Good day and thank you for standing by. Welcome to the Cedar Fair Entertainment Company 2021 First Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] Thank you. I would now like to hand the conference over to your host, Mr. Michael Russell, Corporate Director, Investor Relations. Sir, the floor is yours.

Thank you, Lara. Good morning and welcome to our 2021 first quarter earnings conference call. Earlier this morning, we distributed via wire service our earnings press release, a copy of which is available under the News tab of our Investors' website at ir.cedarfair.com. On the call with me this morning are Richard Zimmerman, Cedar Fair President and CEO; and Brian Witherow, our Executive Vice President and CFO. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ from those described in such statements. For a more detailed discussion of these risks, you may refer to the company's filings with the SEC. In compliance with the SEC's Regulation FD, this webcast is being made available to the media and the general public as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content on this call will be considered fully disclosed. With that, I would like to introduce our CEO, Richard Zimmerman. Richard?

Thank you, Michael and thanks to everyone for joining us on the call this morning. We trust that you're well and hope that springtime has brought a sense of renewal and optimism to your businesses, colleagues, families, and friends. On today's earnings call, we will cover two main topics. As usual, we will discuss our quarterly results in near-term financial outlook, as well as update you on park operations. Additionally, we want to start today's call with a discussion of the key components of our business optimization program, which is already well underway. As I mentioned on our last earnings call, we've used the past year as an opportunity to take a step back and reassess nearly every aspect of our company, something I've been referring to internally is the great reset. The pandemic, while enormously challenging to our business, has allowed us to rethink our long-term strategy with the ultimate goal of driving profitable and sustainable growth in our business. The outcome of our efforts was the development of our business optimization program, which was designed to streamline our business processes, realize efficiencies that improve our financial performance, and bring new ways of thinking to how we entertain our guests. Ultimately, the initiatives within the business optimization program will ensure that we can not only meet, but exceed the expectation of our guests and associates now and for many years to come. To ensure the success of our optimization efforts and maximize returns, we engaged outside consultants to assist with design and implementation and to provide added bandwidth and a fresh perspective. It's a dynamic process that we expect will evolve over time, but it currently consists of multiple initiatives focused on high value areas to produce a better guest experience and improve profitability. Implementation of these initiatives will…

Thanks Richard and good morning everyone on the call. I'll start with a recap of our first quarter results and our outlook around liquidity before discussing the expected financial impact of the business optimization program Richard outlined. But first, I need to remind you that due to the business disruption caused by the COVID-19 pandemic financial results for the 2021 first quarter are not comparable to results for prior years. In responses spread of the coronavirus and in compliance with California mandates, full park operations at Knott's Berry Farm, our only year round park remained suspended in the first quarter, and we were limited to hosting a culinary festival. Results for such festivals are not -- are included in out-of-park revenues are not included in the company's attendance or in part per capita spending data. As we announced last quarter, our 2021 operating strategy is designed to maximize results for our seasonally weighted second half by scheduling park openings beginning in May. Taking advantage of a we anticipate who would be a broad rollout of vaccines during the first half of the year and optimizing cash burn and liquidity when operating restrictions remain the tightest. As expected during the first quarter of 2021, we had zero operating days compared with 90 operating days in the same period last year. For the quarter ended March 28, 2021, net revenues totaled $10 million versus $54 million for the first quarter of 2020. Approximately 75% of first quarter net revenues were generated from the sale of food, merchandise, and games associated with a culinary event hosted by Knott's Berry Farm and amateur sports tournaments hosted at the Cedar Point Sports Center. The decrease in net revenues was the result of a 936,000 visit decrease in attendance and a $2 million decrease in out-of-park…

