Ok kids, let's have a quick talk about privatization. Here at the Chautauqua Institution (where I currently live and work) we have a common problem with retail availability. Chautauqua runs a 9 week summer enrichment program, and during those 9 weeks the town of Chautauqua gets an influx of nearly 200,000 visitors. These people come to learn, rest, listen, and enjoy the atmosphere, but they also require services. The visitors at Chautauqua want fine dining, groceries, supplies, and personal services like spa treatments, haircuts, and manicures, but they don't want to have to leave the grounds or drive. Chautauqua is a walking community, and most of the residents and visitors would like to be more green and less dependant on cars during their stay here. Still for the most part property owners and visitors alike have been unsatisfied with the retail services here for many years. They complain that the food is bad, the groceries and supplies are overpriced or under stocked, and the service is unsatisfactory. This is a classic problem for economists, city planners, and businessmen alike: How to provide the desired services at appropriate prices in a unique and strangely structured community.
In order to fully understand the issue it is important to consider the difficulties that community leaders, local administrators, and business owners face in a situation like this, and to look for some classic remedies. During the past 5 years there have been 8 different food service locations operating on the grounds at different times, of these 8 locations 5 have been owned or operated by Chautauqua Institution at some point, and only 2 of the 3 that have not been directly associated with the institution are still operating. This is an important thing to notice when prices are high and service is poor.
As an economist my first impulse is to wonder why the Chautauqua Institution, a non-profit organization dedicated to academic, political, and religious discourse and the promotion of the arts, would try to get into the food service business. A quick answer is probably necessity. An organization in charge of providing residents and visitors with a desirable and functional community may not feel comfortable negotiating with outside vendors, and thus feels compelled to provide services themselves that they see as necessary. This is a critical (but sometimes unavoidable) mistake. Some curious parties might be skeptical about why Chautauqua Institution could do such a bad job at providing food service (assuming customers believe that they do a bad job...which they do). They might say "Chautauqua seems like a well run and intelligently operated organization, they should be able to figure out how to serve me a decent hamburger or a Filet Mignon right?" Wrong. The question you should be asking is "How could we possibly expect a non profit institution responsible for music, arts, religion, and knowledge to know how to run a restaurant?" These business models are completely different and unrelated. Planning lectures and concerts and enrichment classes has nothing to do with refrigeration, kitchen operations, deep fryers, menu layout or the satisfaction of customers tastes (literal, not preferences).
This is not an accusation of stupidity or an outline of some diabolical plot to provide low quality food at high prices, it is simply an assertion of fact and the presentation of an explanatory theory. I have seen similar problems in other places, most notably the on campus grocery store at my college, where I saw prices that were double what I would pay at the regular grocery store down the street and an apparent inability to stock more of popular items and less of worthless ones. This is an issue of improper ownership and business models. My suggestion in this case is similar to my suggestion in most cases: leave it to the pros. So back to the title...If Chautauquans want to buy high quality groceries on the grounds then Why Not Wegmans? If they want great food and service, then the Chautauqua Institution needs to approach a local restaurateur and offer them an enticing lease or rental package on some valuable retail space. The fact that this sort of deal has not already happened means that there are organizational problems including but not limited to: resource management (accounting and budgeting), negotiations, and real estate pricing (this is an essential issue when dealing with vendors...what is a reasonable rent to charge?). These problems need to be addressed, and hopefully they can be once the goals have been properly defined and a plan has been made.
Comments?
Ideas?
Insights?
Arguments?
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1 comment:
Excellent summary and problem statement. I'll try to define what I see as further problems:
- opportunity for profit is low in a nine-week season, so 'the pros' may not be interested. the several non-Institutional food and non-food service outlets seem to be dedicated amateurs who give up when the business no longer gives them pleasure.
- labor issues combine with the above to make it unattractive to hire and train (much less nurture and provide career paths) to employees who, by definition, are temps or, at best, summer hires.
- supply and shipping are awkward in a gated, anti-automobile community.
I hate non-transparent subsidy, but the Institution could provide infrastructure which would address these problems, making it more likely that outside providers would come "inside."
the most obvious approach is to encourage retail "inside/outside" allowing limited time parking and services along 394 with a gate for passage to and from the Institution.
another approach would be to assist service providers with their supply and labor challenges.
the first step should be face to face meetings with service providers, the ones who are here now or who might be here or who have been here and left: find out what it would take to make this a friendly atmosphere for their business.
good discussion.
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