When Delaware North Companies (DNC) announced last month that it would be purchasing the assets and business of the Delta Queen Steamboat Co., no one should have been surprised (for more on the deal, see sidebar).

While Buffalo-based DNC is known mostly for operating concessions at sports stadiums and national parks and managing retailing at airports, Delta Queen’s riverboats are a natural extension of its capabilities, and their purchase signals a new aggressiveness by the company to expand into segments that complement its core businesses.

“We are evolving into broader aspects of the service business,” declares Chairman/CEO Jeremy Jacobs, Sr. “We’re not leaving one in favor of another, but we’re adding to them.” Jacobs notes that the recently purchased riverboats are similar in their day-to-day operations to what DNC’s Parks Services division already operates, “except they’re on water.”

Parallel with the acquisition, DNC also announced an internal management overhaul that consolidates the company’s seven operating units into two broad categories based on core business similarities that cut across segment lines. It positions Jacobs’s two sons, Executive Vice Presidents Jeremy, Jr., and Louis, to take on direct responsibility for developing new strategic directions for the company.

“Lou and I have extracted ourselves from the daily operating side of the business to focus more on the strategic opportunities that are before us,” explains Jacobs, Jr. “There is now the ability in the organization to literally enter new businesses like the riverboats without disrupting the overall efficiency of the company. I think what can be expected as a result is a more aggressive approach to how we think strategically.”

With the two initiatives, DNC embarks on a new chapter in an already long company history, one that began with supreme modesty in 1915 when three brothers—Louis, Marvin and Charles Jacobs—began selling peanuts to theater customers in Buffalo.

THE MANY FACES OF DELAWARE NORTH (top to bottom): High-end catering in sports arenas by the Well Bread division of SportService; letting loose the hounds at one of SportSystems’s dog racing tracks; the recently acquired Delta Queen riverboat churns up the Mississippi; visitors “Lunch with an Astronaut” at DNC Parks Services’s Kennedy Space Center operation.

Working on leisure

For most of its history, DNC has ridden American society’s expanding appetite for leisure, recreation and amenities, from those original 1915 theater patrons to today’s customers at ballparks, national parks, racetracks and even airports (where shopping and foodservice are practically the only “recreation” available).

The soundness of DNC’s strategy has been validated in the last few decades by an explosion in leisure spending in thiscountry. Despite talk of “overworked Americans” and “declining leisure time,” per capita recreational spending in the U.S. (adjusted for inflation) ballooned from around $500 in 1970 to $1,650 in 1995 (the latest figures available).

DNC’s sales continue to soar along with the cultural tide, up 33% in just the past five years, with no significant acquisitions.

DNC initially grew through aggressive expansion into a wide variety of businesses, often through acquisition. However, acquisition-fueled growth was curtailed in the 1980s, when the company decided to consolidate into a few core businesses. In fact, until the recent steamboat deal, the last major segment DNC entered was public parks, almost a decade ago.

The recent restructuring signals a return to a more orderly version of its former aggressive growth strategy by providing a template for controlled expansion into related businesses—such as riverboats. It’s also designed to facilitate the nurturing of organic growth through internal synergies.

“We don’t think of the company in terms of seven operating divisions any more,” says President/COO Richard Stephens. “Rather, we have two clusters of related businesses that can provide more flexibility.”

The new Contract Services division, headed by former vice president/CFO John Fernbach, includes CA One (airport retailing), SportService (sports concessions/catering) and DNC International (operations in Australia and New Zealand), while the Hospitality & Entertainment division, headed by former Parks Services president Dennis Szefel, includes Parks & Attractions Services, SportSystems (dog and thoroughbred racetracks), the new riverboat business and American Park ‘n Swap (see sidebar).