Over the weekend, Seattle’s restaurant association took to the op-ed pages to complain about the City’s parking policies downtown. As they tell it, changes in parking policy “hits them where it hurts our businesses the most: their wallets.”
Yet as with so many discussions of parking, the restauranteurs’ argument is long on conjecture but extremely short on hard data. A look at gross receipts figures for downtown restaurants shows precisely the opposite of what the business group alleges. Their wallets appear to be doing just fine:
After paid parking hours were extended in mid-2011 gross receipts for downtown restaurants climbed by 5.4 percent.
The extension of metered parking from 6 to 8 pm went into effect in the middle of 2011, so by comparing the 3rd and 4th quarters of 2011 to the 3rd and 4th quarters of previous years we get a year-over-year comparison. To be sure, we should treat this analysis as preliminary, but the data we have so far suggest that in the era of higher parking costs business is practically booming.
On the one hand, it’s easy to understand why restaurant owners worry. A lot of these businesses skate by on thin margins, and proprietors may feel that parking changes could put their livelihood at stake. But on the other hand, it’s important to cross-check our beliefs with the data. And the data show that higher parking costs downtown have most definitely not led to a decline in overall sales.
How is that possible? Can higher parking costs actually boost business?
It may sound counter-intuitive at first, but on inspection it turns about to be totally sensible. By increasing turnover in on-street parking and ensuring that spaces are available for customers, well-calibrated parking policies really can increase patronage. (After all, would you rather grind through congested downtown streets in the rain while hunting for a parking space or pay a few bucks to stash the car curbside until 8?) In fact, boosting business is exactly what Seattle set out to do when officials adjusted meter rates and extended paid hours downtown.
Given the numbers so far, it looks like the City got it right. Receipts notched up in each of the three downtown zip codes. Sales rose by 2.2 percent in 98101 and by 8.7 percent in 98121. In the 98104 zip code, which encompasses the Chinatown/International District that has been the subject of so much hand-wringing over parking policy changes, business is stronger yet:
In the 98104 zip code, gross receipts spiked by nearly 9 percent after the parking changes went into effect. So, contrary to all the hullabaloo (and criticism of my earlier post on the subject), there’s little verifiable evidence that parking meters are driving business out of the southern part of downtown that includes Chinatown. If anything, the parking changes would seem to be increasing business.
Personally, I’m getting sick and tired of what seems like endless complaints about parking that are totally unsupported by data or analysis. Instead of anecdote and hand-waving, how about we all agree to spend more time examining the actual numbers?
The numbers I’m reporting here, by the way, are available to anyone. I got them by doing a public records request with the City. I was given aggregate gross receipts data by NAICS code for each of the three downtown zip codes for each quarter from 2008 through the end of 2011, the most recent available.
When you’ve got enough data on your hands, it’s usually possible to squint at it long enough to gin up some counter-story or oddity. But in this case, the receipts figures for downtown restaurants are reasonably clear: since paid parking hours were extended, business has increased, at least in aggregate. Plus, the aggregate data I’m reporting here is corroborated by the two other sources I’ve explored, sample data from the City for 14 establishments in Chinatown/International District and state Revenue Department data for the city as a whole.
In the future, I hope we can root our discussions in the actual numbers, and fewer data-free reactions from the restaurant association and Seattle Times. And if our debates about parking policy should ever graduate to the level of using actual numbers, then maybe we can start exploring more advanced topics like correlation and causation.
Notes: The data I use in the post refer to NAICS codes 722, 7221, 72211, 722110, 7222, 72221, 722211, and 722212. These are codes that refer to types of restaurants and they exclude places that are primarily drinking establishments. I also requested and received data for 722213 (“Snack and Nonalcoholic Beverage Bars”) but discarded it because the receipts figures are huge in 98104 but very small in the other zip codes. I assume that’s because 98104 includes at least one of the stadiums.
The timing of the extension of metered hours from 6 to 8 pm varied from place to place, and meter rates also changed in some places. In downtown proper, roughly consistent with 98101 and the northern part of 98104, parking rates also went up from $2.50 to $4.00 per hour and the changes took effect in April and May 2011. In Belltown, roughly consistent with 98121, parking rates declined from $2.50 to $2.00 per hour and the changes took effect in June and July 2011. In Chinatown/International District, a subset of 98104, parking rates did not change, but parking hours were extended starting in August 2011.
