John Paul Andree
Great question – Yes, over 60% of FedEx’s revenue comes from its Air segment (FedEx Express). See Figure 1 for the full breakdown. I agree with you that document delivery has the chance to be disrupted, however the company is well-placed to ride the rising wave of e-commerce. Even if a company like Amazon wanted to enter this space directly, it would be very capital intensive to do so.
Great blog post and very clearly structured!
Did you find any data on the throughput time of a Chipotle compared to a normal fast food chain or a casual restaurant? It would be interesting to see where the break point is for people that want fast-casual quickly. Conversely – is there a minimum amount of time where people get suspicious that their food is not as “fresh” and “good” as it could be if it is instantly prepared?
Based on your analysis, what’s striking to me too is that the core business model really has nothing to do with it being a Mexican chain, like you said, its Tex-Mex offerings are an approachable and popular choice in the U.S. However, the value proposition to the customer really doesn’t derive at all from the type of food on offer. I would also like to see how comparable fast-casual restaurants have fared. Have all done as well as Chipotle at executing this business model and operating model (fast and socially conscious)? Or is there more to the fact that it’s a burrito and not a pizza (Mod Pizza anyone) or a salad? At first blush, it would seem that burritos allow Chipotle to execute well operationally (an efficient operating model) thus fulfilling their business model, and other forms of food may have more trouble replicating this.
As a long time Vail skier (I started skiing there and Beaver Creek when I was five), I’ve been a lifelong Vail Resorts fan and definitely enjoyed your post.
Two aspects that I’d like more information on are Vail’s real estate holdings and the environmental restrictions.
I agree with you that VR “owns the mountain” by owning the land at the base of the mountains, but how much of that is VR owned vs. them leasing the land to other companies? I also remember that in the 90s (before the rise of the Epic Pass), the company was making more money selling land for ski-in ski-out homes to multi-millionaires in the Bachelor Gulch area of Beaver Creek than they were in lift tickets. Do you know if this is still the case at resorts that they are still developing?
Great analysis of the Epic Pass – prior to its arrival only Colorado residents would purchase a season pass (the Colorado pass) for the ski areas at a reduced rate. With the Epic, it locks in the large, affluent ski community that flies in to the ski areas each winter. Totally agree with you that the Epic Pass and buying multiple locations of resorts diversifies the risk to the customer – they are much more likely to choose a VR resort vs. another location regardless of the state if they already have an Epic Pass.
Environmental restrictions are another area of interest. VR owns some of the largest ski areas in the United States and most ski areas are not allowed to expand due to the EPA/Forestry Service or because the surrounding geography is unsuitable. I wonder if this will continue a “rich get richer” future as people with money to spend head to the mountains with the most options – thus driving their demand up even further. Small wonder that the price of a one day lift ticket at Vail has gone from ~$52 in 1997 to over $150 in 2015.
Great post, especially on a company that I enjoy greatly. I personally have gotten to experience the legendary hospitality of Disney at the parks (a castmember gave my fiancee and I free merchandise and a ride pass after chatting about our proposal story) – suffice it to say we will always go back. I agree with your analysis – the ability to make discretionary decisions at the lowest level really ties the operational model to the business strategy of the parks and makes the whole experience “work.”
Did you also research some of the infrastructure/operations that go on in the park?
One aspect of the park that has also fascinated me is the operational model of the back-shop support – each night the park is “reset” for a new opening day, and this requires a huge team of highly efficient and synchronized teams – mechanical working on rides, cleaning crews in the park (complete with a pneumatic waste disposal system underground), teams to repaint the park, resetting the fireworks, etc. Quite a lot of behind the scenes activity goes into fulfilling on that Disney promise.