My FEC is feasible since there's nothing in my town for families to do

We can't begin to tell you how often we get inquiries from prospective FEC developers who tell us, “I know my FEC is feasible since there's nothing in my town for families to do.” 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.” Many of these FEC entrepreneurs will have already developed elaborate business plans based on that underlying assumption of market feasibility.

We've been working in the FEC industry now for 26 years and have seen way too many sad examples of shattered dreams, and sometime lives and wealth, when that feasibility prediction didn't pan out. Unfortunately, that feasibility criteria is a major generator of FEC industry road kill.

Both statements might be true, but that doesn't equate to market feasibility. Lack of competition and a need does not equate to feasibility. FECs, like retail malls, require a critical mass (size and mix) the right size market based on its demographic composition to work. You can't downsize FECs to fit a very small market any more than you can downsize a fashion-oriented mall to 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 FEC unless it also attracts either a regional market population or hundreds of thousands of tourists.

The required market size and characteristics needed to support an FEC are also changing. More and more entertainment spending is shifting to consumer digital technology and entertainment content. And a larger and larger share of location-based entertainment spending is shifting to higher socioeconomic consumers. A market that might have easily supported an FEC only around a decade ago might not support one today.

Additional reading: The Perfect Storm: LBE Disruption & Opportunity.