Thanks Brian. For our parks and our thousands of associates, it's now go time. Tremendous excitement is building among our associates, guests, and communities as our parks prepare for their opening days. To put things in perspective, for several of our parks, including Great America, Michigan's Adventure, and Valley Fair, opening day will mark the first time since 2019 that the rides and attractions will be operating. Both of our California parks will debut long awaited major attractions, including Knott's Bear-y Tales return to the Fair, a 4-D interactive dark ride and South Bay Shores Waterpark, specifically designed for Great America to be the Bay Area's coolest place to slide, splash, chill, and dine. These and similar attractions at our other parks such as the 150th Anniversary Celebration Cedar Point, and the 100th Anniversary Celebration at Knott's Berry Farm strengthen our legacy of connecting with guests in a meaningful and memorable way. We kicked things off this Saturday with the opening of both Schlitterbahn Waterparks in Texas. And within one month, all of our U.S. properties are scheduled to be fully open. As of today, only the opening of Canada's Wonderland will be delayed as COVID-19 restrictions remain in place that directly affect our Toronto Park. Until restrictions are lifted, we will minimize park operating costs and maintain Canada's Wonderland in a state of readiness. While we are happy and excited to be reopening, the health and safety of our guests and our associates remains our highest priority. Therefore, our parks will continue to observe state and local guidelines, which pertain primarily to capacity limitations, mask wearing, and social distancing protocols. As the season progresses, we will continue to -- we will closely monitor state and local requirements as well as CDC guidance, and we will adjust our park safety…

Absolutely sir. Thank you. [Operator Instructions] Your first question will come from the line of Brett Andress, that's from KeyBanc. Your line is now live, go ahead please.

Hey, good morning, guys. So, I may be confusing myself here, but I just wanted to make sure I understand some of the language in the business optimization plan this quarter compared to last quarter. So, last quarter, there was 200 to 300 basis points and margin. That seemed predicated on a return to 2019 attendance. Today, it's $50 million over the next two to three years. So, you gave us some of the moving parts in the prepared remarks. But like if we get back to 2019 attendance over the next 12, 18 months, does that 200 to 300 basis points still hold?

Hey Brett, morning. Its Brian. So, I think you're stepping back just for a second as we said on the last call, we were earlier in the process as related to the development of the program -- the business optimization program. We still do believe that 200 to 300 basis point margin expansion that we talked about previously is very executable. The timeline, as we've gotten deeper into this, certainly some aspects of the program on the cost side may take a little longer to develop and as I noted in my prepared remarks, there are some big components in here that are highly dependent on that attend -- that returned to historical attendance level. So, it does depend on your view of the recovery to back up to that 28 million or more in attendance. As you know, that's the big driver behind margin. But as we've gotten deeper into our -- into the process, and building out the program, we've identified more costs, and the potential the longer term for that margin expansion to maybe be even be -- above and beyond that earlier range we provided may exist as well.

Got it. Okay. And then you're removing the outdoor mask mandate at a few of your parts, which I think puts you at the leading edge compared to your peers. I guess maybe what drove that decision in those parks? What's the initial customer feedback or response been to that? And are you looking to do that in other parts this season?

Yes, Brett. Good morning. First of all, as we always say, and as everybody on this call knows, the health and safety of our guests and associates is top priority. As we looked at it last year, going into the pandemic, we thought it was an appropriate step to both insist on appropriate safety -- social distancing protocols, mask wearing, things that would ensure in the environment we had last year, what would keep everybody safe. I'll go back to what we said on last earnings call and reiterate today, all of the protocols that we put in place; there wasn't a single case contact traced back to us in almost 3 million visitors we had to all of our parks last year. So, we felt really good about that. As we now see the landscape change this year, conditions on the ground are very different region-to-region, state-to-state. We always tried to rely on the most recent regional information, and work with both our infectious disease team that we consult with, outside doctors, but also very close to the state and local regulators who have their fingers on the pulse of what's happening throughout the region. So, we're encouraged by the improving trends. And I think that the protocols we've come out with, or react to what we're seeing on the ground and what we think is appropriate, given all those conversations, both of outside medical experts, but also our state and local partners. So, we're monitoring everything as we go forward. But as things improve, I think we're encouraged that we're seeing relaxation in the restrictions throughout, throughout certainly the U.S., we're watching Canada closely as I said in my remarks, but the initial reaction has been positive. I think there is going to be pent-up demand. And I think there's a desire to get back to not just normal, but get out and really enjoy this summer. When you look back at last summer, everybody will was impacted and didn't have quite the experience they wanted to but closer to home outdoor entertainment, the regional. The key tenant of the regional theme park business, I think rings really true right now.

All right. Thank you.

