Want to guess how much RCL pays for food?

[Daghis]

I was curious about some financial aspects of Royal Caribbean, so I read through their 2010 Annual Report. It was very interesting to see some actual numbers related to how much they make per passenger on average and how much it costs them to ferry us around for our enjoyment.

 

According to the financial report, the "gross yield" per passenger-day is $218.45. Assuming that we're talking about a 7-day cruise for this example, that means that an average passenger has paid $1,111.60 for their cruise fare and spent an additional $417.55 onboard.

 

For that week-long cruise, Royal Caribbean has paid $146.80 (9.6%) (per passenger) for fuel, $145.27 (9.5%) for the cost of the ships themselves, and just $87.16 (5.7%) for food.

 

I have a very hard time believing the food number. Part of the problem is that I cannot imagine the economy of scale that is necessary to provide a week's worth of food for as many as 6,000 passengers plus all the staff onboard as well. I'm sure that the price Royal Caribbean pays for food is far less per steak or head of lettuce than I would pay at my local grocery store.

 

Anyway, I thought I'd share this little insight with others in case it's of interest to anyone else.

[ehfl]

This seems about right.

[mrobstad]

Very interesting.

[woody73]

 

For that week-long cruise, Royal Caribbean has paid . . . (per passenger) . . . just $87.16 (5.7%) for food.

 

I have a very hard time believing the food number.

That's $12.45 per day per passenger. That's consistent with figures I've heard from other sources.

 

As an aside, I met someone who had worked for a food supplier. He said the cruise lines would grind them and grind them for some outrageously low food prices. Since the cruise lines were such huge customers, they weren't about to lose the account to a competitor.

 

Woody

[Mark_K]

That's $12.45 per day per passenger. That's consistent with figures I've heard from other sources.

 

As an aside, I met someone who had worked for a food supplier. He said the cruise lines would grind them and grind them for some outrageously low food prices. Since the cruise lines were such huge customers, they weren't about to lose the account to a competitor.

 

Woody

THe food cost in the annual report includes staff/crew, so it would be considerably less than that per passenger.

[Mark_K]

I was curious about some financial aspects of Royal Caribbean, so I read through their 2010 Annual Report. It was very interesting to see some actual numbers related to how much they make per passenger on average and how much it costs them to ferry us around for our enjoyment.

 

According to the financial report, the "gross yield" per passenger-day is $218.45. Assuming that we're talking about a 7-day cruise for this example, that means that an average passenger has paid $1,111.60 for their cruise fare and spent an additional $417.55 onboard.

 

For that week-long cruise, Royal Caribbean has paid $146.80 (9.6%) (per passenger) for fuel, $145.27 (9.5%) for the cost of the ships themselves, and just $87.16 (5.7%) for food.

 

I have a very hard time believing the food number. Part of the problem is that I cannot imagine the economy of scale that is necessary to provide a week's worth of food for as many as 6,000 passengers plus all the staff onboard as well. I'm sure that the price Royal Caribbean pays for food is far less per steak or head of lettuce than I would pay at my local grocery store.

 

Anyway, I thought I'd share this little insight with others in case it's of interest to anyone else.

Keep in mind that the food cost in the annual report is the cost of the food (i.e. the ingredients), it doesn't include staff to cook it, energy to heat/cool it, the ovens, appliances, etc. to make it, store it, clean it, prepare it. It really can't be compared to the cost of meals at a restaurant. Or even the cost of you doing it at home, they buy in bulk and make most things themselves rather than buying it packaged.

[Rancher Dave]

Keep in mind that the food cost in the annual report is the cost of the food (i.e. the ingredients), it doesn't include staff to cook it, energy to heat/cool it, the ovens, appliances, etc. to make it, store it, clean it, prepare it. It really can't be compared to the cost of meals at a restaurant. Or even the cost of you doing it at home, they buy in bulk and make most things themselves rather than buying it packaged.

 

They definitely buy in bulk. Think Voyager, Freedom, Oasis...any of those buys enough food to feed a family for years on end. If we could buy and store that much for years to come we too could get better prices, but then they buy that times a number of ships and a number of sailings per year...it really adds up.

 

It would be great if they spent a few more bucks on some of the food for better quality, but the again they have to make a profit for the stockholders.

