Sportico

Fans Splurge on NFL Concessions as $5 Beer Era Goes Flat

By Eric Jackson

Fans Splurge on NFL Concessions as $5 Beer Era Goes Flat

After seeing pandemic-induced declines almost across the board last year, the NFL has bounced back with strong ratings and an increase in club seat sales. Though general attendance has been down for several teams around the league, there has been a consistent trend among the fans who are showing up: They’re opening up their wallets.

While the stadium food-and-beverage category, pre-pandemic, seemed to be moving in the direction of fan-friendly pricing, Food Service Matters CEO Mike Plutino is seeing that movement stop in its tracks. After gaining traction with venues and concessionaires about dropping prices before the pandemic, he says that now some NFL teams are experiencing per cap increases as much as 40% and that one of his NFL venue clients already met their revenue threshold of the last three years with four home games left.

“It’s putting us in the position of ‘well don’t touch it now, because [fans] are spending like crazy,” said Plutino, an industry consultant who specializes in food service at pro sports venues.

Other leagues may see concession revenue as an integral source of income, but it’s minimal for NFL teams, sitting well outside their top four revenue streams. So when the Atlanta Falcons disrupted previous models by inserting ‘fan-friendly’ prices, dropping hots dogs to $2 and beers to $5, when it opened Mercedes-Benz Stadium in 2017, they were acting on a simple question: If you can sacrifice some gameday revenue in a nonsignificant category to make fans happier, then why not?

AMB Sports & Entertainment, the parent company of the Falcons and MLS’s Atlanta United FC, was behind the concessions overhaul four years ago. AMBSE vice president of strategy and corporate development Gordon Barfield says that sales volume on ‘fan-friendly’ items is down about 8% on average from the first year, but they have seen an increase on premium items sales, as fans have grown accustomed to the initiative and the novelty of cheaper prices has worn off.

“All the reasons why we did it were validated,” Barfield said. “Fans have responded both with their wallets and how they value us as an organization…. It has definitely met our expectations, if not exceeded them.”

The Baltimore Ravens followed suit in 2018 with ‘Flock Friendly Fare,’ dropping the prices on 21 items by an average of 33%. Ravens senior vice president of stadium operations Roy Sommerhof says the team takes a lower commission from their concessionaire, Aramark, to make the arrangement work. Sales volume, Sommerhof said, has increased only about 10%, but he notes that season ticket renewal rates have been above 90% over the last few years. Of course, that also coincides with a better on-field product, as the team reached the playoffs in the last three seasons, but executives believe affordable concession prices also helps with retention rates.

“The most important thing in the NFL is getting fannies in the seats,” Sommerhof said.

The Falcons’ ‘fan-friendly’ pricing model has inspired some college and other pro sports venues to drop their prices, so why don’t more NFL teams adopt it? Apart from the Falcons and Ravens, only the Detroit Lions, Buffalo Bills and Carolina Panthers have joined the movement in earnest, according to Team Marketing Report. (TMR data shows some teams dropped the price of hot dogs and soda in 2017).

Some teams are enjoying the fruits of this pent-up fan demand, but they may still consider dropping prices down the road. What’s more, the infrastructure at NFL stadiums also plays a role, as do teams’ long-term agreements with concessionaires. It took the San Francisco 49ers six years to roll out their ‘Member Inclusive Menu’ last year. The program provides added value to season ticket members by including 15 concession items with purchase of the membership.

49ers vice president of business strategy Moon Javaid says the team waited until striking a new contract with concessionaire Levy Restaurants three years ago to execute the new program. Javaid says it was worth the wait, though, as season ticket fans are spending roughly as much as they were on food and beverage before the program started.

“Our customer satisfaction has been at an all-time high because of this,” he said.

The 49ers raised ticket prices about $20 per ticket due to the program. When the Falcons introduced their low concession prices, it was part of a new stadium that required personal seat licenses. Based on fan survey, both fan bases have enjoyed the offerings.

“Psychologically, it seems reducing prices helps the customer in their overall evaluation,” said Chris Bigelow, who runs a consulting firm that specializes in food service at sports venues. “They’re not looking at what they paid for those tickets or seat licenses…. Maybe that’s because you buy your tickets once at the beginning of the season, where concessions you pay for that every time you’re there.”

The connection between lowering concession prices and driving merchandise sales remains debatable, with experts largely tying the latter to team performance and brand strength. As NFL teams look to stabilize after the financial fallout of last season, the idea of shaving gameday revenue and investing millions on more infrastructure and equipment to accommodate higher volume of concession sales may be a non-starter.

AMBSE has inspired entertainment venues nationwide, but its impact around the NFL remains minimal. The pandemic hasn’t helped their efforts to revolutionize the stadium food industry, where other teams around the league would introduce their own full-fledged ‘fan-friendly’ menu for fans.

In fact, the opposite could happen. Plutino believes more teams may optimize and quietly raise food and beverage prices in response to a surge in ticket demand as Covid subsides. Other factors could also be impacting prices right now. Sommerhof said the Ravens slightly increased prices on select items due to supply chain issues. And nationwide, venues continue to struggle with staffing levels, so labor costs are also playing a role here.

“Prior to the pandemic, teams were dealing with [digital entertainment], and there was fatigue of going to a live event, and now that’s all [fans] want to do,” Plutino added. “The [pandemic] kind of flipped things around. In the short-term, there will be a reluctance to bring prices down…. What was making sense a year and half ago has changed quickly.”