by Howard McAuliffe
What is an FEC Feasibility Study?
A Family Entertainment Center (FEC) feasibility study evaluates the strengths and weaknesses of a project proposal and determines if it’s technically viable and financially feasible. Family entertainment centers may choose to undergo a full or partial evaluation depending on whether the proposal is their first venture, how much capital is available, and their level of risk tolerance. Most lenders, including the Small Business Administration (SBA), require an industry expert’s feasibility study. Even experienced experts hire consultants to validate assumptions and gather other opinions.
An FEC feasibility study is essential to any business’s development phase. This article outlines the non-negotiable components of a feasibility plan and will help you decide whether your company should outsource to feasibility study consultants.
The Main Components of a Feasibility Study for FECs
The components that come into focus for a feasibility plan span demographic analysis, competition analysis, staffing, projected financials, operations, and management. FEC feasibility studies are complex but essential for anyone who wants to start a family entertainment business.
Site Selection & Evaluation
The site selection of a family entertainment center plays a major role in its success. A business’s location, no matter what industry it is in or how big it is, determines the quality of staff and employee satisfaction, customer traffic, the efficiency of operations, and, therefore, the bottom line.
During the feasibility plan’s site selection and evaluation stage, demographic analysis is balanced with cost, regulatory, legal, and competition considerations. Many potential FEC entrepreneurs will likely have a ‘wishlist’ of family entertainment center locations based on a basic understanding of target demographics.
For example, an FEC entertainment business will consider the age demographics of the community in the likely drive time for customers, which varies greatly by market. For example, customers will drive long distances in rural areas to access entertainment, whereas customers in cities will drive far less distance. FEC site evaluation services will also assess the likelihood of achieving future goals, such as expanding into outdoor activities or adding an indoor cafe, bar, or food stand.
Choosing a location based on convenience and accessibility to your target market is the easy part. Often overlooked challenges include taxes, zoning laws, permits, and insurance. During this phase, you’ll likely have to coordinate with local government officials, real estate agents, service providers, and contractors.
Navigating complex bureaucratic processes may feel unnecessary, even painstaking, and can discourage many potential FEC founders. Starting a family entertainment center is no easy feat, so before you abandon your grand plans, seek guidance from an FEC entertainment consultant. Feasibility study costs include FEC site visits and financial advice, like reassurance that higher-cost sites are more likely to generate faster profits.
Economic Market Study
An economic market study combines analysis of consumer demographics, behavior and market trends, providing you with a snapshot of your target customers’ needs and preferences. An economic feasibility market study for FECs should also include financial projections estimating the profits the family entertainment center will generate in the first few years of operation. The study’s predictions will help you confidently launch your family entertainment center at the right time.
Competitive Analysis
There is no hard and fast rule to conducting a competitive analysis. Regardless of your chosen factors, start with selecting at least 5-10 direct competitors to evaluate and compare. Direct competitors are business models that overlap with yours in some way. A direct competitor may sell products or services similar to yours, operate an established family entertainment center close to your desired location, or use the same equipment suppliers as you intend to.
Once you identify your direct competitors, evaluate their strengths and weaknesses. Based on these insights, adjusting your business plan to reduce competitive threats may be necessary.
For example, some family entertainment centers may want to capitalize on social or cultural trends. However, a competitor analysis may reveal that the market is already oversaturated with similar FECs. This stage will also evaluate whether your FEC entertainment idea is agile enough to adapt to changing consumer preferences and maintain long-term viability.
A well-conducted competitive market feasibility study will also consider indirect competitors. These might include all-ages sporting facilities, like local pools, at-home entertainment offerings, or a Top Golf. This helps you identify a gap in the market, providing insights on ways your family entertainment can do things better or what to avoid to gain and maintain a competitive advantage.
FEC Concept & Value Proposition
The FEC concept and value proposition stage involves discovering, testing, and asking: what makes my FEC entertainment idea unique? Then, logically justify that answer without bias. Our family entertainment center consultants have seen hundreds of FEC plans like yours. Their value lies in providing objective (and honest!) guidance on your value proposition.
While friends or family members can be great sounding boards, they won’t fully know how your business should work. Many people make the mistake of assuming that if they need a particular service or gimmick, everyone would too. Every business owner has biases. Some common reasons family entertainment centers fail are lack of sufficient capital, poor concept design or concept, and/or poor execution by the management team. FEC consultants help their clients get out of their heads and remove any subjectivity inhibiting growth and success.
