Opinion: Lions must follow Falcon's plan for cheap stadium concessions
The Detroit Lions announced last week that this season they are instituting fan friendly concession pricing, titled Silver Savings, and a DTE Energy Power Hour, a pregame period with even greater savings on stadium concessions.
The Lions are following a trend of lowering concessions prices in NFL stadiums and fans are the winners.
The Atlanta Falcons moved into their new Mercedes Benz Stadium last year and in the process, dropped the price of some of their fan-favorite concessions — Coke, hotdogs, waffle fries, popcorn — by about 50 percent. For those of us familiar with sport stadium pricing, the move was unfathomable. What the Falcons did was a proactive effort to make the gameday experience more fan friendly. In fact, it is called, “Fan First Pricing.” And everyone agrees, the average NFL fan could use a little extra loving.
Did the Falcons do it to be nice? Sort of.
Atlanta fans certainly took notice. The Falcons organization skyrocketed up to near the top of the NFL rankings in game day experience and family friendly environment rankings. Undoubtedly, fans saw more value for their ticket purchase.
But there’s more. The Falcons organization actually made more money by lowering concession prices. Fan spending went up by 16 percent. While this seems counter-intuitive it makes some sense.
An NFL team has a lot of ways to make money. Selling food and beverages is just one way, and not the biggest revenue stream available. Teams in the NFL all share in the league’s lucrative broadcasting rights deals. In addition to that, teams profit from merchandise sales, parking, personal seat licenses, ticket sales, and stadium naming rights.
Lowering the prices on a portion of their food and beverage options, still leaves an arsenal of revenue streams from which a team can make money. Potentially making less on one money-making tool doesn’t bankrupt a team because it can rely on a batch of other tools still bringing in money.
And though fans will save money on food, they still spend money on the other revenue streams. The NFL offers fans a large menu of things to buy at a game and fans who got a break on their hot dogs, turned around and bought additional food, beverages, and merchandise and were happier about it.
Fans got a break on the price and dug deep into their pockets and continued to spend. President and CEO of the Falcons, Richard McKay reported that under the new Fan-First Pricing, the volume of concessions sales at kickoff equaled concession sales from the full game from the previous year. What’s more, merchandise sales were ninety percent higher over the same time period.
And those fans who are spending money are planning to come back and do it again. Post-game surveys indicate a strong future purchase intent, especially among families. This plays well into the solid business concept of creating a relationship with your customers.
Now Ford Field patrons will soon enjoy a similar system. Offerings will include $5 beers and meal combos ranging between $10 and $12, saving fans over 30 percent on stadium concessions.
If it works like it did in Atlanta — and makes the team more money and the fans happier and more loyal — the Lions would likely continue it. It makes sound business sense.
What do the Lions have to do?
First, learn from Atlanta. The Falcons have said that they want to share their business model with the league. The Lions are in a position to learn it fastest because both clubs, the Lions and Falcons, work with the same food and beverage supplier, Levy. Levy should be in a position to transfer some of the business model to Ford Field.
Second, design the whole fan encounter: don’t just lower prices. Managing the game day experience so fans have a good time enjoying the event is an intricate exercise that’s been designed in the same way Disney designs their guest experience. If stadium management randomly makes a change in one area of the fan’s experience they could disrupt the entire system.
Though it seems like simple economics — lower the price of food, and people will likely buy more — logistics complicate the plan.
What if there are not enough cash registers available and wait lines grow? People will get mad standing in line.
What if people buy more hot dogs and the Lions run out of the offering? Yup, upset fans.
Implementing a price drop without properly considering the total picture could result in lower profits for the organization and a bad experience for the Lions fan.
When the Falcons designed their new Mercedes Benz stadium they built it with 60 percent more points of sale in the building to handle the anticipated greater demand. The Falcons also encouraged fans to get to the stadium earlier by offering the lower priced food and beverage for sale earlier. This design idea encouraged Falcons fans to gradually enter the stadium well prior to the game’s start, minimizing the long wait lines fans previously experienced when they thronged into the stadium just minutes before kickoff because they tailgated as long as possible enjoying their less expensive, brought-from-home refreshments.
Eliminating the wait lines served to make fans happier, lessen stress on the Falcons resources, and got fans into the concessions areas earlier. And, as fans lingered in the concession areas of the stadium, they purchased items.
If designed properly, there’s no reason this value menu idea couldn’t work.
Brian Larson is a professor of marketing and sport management at Widener University in Chester, Pennsylvania.