Ferry seeking vendors to take over food, retail services

Delaware River and Bay Authority officials have decided to turn over their food and retail operations at the Cape May-Lewes Ferry to a private firm. The transition process, which will include an open house for interested private operators and a proposal solicitation, is expected to take up to two years.

Jim Johnson, executive director of the authority, said the decision will affect seven employees in Delaware and nine in New Jersey. "We will be working with all of these employees to help them find positions, if possible, within other authority departments or with whatever firm we eventually contract with for the services," said Johnson. The goal is to contract with an established hospitality operator by spring 2013.

Johnson said all the employees have done a good job, but the food and retail side of the ferry operation is losing more than $500,000 each year. "We're just not in the food and retail business," said Johnson. "It's hard. But I have every confidence we will take care of these people properly. If we have no takers from either local firms that might be interested or larger regional outfits, then we'll figure out another way to operate. We just have to figure out a way to stop these losses."

He said the food and retail decision shouldn't be seen as a sign that the ferry itself is in danger of stopping operations. "Everything else with the ferry is fine. It's just too important to the communities and the regional area as part of the transportation system to consider halting."

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 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 fall 2011.

Created by compact in 1962, the Delaware River and Bay Authority 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 July 1, 1964. The service connects the resort communities of Cape May, N.J., and Lewes, and traffic volume on the ferry operation fluctuates according to season.

In the 1990s, a private operator - Gentleman Jim's - handled food and concessions for the ferries and the terminals. In the 1995-96 period, those concessions were brought in-house.

For more information on the ferry, go to capemaylewesferry.com.