Estimate Capital Expenditures
Capital expenditures are funds used to purchase assets that generate long-term business value. Capital expenditures may include property investments or equipment. These expenditures don’t typically appear on income statements but can impact a company’s financial health.
Proper evaluation ensures accurate financial reporting, tax compliance, and operational transparency. While a professional feasibility study increases initial startup costs, the investment pays off in the long run by helping you avoid penalties for the accidental mismanagement of a capital project and by identifying the right vendors to start.
Estimate Revenue Projections
Revenue projections represent the difference between your family entertainment center’s anticipated income and expenses. This estimation is useful for internal stakeholders, such as owners, investors, and planners, to make an informed go/no-go decision.
Revenue projections for existing FECs are typically based on past performance and comparisons to similar projects. For FECs that have not yet launched, revenue projections are based on market research, competitive analysis, real data from similar projects, and economic market studies. There are numerous ways that people approach revenue projections: some may hire a feasibility study consultant, while those with existing data and strong knowledge may use spreadsheets and revenue growth rate calculator tools.
Spatial Design & Concept Creation
A feasibility study’s spatial design and concept creation stage aims to balance substance, style, and safety. To make the family visit worthwhile, many family entertainment centers entice visitors with multiple attraction offerings, such as indoor karting, arcade games, ball pits, or bowling alleys.
The more attractions an FEC adds, the more complicated the set-up of mission-critical systems, including ventilation, electrical wiring, and plumbing. To help an FEC check all the boxes, the team at Pinnacle Entertainment Group optimizes your desired entertainment space by creating scale model layouts in an Autocad format provided by the Principal’s architects and, more importantly, by bringing decades of operations experience to the table. Architects are an essential part of the team, but almost none have operated an FEC.
Cost Estimate & ROI Projections
Accurately calculating the return on investment (ROI) is one of the most valuable metrics in FEC feasibility studies. ROI projections provide a clear picture of potential profitability. This allows FECs to gauge whether the expected returns justify initial investments–both monetary and time–or whether tactics should be recalibrated.
ROI projections are also a mainstay of investor relations. Most investors require them to be as realistic and detailed as possible, so they can be confident that their investment will yield positive returns.
FEC Feasibility Study Costs & ROI
FEC feasibility studies can cost between $10,000-$500,000. This is a substantial range, and the cost can vary based on FEC complexity, the number of locations, and whether you chose a full package or a partial study, such as a standalone economic proposal or site visit.
The feasibility study cost covers the number of technical experts and FEC consultants required to test whether your family entertainment center business plan is commercially viable and financially feasible.
Investing 1-2% of your budget for a well-conducted feasibility study will inform your decisions about the remaining 98%. Skipping an FEC plan can lead to financial consequences, such as wasted resources, missed opportunities, and risks to your family’s economic security.
Why You Should Do an FEC Feasibility Study
Some entrepreneurs may skip or rush through an FEC feasibility study or market research to focus on aesthetics, flash website graphics, and other “fun” stuff. However, these details–intended to generate profits–can become costly missteps without a feasibility framework.
For example, without market research and site visits to indicate otherwise, it wouldn’t be smart to introduce a drone-racing family entertainment center in a region with a minimum operating age of 18, or no drone-specific machinery repair shops nearby.
Every business comes with its own set of risks, but an FEC feasibility study will help your brand weather many storms that may come its way. It’s better to dot your I’s and cross your T’s now than lose unrecoverable time and investment should your proposal fail. Having a team of experts who have done this many times before is very valuable as experts become experts by learning from a lot of mistakes.
Feasibility Studies Are Key for Your FEC Business Plan
FEC feasibility studies differ from business and marketing plans and are best completed in tandem with them. Business owners should complete a feasibility study before starting a business plan, as the results will inform realistic and measurable goals and a timeline to achieve them.
For example, a feasibility study will recommend whether there is the proper demand and demographics for your proposed FEC entertainment venue. Then, the subsequent business plan will outline the hiring strategy and main marketing channels. Data from the feasibility study and the business plan will overlap, as will competitive analysis and market research.
Ready to Start Your Family Entertainment Center?
Pinnacle Entertainment Group has years of experience and knowledge in family entertainment centers like yours. We tell our clients the truth based on realistic projections, even if that means recommending they don’t proceed with a project. Our FEC feasibility studies also help you attract investors and obtain financing.
We offer a free one-hour phone consultation to discuss how we can help with your project. Contact PEG for your FEC Feasibility Study today.