Foot of Shelf space Penetration-Transactions measured against the total number of visitors

Cost of goods – Wholesale price retailer pays to obtain an item Importance: Directly impacts margin – Expense is taken directly from the bottom line…includes freight costs Labor costs – Cost of the labor that was required to sell item Importance: Impacts margin, is important indicator of both insufficient labor (understaffed) and surplus labor (overstaffed)

How “In-park” revenue is analyzed To determine operations revenue, subtract the cost of goods and labor cost from sales revenue: Revenue derived from sales (minus sales tax) – Cost of goods =Gross margin – Labor cost -Supplies, equipment repairs etc. =Net/Operating profit The result is the net profit from revenue operations Instructor Notes Resources and Suggestions How Operations Revenue is Calculated Provide some examples of operations revenue calculations using the formula presented here. This formula shows how important it is to control both the cost of goods and labor cost on all revenue operations throughout the park. REVIEW: MARK-UP…Keystone=50%... normally figures as a percent of retail Pricing as an art…take extra mark-up on items to pad your gross margin to offset MARK-DOWNS-reduction in price and margin to sell slow moving items

Funworld Revenue Operations (000) Rev COS Op. Exp OP Profit Profit % Food/Bev Merch Games Concession Parking TOTAL $ $1, $1, $2, % Funworld Revenue Operations Instructor Notes Resources and Suggestions Cost of Goods Sold The table illustrates the relative cost of goods for each revenue operations type. It shows the differences in these ratios between parks in different areas of the world, and between parks across the range of annual attendance figures. Figures noted below are from the TOTAL column at right. Arcade games and beverages are the most profitable categories of items for either resale (beverage) or reward (games), at an average, for all attraction types, of 20 percent and 22 percent respectively. Plush/operator games are the next most profitable, with an average of 26 percent. Food averages 29 percent and is the second least profitable type. Retail/merchandise is the least profitable, with an average ratio of 40 percent of revenue. Note: Cost of goods includes product cost, freight, packaging, paper products, and sales tax on inventory.

COST OF GOODS SOLD COMPARISON* Funworld USA (500-1, Europe F&B 33% % % Merch. 45% % % Games 26% % % *IAAPA 2009 State of the Industry Survey

Key influences for all revenue operations Factors that influence performance metrics Visitor mix Tourists – More likely to buy souvenirs Local repeat visitors – Less spending per trip Group outings – School classes, seniors, etc.; patterns vary Weather Facility’s mix of offerings Instructor Notes Resources and Suggestions The Three Key Metrics for All Revenue Operations Per caps To review: Per caps is the amount of money spent on a particular item, or in a particular venue, divided by the total attendance at the park, in any given period. The result is the amount spent on that item, or in that venue, per visitor. Penetration Penetration is the proportion of how many visitors, out of the total present at the park, are visiting, or consuming (food or beverages), or buying something (retail), or playing (games) at any given time. For example, for a retail shop, its penetration indicates its ability to attract visitors. If one shop has a higher penetration rate than a second shop, this indicates that more visitors frequent the first shop. Factors When analyzing the success of a venue or shop, certain factors may be influencing its success. For example, on a day when several adult group bus tours are at the park, the park might have high sit-down restaurant penetration, a high per caps for the sit-down restaurants, and a high per caps for gift and souvenir shops. On other days when young families predominate, the highest per caps and penetration figures might be fast food, pizza places, and game arcades. The park’s variety and mix of offerings also affects per caps and penetration; and the daily variable of the weather must always be considered.

Funworld Park’s Revenue Operation
Revenue operations outlets at Funworld 7 F&B outlets-3 Stands, 2 Sit Down Fast Food, 2 Full Service 12 carts Small catering operation- Picnic Grove-700 capacity 5 retail outlets-2 gift Shops, 2-Tee-Shirt Stores, General Store 2 games venues-22 Total Games Instructor Notes FunWorld Park’s Revenue Operation Recommended time for this segment: Approx. 20 minutes Resources and Suggestions FunWorld Park has: F&B 12 food stands/carts 3 walk-up food and beverage outlets 2 sit-down fast food restaurants 2 sit-down full service restaurants A small catering operation Retail 2 gift shops at ride exits 2 T-shirt stores 1 general store/candy emporium Games 2 midway game areas with 22 games total