Please attempt to adjust your data for inflation. As long as we have inflation and flat business, gross receipts will increase from that alone. Seeing some comparisons to zip codes that did not see parking rate/time increases would also be valuable. (Note also that restaurants as businesses will care more about profit than gross receipts.)
Adjusting for inflation is a reasonable idea. Using these figures — Consumer Price Index estimates for the second half of the year, for the Seattle-Tacoma-Bremerton metro area, from the Bureau of Labor Statistics — I get inflation-adjusted gross downtown restaurant receipts as follows:
2008: $190 million
2009: $193 million
2010: $203 million
2011: $208 million
Food input costs provided below in the chain of replies. I’ve sourced all the links for beef, rice, corn, sugar, etc.
For the ID, I get:
2008: $50 million
2009: $53 million
2010: $53 million
2011: $55 million
Again, I’m adjusting for inflation by using “Half2” CPI figures for Seattle-Tacoma-Bremerton.
Thanks! I’d also point out that given this adjusted data the “spike” you highlighted in 98104 zip should be 3.8%, right? Which is smaller than the inflation adjusted 6% change 2008-2009. So while I buy the part of the argument that the parking changes are not destroying businesses I’m not convinced its driving increases in gross receipts. (Nor do i have any idea how to pick a better metric than CPI for restaurants – but if restaurants don’t provide data this is as good as it gets)
At a time when many businesses are having revenue drop, even a flat line, could mean a success.
For the ID, not having over night parkers, take up spots during the dinner hours could be a big help.
It creates incentives to use other transportation modes, which benefits everyone.
Eric de Place
By my calculations, it was a 6.2 percent inflation-adjusted increase (and 8.9 percent nominal increase).
I’m not sure if this article points more toward misrepresentation or more toward a lack of basic business finance understanding. I came upon this article via a posting from the Mayor’s Facebook page on my feed.
From the IRS Website: “Gross receipts are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.” (Emphasis my own)
The cost of goods, delivery, cost of living, etc has likely far outpaced the Gross Receipts. Gross Receipts don’t matter in business if your expenses make them null. These graphs would have been more relevant if they had added overall business expenses so we could have seen how businesses came out in the wash.
Eric de Place
Unfortunately I don’t have access to that data. But you know who does? The restaurant trade groups.
Perhaps they could share some of that data with the rest of us so that we can fairly evaluate their claims.
Even then, of course, we’d have to try to trace some causal connection between extended meter hours and restaurant sales, which I suspect is no easy task.
of course, the state of the economy might be affecting sales as well. Unemployment figures are starting to go down, people are starting to feel like spending money…
Eric de Place
Sure there are a million factors that bear. Little things like the recession, huge roadway construction projects in core urban neighborhoods, and lots more.
But here’s the thing: one faction keeps saying that parking is hurting business yet they provide no data or evidence to support their claims. All I’m trying to do is take a look at the data. Is business declining? The answer is no.
At minimum, you need more data from the non-recession periods, so you are comparing apples to something that remotely resembles apples. A recession, and the worst one since the Great Depression, is not a little thing.
The subtitle of your article as well as your statement “How is that possible? Can higher parking costs actually boost business?” implies causation. Just be reminded that correlation and causation are two very different things.
Eric de Place
I disagree. My subtitle does not imply causation, it simply notes that the data show clearly: business receipts have risen with parking costs.
The other sentences are posed as questions (though it is worth noting that in parking management literature there is evidence that high parking costs can, in fact, increase business).
Anyhow, I don’t need more data from non-recession period to make my point. The restaurant guys says business is declining, yet the numbers show it is not. Case closed.
It is incumbent upon them to provide some actual evidence to support their conclusions.
How about the population numbers, the improvement in the economy, and other factors?
Eric de Place
Right. As soon as the opponents of parking policy changes start using numbers and data to support their arguments then we can turn to examining the variety of factors bear and see what we can say about causality.
Until then, however, I’ll settle for just pointing what the numbers say: receipts are up.
