Walt Disney World recently announced a cut in entertainment offerings. Among those entertainment acts cut was a wonderful Magic Kingdom show called Great Moments in American History with the Muppets. In the show, Sam Eagle would tell American history stories while Kermit, Gonzo, Fozzie Bear and Miss Piggy tried, with mixed success, to illustrate the tales.

So, why did Disney cut such a wonderful, guest pleasing show? Like any responsible business, it’s a question of cost control. Disney has two kinds of costs: fixed and variable.

Fixed costs include things like legal and safety support, goods and supplies, vehicle maintenance, electricity and fulltime employee labor. These costs are hard to cut. Electricity, for instance, is fairly constant. Where most businesses can lock the doors and turn off the lights, Walt Disney World never closes, and the lights never get turned off. Speaking from experience—I helped write the third shift custodial training—a lot of activity takes place once the guests leave.

There are fewer variable costs, with the main variable being labor. Entertainment is especially susceptible to cuts. Walt Disney World entertainment serves four main functions: (1) to provide guests with exposure to Disney characters without having to deliver as many one-on-one greetings; (2) to occupy crowds in line; (3) to soak up guests who otherwise would be wandering the streets or waiting in line; and (4) to quickly add an attraction that can just as quickly be cancelled.

Attendance this summer, for some reason, has been soft. Disney has likely been spending more money per guest than its costs performa recommends and thus entertainment has been cut.

The three lessons I take away from this situation are …
1. Disney may seem like a moneymaking machine but it is only so because Disney aggressively manages its expenses.
2. When expenses are out of balance, Disney is ruthless in bringing those costs back into line.
3. What Disney cuts to rebalance its books are items that most guests won’t notice are missing.

What about you. Do you keep a ruthless eye on your bottom line while giving your customers everything you can WHEN you can AND cut back in tough times while not destroying the experience when you can’t? Disney does and that’s why they fired the Muppets.*

* NOTE - When attendance increased over the Christmas holiday season in 2019, Disney brought the show back for a limited run, proving the point that it is always about attendance and financial balance.