Given the history of others’ poor results in catering hot dogs at sports venues and the resulting low expectations meant that Levy could really change the paradigm of a sports team owner’s expectations. In addition to the improved financial results for the Levy Organization, customers were happier. As one might expect, each new arena and stadium elevated expectations. Yet, Levy was able to far exceed even those expectations.
The sports venues would have seemed daunting to some—Levy was competing against six well-established food companies, including Aramark, Volume Services, Service America, and Delaware North. Yet, the risks were actually low. The competitors, according to Levy, were not concerned with food and service quality. Larry feels “they were all old businesses; they were all run by hacks at the time. They knew how to count the beer cups so that nobody would steal, and they knew how to make a warm hot dog, not a hot hot dog. And the buns were served right before they went stale. And basically, over the period of a year we learned that this was a huge opportunity.” Around that time, the name of the company was changed from “The Levy Organization” to “Levy Restaurants,” a clear indication of which side the group’s bread was buttered on as well as a better brand for its growing facilities catering business.
Levy notes that as a land developer he benefited from his understanding of the economics of real estate. And the economics of a new baseball stadium was about specific real estate—the premium (club and sky box) seats and special restaurants that served them. Those old catering companies, the old establishment of the industry, were not capable of providing competitive food and service.
“We learned that the demand created totally elastic pricing. You could charge just below gouging. And in this sky box business, the person paying for it is not present. The people in the box, in almost all cases, were the best customers of the company that leased the box. The most important person in making a sale, a presale of lots of food and beverage, was the secretary to the lessee’s CEO.”
Artwork by Yevgenia Nayberg