Thank you, sir. Your next question will come from the line of the Steve Wyzinski from Stifel. Your line is live. Go ahead, please.

Hey, guys, good morning. So I want to start on the labor side of things. You mentioned, availability, and the cost of labor has moved against you guys. And I'm wondering, from here, how do you balance the labor side of things from an availability perspective relative to the guest experience? Meaning, how do you balance trying to lower the amount of labor in your parts versus not impacting the eventual customer experience?

Yes. Steve, good morning, it's Richard, I'll start and then Brian can weigh in. You know, when we go back to what we seen in terms of cost pressures, in the past several years, go back to 2016, 2017. We were seeing high single-digit kind of pressure on the wage rate and through efficiencies, and the focus of the park teams were able to bring that down to mid-single-digit. So, within our business model, we've always had an ability to find a way to both maintain that the quality of the guest experience, when I go back to those years, we saw improving guest satisfaction scores. So I think that's part of you having one of the most experienced teams in the business as part of what, you know, I certainly work with the teams in the field to make sure that we're accomplishing that high quality guest experience everybody's come to see, come to expect. But in terms of the actual numbers in the pressure, Brian, anything you want to add?

Yes, Steve, I would just say, similar to what we – how we approach, this in any given year, while as Richard noted in his prepared remarks. This environment, labor environment, maybe unlike any we've ever seen, in terms of scale or magnitude, there are still some similarities, right, it's always a little more challenging to find labor in the shoulder seasons spring, before schools are out of session, fall, schools are getting back in session. And what we've done in the past, it is managed, our operating calendars are ours with that in mind, because as you noted, we always want to provide the best guest experience. And so we've made those kinds of adjustments that you have to make in the near-term, longer term, as we noted, in the call, and in previous calls, it puts more and more pressure on automation within the system, using more advanced technology, like our new workforce management system, to more actively and dynamically manage our staffing, sharing staffing around jobs in the park, adjusting staffing levels, based on attendance levels, et cetera. So, there's things that we need to do and are working on in near-term. But there are also things that we need to be focused on and are focused on more longer term, because we don't see this as just a 2021 issue. We think that, this is a longer term issue that needs to be addressed.

Okay. Got you. And then second question would be around the CapEx side of things. You talked about how -- if conditions permit, you guys might, you know, invest in additional capital projects with – with compelling return. So I wonder if you could help me think about that a little bit more in terms of, what those conditions -- what conditions you're looking for. And then what kind of return profile you guys are targeting at this point?

Yes, I'd say, in terms of the broad conditions, at a high level, right now, what we're focused on is, is the projects within that $100 million that we spoke about in our prepared remarks, to the extent that, as we as we start getting towards the second half of this season, and demand is strong, and we're seeing you know, better pacing and our fall sales, around 22 passes are solid and we feel better and better by liquidity. There may be an opportunity start leaning into projects that have compelling returns as we've always done in the past, right? We've never been shy to spend money on projects that have compelling long term returns. For us, that's usually projects that, are approaching that 10%-plus ROI, mid-teens maybe on the bigger more marketable rise and attractions, you something a lower double digits. If it's ancillary revenue and EBITDA stream like the hotels and the incremental revenues, adjacent development type projects we've added in the past. But we're probably a little bit away from that at this point, Steve. I think it really, there's a lot to still be seen as a 2021 season developer, but we feel very confident and comfortable with the level of spend that we do our plan for calendar year 2021 at this point.

Okay, great. Thanks, guys. Appreciate it.

Thank you, sir. Your next question will be coming from the line of Ben Chaiken from Credit Suisse. Your line is now alive. Go ahead, please.

Hey, how's it going? I mentioned pent-up demand a few times in the release. Just any color you can provide on spring passes trends in April or May that may not be reflected in that 1.8 million number? And then kind of how are you handling spring pass sales selling period? With those parks closed, I have another segment.

