Merlin Entertainment

PROJECT

Roller Coaster Restaurant Profitability Assessment

TASK

After Disney, Merlin Entertainments is the largest theme park operator in the world. In Australia, it operates brands such as Sea Life, WildLife, Sydney Tower and Madame Tussauds. Merlin were considering launching a new themed restaurant in Australia and sought B&P’s expert industry advice on the cost of operating restaurants in Australia to peer review their business case.

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OUTCOMES

B&P was the only firm able to deep dive into each line item of the business case and provide robust intelligence on the “reality” for achieving both income and associated costs.

• Starting with revenue projections, B&P provided Merlin with deep insights and data into the theme park landscape in Australia sharing comparisons of frequency of visit to theme park restaurants to other dining options by various age groups and demographics profiles.
• B&P coded the proportion of theme restaurants to other dining choices and prepared a gap analysis for the subject site. We were able to prove the projected level of table turns, which formed a basis for the business case sales calculations was much higher than currently achieved in Australian tourism dining venues.
• For the line item cost assessment, B&P revised the wages projections based on current Australian award wages that were applicable.
• The cost of goods projections in the business case were based on a high proportion of the menu using pre-prepared items. B&P justified how this type of produce was not popular for Australian diners and re-modelled costs on a fresh prepared basis.

Most importantly, the premise of the business case was below average costs for wages and cost of goods (food products) because of an intense capital investment in the “theming” of the restaurant. The proposed capital investment being 2.5 times the average investment per square metre for a tourist based restaurant ($16,000 per square metre versus $6,000 per square metre).

Our final modelling concluded there was greater customer demand, greater profit per m2 and a lower investment cost by swapping from a themed restaurant concept to a more family friendly, lower price pointed casual dining option than proceeding with the themed international brand.