It’s a Holly Jolly Day to Buy Some Ownership in Walt Disney
It’s Friday but judging by the weak Wifi signal in the hotel, this post may not go live for who knows how long. My dad arrived this morning to spend the weekend out here in California with my mom. We all went over to the Disneyland park and had brunch together at the Holly Jolly Bakery Cafe with Ashly, our godson Evan, and later, Chuck and Linda joined us. With the Blue Ribbon Bakery gone and replaced by a Starbucks (something I maintain was one of the few mistakes made by management during the golden era in which the firm finds itself at the moment), rumor was they had the classic Disneyland cinnamon rolls here at Mary Poppin’s eatery – conveniently adjacent to The Coca-Cola Refreshment Corner – which they did. All of us think the recipe tastes like it uses more butter but, perhaps, the heat is playing tricks on us. (On that note, the weather is starting to get nicer. Even though today will still be hot, it is peaceful right now and feels fine in the shade. After surviving 101 and 105 degree days, this is, literally, a walk in the park.)
Since we were at the original Disneyland location, it seemed like a good excuse to pick up a handful of shares of The Walt Disney Company to add to the souvenir collection. I threw in $1,200 or so worth of Disney stock, while putting the other funds in reserve to use at my discretion in the future. The updated VSIP spreadsheet now shows the new tally. I might buy some more when I play Kingdom Hearts III, which is supposed to be released this year.
Watching the throngs of individuals, couples, and families of every conceivable background, race, age, sexual orientation, political persuasion, geographic origin, and language open up their wallets to pay $3.25 for a 20 ounce bottle of Coke or $52.95 for an infrared controlled Lightning McQueen race car never ceases to amaze me. It’s as if people enter a trance. I know the metrics from the 10K and other filings – RevPAR, gross margins, capital expenditure rates, expansion projects – but seeing it, actually watching the transactions occur, makes the business so much more tangible.
I can see the castle and the throngs of people pass by as we have breakfast/lunch at the Holly Jolly Bakery Cafe. I borrowed my mom’s iPhone and used it to place an order for a few more shares of The Walt Disney Company. The VSIP spreadsheet has been updated.
It reminds me of a lesson that I didn’t appreciate earlier in my career: Every commercial empire is built on the moment when a customer decides to hand over money for something he or she wants. Whether you are selling rare gemstones at Tiffany & Company or Elsa dolls from the movie Frozen, it all happens at that point of exchange. Sales is not a dirty word. If you think you are somehow above sales, or that your profession is somehow more worthy than sales, you’re deluding yourself. Sales is really just a word we use to describe the process of giving someone what they want in a free exchange; satisfying their needs and getting paid for it. To repeat something I’ve said on this blog often: Walt Disney was in sales. Steve Jobs was in sales. Even your local heart surgeon is in sales because he’s selling his time and skill set to the hospital. Everybody, everywhere, in any free society, is in sales. The quality and terms of the product or service you offer your fellow citizens will determine, to a large degree, the outcome you get in life.
My brother often jokes that I could sell ice to an Eskimo but the secret is I remember reading a long time ago that the best salesman and sales enterprises don’t convince the buyer to purchase something, they free the buying impulse by inspiring folks to open their wallets out of excitement. People like spending money and getting products or services that entertain, delight, or convenience them. As long as you only recommend products you know will make their life better, and only recommend products that you, yourself, believe are the best in their price class, human nature does the rest. The problem comes when people try to sell something that doesn’t meet those qualifications or they try to make a quick one-time buck off someone else’s ignorance. It’s a short-sighted, counterproductive way behave because the real money is in repeat business; having people come back to you time and time, again, throughout their lives.
California heat is so different from Missouri heat. In the Midwest, the humidity means you can’t escape the temperature even in the shade as the moisture in the air carries it. Yet, here, once you’re sitting under a covered porch, it’s much cooler.
The profit margins on coffee and tea are normally astronomical – 99% or greater. In Disney’s case, they aren’t charging $1.00 or $1.50, they’re charging $3.69 or more (e.g., a large sweet tea). Every beverage in the park is essentially all profit for the stockholders. In the aggregate, it’s these sorts of profit enhancers that increase the overall return on capital the park enjoys. We used this strategy for one of our businesses in a way that selling $3-$4 add on items increased the actual profits on the main products by double-digits because the add-ons had no cost against them. It’s one of my favorite strategies. Practically nobody worries about the few extra dollars if they are getting utility from it but it can make all the difference for owners.
I couldn’t help but take another picture of the Coca-Cola Refreshment Corner. I need to do some research because when the park opened, PepsiCo had the contract. I don’t know 1.) when, 2.) why, and 3.) on what terms Coke secured its place. I’d like to discover the answer so that’s going on my homework list.
My mom and dad are going to check out some rides. Aaron and I are going to get on The Haunted Mansion, Peter Pan (they recently renovated it), and Snow White’s Scary Adventure (never been on it and at this point, needs to be done). Fun fact: If you look at satellite images of the park or the maps that have been made available by corporate, you can see the way the Disney Brothers lowered their capital expenditures without customers knowing. The Haunted Mansion front is built against a huge, hidden warehouse that is home to the actual ride itself. You are lowered into it in the beginning when the room with “no windows and no doors” stretches.