While one can certainly consider the effects of inflation, population growth, a rising economy, it is unavoidable that the numbers do not support the Seattle Times contention that “the longer parking-meter hours that started in August have cut business by as much as 50 percent.”
Interesting piece, Eric. The data you’ve managed to track down so far seems less than conclusive, but it does suggest that most places aren’t seeing the fabled 50% cut in business.
A couple data points that could shed meaningful light on this:
(1) How many 6pm-8pm parking hours have been purchased monthly, compared with 4pm-6pm parking hours, and has there been a change in 4pm-6pm parking hours purchased since the change was made? (e.g., are people parking less 4pm-6pm because they’ll have to come back and meter-up again for the 6-8pm time?)
(2) How do Seattle restaurant receipts compare to Bellevue, for the same time period? If Bellevue is growing at a much faster rate, there’s a strong case to be made that (a) the prevailing rate of growth in local restaurant/retail is higher, and (b) folks who would drive into Seattle for a meal are choosing to remain on the east side where parking is cheap (or free).
Thanks again for the article.
Eric de Place
Great questions. Some answers are available in a new post over at the Seattle Transit Blog, here: http://seattletransitblog.com/2012/03/29/parking-is-hard-to-find-when-parking-is-free.
I agree that what I’ve provided is not conclusive. But I do think it’s a start toward fact-checking our intuitions about how parking policy really works.
This argument doesn’t carry water either, for all the missing data that has been mentioned. I would also add:
–Who knows how much more the gross receipts may have gone up if parking weren’t an issue. Is anyone doing a consumer study?
–Inflation is one thing, and I could be wrong here, but food costs seem to be rising much faster than the average inflation rate.
–I’ve heard the turnover argument before, but I’m wondering, how can someone enjoy a nice dinner and perhaps do a little shopping before or after in 2 hours? Since you can’t simply refill a meter, but have to move the car, what has been lost in terms of incremental retail revenue? And besides, who wants to wait for a bus after that nice meal? Oh and cabs…why doesn’t Seattle have more of them?
–Oh, and one more thing. No matter what the receipts say, it’s an overall bad customer experience. Is that what we’re offering people? Will that make them want to continue to go downtown, or are people just going to seek out neighborhood places with free parking? Let’s take a look at that data too.
Eric de Place
I disagree with at least a couple of your points. A bad customer experience is having to circle congested blocks endlessly hunting for parking. A good customer experience is find a spot near your destination.
Also, let’s not forget that street parking is hardly the only parking in downtown Seattle. If you’re going to be stashing the car for many hours it makes a lot more sense — and it always has — to patronize one of the many private parking operators. You can find one on almost every block.
As for missing data… that’s my point! If the restaurant guys want to start producing and sharing data we could actually have a meaningful conversation. (And maybe we could even evaluate causal factors.) In the meantime, all I’m trying to do is analyze and share what I can.
A little information is a dangerous thing, and discounting the consumer’s point of view as “casual factors” can lead to incorrect conclusions. This may be a very small sample, but I talk to a lot of people about parking around the city and they all hate it. They also avoid it if they can, and they’re not necessarily taking public transportation. They’re just not going to the same places. And neither am I. When I arrange a meeting now, it’s mostly where I can park for free and stay for as long as I need to.
And once again, that argument that there are more street parking spots doesn’t hold water if you actually look at behavior. If people need to stay, they’ll just move their cars, pay more and stay longer. But in the end, I bet there are a lot of people just avoiding it altogether. And the lots are a problem too, in that you first have to determine how long you will be, and then, most of the time, overpay for the time you actually do need, because it’s not an hourly thing.
Also, the restauranteurs may not be stating the numbers correctly, but they are seeing declining numbers since the parking laws have changed. Otherwise, why did they decide to complain all of a sudden?
The bottom line is that it’s bad for business and consumers alike. The only benefit is that the city of Seattle is lining their pockets with parking fees and tickets. But I even question that with the higher cost of administration. Why not be an accessible city, rather than one that isn’t?
Eric de Place
You say, “…the restauranteurs may not be stating the numbers correctly…”
No! The problem is this: they’re not providing any numbers of any kind. All they’re offering is anecdote and conjecture.
It would not surprise me a bit if individual owners or even the trade association were simply mistaken. They may have reasons for their beliefs, but all the available evidence I’ve seen suggests that business isn’t down, it’s up!