Ben, good morning. It's Richard. You know, as we look at season passes, I'll start first with the one point -- almost 1.9. We've got, you know, with us, and I'll go back to what we said last time on our earnings call. And I'd reiterate again today, we've seen less than one half of 1% requests for refunds. So, we've had -- we've engaged with our customers, I think our marketing teams have done an excellent job, staying engaged with our customers. And we've kept that loyalty factor going into this season. So, you start with that foundation. As I said in our prepared remarks, we've seen increasing sales week-over-week. And, you know, our customer surveys point towards the high intensive visit. But also go back to you know, early last week, we opened up both ticket sales and reservations. And at one point on the first day, we open all that up, there was over an hour wait to either purchase a ticket or get a reservation. So we had a virtual queue on our e-commerce site. So tremendous response from and I think it just goes back to that really deep customer loyalty we've seen throughout all of our parks in our regions.

Got you. That's, that's helpful. And then one more on the pass, I think that you had articulated before that 75% to 80% of pass revenue, you know, ballpark was going to be allocated to 2021. From passes that you sold the previous year, now that we didn't have a 1Q because of COVID essentially, is it pretty close to apples-to-apples at this point? Because normally you'll you would have released some pass revenue into 1Q, I guess what I'm getting at is, is there a drag -- for the remainder of the season that how to allocate pass rev per for visitation? Or is that normalized because of the lack of 1Q essentially? That didn't make sense; I can try it a little bit differently.

Yes, Ben, let me try and answer it this way. From what we had commented on previously, we had coming into Q1 not anticipated releasing any meaningful deferred revenue based on our outlook for the operating calendar. So in the situation still applies. It is still pretty dynamic, right? Something like Canada's Wonderland, as Richard noted on the call. We're still in a state of flux there in terms of getting reopened and, and that's a bigger season pass based part for us. So where that sorts out could ultimately impact and potentially create a little bit of drag. But we don't know what we don't know at this point in time. I'm not sure, if that answers what you're looking for, but -- hopefully it does.

Okay, cool. Thank you. That's really helpful.

Thank you, sir. Your next question will come from the line of Mike Swartz from Truist. Your line is now live. Go ahead, please.

Hey, good morning, guys. Just wanted to follow-up on the earlier question on – on labor inflation, I think you said back in the 2016, 2017 timeframe, that kind of the gross rate of inflation was something in the high single-digit range. Maybe give us a sense of a little bit of context of what maybe you're seeing right now, or how are you thinking about labor inflation going forward?

Yes. Sure, Mike, it's Brian. So yes, as Richard noted, in that -- in the answer to that previous question, we had gotten aggressive in taking market adjustments, and we have some statutory requirements in some markets. But in that sort of that 2016, 2017 timeframe, we were seeing rates in the high single-digit in terms of that pressure, 8%, 9%, even maybe even 10%, and certainly some markets. That began to subside a little bit, because of the more aggressive increases that we took in that timeframe, back into the mid-single-digit, the last couple of years. And that sort of 5% to 6% that was where our seasonal labor rates were in 2020 over 2019, we came into 2021. Expecting and planning for something in that same range that 5% to 6% range in terms of wage rate, inflation. I will tell you based on some of the adjustments that Richard noted, the strategic increases in hourly rates in certain markets and uncertain more difficult to fill jobs, the retention bonuses and the signup bonuses, when you factor all of those pieces in that rate pressure inflation is now approaching something closer to 10%. And so our focus is on managing hours, again, aggressively trying to find those efficiencies on the hour side of the equation to help some -- take some of that pressure off the overall cost increase we might be facing based on the higher inflation than originally planned.

Yes. So Mike, I'd also add, one of the benefits, we saw the increase in our wage rates back in the last few years as a higher quality applicant and a higher quality employee associate. So as we -- as I sort through that, that's allowed us to be far more productive. As Brian said, we've gotten -- we've always seen whenever there's more money in the pockets of our core customers, so as wage rates go up on our key demographic, that teen young adult, we've been able to pass along price increases. And that's been one of the unique things about our business model, not just the customer loyalty, but the high guest satisfaction, you hear me talk all the time about price value, let's focus on the value. So we continue to take price, all those factors over time I think we know the levers to play, and we know how we can use those to both mitigate, but leverage this issue around wages.

Okay, great. Thanks for all the color. And then just a second question, maybe a little different when the optimization plan. I'm just wondering from an organizational buying standpoint, we'll just how does the -- compensation structure for like park managers and corporate employees change it all, based on some of the targets that you've now outlined with cost savings and some of the revenue pickup opportunities?

