Feature - Keep it Fresh - February 2019

SCENE75

Expansions at family entertainment centers can attract new guests and boost revenues

by Heather Larson

Arcade, food, and entertainment complexes in the United States have grown by 3.3 percent in the past five years, to a tune of $2 billion in revenue, according to IBISWorld, an independent publisher of industry research reports. That statistic encompasses debit card- and coin-operated games, food, beverages, admissions, and corporate party event services—basically, everything you’ll find in a family entertainment center (FEC). 

The growth rate for FECs in general isn’t new, says John Gerner, managing director of Leisure Business Advisors LLC (LBA).

“FECs are an established type of amusement business started in the 1990s that continue to do well,” says Gerner. “It’s the type of specialized FEC—like adventure parks or centers that emphasize physical activities—that have been trending upward in recent years.”

Gerner says FECs offering more extreme activities like ropes courses, ziplines, and ninja courses appeal to active families, who also like to socialize while expending energy.

Multiple individual complexes have recently increased their square footage or opened new locations. For operators considering an expansion, here are some points to evaluate when including new products and a look at what it may cost.

First Steps for Expanding

Gerner suggests taking inventory of the physical space available for construction and, of course, the available budget. The next crucial step is to reach out and talk with other FEC owners and operators. 

Jeff Gebhart, CEO of Craig’s Cruisers, did just that before finalizing his expansion project on the company’s Grand Rapids, Michigan, location. He wanted to add trampolines to his FEC mix because other companies had brought them into the local area and were taking away some of Craig’s Cruisers’ business.

“We (owner Craig Cihak and Gebhart) traveled all over the country looking at trampoline parks and went east to look at rides to see what works and what doesn’t,” says Gebhart. “We looked at innovative uses in the industry, and eventually, we found the perfect mix. Doing our homework really paid off.” 

Because safety comes first at Craig’s Cruisers, Gebhart’s team researched trampoline manufacturers and found Shock Trampoline Park Systems. Gebhart says they also researched best practices for safe operating procedures.

2016_5_25_Scene750055-(1)---Credit-Scene75

Each of Scene75’s locations features go-karts, laser tag, arcade games, dining options, blacklight mini-golf, inflatables, motion simulators, and event space. (Credit: Scene75)

Why Expand

Because of the inclement winter weather in Michigan, Gebhart wanted to increase the number of indoor experiences his FEC offers.

“It was time to add on and change some of our attractions. We offer lots of attractions, so visitors have lots to do,” says Gebhart.

Craig Buster, general manager of Wild Island Family Adventure Park in Sparks, Nevada, also wanted to offer more indoor attractions and more options for guests when he decided to further develop his FEC.

“Our two outdoor go-kart tracks needed repair,” says Buster, “We decided to bring them indoors so we’d have year-round business. Big companies including Google, Tesla, Switch, and Panasonic have been settling in the Reno-Sparks area, so we wanted to give new residents moving here lots of choices.”

Expansion Budgets

John Gerner, managing director of Leisure Business Advisors LLC, suggests FEC owners and operators look at 5 to 10 percent of their gross revenues per year as a starting point when considering how much to spend when adding offerings. One way to save money on the project is to buy used equipment. He recommends making a wish list of desired attractions or additions and then searching for auctions or sales of equipment at a discount.

To tap into an additional market, Jonah Sandler, founder and CEO of Scene75 Entertainment, says his group recently opened a fourth location in Pittsburgh, Pennsylvania, which appealed to the company because the locale was easily accessible from its base in Ohio, so the team can visit frequently. During those stopovers, the team ensures Pittsburgh retains Scene75’s consistencies in culture, operations, and values.

The second reason Scene75 chose Pittsburgh was because it felt the area was underserved for quality family entertainment offerings.

Once FEC operators have identified available space, a budget, and reasons for expanding, how do they decide what to add?

Additions That Make Sense

Offering what is popular, while emphasizing unique activities guests can’t do at home, can be a good plan. Physical and social experiences are particularly good examples.

“People now want to be more active and control their experience instead of being passively entertained,” says Gerner of LBA.

Craig’s Cruisers’ addition of a ninja course and trampoline park bears that example. It increased the FEC’s indoor space by nearly 40,000 square feet at a cost of $5 million, taking the facility’s indoor attractions up to a total of 120,000 square feet.

“Besides the trampoline park and the ninja course, we added a two-level laser tag area and a spinning [indoor] coaster. We spent a lot of our energy on lighting—the light show you experience in the trampoline park is like a rock concert. When we were looking at other FECs, we saw the spinning coaster and decided we had to have it. The whole family likes to ride it,” says Gebhart.

Because of the popularity of the TV show “American Ninja Warrior,” Craig’s Cruisers added its own ninja course. 

“Ours is a full-fledged timed attraction with an emcee who announces the play-by-play,” Gebhart says. “It’s intense, and you must be in decent physical shape to complete the course. Besides appealing to players, this attraction draws a big audience, as well.”

Wild Island went all out with a 30-player, two-level Laser Tag Arena, the latest arcade games, an arcade redemption store instead of a counter, six new bowling lanes, two private party rooms, and a 150-person private event mezzanine overlooking the arcade and go-kart area.

“We now have the only one of its kind, indoor blacklight go-kart track,” says Buster. “We hired an artist to paint a jungle theme, added lots of props, and riders are fully immersed in a story while go-karting.”

The redemption store allows kids to shop for their prizes instead of hemming and hawing while an employee waits for them to decide what they want. Buster says it’s a better experience for guests, and kids learn math without realizing it.

Buster is also proud of the upgrade to the facility’s bowling lanes. In addition to fewer equipment breakdowns, guests can order food from the lanes, log into their social media accounts, share their scores, put photos of themselves on the big screen, and text each other from lane to lane.

The Wild Island expansion added 50,000 square feet at a cost of $10 million.

Sandler says the Pittsburgh location encompasses 90,000 square feet and has the same attractions as Scene75’s other locations, including go-karts, laser tag, arcade games, mini-golf, mini-bowling, inflatables, and a virtual reality experience.

“We did, however, add an additional private party room to ensure we could capture more party business,” says Sandler.

Once a facility has invested in an expansion, when will it see profits again?

Likelihood of Return on Investment

Craig’s Cruisers’ Gebhart says so far, he’s very happy with the performance of the new space. The numbers are better than he expected.

Management at Craig’s Cruisers decided not to raise its prices. Instead, by offering more attractions, the facility could handle more people.

“We have a Wednesday Wristband special from 4 to 9 p.m. that includes our pizza buffet for $25.99, or any day you can purchase the Works Wristband for three hours of unlimited fun. That wristband sells for $29.99 per person without the pizza buffet and $34.99 with the buffet. Our in-house chef makes everything in the buffet, including pasta, cookies, soups, and, of course, pizza,” says Gebhart.

Over at Wild Island, Buster instituted a minimal increase in prices and expects to achieve his return on investment in seven years. He admits that’s very conservative.

No matter what new and trendy attractions or technology-based arcade games an FEC may have, if it doesn’t have good customer service, it may not get repeat visitors.

“Customer service is even more important than your equipment,” says Gerner. “It’s not expensive to bolster up your guest relations. You should be conducting surveys on a regular basis asking your customers how they felt about their experience at your FEC.”

Gebhart also has another suggestion for keeping guests coming back: regularly update offerings. The new ninja course at Craig’s Cruisers changes every three months so guests returning discover different obstacles to conquer. “If a park isn’t staying fresh, then it’s getting old,” Gebhart says.


Heather Larson is a freelance writer in Tacoma, Washington, who frequently writes about small-business issues.