Remember when restaurants said that the state smoking ban would kill them? They were simply wrong about that. It could very well be the same thing here.
When you say, “if you actually look at behavior” you pique my curiosity. Do you have some behavioral analysis or study that shows what you say? As far as I know from SDOT’s work, the parking policies are doing what they’re intended to: increasing turnover and freeing up a space or two on every block for a net increase in total parked cars on the street.
Finally, you say this: “The bottom line is that it’s bad for business and consumers alike.”
I’m baffled. Why do you say that? Can you show some evidence that it’s bad for business? I sure haven’t seen any.
I stopped driving into Seattle due to tickets i got while parked paying alot to be there and getting tickets cause i was a few minutes late. I think it is ridiculous to charge so much for so many hours and on Saturdays as well. I guess Seattle is glad i don’t drive there anymore. Getting less $ from me.
Eric de Place
It’s basically supply and demand. Parking spaces are in very high demand because there are a lot of people who want to be in downtown Seattle both during the workday and during non-work hours. Street parking is generally priced below market rates — that’s why it’s cheaper per hour than private garages and also why it’s difficult to find a space.
As other posters have previously noted, gross receipts are a horribly inadequate metric and the data is inconclusive as is.
The arguments in favor of metered parking assume rational consumers (ie by restricting access, fewer people will enjoy Chinatown but those few who will will be happy to pay much higher prices). Practically, “free” carries a very different value from “$0.99” – just ask any iPhone app author. There is also the cost of collection (setting up metering) and the interesting way we collect that toll (parking tickets in case of minute overruns, making the cost/hour unpredictable).
I’ve stopped going downtown and Chinatown simply because if I want to go out for a bit in the evening, I am too tired to do the math of “here’s how much parking will cost, what’s the risk I might get a ticket” and tolerate the experience of “I’ll feel pressured all throughout dinner worrying about getting a ticket”.
My personal experience from a smaller town is that once they started metered parking in downtown, downtown essentially died – fewer people came in, businesses were forced to raise prices, which led to even fewer people visiting which eventually led to most businesses closing.
Eric de Place
Actually, gross receipts are a perfectly adequate measure of gross receipts. The business groups are saying that business is declining… and yet it is not.
Anyway, given the on-street parking occupancy data—very high quality figures available from SDOT—it’s clear that there are plenty of people who don’t have your experience with on-street parking. I suspect many more folks are like me: driving in congestion to hunt for a space is more annoying than paying for it.
But if you’re so worried about getting a ticket, I would suggest parking in a private lot (there are tons in and around Chinatown) or leaving the car at home. (It’s well-served by transit and within walking distance of many neighborhoods.)
Leaving my car at home is pretty laughable where I live (Seattle has some awful public transportation compared to other places I’ve lived).
I am not stating that other people live different lives and that this development isn’t great for them. I am saying it doesn’t work for me. I am also saying that I’ve seen metered parking kill an inner city. And the businesses in the target area are complaining.
I’d agree that gross receipts area wonderful and adequate measure of gross receipts (as you state). Except, they are not much good for anything else. Example: my business has 100 customers a month, I net $1000 gross receipts from those customers and my monthly cost is $500. Good times. Next month, I am down to 10 customers, but I’ve raised prices so that I net $2000. Better, right? Except that my cost of doing business happens to have increased to $3k due to a change in legislative environment and increased input costs. Summary: gross receipts are largely useless without other data 🙂
Eric de Place
Then it seems the restaurant trade group should supply some data. Any data.
I would like to hear more about how the parking meter killed your downtown. Our small, tourist–driven downtown wants to install marking meters and the merchants are just terrified. The city only has 1,200 residents and we have finally built our downtown district into a thriving destination. I’m having trouble finding information online about how the meters can hurt small, rural downtowns.
“How is that possible? Can higher parking costs actually boost business?
It may sound counter-intuitive at first, but on inspection it turns about to be totally sensible. By increasing turnover in on-street parking and ensuring that spaces are available for customers, well-calibrated parking policies really can increase patronage.”
First, as others have pointed out, your headline is suggesting causation. Sure, you hedge from causation into correlatin with the subtitle and in your own comments to others, but your headline does not hedge.