Funworld Park’s Revenue Operation (cont’d)
Food & Beverage outlets* Types of F&B Relative advantages and disadvantages (from operations viewpoint) Food stands/carts (no seating) (12) Walk-up food & beverage outlets (3) Sit-down fast food restaurants (2) Sit-down table service restaurants (2) * Note: FunWorld Park does not have branded food outlets. Instructor Notes Resources and Suggestions Food & Beverage Outlets Give some examples from your own experience of the relative advantages and disadvantages of the different types of food venues at FunWorld Park. Group Activity: Brainstorming Advantages and Disadvantages Recommended time for this portion: Approx. 5 minutes Have attendees break up into groups of about five and, using examples from their own facilities, come up with a list of comparative advantages and disadvantages, from an operations point of view, of each of the four types of F&B venues (food carts, walk-up food and beverage outlets, sit-down fast food restaurants, and sit-down table service restaurants). Have them write their results on a white board page. After about 3 minutes, bring the group back together and have groups share points from their lists with the class.

Food & Beverage outlets (cont’d) Challenges for Funworld’s F&B operations manager Analyze sales information to determine food items that are selling and those that are not and modify menus/orders accordingly POS Systems/Food Tracks Improve per caps/margins/operating profit High margin items, pricing, portion control, waste, theft… Instructor Notes Resources and Suggestions Food & Beverage Outlets (cont’d) Key metrics Besides the cost of goods, the metrics for food and beverage are the average amount of check and the number of table turns during business hours. Challenges: Continual sales data analysis, and per caps improvement, helps the bottom line. “Measures of success” There are several measures of success (which apply to all three revenue types) that have to do with how to track progress and monitor the health of a venue as well as the operation as a whole. This involves developing a reporting system that will provide the data necessary to monitor progress on a daily, weekly, monthly, quarterly, and annual basis. Some of the questions the data reporting needs to answer are: What were the sales for any given day? Were there any factors on that day affecting sales – weather, etc.? How do that day’s sales compare with the same day last season? How do sales to date compare with the budget to date? How does the current weekly/monthly/quarterly sales data compare to the same period last season? What does this data tell about whether we are gaining or losing? Tell how your organization determines its measures of success. Discuss with attendees.

Retail Merchandise Outlets Types of retail- Relative advantages and disadvantages Carts: Pros- Capture midway traffic, quick transaction time, ease of setup & tear down Cons: High exposure to theft/inventory/cash control, weather, challenge to re-stock during business hours-Impulse items Gift store Pros- Specific, unique product mix, higher average transaction, upsell opportunities Cons- drawing guests into the store, slower turn & higher risk on inventory/high number of SKUs Souvenir/gift stores at exits of rides: Pros- Forced traffic flow, relevant product mix, memory of the day impulse Cons-Lower spending per cap, limited opportunity to capture attention & sales Pay-Per-Experience/i.e. Photo booth: Pros- Incremental spend, low inventory investment, opportunity for multiple locations Cons- Equipment maintenance, new technologies, concession expense, operating expenses v. revenues Instructor Notes Resources and Suggestions Retail Outlets Go over the advantages and disadvantages of the different types of retail venues at FunWorld Park. Some further details include: Carts – Carts provide impulse spending opportunities, and are located on a midway or near an attraction or high traffic area. FunWorld Park does not have retail carts. Souvenir stores, or end-of-day stores, typically have a lower labor percentage as well as high revenue with end-of-day sales. FunWorld Park has three in all: a general gift store / candy emporium, and two T-shirt stores. Souvenir or gift stores at ride exits provide guests with souvenirs to help capture the excitement and the desire to remember the experience of the ride. FunWorld Park has two ride-exit gift stores. Photo booths can be owner operated or shared revenue. It is sometimes difficult to get guests to spend on retail in the middle of the day. Some ways to create more interest in mid-day spending: Offer package pick up for your guests to pick up at the front of the park at the end of the day. Vary product assortment by store. Have exclusive items in specialty stores only available at that location. Fill in additional detail or examples from your own experience.

Merchandise Outlets (cont’d) Key metrics and measures of success for retail Per Capita/Gross Margins/Markdowns/Cost of goods Inventory control –POS Turns “Open to buy” – Retail management tool Challenges for Funworld’s retail operations manager Merchandise Plan-need to make buying decisions months in advance – Anticipate styles and fads-Import/Domestic If items are not selling they must be marked down quickly or they’ll need to be written off at a loss Instructor Notes Resources and Suggestions Retail Outlets (cont’d) Cost of Goods Discuss how cost of goods impacts the company’s bottom line. Inventory Control Control of inventory is critical in attractions retail. Discuss with attendees why this is true. Ask for any examples from attendees’ own experiences. Open to Buy Very briefly describe the open to buy concept, and how it helps track inventory. (Note: Open to buy will be covered in more detail in the “Revenue Operations in Practice” section.)

