PT the Auditor
Jerry Brown Said, 'Small Is Beautiful'; Would Your Senior Management Agree?
By John Van Horn
A one-time governor of California who had a Plymouth as his limo, slept on a mat, ate bean sprouts and ran around with a pop star made the statement that "small is beautiful." He wasn't talking about parking, however; he was referring to government.
Many large companies lose money, or at least they don't make as much as they could if they were smaller. By reducing their size, they increased their bottom line. What about parking?
We were reviewing a garage in the Northwest. It had an operation with a bunch of valets. The valets were costly, but garage management felt that the valet assist was necessary to handle the customers, and to keep the numbers up.
When the P and L was reviewed, we noticed that the valets were indeed expensive. We did some quick numbers on the outcome if valet parking were dropped and found that even though we would lose about 200 monthly accounts, we would get more than the loss back in reduction in costs.
So, we did it.
And sure 'nuff, although we dropped about 200 customers, our bottom line went up. The reduction in the cost of the valets, HR costs, overtime and taxes actually raised the profit of the location. Plus, there were much fewer headaches and a lower liability (valet vs. park-and-lock).
We also had an immediate waiting list of 200 monthlies, which we filled over the next couple of months through attrition and just a bit of oversell. Had this operator understood his "vacancy/oversell" factor that we had discussed a couple of months before, he wouldn't have lost a single account.
As you recall, last month PT ran an article about a medical center in Century City California. It had a ton of valets and was parking 2,000 cars a day in 700 spaces. Of course, this plan wouldn't work there. The medical center needed to provide the space for the tenants in the building and for a nearby private hospital. It would never think of reducing the valet service.
So when you decide to cut valet service, you have to take into consideration the facility you support. If you are a stand-alone garage that is being run simply as a business, the bottom line may be all that counts. However, if the garage is an amenity to another business, "whatever it takes" is the answer to the parking situation.
I could say that in the last instance "profit be damned," but I won't. The extremely well-run valet operation at the Century City (CA) Medical Center was profitable, and was so due to diligent management, simply shoehorning every possible vehicle into the garage, and being in a location that offered no other parking in the area. Its office building and hospital had more than 1,000 parkers - but some were on shift work - and more than 1,200 dailies who visited doctors' offices or the hospital every day. According to the owner, they were happy parking "the more the merrier."
Jerry Brown, the second Brown to govern the state of California and current mayor of Oakland, pleaded for smaller government, contending that the smaller an organization, the better it ran. Frankly, I tend to agree. I will say, however, that large and efficient aren't mutually exclusive.
Think about McDonalds - it delivers billions of burgers each day, and every one is exactly the same. You may not like the taste, but you can't argue with the delivery.
The difference in the parking business is that we don't get to pick our location or the type of business we support. Stand-alone garages are one thing, but a garage that supports a hospital, university or airport must be able to take the business it receives. If the theater has a screening at 10 p.m., you can't close at 8, even if keeping the garage open cost you a buck or two.
Article Abstract from April, 2006