Walt Disney World has kicked off 2022 in style, increasing prices on tons of food items around the parks, resorts, and Disney Springs. These include pretzels, popcorn, burgers, hot dogs, bottled beverages, Dole Whips, Mickey Mouse ice cream, beer, cocktails, and more. This post shares a sampling of the price jumps, plus our commentary about why this is happening and whether these price trends are sustainable in the long term.
Unlike past price bumps that impact outdoor vending carts or counter service spots or table service restaurants or bars, these are fairly widespread–everywhere from the kiosks at Typhoon Lagoon to the drink menu at California Grill has been impacted. In fact, hundreds in the headline is no exaggeration–if anything, it’s underselling the scope and scale of this increase.
There’s a strong possibility that over 1,000 menu items have had their prices increased as of January 2022. Unfortunately, there’s no comprehensive way of tracking the before and after of every single menu, so we’re not quite sure. However, virtually every menu I’ve checked has been impacted–this is the most sweeping food price increase in the last couple of years.
Some items at outdoor vending carts only increased by $.25 to $.50. Others increased by more, with Dole Whips up by $1 and many alcoholic beverages doing the same. Many appetizers and entrees at table service restaurants are up by $2 to $3, with burgers and other meats at counter service restaurants up by $.50 to $1.
If you’re visiting Walt Disney World soon, plan to increase your dining budget by about $1 per item. While some things didn’t increase at all and others are only up by $.25, that’s still about the average when you factor in the many entrees that jumped by $2 or $3.
This shouldn’t come as a huge surprise. Anyone who has stepped foot in a grocery store in the last several months knows that the cost of food is increasing. The cost of meat, poultry, fish, and eggs in particular has all skyrocketed. The USDA tracks a breakdown by food type in its Food Price Outlook page (towards the bottom there’s a spreadsheet with percentage changes over the last 3 years).
Per Bloomberg consensus data forecasting, consumer prices likely surged by 7.1% in December. That’s up even further from November’s 6.8% year-over-year rate, which had been the fastest pace in 39 years–since June 1982.
It should go without saying, but businesses attempt to pass higher costs on to consumers. This is clearly what’s happening at grocery stores, and explains the entirety of higher “food at home” prices on the CPI. However, you might notice that “food away from home” has not increased in lockstep with its grocery store counterpart. Whereas the latter is up by 6.4%, the former is up by 5.8%. This is despite higher labor costs and the industry still in the midst of a recovery from 2020.
One potential explanation for this is trepidation among restaurants about their ability to pass on higher prices to consumers without seeing a corresponding drop in demand. Of course, many do–especially lower margin locations that simply are not economically viable otherwise.
However, not every restaurant or other business has the ability to simply pass on higher input costs to consumers, across-the-board. In fact, you might recall that during Disney’s fourth quarter earnings call, CFO Christine McCarthy was asked about the impact of inflation on Walt Disney World.
She started by saying this was a question that’s on the minds of every CFO and senior management team running companies in the United States, noting that Disney is watching inflationary pressures and trying to manage them.
In addition to raising prices, McCarthy discussed managing costs: “We can adjust suppliers.We can substitute products. We can cut portion sizes, which is probably good for some people’s waistlines.We can look at pricing where necessary. We aren’t going to go just straight across and increase prices.”
“We’re going to try to get the algorithm right to cut where we can and not necessarily dothings the same way. We’re producing technology to produce some of the operating cost. That gives us to absorb some inflation. We’re trying to use our heads here to come up with a way to kind of mitigate some of the challenges that we have.”
Even prior to McCarthy’s infamous “waistline” comments, we had noticed that portion sizes have become noticeably smaller post-reopening, with quality cuts along with them. There are a number of restaurants where this has been noticeable, and it has gotten so bad at Flame Tree BBQ that we rarely dine there anymore. (That’s just one specific example of many.)
The point is that Walt Disney World is not just increasing prices. They are reducing portions, decreasing quality, and raising prices. Obviously all three of those things aren’t happening on every single item (kind of difficult to reduce the size or quality of a 20 ounce bottle of Coke!), but they’re making these “adjustments” wherever possible.