Second, you say “…on inspection…” Really, on inspection? Where is the inspection? I think what you meant to say is that you have a theory about why receipts are rising with increased parking rates. You’d have to do some research to prove your theory. Is that next? I hope so, and I look forward to it. Otherwise, you’re similar to the paper and associations you criticize, making baseless assertions.
In the end, if you can prove your theory with data, why go the low road? Why fight dirty just because you see the other guys fighting dirty? You risk damaging Sightline’s brand and credibility as a research based organization.
Eric de Place
My headline is a question.
Yes, I have a theory. You’ll notice that I explain it in the post. You can find more about this theory at SDOT’s website (http://www.seattle.gov/transportation/parking/paidparking.htm) where it is referred to as “performance-based parking pricing.”
SDOT has also conducted a large study on the subject. Please read all 133 pages here: http://www.seattle.gov/transportation/parking/docs/SDOT_PbPP_FinRpt.pdf.
I’ve written about San Francisco’s approach here: http://www.sightline.org/2008/06/17/i-left-my-parking-space-in-san-francisco/.
Many other cities are studying (and implementing) the same idea. Here’s more about DC: http://ddot.dc.gov/DC/DDOT/On+Your+Street/Traffic+Management/Parking/Performance+Based+Parking+Pilots.
Please explain how I am “fighting dirty.” I am simply gathering and reporting relevant data that calls into question the unsupported assertions of a trade group.
True, fighting dirty was a poor choice of words. My sincere apologies. I wish I could take that back.
I like that you provided all the links in your reply as supporting information. Thanks. I’ll check them out, as I am indeed curious. My point, perhaps poorly stated previously, is that your “inspection” wasn’t clear. Perhaps the links you supplied will prove your theory.
As you say, I think there’s still plenty of work for you to do to feret out what’s causal and what’s correlation. I think it’s premature to claim your theory is validated in Seattle. Many posters have pointed out the flaws and other possible causes. I hope you do further study — and point out when you’re right and also when you’re wrong. I support your larger goal of making sure research is a part of policy decisions. Just don’t cherry pick, please, because it supports the larger goal of your organization.
As a reader, I am always presented with two sides to a story, in this case, a trade group (who has a stake in the game), and you, an advocacy group (who also has a stake in the game). A reader like me is trying to figure out how to separate what’s true from what you’re trying to make me believe is true. It’s a tough, exhausting job.
And that is why I object to your headline. Yes, it is a question, but a rhetorical one. It’s leading, IMHO: it’s not what’s true, but what you want me to believe is true.
Eric de Place
Thanks, George. Your points are well taken.
What I’d like to see happen is for everyone involved to have a data-driven conversation about the policy. But as you say, even clearer data about restaurant profitability won’t necessarily answer the question.
If sales are up, does that mean high parking costs are good? (Or might sales have been higher yet?) If sales go down, does that mean high parking costs are bad? (Or might sales have declined further yet?)
Plus, there a bunch of unrelated factors that matter: perceptions of crime in Belltown, the gargantuan roadway construction in SoDo, how well the M’s are doing, the weather, the economy, and much more. All of these presumably have an effect on how restaurants do in the urban center.
You raise good questions and variables. I hope your research also would include not only just what can be derived from large, readily available data sets (like the sales receipts), but also what I believe another poster was suggesting – aggregating the experiences and actual behaviors of individuals who patronize a sampling of restaurants. You know, ethnographic studies, longitudinal studies (think Nielsen but for eating out), surveys, etc. Since the policy is affecting specific communities I think this kind of data is even more important.
This is the kind of research I mean. It’s from the SDOT report (pg 86). It’s a study they propose to evaluate the impact on the customer. Is SDOT doing that? I think they should have been doing this study before as well as after implementing changes. It seems an essential part of the equation.