Games/arcade Types of games- Relative advantages and disadvantages Single-player games (midway-type) Pros-Prize and skill appeal driven Cons-Can have a “carny” look, need a good operator, must be set-up properly to control “give” Multi-player games (competition) Pros-Creates excitement, higher revenues, builds traffic Cons-Game piece expensive, hard to change look/theme Redemption centers (arcade game venue; points won earn tickets, which the player can accumulate to redeem for prizes at different value levels) Relates especially to video games/arcades Pros-Appeals to all ages, area creates excitement, builds traffic Cons- Set-up…Games, redemption counter, room…Expensive-May need a partner Instructor Notes Resources and Suggestions Games and Arcade FunWorld Park has two midway games locations, with a total of 22 games. Discuss the advantages and disadvantages, from an operations point of view, of the different types of game venues.

Games/arcade (cont’d) Key metrics and measures of success for games Virtually the same…Terms: Gaffe (set-up), Give (cost of goods), Flash (merchandising) the game/area Challenges for Funworld’s games operations manager Purchasing challenges are similar to retail: Need to make decisions six months in advance as to what will be “hot” prizes Popularity of prizes can be major driver of whether visitors play games Hiring outgoing staff-a must Redemption centers – The redemption tickets equal cash; there must be an effective system to control them-Think Skeeball Videos-How many?/Mix?/Redemption Component?/ Who owns?/Split? Cash and Inventory Controls Instructor Notes Resources and Suggestions Games and Arcade (cont’d) Cost of Goods The cost of goods calculation for game prizes is especially complex. This is discussed under Challenges below (second bullet). Challenges Just as in retail, purchasing decisions for prizes are being made six months in advance. The buyer needs to be able to predict at that point, what figures and themes are going to draw people to play via their popularity – Sponge Bob, Spiderman, etc. Another key factor of the complexity of planning the prizes for games is determining, for every game, what the prize will be; about how many winners there will be per day – and if the prize is valuable, ensuring that the game is difficult to win; and the amount that will be charged guests for the game. Video games at attractions and parks have suffered somewhat from the saturation of the outside market with computer video games. However, using creative pricing schemes and desirable prizes can still generate interest for the video game/arcade activities, especially among teenagers.

Revenue Operations in Practice
Practical factors affecting revenue operations Layout/placement of F&B, retail, and game areas ** Location of all types of outlets must preserve traffic flow Must be integrated with the attraction design and layout Outlets easily accessible from, but not impeding, main flow of traffic Ride exit flow (recent trend: exiting a ride through a gift shop) Food – Offer convenient venues for all types of food needs Quick drink stands, vending machines, snack shops For popular restaurants, open location – Space for lines, in shade Provide convenient cold drinks on hot days, and vice versa Merch. – Expert visual merchandising-Layout/Color/Traffic Flow Make it as easy as possible for people to spend money, but not feel they’re being pressured Instructor Notes Revenue Operations in Practice Recommended time for this segment: Approx. 15 minutes Resources and Suggestions Practical Factors Affecting Revenue Operations Go over the guidelines for layout and placement of the F&B, retail, and games areas within the park/attraction. Offer any insight or examples from your own experience. (Note: Layout/placement of games venues appears on the next slide.)

Revenue Operations in Practice
Practical factors affecting revenue operations (cont’d) Layout/placement of F&B, retail, and game areas (cont’d) Games – Should be located in high traffic areas Display the plush (prizes) outside – Appealing, draws interest Pricing strategies Products should be at prices relative to the marketplace and the park’s customer profile Product offerings should cover all price levels to meet the spending composition of all guests “Trading guests up without trading them away” – Focus on average retail size of transaction ($5-7) and increase units per transaction, while balancing the layering of price points….Note: Pricing is as much an art as a science-Take extra margin whenever possible Instructor Notes Resources and Suggestions Practical Factors Affecting Revenue Operations (cont’d) Pricing Strategies The key to pricing is to remember that there will be guests to cover the entire spectrum of variations in spending motivation and ability, so the product mix should always offer a wide selection in different price points. Also important in purchasing is to remember that if a shop wishes to sell higher end items to attract the gift shoppers, the items sold need to be very unique, and of a higher quality than the standard items.

