As an example, a hypothetical FEC that grosses $1.2 million in revenues would have 100,000 customers walk through its doors, spending an average of $12 per visit. The simple formula for this is: Gross Revenue = Per Capita Spending X Attendance. But when you factor in repeat visits, you’re really talking about only 35,000 unique visitors, many who come multiple times per year. So one of the most important growth strategies, beyond re-investing in your facility, is to increase the visitation rate of your core group with a few proven strategies.
This is important because we have locations where 3% of the customer base are generating 20% of the total revenue! This is a great cushion to have and is the prime reason why our revenues did not slip at all during the past economic downturn. But what about the other 97% of the customer base? Obviously they are not interested in a VIP program but many can be encouraged to recruit their friends as new customers if the incentives were attractive. Every new location will generate a certain amount of traffic from people who will come once for the novelty factor or in response to a marketing effort. The goal is to convert enough of those people into repeat customers. It’s really a numbers game because only a certain number of those initial visitors are going to come back after either a walk-in or a birthday party.
Through the years I’ve met owners/managers who have been running seemingly successful FECs for years and yet they do not pay much attention to their game data. They don’t weekly track or manage their redemption games ticket or e-point payout percentages or merchandiser win percentages. Even the Family Entertainment Centers that do track that information aren’t using it to improve their business. Any one of our AEM Team (Amusement Entertainment Management) can walk into a Family Entertainment Center and within just a few hours can recommend action steps that result in game revenue increases of 15%-25% or more. This involves teaching the technician and manager how to properly track their game information, make the necessary game programming and price/play adjustments, and improve the game layout.
FEC operators also don’t pay much attention to the game mix. Even a rotation of one new game every three months would improve revenue because Family Entertainment Centers have to provide their customers a reason to come back. Just paying attention to a well thought out list of operating procedures could benefit so many Family Entertainment Centers.
When you drill down into who is patronizing locations, many Family Entertainment Centers are being supported by a very low number of individual customers in a particular market. That’s why an accurate feasibility study is so crucial, so that you have a realistic grasp of your target audience and you can invest appropriately. You also have to analyze the average individual and family out-of-home entertainment spending on an annual basis. This is all the more crucial today when you consider how much money is going to mobile providers and the newest electronic devices. Those new family budget items have definitely cut into the money that used to get spent on more traditional entertainment like ours.