[negc]

They definitely buy in bulk. Think Voyager, Freedom, Oasis...any of those buys enough food to feed a family for years on end. If we could buy and store that much for years to come we too could get better prices, but then they buy that times a number of ships and a number of sailings per year...it really adds up.

 

It would be great if they spent a few more bucks on some of the food for better quality, but the again they have to make a profit for the stockholders.

 

To a certain degree, it is irrelevant unless you want to compare it to what another line might budget for food. Do you care what your favorite restaurant or a fast food franchise like McDonald's pays for the food it purchases? In every case it is going to be much less than what you might pay for the same ingredients and is only part of the formula that decides how much is represented in the cruise fare that you pay. How much you enjoy the food you are served depends just as much on the talents of those preparing it as it does the quality or cost of the ingredients.

[Familygoboston]

Just wondering how you got the break down of fare vs on board expenditures. Is that in the report too? Because you mention the yeild per pax per day, but I don't see where that split comes from.

I'm sure the food they get is far cheaper than what we could buy, much of our food costs are from marketing and advertising for branded food. Wholesale food has none of those expenses. I'm sure they use very little convenience foods either, their labor costs are low, so it's probably cheaper to have someone make dressing than buy it, for instance.

[Daghis]

All the information I posted came from the annual report that I found on this page.

 

I found the details on pages 47-48 of the PDF. It breaks down the gross revenue as being 72.7% from tickets and 27.3% from onboard and "other" revenues.

 

To get the average revenue per passenger, I took the number of cruise passengers in 2010 from page 15 of the PDF (18,740,000) and divided the total revenues shown on page 48 by that number.

[seaofwonder]

Very interesting! Thanks for posting.

 

We typically average about 1K for fare (balcony or higher). Our onboard spending is usually quite higher as we do gamble on most of our cruises.

[steve20832]

$12.45 per day/per passenger sounds about right since they buy everything in large bulk. They are probably paying less than half of grocery store prices at the volume they buy.

 

A 2,600 passenger ship will use in a week:

 

14,000 lbs of Beef

4,000 lbs. of Fish

22,000 Eggs

 

 

Read more: http://wiki.answers.com/Q/How_much_food_does_a_cruise_ship_use#ixzz1Jrtso5z9

[amybear912]

I'm sure they use very little convenience foods either, their labor costs are low, so it's probably cheaper to have someone make dressing than buy it, for instance.

 

Actually, I'll bet the opposite... That they use plenty of pre-prepared foods because that is cheaper (pre-packaged items tend to use cheaper ingredients) The amount of prep time (labor) involved in making things from scratch is quite high... Making from scratch usually involves a higher waste factor too... Not to mention that the storage for all those ingredients to make from scratch...

[Whitnee1]

Actually, I'll bet the opposite... That they use plenty of pre-prepared foods because that is cheaper (pre-packaged items tend to use cheaper ingredients) The amount of prep time (labor) involved in making things from scratch is quite high... Making from scratch usually involves a higher waste factor too... Not to mention that the storage for all those ingredients to make from scratch...

 

Whatever they are doing and spending they need to do differently because the quality of the food has declined to the point of being between bad and horrible.

[Happy ks]

That sounds about right.

 

It gives a new meaning to the thought of people eating enough to get their money's worth ;) It also shoots down the argument of people thinking small children should get a bigger discount because they don't eat much. If that were the case, I've seen plenty of people who should be paying 3 times the amount for their cruise than others.

 

I've always known the operation costs far exceed the cost of food on a cruise ship. Years ago I worked in a hotel in the accounting department and saw what the food costs were. Yes they got a discount over retail, probably not as much as people would think, but the prep cost was more than the food cost.

[negc]

Whatever they are doing and spending they need to do differently because the quality of the food has declined to the point of being between bad and horrible.

 

Not everyone would agree with your assessment of the food quality. In my experience the talents and abilities of those who prepared the foods had much more to do with how I evaluated the quality of the meals than the particular ingredients. It is easy, but probably not accurate, to claim that a bad meal experience demonstrates that quality has declined. At its best meals in the main dining rooms has always been good banquet type food and nothing more, no matter how much some would like to romanticize the meals that they remember from the past.

