The location-based entertainment industry (LBE), which includes family entertainment centers (FEC) and other types of community-based LBEs, is full of landmines for start-up entrepreneurs. Many aspects of developing and managing LBEs are counterintuitive, the exact opposite of what you might think. There are many industry myths. Here are a few we run across with clients on a repeated basis.
There is nothing in my town for families to do, so I know my LBE is feasible.
Along with this we often here something to the effect: “Our Chamber of Commerce did a survey and it showed that families want more entertainment options.” Both statements might be true, but that does not equate to market feasibility. Lack of competition and a need does not equate to feasibility. LBEs, like malls, require a critical mass of size to work. Downsize them to fit a very small market, and they no longer work. Many small markets lack fashion-oriented enclosed malls because the market is simply too small to support one with enough variety and selection to appeal to customers. For the same reason, a small town will never support a profitable LBE unless it also attracts either a regional market area or hundreds of thousands of tourists.
To be successful, my center needs to appeal to people of all ages.
Because they're called "family" entertainment centers, some people believe that FECs should have a little bit of something for people of every age. This is not the definition of "family" in terms of FEC visitation, where family means children, predominately no older than tweens, accompanied by their parents. Other types of ‘family entertainment centers’ can target non-family markets, such as young adults.
It is difficult, if not impossible, to please any market niche without focus. Our company has identified a minimum of twelve distinct "ages of play.” Without an FEC the size of the Kremlin, it is impossible to offer each age of play enough events that appeal to them and will generate a sufficient length-of-stay. Nor can you focus on and please so many groups at once, most with divergent needs, wants, and tastes. Furthermore, many of these groups just don't mix, particularly indoors. Families, especially mothers, are incompatible with teens, and teens don't want to be mixed with adults and younger children.
Delighting guests and inspiring loyalty requires focus through a mix of attractions, services and programs tailored to a targeted market niche. This is called "focused assortment" and is like shooting with a rifle rather than a shotgun. Focus not only targets a narrow age range, but also the type of group and a specific socio-economic/lifestyle grouping.
I can copy the FEC I saw on vacation in another town. It was really busy on the Saturday I was there. They must be printing money.
Most LBEs do 30%-35% of their business on a Saturday. Sure they will be busy. But none print money on Saturday. In fact the weekend business is most likely barely paying the bills. It’s all the other crumbs of business that an LBE has to generate that eventually make it profitable. This includes weekday and group business.
Copying a formula that might be successful a one location does not mean it will at your location. Markets are different. Competition is different. Perhaps the other LBE was developed five years ago with much lower costs than today. Perhaps it is in its honeymoon period when just about any new LBE works, as everyone shows up once to check it out. The issue is, will there be enough repeat business. Perhaps its financing structure is different, giving it a lower breakeven point. Imitation is flattery, but not necessarily the formula for success.
I am a good judge of what my customers will want.
You are not your customer, especially if you are a man, unless of course you are designing a macho male-oriented center. And even then, that does not mean you are the age or from the same socio-economic/lifestyles as your potential guests. There are also many entrepreneur bias traps that can do in the most well-intentioned project.
Food isn’t important; people come for the entertainment.
They may come for the entertainment, but how often? And they will leave when it’s mealtime. The concepts that have stood the test of time, 25+ years, have revenues that are evenly split between food and beverage and entertainment. The fastest growing and most successful concepts all have destination dining. Dining drives frequency as well as creates synergistic appeal with the entertainment.
My local architect can design my LBE
Architects are wonderful people, really. But asking your local architect to design your FEC is like expecting your family doctor to perform a triple bypass. In both cases, generalized knowledge does not translate to specialized knowledge.
An LBE’s success depends upon design factors that require specialized knowledge that only comes from years of experience in the industry. The facility’s design affects every aspect of the business. There's the issue of adjacencies - what is placed where. There's theming. There's designing to minimize staffing at slow times. There's queuing, traffic flow and wayfinding issues. There's right sizing, entertainment capacity, queuing and throughput considerations. There's atmospherics, which deals with the psychological/emotional feel of the center. It takes a specialist in the industry to know how to create a successful design.
I can rent inexpensive warehouse space, fill it with inflatables and be successful.
To that one, without sounding too pompous, good luck. It may work for a year or so, but then watch out. Consumers now have very high expectations for everything about a business, including its interior design and décor. Other than for a warehouse store that needs to look like a warehouse to reinforce the perception of low prices, warehouse finish doesn’t work for entertainment (excepting maybe indoor go-kart centers) any more than it would work for any type of restaurant. As for the inflatables as an attraction, they are becoming a commodity, no different than what happened to soft-containment play. Remember Discovery Zone?