Really good question, Mike. Let me just tell you that it's our firm belief and I know it's our board's belief that compensation structure and incentives need to follow strategy. So as we think about the strategy going forward, right now, everything that we've got in place really focuses on the recovery. But longer term, as we think about what incentive is appropriate, we're going to make sure that it lines up behind the strategies we've laid forward at all levels.

Okay, great. Thank you.

Thank you, sir. Your next question will come from the line of James Hardiman with Redbush Securities. Your line is now live, sir. Go ahead, please.

Hey, good morning. So I apologies, if you've already clarified this, but the $50 million, just want to understand if that is a gross or net benefit, I guess, particularly given the labor headwinds that we keep talking about here ness some of the labor should we still expect and EBITDA number that $50 million better once we're through all of these initiatives?

Yes. James, it's Brian, good morning. Based on what we know, right now, yes, the target that we're aiming at that $50 million is reflective of headwinds within the labor category.

Okay. And so it should be -- I mean, obviously, none of this is going to be perfect. But if I just look at 2019 revenues and adjusted EBITDA, once we get back to those levels of attendance, we should be thinking about revenues that are $15 million higher, and EBITDA that's $50 million higher, correct?

Based on what the way you just summarize that, yes, that I'd say that's a fair way to look at it. Yes, I would say that, as we continue to see the -- this labor market and the labor environment globally evolve, our views around labor may change, but as of right now, that's, that's where we stand.

Got it. Okay. And then lastly, maybe there's no answer here. But, obviously, you didn't have any traditional Park operations in the fourth quarter and for the most part in April, it's not some things are starting to open up last weekend or two, but I think the last we spoke, we were talking about attendance, that was maybe 40% of the prior year. I'm sure you know, Six Flags reported last week and they saw a pretty significant ramp over the past few month. Is there any reason to think that that once your parks open back up again that you will also benefit from a really significant uptick in attendance versus 2019? And if not, what else do you look at? I guess, given that we don't have actual Park operations as a barometer, how should we think about sort of where this is headed?

Yes. James, great -- good question. And part of the challenge of, of this particular point in time is we haven't had significant operations. I need to go back and lean back into all of the leading indicators we typically would follow. So I look at the season pass channel, we've seen increasing sales there across all the ballparks, for the most part. I look at our reservations on the resort side, particularly they're in Ohio and elsewhere. And we're seeing those start to pick up nicely. So we're seeing what we would expect to see. And then lastly, I think keeping -- to your point, I think everybody where the restrictions have been starting to be relaxed, there has been great demand. So, I think part of the challenge in our portfolio in answering your question is, where is each part? Where is that region in terms of relaxing the restriction? We said from the beginning, what will impact us the most is how quickly restrictions lapse, how quickly you get -- you're able to get back to what would be a fully operating model 100% of capacity. We're not there in a lot of places yet. So I think the answer your question lies, how quickly do things improve? I don't have a crystal ball on that. But I will say what we see from our side, the things we can watch, and the things we can't control are very encouraging.

Got it. That's helpful. And good luck this next critical month or so. Thanks.

Thanks, James.

Thank you, sir. [Operator Instruction] Your next question will come from the line of Paul Golding with Macquarie Capital. Your line is now live. So go ahead please.

Great. Thanks so much for taking the question. I just wanted to clarify in the labor supply commentary, you have labor in place to meet your anticipated demand for the U.S. re-openings over the next month, is that correct?

Yes. When I look at where we are, based on the calendar we've put out there, we've got sufficient labor to meet that demand. But typically, as we've seen in the past, our early season needs, and I put, particularly the month of May, early June into the early season, very different than prime season. But what we've also seen, which we've seen in past years is as you get closer to opening and the noise around the park being open, that tends to help applicant flow as we get into it. Again, this is a really unique time because of the pandemic and its impact and all the programs around labor and supporting those on unemployment. So it's a unique time where there's a lot of crosscurrents in the labor market, particular in the leisure and hospitality space. But right now, as I look at what we're doing, I think we have what we need to provide the high-quality guest experience our guests have come to expect. And as we build out, and we see the improvement in our labour availability to us, then we'll react accordingly on the operating calendar and operating hours.

