Funworld May 2008

The Rising Wage

by Mike Bederka

How family entertainment centers can keep labor costs in check

MINIMUM WAGE HAS CAUSED MAXIMUM WORRY FOR SOME. To compensate for the steady rising cost of labor, family entertainment centers across the country have cut hours, increased prices, and reduced staff.

Be careful with the penny pinching, though. Moves too drastic can compromise safety, service, quality, and profits.

For example, if you slash by half the number of kids manning the gokart track, you won’t get as many rides through and people will wait longer in line. As a result, sales will slide. Conversely, shrewd minimum wage planning will keep business brisk, notes Harold Skripsky, president of the Scottsdale, Arizona-based consulting firm Entertainment Management Services Inc.

“It can be dealt with,” he stresses. “You don’t go around screaming ‘the sky is falling.’”

Smart Scheduling
Darren Harmon, general manager of the Family Fun Center in Wilsonville, Oregon, has felt the effects of minimum wage more than most. Staffers in his state now start at $7.95 an hour—one of the highest numbers in the country. “It’s very tough,” Harmon admits.

His FEC partially made up for the increase by shortening its hours of operation during the week, a traditionally slower time. It went from 11 a.m. - 9 p.m. to noon-8 p.m. “During the summer, you can increase the hours, but you have to watch when you close,” Harmon says. “Don’t stay open to midnight if you’re not having the business volume. In the olden days, you would stay open as long as people were coming in.”

Olivier Sermet also had to cut back. The Jungle, with three California locations, reduced hours 30 minutes every day of the week and opens an hour later on Saturday, the owner explains. California’s minimum wage jumped from $6.75 to $7.50 in January 2007 and to $8 this past January.

Take advantage of your busy-time-of-day reports from the point of sale system, urges Gregg Borman, senior vice president of the FEC division for Palace Entertainment, headquartered in Newport Beach, California. This technology will help to determine hours and staff coverage. “Now, you can plan an operating schedule that makes sense,” he says. “You can look back and say people don’t really come to my park at 10 a.m. If I open at 3 p.m., I’m going to save five hours of labor.”

Managers must use discipline and forethought when creating a schedule, Sermet adds. He doesn’t allow his staff to chalk up enough hours to earn overtime. “It forces better and stricter scheduling of your employees,” he says.

If someone on the night shift calls in sick, don’t let an afternoon staff member cover for him. Instead, have a backup plan and keep another person on call.

Dealing with Raises
With higher starting wages, many FECs have limited the number of merit raises they give. “It’s promotions now,” Harmon says. “That’s the only way you can increase your income.”

Management at the Family Fun Center will offer a variety of morale boosters, though. Employees going above and beyond can earn free food at its restaurant, tickets to a local basketball or baseball game, or a gift certificate to the movies.

They also host a few employee parties a year. Sermet’s staff members still will be evaluated twice a year for potential raises, but they now receive a lower amount.

Pay increases can be especially “sticky” for those longtime employees earning a few bucks over the minimum wage, Skripsky says. They may feel they should get something extra out of this legislation. In these cases, managers should look at each employee individually to decide what, if anything, he will receive. Several factors can play a role in the decision: How many hours does he put in? How long has he worked for you? How well did he score in his last few performance reviews? Will he be around for a while?

Cutting Costs, Generating Revenue
In these tough times, FECs should examine their whole operation and look for other efficient ways to improve the bottomline. Sermet recommends reviewing relationships with vendors and asking them when possible to reduce their costs. “We have to squeeze them,” he says, acknowledging that can be a tough task. Also, turn frontline employees into lead generators, Harmon says. They should see if satisfied customers have any interest in returning for a birthday party or group event and then pass along this vital information to the sales department. In addition, start cross-promotions with onetime FECcompetitors likemovie theaters and baseball teams, Harmon says. “You have to become their friends.”

But beyond anything else, raising prices is probably the best way to deaden the impact of skyrocketing minimum wages, Skripsky says. “This is the perfect opportunity,” he says. “You can blame the government. People are absolutely more willing right now to understand why you might do it.”

Of course, raising prices must be done in a professional manner. Sit down and see exactly how much the new wages will cost. If it’s $30,000, don’t make up for it with a $100,000 jump “unless there’s a good business reason why,” Skripsky says. “Recoup your increased labor costs andmaybe give yourself a little raise,” he concludes. “Don’t get crazy.”

Mike Bederka is a contributing editor for FUNWORLD. He can be reached at mbederka@iaapa.org.