“Customer experience should drive not just parking pricing decisions, but all decisions relative to
downtown and business district paid parking. Creating a positive experience for the customer requires an
understanding of the customer. The city should develop an underlying philosophy among all parking staff
that understands and values customers. Parking is not about storing cars, but rather it is coupled with the
overall experience of arriving at the preferred destination. People park because of this desire to go to a
particular destination or area. Increasing costs will likely not deter people from coming if the desire to go
to that destination is great enough. Instead, availability of parking becomes the most significant factor
influencing the customer experience. Additionally, customers may want more time to shop and/or
socialize as part of their visit. A one- or two-hour time limit may not be enough and could contribute to a
A thoughtful, well-funded study could be conducted to determine who uses downtown metered parking,
how long they usually park, to which destinations they are going, how often they use on-street and off
street parking, preferred methods of communication (rates, time limits, availability, etc), and general
opinion of the current and proposed systems. Any business should make it a priority to know its
customers. The city’s metered parking business shouldn’t be any different.
A strong focus on customer service not only requires a successful system, but also a focus on
communication. Effective communication is always a challenge, yet it is essential. Customers may find
metered parking annoying to begin with, and if new rates and performance-based strategies make it more
confusing and more expensive, the result could be both a political and economic disaster.”
Matt the Engineer
A finer point: I think Eric was talking about inspection in the mathematical sense, not claiming some sort of parking inspection agency has come to a conclusion.
This is inspiring. I plan to do a similar study for Capitol Hill.
The input costs for restaurants have gone up tremendously over the last five years. Yet many restaurants have been unable to increase prices between 2008-2010 given the recession. 2011 was the first year some businesses started increasing prices given the necessity and that the economy finally started stabilizing.
See below for commodity costs for restaurants. They are MUCH higher than your CPI figures. In fact, the average cost of rice has gone up almost 100% in the last 5 years. Yet we have been unable to increase prices until recently.
Oil is one of the largest costs which translate to the cost of distribution and the cost of oil has doubled in the last 5 years. Likewise, rice has nearly doubled, same for beef, corn, etc.
Matt the Engineer
I’m not convinced that the price of raw ingredients is a significant cost in the restaurant business. My understanding is that the prime restaurant costs are labor and rent. Have either of these gone up?
Food costs are a very major costs for restaurants! It is the main product we’re serving customers. It is usually a third of a restaurant’s costs.
Labor is the other major cost. And those have gone up as well. Minimum wage goes up every year. Not to mention our employees are telling us that can’t afford gasoline to fill their cars because the price of gas has gone from $2.50 gallon to over $4 a gallon (a 50%+ increase); not to mention their own grocery costs.
Rents are the smallest of the three expenses and those are usually CPI adjusted, and so they go up modestly too!
Eric de Place
In Washington, minimum wage also goes up at the rate of CPI.
Matt the Engineer
[Bob] Are you talking about food costs or raw ingredient costs? I could get a plate full of corn, rice or sugar for pennies – having to pay an extra penny or two is not significant.
Until an independent group does their own study (or if someone can point me to one), I’ll go with my anecdotal data — that a lot of people I know, as well as people I don’t know on blogs and even this one, have stopped going places where they need to pay for parking as well as eat. Let’s employ some logic too. Am I really going to go downtown for a cocktail (that, by the way, now costs about $10 plus tax and tip) and pay another $8 to park (and that’s only for 2 hours — ratchet that up for the second cocktail)? Uh, probably not. And we haven’t even eaten anything yet.
Eric de Place
I highly recommend checking out SDOT’s study of precisely these issues. It’s well-grounded in empirical research, including direct elasticity measurements in Seattle neighborhoods and other cities. It’s here: http://www.seattle.gov/transportation/parking/docs/SDOT_PbPP_FinRpt.pdf.
What you’ll find there is, I think, fascinating. In some cases meter rates correlate positively with occupancy, which is your argument. But there are loads of cases where meter rates go down and parking occupancy goes down with it! (Ballard and North Belltown, for example). And even in places where rates stayed the same, occupancy fluctuated considerably in year-over-year measurements.
I’d argue that in these kinds of systems, anecdote-based “logic” really doesn’t get you very far. Without getting too far afield, behavioral economics and other research has documented pretty extensively that people are poor judges of even their own behavior, much less aggregate group behavior. Plus, there are so many confounding factors—the quality of establishments, perceptions of crime, the weather, etc, etc—that it’s rather hard to establish causality with much rigor. To do that, you really need to evaluate data in an analytic fashion.
What “everybody knows” and what’s actually right can be two wildly different things. See the movie Moneyball for a cool treatment of that.