Revenue Operations in Practice (cont’d)
Practical factors affecting revenue operations (cont’d) Inventory control An attraction selling $5 million at retail is dealing with thousands of items, which need to be sold to be profitable Need for strong policy and procedures, good systems, and management to move the merchandise Important to develop inventory and cash control procedures and physical inventory procedures “Open to Buy” Definition: The dollar amount of merchandise budgeted for a particular period that a buyer has not yet ordered A management tool – Tells buyer what is selling and not selling, to allow decisions early in season of what to discount-TRENDS/PROJECTIONS Instructor Notes Resources and Suggestions Practical Factors Affecting Revenue Operations (cont’d) Inventory Control As mentioned previously, with the thousands of individual items sold in attraction revenue operations, inventory control is critical. Open to Buy How Open to Buy works – At beginning of season, retail manager commits (in the budget) to spend a given amount of money in inventory. As the season progresses, the manager monitors which items are selling, and orders more of those items. With open to buy, the manager asks the question: How much of inventory have we sold, that allows us to buy more? Open to Buy might enable a manager to determine, in early July, that a certain item – say, a Sponge Bob tie – is simply not selling. The manager can then begin the plan to deeply discount the tie, or even package it with another more popular product (i.e., basically give it away), so that the store can move the product out, and not have the inventory still unsold and on the books at the end of the season.

Practical factors affecting revenue operations (cont’d) Inventory control (cont’d) Shrinkage/ Loss Prevention/ Cash Control – Cannot afford to ignore Goal is not to eradicate (which is impossible), but control to a number that is manageable Need to have enough controls to “keep the honest people honest” but not make the park an unpleasant place to work Employee training: Up-selling Employees – Well-trained in cash register, suggestive selling Guest contact – Individual sales to each customer; focus on individual sales, up-selling, and transaction speed…Eye Contact/Smile The right employees are crucial in games – Fun, energetic, engaging, outgoing staff will generate more revenue Instructor Notes Resources and Suggestions Practical Factors Affecting Revenue Operations (cont’d) Inventory Control – Shrinkage and Loss Prevention No matter what you do, there will be shrinkage. This is any type of reduction or loss in inventory, that may be due to any of the following: Shoplifting, Employee theft, Paperwork errors, Damage, or Supplier fraud Since you cannot complete eradicate shrinkage, you should aim to reduce it to a number that is in line with other costs. Employee Training The following training is most important and helpful for employees who work in revenue operations: Good, fast cash register operation Friendliness and helpfulness to customers Individual guest sales Upselling and suggestive selling

Creating new operations revenue sources Non-traditional revenue sources/opportunities: VIP tours, front-of-line access, birthday parties, sleepovers Mitigating the unpredictability of retail – Increase operations revenue by: Targeting outer-market visitors: Learn what demographics are being marketed and focus product mix to that market Leveraging group sales: Find out (from Group Sales Dept.) about park’s group business and tailor food and retail products specifically to reach those groups Wooing repeat customers: Local visitors may respond to effective couponing and promotion of non-logo items (fudge, candy, etc.) Instructor Notes Resources and Suggestions Creating New Operations Revenue Sources Non-traditional revenue sources: VIP tours Visitors who are willing to pay for front-of-line access Birthday parties, sleepovers, and other special events There are some good ways to improve operations revenue via targeted purchasing – basically, by tailoring product offerings to specific groups or demographics. Via coordination between the group sales, purchasing, and marketing departments, the purchasing department can learn what groups are coming to the park, and target merchandise purchases to the groups’ demographics. Gearing the product mix at different times to outer-market visitors, visiting groups, and/or repeat customers – based on sales information – will increase the likelihood of customer purchases.

Skills Exercise: A Case Study
Funworld Park’s Revenue Operations have shown consistent results, but each department has areas in which it can improve... Identify each area’s: Major strengths and weaknesses New operating strategies you would employ to improve performance Any capital investments you would propose to improve the bottom line Instructor Notes Skills Exercise – Case Study Recommended time for this segment: Approx. 30 minutes Hand out to each attendee a copy of the FunWorld Park reports that the new merchandising manager has been examining. Have attendees get together with a partner. Provide each pair with a sheet of white board paper and ask them to discuss the reports and determine where the problem(s) are, as well as the remedies that would resolve the problem(s). Have them write their results on a white board page. After about 10 minutes, bring the entire group back together and lead a discussion of their ideas. Appoint someone to come to the front and write the recommended solutions on a white board for the group.

Instructor Notes Total time allotted for this course: 90 minutes

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Instructor Notes Total time allotted for this course: 90 minutes

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