While it’s clear now that Walt Disney World is going to try to pass on some of those costs to consumers, it’s erroneous to assume that this was an inevitability, or that Disney prices are predicated upon its costs. After years of increases, menu prices are wholly divorced from input costs.
As we’ve said before, Walt Disney World charges what the market will bear, increasing prices not at the rate of inflation or because its costs are rising at a commensurate level, but because they can. Walt Disney World is an extremely savvy and sophisticated business that maximizes profits to the greatest degree economically feasible. It’s not as if they have been “holding back” and could’ve unilaterally increased prices even more prior to this.
Presumably, Disney waited so long to increase food prices because there was internal uncertainty as to how consumers would react. Not in terms of vocal complaints or outrage on social media, but behaviorally. If the extra $.50 here or $2 there causes more people to balk at impulse snack purchases, buying more booze, or even eating another table service meal, it could be counterproductive.
These items are all profitable even pre-price increase, so it’s not as if Disney “needs” to institute them in order to remain economically viable. It’s more a matter of wanting to maintain its margins without seeing reduced demand. Now that consumers are accustomed to the impacts of inflation on food, perhaps Disney felt that would give them cover to raise prices–that people would more easily accept the prices as out of Disney’s control or commonplace in the market. It’s likely that many guests will shrug off this news, numb to headlines about inflation or skyrocketing food costs.
In the near-term, it’ll be interesting to see what impact this has on guest spending. One relevant consideration here is that Walt Disney World’s dining capacity is still not back to 100%. This disproportionately impacts table service restaurants, where Advance Dining Reservations have been in short supply for much of the last year. (I’m actually somewhat surprised Disney didn’t capitalize on the previous supply-demand imbalance, and raise prices on table service menus months ago.)
Even absent price increases, that trend may not have continued as before. The busy holiday season is over and even if the next couple of months don’t end up being a typical winter off-season, they almost certainly won’t be as busy as the last two months. As things continue to normalize—the labor market, household savings, and supply chains—there could be less of an issue with all of this, anyway. For their part, many economists are forecasting food prices to stabilize in 2022.
On the spectrum of things that are significant or important to a Walt Disney World vacation, pretty much anything sold at outdoor vending carts is on the super low end. These aren’t iconic meals, snacks, desserts, or specialty beverages that only Disney does. That’s even true of churros and Mickey-shaped novelty snacks, all of which have comparable counterparts at Costco. Pack your own snacks and allocate your dining budget towards food that’s actually unique and delicious.
Eventually, this could catch-up to and be self-defeating for Walt Disney World. To be sure, they’ll reap some short term revenue gains by charging a bit more for various foods. Guests may balk at prices for some unnecessary purchases, but not everything or everyone. The people who are already at Walt Disney World are largely a captive audience.
However, these decisions also have long term ramifications that can far outweigh the immediate gain of the current quarter. The biggest consequence of this and every recent price hike will eventually be in terms of perception. We’ve mentioned this before in the past, but there’s a cumulative impact of these increases. Even if this is not borne out right away, they do take a toll on guests and change how people view Walt Disney World’s value proposition.
It’s unlikely that many people will cancel their Walt Disney World vacation upon reading this news. If the end of free FastPass, Disney’s Magical Express, etc. wasn’t the straw that broke the camel’s back, this probably won’t be, either. Rather, this is yet another gradual annoyance about Walt Disney World nickel and diming guests, the cumulative impact of which eventually changes behavior.
Right now, visitors wear “Most Expensive Day Ever” (among countless other designs) Etsy shirts half in jest, while still visiting Walt Disney World. They’re willing to laugh off the expensive nature of a Walt Disney World vacation as they are comfortable with their personal economic circumstances and the overall cost of the trip, even if grumbling about it. That won’t always be the case–but we’ll spare you further commentary about Disney’s perception and reputation problem. For years, we’ve been saying this is a long-term liability; given that it has yet to catch up to Disney, maybe it never will.
What do you think of these and other recent price increases at Walt Disney World? Think this is a natural consequence of inflation, or another example of Disney getting more greedy? Will these price increases impact your plans for future vacations? Do you agree or disagree with our commentary? Think there will be long-term consequences for Walt Disney World resulting from its pricing trends the last few years? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!