The best measure of how increased parking rates have impacted restaurant business is measuring the “number of patrons” that come to the neighborhood between 6-8pm…not “sales”.
It is you and the City who are trying to confuse the issue with discussion around “receipts”.
This is such a sad display of political spin.
I don’t understand how anyone can honestly believe an increase in pricing will ultimately result in increased demand for a product.
All this talk of increasing parking rates to lower occupancy and provide more space and increase turnover is hogwash. Of course there are more spaces when you increase prices; because fewer people are coming to the neighborhood.
It is twisted to try and convince people that because there are now more spaces, that more people will use them.
If people can’t see past the faulty logic of the argument for increased turnover, then that is very sad.
Increased pricing = lower demand = lower parking occupancy.
In order to achieve lower occupancy for more spaces, you need to first lower demand. To argue that lower occupancy rates translates to more demand is just twisted and sad that the political spin has come to this point.
In fact, SDOT already has this data. You can quickly verify the data by asking them if the lower parking occupancy indeed translated into higher turnover and more usage.
SDOT has gross receipts from parking in the Chinatown / ID between 6-8pm in September 2011. Take gross receipts and divide it by the rate of $2.50/hour and you will derive total parking hours used. Compare this to data from September 2010 and you will have your answer.
For the month of September 2011 the data showed a decline in parking occupancy by 10%. Why don’t you ask the City if total parking hours indeed went up?
Sorry, SDOT won’t have data for Sept 2010 between 6-8pm because the hours were only until 6pm.
But if you compare gross receipts in Sept 2010 between 8am – 6pm to receipts in Sept 2011 between 8am – 6pm…that should tell you whether turnover increased.
Eric de Place
I like your reasoning when you say this: “f you compare gross receipts in Sept 2010 between 8am – 6pm to receipts in Sept 2011 between 8am – 6pm.”
But I actually don’t think that would tell us as much as we need. That’s because between 8 and 6, parking in Chinatown was metered at the same rate in 2010 as in 2011. So if gross parking receipts went down (or up) in that comparison it would almost certainly have to be attributable to other factors.
One such factor might be the gi-normous roadway construction on the south end of the viaduct that is fouling up traffic. I’m sure there are others.
Then go to another neighborhood where rates were increased and ask SDOT for the data. The August 2011 SDOT parking study clearly showed occupancy went down in First Hill by 18% when rates went up from $2 to $4/hour. In fact, there are other neighborhoods where you can get this data: Capitol Hill, Pioneer Square, etc.
I would bet that the parking hours used went down.
Eric de Place
You say: “Increased pricing = lower demand = lower parking occupancy.”
So quick thought experiment. If downtown Seattle had free street parking all day long would there be higher or lower parking occupancy?
The answer is lower (and probably vastly lower). Because people would claim a spot and squat on it all day long rather than turn them over frequently to make way for new parkers. I believe parking literature documents this rather extensively.
Matt the Engineer
(I assume Eric means lower turnover, not occupancy. Occupancy would be about 100%.)
Eric de Place
Yes, I meant lower turnover. Thanks, Matt.
Free parking would yield fewer total parkers.
Look at page 3-6 in the study above from SDOT.
This clearly shows parking demand is sensitive to pricing. Demand has a negative elasticity to price increases in the last column. Meaning demand goes down.
Public parking is the low cost option for the public. If you lower the pricing, the demand won’t necessarily change all that much because it is already the low cost option. That is why the data shows a mixed bag.
The ultimate demand for parking in the neighborhood still is driven by the draw of the neighborhood. And their won’t necessarily be an increase in demand because public parking is already the cheapest option. So unless parking occupancy is over 100%, lowering pricing won’t necessarily change the demand.
Parking demand is clearly elastic to prices. See page 3-6 in the study from SDOT above. In the last column, parking demand has a negative correlation to price increases.
Public parking is the low-cost option for users. So even if you lower pricing the demand won’t necessarily increase as shown by the data in the study.
Demand for parking is ultimately a result of the draw of the neighborhood. Even if you lower pricing, it may not necessarily increase demand for parking; because public parking is already the low-cost option. So unless parking is running over 100%, increasing the price won’t change demand for street parking.
