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.
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Comments
If a 20-oz bottle of anything costs the same in two different parks, it's because one of several things. The cost to the park concessionaire may have been the same or super close, and the same mark-up applied (with rounding smoothing out the slight difference). The manufacturer may have had a retail price printed on the bottle (not likely for beverages). The Concessionaire may have chosen to sell the beverage at an attractive price (like 99 cents) instead of the (higher) actually authorized rate.
Just for the record, a concessionaire may always charge less than the authorized rate for an item. It does happen, although I know lots of folks wish it happened a lot more.
The reason for the odd pricing is that the concessioner is only allowed a certain % of mark-up for each item and are not allowed to round up to make the price come out to the nearest even dollar amount. Keeping in mind that the concessioner is there to make money it makes no sense for them to round the price down to make it come out to the lower dollar amount either.
How about a roll of TP?? How come it's so expensive at Yellowstone?? LOL
That is so true. I worked for Hamilton Stores in Yellowstone and the blue enameled cookware that was sold in our camping department was about 25% less that in Cody, WY. Also the beer was usually cheaper than in West Yellowstone, MT . I would often hear parents say" We don't want to buy that here. We will get it when we leave the Park".
Kurt, regarding your question about a 20-oz bottle of Coke costing the same in Glacier Bay and Yellowstone; I am guessing Glacier Bay was using the Coke as a loss leader in order to get you to buy more $5 bags of potato chips and $2 Twinkies.
Hi David and Kay. Great article but please check your math on the markup percentage example for bread. You state that $2 x 1.46 is $3.92. Actually $2 x 1.46 is $2.92. Other than that, very nice explanation of the pricing of items in NPs.
Sounds like I paid too much for the bread.
Many "gateway communities pretty much serve a specific audience and can overcharge because the free market allows them to. I remember going to the McDonald's in West Yellowstone and noticed that not only were the prices considerably higher (about the same as Manhattan) than other locations, but that the "Dollar Menu" was conspicuously absent.
I do remember attending a ranger talk on water sources at Mt Rainier, and I figured that I would get a can of Rainier Beer (a pretty standard bland beer) since it's supposedly made with local spring water. It was less than a dollar. I think I would have paid much more for one at a convenience store outside the park.
And although I wouldn't condone it (wink wink), I understand that some people sneak "heavy beer" and liquor into Utah. I saw people drinking some standard ABV beer on the porch of Bryce Canyon Lodge. I'm thinking that enforcing Utah alcohol laws isn't a priority with NPS. I think Utah's rules are confusing as heck, since someone carrying alcohol in their vehicle (even if not for consumption in Utah) is technically in violation of their laws. The only exceptions are for one liter duty of free liquor brought into the US or alcohol brought into Utah during a move - with specific state approval, the alcohol tagged with a state label, and a fee paid to the state. They know it's happening anyways. They head over to Nevada, Wyoming, Idaho, and Arizona to buy their booze anyways.
http://www.abc4.com/content/news/state/story/With-DABC-closures-Utahns-h...