Have you ever wondered how national park concessionaires price the convenience items they sell?
Perhaps during the last visit to Yellowstone National Park you thought a bag of ice was overpriced, but beer seemed reasonable, at least compared to the prices you paid back home. Why did you have to pay such a high price for a quart of ice cream, while magazines and paperbacks sold for the same price at home?
Kind of mysterious, isn’t it?
Actually, the pricing isn’t mysterious at all. National Park Service concessionaires are required to price merchandise using published industry gross margins - the difference between cost and the price charged, divided by the price charged. If the average gross margin on candy is 50 percent, a concessionaire that pays 40 cents for a bar of candy would price the same candy for 80 cents.
A related statistic is the markup. The markup is the difference between cost and price, but divided by cost rather than price charged. In the case of the candy, the markup would be 100 percent. In other words, the concessionaire prices the candy at double its cost.
Markups and gross margins are different for different product categories. For example, a dispensed liquid beverage such as coffee has approximately three times the markup percentage as packaged sweet snacks. Markup regulations do not apply to merchandise already marked with a manufacturer's suggested retail price (MSRP).
As an example, suppose a concessionaire’s cost for a quart of ice cream is $2. The markup percentage allowed on packaged ice cream and novelties for 2012 is 92 percent, so the concessionaire would add 92 percent to its cost and price the ice cream at $2 x 1.92, or $3.84. The markup percentage for packaged bread is 46 percent, so a loaf of bread costing the concessionaire $2 would be priced at $2 x 1.46, or $3.92. Rounding is permitted, so the concessionaire could sell the bread for $4. However, a loaf of bread marked with a MSRP of $4.19 would trump the allowed markup and be sold at the higher price listed on the package.
Standard retail pricing practices such as using prices ending in 99 cents are permitted. Variances from published markup percentages are sometimes permitted, but only after approval on a case-by-case basis by the park superintendent. Picture Delaware-North, the concessionaire at Yosemite, asking the park superintendent if it can raise the price of a jar of jelly by 15 cents.
If concessionaires are required to use average industry markups, why do items sold in national park concession facilities often seem so expensive?
One reason is concessionaire costs are likely to be quite high. Can you imagine what Glacier Bay Lodge pays for candy bars? Or how much isolated North Cascades Lodge at Stehekin pays for a quart of ice cream? How about the price Forever Resorts at Big Bend National Park pays for a loaf of bread?
These are the costs subject to the standard industry markups listed below. The same markup percentage on an item that has a high cost will result in the item having a high retail price for national park visitors.
Also, if you are like us, at home you try to buy items when they are on sale. Who hasn’t stocked up on Coca-Cola when it is on special at four 12 packs for $10? When is the last time you saw beer, ice cream, bread, or candy bars on sale in a national park? Have you ever seen a sign in a store at Yosemite that says “Stock up and save”?
Buying convenience items in a national park means you will always be paying full retail. About the only things we have seen marked down in a national park store are faded T-shirts. Even distressed bananas generally sell at full retail.
Category Markups To Be Used By National Park Concessionaires During 2012
Category..................................................Markup Percentage
Cigarettes......................................................18%
Other tobacco.................................................46
Packaged beverages (non-alcoholic).......................67
Beer.............................................................26
Wine............................................................39
Liquor..........................................................35
Edible grocery.................................................81
Non-edible grocery...........................................73
Perishable grocery............................................55
Frozen foods...................................................82
Packaged ice cream...........................................92
Candy...........................................................106
Salty snacks.....................................................63
Packaged sweet snacks........................................49
Fluid milk products............................................43
Other dairy and deli...........................................67
Packaged bread................................................46
Health & beauty care.........................................113
General merchandise..........................................54
Automotive products..........................................87
Publications....................................................29
Ice...............................................................364
Food Service
Food prepared on-site.........................................115
Packaged sandwiches..........................................57
Hot dispensed beverages......................................148
Cold dispensed beverages.....................................94
Frozen dispensed beverages..................................98
Source: NACS State of the Industry Annual Report, 2010 Data as contained in Memorandum from Chief, NPS Commercial Services Program.
Comments
Thanks for the informative article. Very clear.
Danny
In addition, retail businesses located outside of park boundaries are not subject to the same price ceilings that park concessionaires are restricted to, which is why items bought outside a park are often even more expensive than those same items bought inside the park. Many of these external businesses prey on the lack of awareness of park visitors who assume that they will be gouged inside the park and naively make a run out of the park to make their purchases.
Do transportation costs affect prices in parks? Some of those parks are awfully remote and it does cost money to haul candy bars all the way out there.
Fantastic article, very well written and informative. I think it's valuable for park visitors to understand these types of relationships between concessioners and the NPS as well as associated pricing regulations. Thanks for posting!
High transportation expenses result in a higher cost to the concessionaire, thereby resulting in a specific markup producing a higher retail price for visitors. Imagine the cost of transporting milk to Big Bend National Park's small camp stores that are 110 miles from Alpine, the nearest town of any size. Once we watched as a UPS truck arrived at the park's Chisos Mountains Lodge and wondered how much money UPS lost making that delivery.
Thanks for the explanation, but I'm still going to gripe about the prices, anyway. I noticed that one of the lowest markups is for beer. The highest is for ice. I guess they make up on the low markup on beer by making you pay to keep it cold. LOL.
The highest price difference that I remember paying (that is, what we were 'used' to paying at home vs what we paid in the park) was for bottled water in Yellowstone. I don't remember the exact price but I do remember it was over twice as much for an 8 pack of 16 oz bottles as we paid per 'flat' of 36- 16 oz bottles we brought in our RV from home. It floored us because we had expected to pay through the nose for fresh produce (which wasn't priced too bad) but not water! I realize I'm comparing apples to oranges, since theirs was Dasani (a 'brand' name) and ours was Costco brand. Too bad the concessionaires can't clip coupons or shop at Costco, or better yet, hire my 89 year old Mom to shop for them. Mom can sniff out bargains and sales on groceries better than a hungry wolf can sniff out prey!
BTW-my husband was delighted to find out that it was cheaper to drink beer, and a good microbrew at that, than water. Any old excuse......sigh.
Anyone else remember a particular 'sticker shock'?
David, perhaps you can explain why a 20-ounce bottle of Coke costs the same at Glacier Bay as it does at Yellowstone???
I have a somewhata related question. On a geology field trip with a group of teachers, we stopped to have ice cream cones at a national park concession. As all 30 of us went through the line, each of us had no change, only bills, with which to pay. The cost of the cone was something-99 cents plus tax. That meant that everyone of us had to receive almost a dollar's worth of change. Would it not be simpler if the price were just adjusted so that it came to a rounded dollar value? Many travelers don't carry change. Just a thought....