Great. And then my follow up is around the interest commentary. You mentioned the 25 million per month in cash interest expenses and expected for second quarter. How are you thinking about pay down versus refinancing opportunities, any commentary around timeline and access there and how you're weighing those options, given the substantial interest cash outflow component that you're flagging for 2Q and future period?

Yes, Paul. It's Brian. What I would say, first, is that we're very comfortable with where we're at from a liquidity perspective, as noted. That said, we -- as Richard said on the call, paying down debt deleveraging remains our top priority at this point in time. We have a lot of flexibility in the capital structure right now, there aren't any near-term maturities. And so, as we see how 2021 develops the second half of the year, we'd like to see a little bit of a more return to normal where some of the restrictions and the macro factors capacity limitations as an example, things that are outside of our control as those start to be relaxed and fall off, when we can feel a lot more comfortable about going into the 2022 season, and getting back to what I would characterize as normal cash flow generation for Cedar Fair, strong second, third, fourth quarter will be in a better position. I think as we get into 2022, just start thinking about actually paying down debt. Right now, I think maintaining that liquidity and having that flexibility is probably more important than paying down debt at least over the balance of this year.

Thanks a lot.

Thank you, sir. Your next question will come from the line of Eric Wold from B. Riley Securities. Your line is now live. Go ahead, please.

Thank you. Good morning. It's a couple of questions. I guess, one, as you -- as the parks start to reopen and you got obviously the reservation systems in place. Can you talk about the initial mix that you're seeing on this reservation between single-day tickets and the season pass holders? And how does that compare maybe to 2019 and kind of what is your goal for that mix evolving as this kind of business optimization kicks in?

Eric, good morning, it's Richard. We're seeing the same thing that we saw last year. And our approach is similar to last year. So if you go back to what we -- how we started the reopenings last year, we reserve some days and some time slots for season pass holders. We're doing that again this year. We sold as we said, we got almost 1.9 million season passes hold out there who have stayed with us. So for instance, starting this weekend, season pass holders will get into Knott's Berry Farm. And there's been strong response to that. And then we'll open up to the public a couple of weeks from now. You'll see early days reserve for season pass holders. So if you go back to 2019, we're at 53% of our tenants with season pass holders. Last year, we settled at around 62%. So, 62% or so for all of 2020. So when you look at those types of numbers, I think, you'll see similar impact this year with a heavier waiting early. And then the longer we're open and fully -- the more we can get fully open, I think, you'll trend start to settle into whatever the normal trend will be. But it will look closer to what we've seen in the past.

Got it. And then final question. As you think about the parks kind of reopening and moving into the stronger the back half of the year, obviously, pent up demand, obviously, the earlier question or comment around what Six Flags reported. What do you anticipate the actual headwinds from any kind of "official capacity limits actually being in the back half of the year versus kind of your realistic ability to get people into a park"

For -- I’ll let Brian weigh in here in a second. We go back to how we've talked about it in the past. We've always had 20% or 25% of the days that we've called peak attendance broadly throughout the system, many of those happen in the back half of the year. So I think the difficult part about answering your question is we just don't know how the restrictions will lapse in all of our markets. And again, we’ve got -- we're monitoring closely, Canada, and seeing how those restrictions lapse. So as I think about where the impact of any capacity restrictions really reside, it's in those peak days. So to the extent that the peak days have no restrictions, then we'll be able to realize more of today that historical attendance on those days. And certainly, those days have a meaningful impact on our both profitability and our ability to drive revenues. Brian?

Yes, I think, Eric, that's the key point that Richard just made is that the -- when we look at a normal operating season, and if we narrow it down to the second half of the year, while there may be more of those peak days in the second half, being Saturday is in July and August, the fall season, ever popular Halloween events. There are still more days where we set below that 50th percentile of theoretical capacity. So there's more upside. But those key days are critical. So certainly at some of our parks, those are some of the biggest margin, our highest margin, biggest revenue, biggest EBITDA days. And so seeing a relaxation of the restriction, the capacity limitations, et cetera is our ultimate end game. But we're just going to have to wait and see how that develops in 2021.

