DRBA Pursues Privatization of the Food and Retail Operation at the Cape May – Lewes Ferry

(New Castle, DE) Today, Delaware River and Bay Authority (DRBA) officials announced the decision to pursue the privatization of its Food and Retail operation at the Cape May – Lewes Ferry (CMLF). The transition process, which will include an open house for interested private operators and a proposal solicitation, is expected to take up to two (2) years. The goal is to contract with an established hospitality operator by spring 2013.
According to Jim Walls, Chief Operations Officer for the DRBA, the decision to explore the option of privatizing the food and retail side of the business was based on a number of factors. “The Ferry is very important to the tourism economy of the resort communities on both sides of the Delaware Bay and we want to make sure our customer experience is the best it can be,” Walls said. “We need to partner with a proven hospitality operator that can offer brand name menu selections that will not only increase customer satisfaction, but will provide a much needed source of revenue for the CMLF. In addition, a hospitality operator has significant economies of scale and cost efficiencies that our small, stand-alone operation is unable to generate.”
Over the past three years, the concession business, which had an operating budget of $4.1 million in 2010, has sustained an operating deficit of at least $600,000 annually. With a proven hospitality operator, the DRBA expects to realize financial benefits not only through revenue sharing with the business partner, but also through the absence of expenditures associated with its Food and Retail operation.
The Food and Retail operation employs 16 permanent employees and a significant number of seasonal employees during the summer season. The DRBA has met with the affected employees to explain the privatization decision and transition process. “We value our food and retail employees’ consistent dedication to serving our customers and their personal contributions to the Authority and we will work with them to make the transition as seamless as possible,” Walls said. Authority employees will continue to operate the current food and retail business until this privatization effort is completed in approximately two (2) years.
Using recommendations from two different consultants specializing in ferry operations, DRBA management made improvements to the concession business, including enhanced food product offerings; but the food and retail business continues to lose money. “The goal of the privatization effort of the CMLF concession business is to enhance the customer experience by offering improved variety and quality of products to Ferry customers while reducing the associated operating costs at the Authority,” Walls concluded.
This summer, the DRBA plans to host an open house for interested operators so these companies can observe the ferry service during peak season. Following the open house, the DRBA will begin drafting a proposal solicitation, which will be issued in the fall of 2011.
Created by Compact in 1962, the Delaware River and Bay Authority (DRBA) operates two crossing links between the States of New Jersey and Delaware: the Delaware Memorial Bridge and the Cape May – Lewes Ferry. The Cape May – Lewes Ferry began its operations on July 1, 1964. The service connects the resort communities of Cape May, NJ and Lewes, DE and traffic volume on the ferry operation fluctuate according to season. In January 1996, the DRBA began operating its own concession business.