Furthermore, it is clear that there parking demand is elastic to pricing! So when you raise rates, you reduce demand. Unless you increase the supply of parking in the neighborhood, lower parking occupancy translates to fewer people coming to the neighborhood. And in the Chinatown / ID, supply of parking has NOT increased!
I think you might be confusing demand for turnover. The overall demand for downtown street parking may have gone down a touch (i.e. fewer people driving in circles for half an hour trying to find a spot), but that doesn’t mean that more individuals aren’t actually parking. If parking is too cheap, it is perfectly reasonable for me to take one spot for a whole afternoon (assuming I can find it) while I have a leisurely cop of coffee and hang out in a park reading.
A policy aimed at increasing parking turnover is meant to increase the number of individuals who park downtown on any given day. I can now by pretty certain of finding a spot (which, for what its worth, might have a positive effect on demand as well) and so I’m able to park my car pretty quickly near the restaurant I’m planning to have dinner at. Two hours later I need to move my car, so I leave the restaurant instead of having that third drink (also probably a good thing since I’m driving). I suppose the restaurant would prefer that I stayed, but fortunately you’re right behind me. Because there are more available spots, you’re able to find one pretty quickly and so you take the table I just left at the restaurant. Now, instead of me occupying that table for an hour nursing a drink, you come in and order a whole meal.
We can’t say for certain with the available data that that is whats happening; the commenters have been right to point out the flaws in using gross revenue. But its the best data we have. One side of the argument (The Seattle Times, the restaurant trade groups, etc) is making pretty sweeping claims about the death of downtown due to an increase in parking but isn’t releasing any data to support their claim. The data we do have gives a weak level of support to the other side of the argument. At the very least, the data we have proves that the editorial in the Times was making up numbers. Eric (and a lot of other people) would love to analyze a more complete set of numbers, but they can’t because the people who have them won’t release them.
This article is horrible. It shows a few numbers but has no statistical evidence for its claims. Gross receipts are not meaningful here because we don’t know how much profit was actually made, hence no claims possible for business making more or not. Get more data before you start claiming anything.
Eric de Place
You say: “Get more data before you start claiming anything.”
That would be excellent advice for the restaurant group.
Given that gross receipts are up in every zip code (and by quite a bit), one would have to to go to extreme lengths to imagine that business is suffering. It sure doesn’t look to be.
I think your article is interesting. Did you conduct any sensitivity analysis between high-end and low-end restaurants and the impact of the parking meters? I personally am more likely to pay for parking if I am going to make a night of it at a high-end restaurant, but less likely to pay for parking for a cup of soup. I would be curious to see if the restaurant revenue increases are concentrated for high-end restaurants, and perhaps low-end restaurants have seen a drop in business due to parking meters.
Ruud van Winden
Eric, good article, and do not be dragged down by these nay-sayers. Gross revenue is what every restaurant owner looks at last time I checked. Oh, actually, it is key data for any business. As for people sitting on data they do not want to release; it is obvious the data speaks for itself, otherwise they would have used it as one of their facts…
You made a great effort to show that free parking always hurts business when it results into 100% occupancy of parking capacity.
Any driver that wants to visit a restaurant (or shop or do anything really) needs a parking spot. No parking = no business.
Plus: if you frequent an area that time and again has no space to park, you will start to avoid it. That is what is bad for business.
So what is the right price for parking? The right price is when an area has 10-15% available capacity. Globally, this is anywhere from 0 to 15 USD per hour (of course extremes exist).
For the non-believers: http://www.youtube.com/watch?v=XkZz703W3jQ
Pasadena has proven that correctly-priced parking helps to rejuvenate neighborhoods. San Francisco has also implemented variable pricing and is reaping the benefits. People can now find parking when and where they need it.
Parking is just one of the factors people consider when they visit a place. Really, how does a 1-5 USD parking fee compare to a 100 USD restaurant bill? Seriously….
It would have been more instructive to have listed gross receipt numbers for 2007.
Choosing 2008 as a starting point is pretty much a low point for any given industry in the past 5 years. Showing improvement today vs. 2008 – especially for a sector particularly vulnerable to changes in disposable income and employment – is not by any means an objective reporting period.
I Don't Believe You
Who funded you to write this article? A city?