Got it. Thank you.

Thank you, sir. Your next question will come from the line of Stephen Grambling from Goldman Sachs. Your line is now live. Go ahead, please.

Hi. Thanks. In the opening remarks, you mentioned more efficient and flexible advertising programs, can you just go into a little bit more detail on how the programs have changed? And then potentially a related question on the per cap side. How are you thinking about potential flow-through if per caps actually hold improvements versus 2019 levels as we've heard from some of your peers? In other words, are your optimization strategies going to impact flow-through on per caps versus history?

Stephen, it’s Richard, I'll take the first one. I'll let Brian answer the second. As we look back on 2021, one of the learnings we had was that we could dive into digital on the advertising front, really more effectively use digital and social media, which is far more cost effective and far more targeted. So as we built the plan this year, we leaned a lot heavier into that. That was -- it really -- we said this so many times about the pandemic, it accelerates the underlying trends that were already there. We've always -- we've seen an increase in terms of our percentage of advertising dedicated to digital and social over the last several years, but it really accelerated the trend. And it's building out that flexibility and being able to target different consumers, different groups, but also go in and out of the market and pulls through. We’re really pleased what we saw in 2020, and that's why we've built a plan that's much heavier, digital and social going into 2021. And obviously, we'll monitor that and make sure that it's as effective as we want it to be. But we -- when I look at the engagement of our customer, tells me our -- both our CRM platform, but also our media message is resonating. So, Brian, on the second part.

Yes. Even in terms of per caps, a couple layers, I guess to that question, just stepping back and looking at last year, and albeit a challenging year and an abbreviated season, we -- as we said on our year-end earnings call, very pleased with what we saw out of the guest spend trends within the park, guest spending on food and beverage, merchandising, games trending up in the low to mid-teens. Now if I step back and try and put that in the context of 2019, there's probably the attendance number moves higher, it's likely that that normalizes a little bit, but it's still reflective of I think what others, as you noted are seeing. And what we have been seeing for several years. Just as a reminder, in an area like food and beverage where we spent a lot of time upgrading or adding new facilities at our parks, adding new technologies, better programs, better quality products with executive chefs. Our food and beverage revenues from 2012 to 2019 were up more than $125 million, which was a five plus percent CAGR over that period of time. And it's been better in the later years as those programs in those facilities have continued to drive strong results. We continue to believe there's more opportunity, and we'll continue to lean into that, in the business optimization front, I think represents some more tailwinds around in parks spend. One of the key focuses for us is transaction counts. We're looking at optimizing the in park guest experience to speed up transactions to provide more conveniences so that we can give our guests more opportunities to spend and spend in a way that they want to spend. Now their problem -- and that then will definitely help flow-through to your question. I think there are potential headwinds that we have to acknowledge though, that could hurt flow-through a little bit and that is on the labor side, right? As we're having to pay more for our labor that is a potential headwind. Now, we're not going to just take that without trying to offset it with. As I said before, efficiencies in hours, efficiencies in technology that allows us to automate. Mobile ordering is a big area, you've heard us talk about in the past. So there are things that work both ways on that. But we're very encouraged by where we've been on per caps spending in the park and think there's more opportunity in front of us.

Awesome. Thanks so much.

Thanks, Stephen.

Thank you, sir. And that will be our last question. I would now like to turn the conference back to Mr. Richard Zimmerman for the closing remarks.

Thanks, Laura. And thanks to everybody for joining us on today's call and for your ongoing support of our company. Hopefully, you'll have a chance to visit one of our parks very soon with friends and families for a whole lot of fun. We will keep you updated on our progress and perhaps see you either virtually or in person at an upcoming investor conference or non-deal roadshow. In the meantime, please take care and everybody stay safe and healthy. Thank you again. Michael?

Thanks, Richard. And thanks to everyone. Please feel free to contact our Investor Relations department with any further questions at 419-627-2233. And we look forward to speaking with you again in August after releasing our 2021 second quarter report, Laura that ends our call today. Thanks, everyone.

Thank you, sir. Thank you so much presenters, and again, and thank you everyone for participating. This concludes today's conference. You may now disconnect. Stay safe and have a lovely day.