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Home My WebLink AboutCSD-003-18Clarftwn Community Services Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: March 26, 2018 Report Number: CSD -003-18 Resolution: GG -171-18 File Number: By-law Number: Report Subject: Recreation Facility Concession Operations Review Recommendations: That Report CSD -003-18 be received; 2. That the Community Services Department be authorized to cease the municipal operation of the concessions at Garnet B. Rickard Recreation Complex, South Courtice Arena and Darlington Sports Centre by May 31, 2018; and 3. That Staff be authorized to issue a Request for Proposal for the concession operations of these three arena facilities for the start of the 2018/19 ice season in September. Municipality of Clarington Report CSD -003-18 Report Overview Page 2 The Community Services Department has undertaken a review of concession operations in our three arena facilities. Based on this review, staff are recommending that municipal operation of them cease and that staff seek interested parties, through a public process, to assume their operation. 1. Background 1.1 The Community Services Department currently operates food and beverage concessions in our three arena facilities; South Courtice Arena, Darlington Sports Centre, and Garnet B. Rickard Recreation Complex. These concessions are generally operated weeknights and weekends, with some variations, during the fall/winter ice season months of September to April each year. During the remaining months the operating hours are reduced to serve a lesser demand from indoor lacrosse, or closed completely. 1.2 In addition to the three arena concessions, the Department has previously operated concessions at Courtice Community Complex, Diane Hamre Recreation Complex and Bowmanville Indoor Soccer. These operations were all closed due to consistently low revenues and rising expenses which created annual operating budget deficits. Although staff did seek interest from the private sector and/or local community groups, these efforts were not successful. 1.3 The concession and vending operations are administered by the Facility Supervisor at South Courtice Arena. The direct supervision of the concessions is the responsibility of the Concessions Supervisor, which is currently a 24 hour part time position. At this time we have 14 concession attendants, seven of which are on employment contracts that expire April 30, 2018. 1.4 Historically, the arena concessions generated annual surpluses that helped to offset the operating costs of our recreation facilities. However, staff have been monitoring a trend in recent years where expenses have surpassed revenues. In response, staff have been diligent in reviewing operating hours, staff schedules and inventory controls to manage expenses. In the past we have also tried new and different foods and beverages to generate additional revenues. Some have been successful and have been maintained, while others have been less so. In September 2016 debit machines were installed at the Garnet Rickard and South Courtice concessions. Adding this convenient method of payment did result in an increase in sales. Municipality of Clarington Resort CSD -003-18 Page 3 1.5 Clarington is not alone in this challenge. A number of other municipalities have undertaken alternative operating methods including issuing a Request for Proposal (RFP) for private sector concession operators, reaching out to local community organizations to operate or in some cases closing entirely and offering enhanced vending services to their facility visitors. 1.6 There are a number of external factors that are contributing to this situation. The increasing availability of fast food options in our community provides our patrons quick and easy options which reduce the demand for food and beverages at the facilities. Also a number of the people who use our recreation facilities are here on numerous nights per week and the overall cost of making purchases each time can be costly. 2. Financial Considerations 2.1 Staff have prepared a summary, below, of the total revenues and expenses for the arena facility concession operations. This includes the actual year-end totals for 2015, 2016 and 2017 as well as the approved budget for 2018. For the purposes of this report, all vending associated revenues and expenses have been excluded. A detailed breakdown of the revenues and expenses for each arena facility can be found in Attachment 1. Arena Facility Concessions 2015 Actual 2016 Actual 2017 Actual 2018 Budget Total Revenues ($296,017) ($276,646) ($306,772) ($317,000) Total Expenses $323,454 $306,408 $319,006 $344,024 Total Surplus/Deficit $27,437 $29,762 $12,234 $27,024 2.2 In order to keep concession prices affordable for our customers, we have established conservative mark-ups on the cost of goods we sell. Although this strategy is beneficial to customers it does place a limit on pricing increases that are needed to maintain or increase revenues. On the other hand if we were to significantly increase pricing for our products, demand would drop and our revenues could decrease. 2.3 For a number of years, we have implemented many cost control measures in the concessions. Some examples of this include simplifying the product options we sell, maintaining lower inventory on slower moving product and reducing staffing levels during slow time periods. Any further reductions in staffing would result in reducing the operating hours in our concessions. Municipality of Clarington Page 4 Report CSD -003-18 2.4 The implications of the recent legislative changes in Bill 148, the Fair Workplaces, Better Jobs Act, 2017 will continue to impact the ongoing costs to operate the concessions. However, staff have been monitoring the concession budgets for a number of years and as can be seen in the data above it is not the reason we are bringing forward our recommendation to cease municipal operation of the concessions. 3. Alternative Service Delivery Options 3.1 As indicated in the budget information above, it is evident that there are significant revenues in the concession operations. For this reason, staff are confident there will be interest in the marketplace from private sector concession operators or other interested parties. 3.2 If approved to proceed, Community Services will work with the Purchasing Division on a Request for Proposal that will seek submissions from the marketplace. These could include private catering or concession operators who are looking to expand their business. As well, there are examples in other communities where local sport and community organizations have assumed control of concession operations. 3.3 Following the RFP process, staff will review any submissions received to determine the best opportunity for both the Municipality and our recreation facility users. 4. Concurrence 4.1 Not applicable. 5. Conclusion 5.1 Based on the budget performance of these concession operations over the last number of years, staff have concluded that our municipally -operated model will not be able to generate adequate revenues to cover all associated operating costs. This will result in the continued subsidization of these operations. 5.2 We are aware of the part time employment benefits that these operations provide, especially for the youth in our community. Our Department has many examples of part time staff who have gained valuable work experience with us that they have used to succeed in future endeavours. By offering the opportunity to the private sector or other organizations to assume operation of these concessions it is possible this could provide similar opportunities to the youth of our community seeking part time employment. 5.3 It is respectfully recommended that Council approve the closing of the municipal concessions and that staff be authorized to issue an RFP for the operation of these concessions. Municipality of Clarington Resort CSD -003-18 6. Strategic Plan Application 6.1 Not applicable. Submitted by. for Joseph P. Caruana, Director of Community Services Page 5 Reviewed by: Andrew C. Allison, B. Comm, LL.B CAO Staff Contact: George Acorn, Facilities Manager, 905-623-3379 ext. 2503 or gacorn@clarington.net Attachments: Attachment 1: Concession Operation Revenues and Expenses by Arena Facility There are no interested parties to be notified of Council's decision. Attachment 1 to Report CSD -003-18 Concession Operation Revenues and Expenses by Arena Facility Facility 2015 2016 2017 2018 Actual Actual Actual Budget Revenue (140,214) ($123,252) ($140,957) ($155,000) South Courtice Expense 153,430 $134,679 $142,620 $159,899 Arena Surplus/Deficit 13,216 $11,427 $1,663 $4,899 Revenue (13,842) ($12,342) ($11,357) ($15,044) Darlington Sports Expense 21,907 $16,256 $16,078 $25,079 Centre Surplus/Deficit 8,065 $3,914 $4,721 $10,079 Revenue (141,961) ($141,052) ($154,458) ($147,000) Garnet B. Rickard Recreation Expense 148,117 $155,473 $160,308 $159,046 Complex Surplus/Deficit 6,156 $14,421 $5,850 $12,046 Revenue (296,017) ($276,646) ($306,772) ($317,000) Totals Expense 323,454 $306,408 $319,006 $344,024 Surplus/Deficit 27,437 $29,762 $12,234 $27,024