Competition heats up at area Christmas tree lots.
Thursday, December 10, 1998
Think you can make a quick buck selling Christmas trees? Think again, say area veterans. It''s harder, and more expensive, than it looks, with start-up costs high and competition stiff.
For long-time independent Christmas tree lot operators, what really cuts into business are mega-boxes like Target and Home Depot, who offer Christmas trees as a come-on to get shoppers into their stores. "They''re pretty much selling at cost or below, which irritates me as a retailer," says Vince Cardinale, co-owner of Cardinale and Wright Christmas Trees, which has been operating locally for 24 years, the last 16 at the Monterey Fairgrounds.
This year, there''s someone else cutting into their business--the newly created Kris Kringle Foundation, founded by Doug DeGeorge, owner of TLC Vending, which manages coin-operated washers and dryers. DeGeorge, who has been selling trees locally for three years under the name Kris Kringle Christmas Tree Company, decided a few months ago to create a 501 C-3 nonprofit foundation to distribute free trees and gifts to local needy families. He explains the move as coming straight from his heart. Like other local for-profit tree salesmen, he always gave away a couple hundred trees to needy families. Last year, one of the women he helped came to see him on his lot. "She had a couple of children trailing behind her, she was shaking and crying, hugging me, thanking me," he says. "It left such a visible impression on me. I said to my wife, ''Honey, we have to do more than this.''"
So this year, he''s expanded his lots from one to four, and he sells trees at what he modestly calls "affordable prices"--actually, prices significantly below his competition. His most expensive trees, eight feet and over, run $34.95, with a $5 reduction if you bring in a toy for a needy child.
Although DeGeorge says the four tree lots are operated on a for-profit basis, as part of his tree company, the foundation benefits in two ways: First, the company donated 100 trees to the foundation, for distribution to local families in need; and second, those same families get the toys donated by customers at the tree lots. DeGeorge says he also uses the cachet of his nonprofit label to obtain trees from tree farms at lower-than-usual prices, and he''s able to pass those savings on to his customers. But, his competitors point out, those lower prices can only help sales at his for-profit company.
Is it fair? DeGeorge says absolutely. Each tree sold means another toy for a local child in need. As of Dec. 6, he''d collected more than 800 toys. The Salvation Army, one of the organizations providing him with names of local children in need, says they will be taking applications from needy families until Dec. 11. And the lower wholesale prices he obtained means he can donate 1,000 free trees to local groups, instead of his usual 100 or 200. Local groups benefiting from his largesse include the Salvation Army, the Hope Foundation, the Monterey County AIDS Project, the YM/YWCA, the Boys and Girls Club, the Angel Project in Carmel Valley Village, the Oldemeyer Center, and local public schools, churches and police departments.
The Carmel Valley Kiwanis Club chapter, however, is miffed. After all, they sell trees to benefit their own local charities, and they feel the Kris Kringle operation is muscling in on their turf, possibly under false pretenses. "It appears to me the guy has a thing going where the end result is he''s making a pretty good profit," says Jim Green, project manager of the Kiwanians'' Carmel Valley tree lot.
The local Kiwanis Club raises from $25,000 to $30,000 annually for eight to 10 local nonprofit projects, including the Cub Scouts and the Carmel Valley Community Center. Last year they netted $3,500 from their tree lots, where they sold about 350 trees, Green says. The Kiwanis Christmas tree operation is relatively small, but they depend on it for more than 10 percent of their annual fundraising.
DeGeorge approached the Kiwanians, Green says, offering to join forces and sell trees together. Three Kiwanians met with him, Green says, but when he mentioned that he''s also selling the trees for a profit, the Kiwanians backed out immediately. "What hit all three of us is, we have a guy who''s wearing two hats [as a tree salesman and chairman of a nonprofit foundation], and we told him we weren''t interested," Green says. On the other hand, Green admits, "Maybe we just don''t like him because he''s competition."
Actually, DeGeorge says, he won''t be making money this year. In fact, he''ll be lucky if he doesn''t lose his shirt. He bought more than 10,000 trees for resale, he says, including the 1,000 he''s already pegged for donation. "We''ll probably be stuck with a lot at the end," he says. "I''m averaging three to four hours of sleep a night, worrying that the trees will all sell. And sales have not been brisk yet. We''ve had to fire one lot manager already, and my wife is managing it now."
DeGeorge''s biggest gift to the community may be a huge bash he''s planning for the Monterey Fairgrounds'' Salinas Room on Dec. 23. Titled "Winter Wonderland," it will be a free party for all comers, featuring a snow-blowing machine, a bouncy house, face-painting, puppets, and toys for all the kids. DeGeorge has amassed an enviable list of sponsors and folks he says are donating to the party: Macy''s is kicking in 400 toys, he says, Target and Circuit City are giving gifts and discounts, TCI Cable is providing free advertising, Growers Ice is donating a 40-foot snow slide, Pepsi is giving free drinks, Monte Mart is giving toys and candy, Rosine''s and Round Table Pizza are giving food...the list goes on and on. All seven local mayors and police departments will send representatives, he says, and some will bring police cruisers and motorcycles.
DeGeorge says he hopes to put on the affair "for less than $5,000." Where will that money come from? "We''re hoping that''ll come from the folks who come to it," he says optimistically. "We don''t have very much of it yet."
So he doesn''t feel bad about maintaining his for-profit tree company, considering the good he''s hoping to be able to offer back to the community.
"The trees are sold as a private enterprise," he says. "And we hope to God we break even."
Old-time tree salesmen agree that making a profit on trees is iffy at best, and they say new evergreen entrepreneurs are as perennial as the holiday season itself. "This year, I see a lot of new [tree] lots in town, maybe five or six," says Cardinale. "People think it can be lucrative. They don''t realize the number of hours, the labor, the finances involved."
"Every few years, people get the grand idea that this is easy money, which it isn''t," agrees Jim Stracuzzi, co-owner of Del Monte Trees, operating at the Carmel Crossroads for the past 10 years. "They open, they lose their money and then they panic. Most of them won''t be around next year."
It costs about $40,000 to start a Christmas tree lot, Cardinale estimates. That includes buying the equipment--lights, poles, banners, cash registers--paying for a business license from your city and a resale permit from the state board of equalization, and hiring workers, which involves paying for workers'' comp and insurance. It also includes buying the trees, most of which come from tree farms in Oregon or even further afield. And when you''re a new guy, Cardinale points out, you have to buy those trees outright, and take the loss if you don''t sell them. "You''re buying them all on spec," he notes. Veterans like himself put very little money up front, paying for the rest as they sell.
"Normally we don''t have any leftovers," he says. "If we have a few, we''ll donate them on Christmas Eve to the Salvation Army. Or we''ll chip them up. They never go to a landfill."
Although a properly run tree lot can be lucrative, Cardinale and Stracuzzi agree, it''s not enough to live on, even with mark-ups of 100 percent or more. Both men operate moving and storage companies the rest of the year. And their lots are among the biggest in our area--Cardinale hopes to sell 1,500 to 2,000 trees this season, and Stracuzzi says he''ll sell about 1,500.
"You can''t make any real money unless you sell 4,000 to 5,000 trees, and you can''t do that on this Peninsula," Cardinale says. cw