[Tranquil Waters]

And the taste of the meals these days makes that figure seem very reasonable. Blah! :( I would rather pay more for the cruise - if they would put those $$ into better meals!! I know there are the specialty venues - and we do use them. But would be nice to dine with tablemates every night like in the "good ole days" rather than having to leave MDR 3 or 4 nights a cruise for some really nice dinners........ :)

[ChipLondon]

Have non of you ever seen the Royal Caribbean team shopping at Publix, when they get all of their coupons out they can really achieve some great deals, the buy one get one free deals are amazing when you buy in bulk.

[CaptData]

I had a friend who was a cook in the Canadian Forces. He could make a pretty bad cut of beef tender enough to eat and make you think it was a higher grade of beef. He said it is the chef and ingredients that make or break the meal. It is easy to over cook or under cook things.

 

One Colonel always wanted his beef burnt so it did not matter if it was a top quality piece of meat or not. The chef finally convinced him to try it done another way and after that he was fine with a slight little pink in the middle where according to my friend is where most people prefer it.

 

The $12 thing is about right for most of the major cruiselines. Look at 150 Park some of their meat is very expencive where as mac and cheese for the kids is very cheap and they make their own.

[IMNiles]

Actually, I'll bet the opposite... That they use plenty of pre-prepared foods because that is cheaper (pre-packaged items tend to use cheaper ingredients) The amount of prep time (labor) involved in making things from scratch is quite high... Making from scratch usually involves a higher waste factor too... Not to mention that the storage for all those ingredients to make from scratch...

 

Take a tour of the galley sometime-virtually everything is made from scratch. It's quite an impressive operation. For an individual family, prepared foods can seem cheaper, particularly since they can't buy in bulk and most aren't good at getting the most out of what they buy. The cruise lines buy in enormous bulk, though, and they are expert at using every part of what they buy (what doesn't go on the plate goes in the soup, etc). I won't say they don't use ANY prepared food, but very little has been in evidence any of the many times I've been through a galley.

 

Say what you will about quality, but theyre not just back there opening up tins.

[Jimnbigd]

I have read that the cost of food is one of the least of the expenses for most restaurants, so this is not surprising for a ship. Can you imagine how much food is thrown out at the end of each cruise? Not just the food left on people's plates, but the unordered food that can't be kept.

[erbunny]

There is a post in a much older thread where someone quotes an RCCI chef as saying it is $10/passenger/day. I wonder how much of the revenue comes from the casino and bars? And stores ? Thank goodness for the shoppers, drinkers and gamblers ( I'm in 2 of those groups ) or cruising would cost a lot more !! One of the Travel Channel docs has the management worrying about whether they were going to make any profit on that cruise, and it was right up to the last day, and thanks to the bar income, that they did.

[time4u2go]

I'd gladly pay more if the meal quality were better!

[Sequim88]

energy to heat/cool it,

Energy for food production is accounted for in the fuel cost since all the ships are electric azipod propulsion the fuel all goes to gas turbine engines to generate electricity. Waste heat in the exhaust is used to run a steam generator to generate more electricity and the steam is used to make drinking water and heat some of that for hot water. I am sure they track Kwh usage for the azipods and thrusters but it would be hard to break out fuel cost for everything else.

 

I would be curious if anyone can confirm if the kitchens have any open flame cooking at all or are all electric. I sort of suspect they don't take LP gas onbpoard or do much with flame for fire safety reasons.

 

Crew eats very plainly and mostly a lot of rice based dishes and the cost for them is much lower per day. Staff a bit better. Officers about same as Windjammer or MDR items. Labor costs are quite low too since room & board are provided - tips making up a large portion for many positions. So as far as prep work to make things from scratch labor would be a much smaller cost that on land.

[amybear912]

So as far as prep work to make things from scratch labor would be a much smaller cost that on land.

 

I disagree.... The more from-scratch items you have on your menu, the more prep work you have... As a result, more labor hours required...

 

Given how many they feed per day and how many meals they provide per day; they obviously have more to prep than an average land-based restaurant....

 

Each ship has more culinary staff onboard than a restaurant on land... They serve more meals in a day than an average restaurant... They serve more people... All of this adds up to a high amount of prep work which translates into more labor dollars to be spent...

 

One thing they have going for them that a restaurant does not is a more definite head count to prep for...

 

As for whether any cooking is done on an open flame... I've seen flame being used in Chops...