This article was originally published on replaymag.com.
The IAAPA show is back! That statement is a little risky as I write this in early October, but it looks like the show is a go! It also looks like we are firmly in the post-Covid stage with businesses recovering so, it’s probably again time for us to “look around the corner…” In a business context, that means finding how to stay relevant, keep entertaining your audience and attract new guests. IAAPA is a great place to get and research ideas and to make some decisions about the future.
What’s next? That’s a great question for out-of-home entertainment operators to constantly ask themselves. The question of “how to grow” goes back decades. A Harvard Business Review article some years ago –– “Creating New Market Spaces” by W. Chan Kim and Renee Mauborgne –– addresses the issue. They wrote: “Most companies focus on matching and beating their rivals and as a result, their strategies tend to converge along the same basic dimensions of competition. The more that companies share this conventional wisdom about how they compete, the greater the competitive convergence. Creating new market space requires a different pattern of strategic thinking. Instead of looking within the accepted boundaries that define how we compete, managers can look systematically across them.”
The history of our industry has many examples of looking across industries. Dave Corriveau and Buster Corley (along with a talented team of people like Reggie Moultrie, Cory Haynes and Mike Plunkett, to name just a few) combined arcade and bar/restaurant in the early 1980s. They made 2+2=5. Forty years later, Dave & Buster’s is an American institution. Neil Hupfauer combined bowling and arcade in a big way and created the bowling entertainment center concept that evolved into Main Event, now a force in our business. Bill Reitzig of Sports Plus took the BEC up a notch by adding ice skating and sports to the mix. You get the idea!
FSR (Food Service Report) recently did a feature on innovation in the restaurant industry. Their #2 trend is “More restaurants will diversify revenue streams.” The article noted, “For many restaurants, an important survival strategy will be to diversify revenue streams…pivoting from their primary offerings and branching out to other verticals…”
Like Dave & Buster’s, other restaurant companies have seen the value of incorporating FEC elements with their food and beverage. We’ve had the pleasure of working with many of them. The Shakey’s Pizza team on the West Coast were early masters of integrating arcades into their pizza restaurants. Our work with Shakey’s introduced us to several pioneering franchisees at Pizza Ranch. We worked with those franchisees to design the arcade, called Fun Zone, establish the operating system and prove the concept. Pizza Ranch Fun Zone is now one of the fastest-growing companies in the FEC industry.
If I had to pick one word as a common success factor for all of these concepts it is “integration.” Their management teams didn’t merely add a few games or a small arcade to collect pocket change from their main customers. They added an attraction and then committed to integrating that attraction into their guest experience.
There have been plenty of missteps as well so, a careful approach is paramount! In the early ’90s, there was Discovery Zone, the “original” children’s play center that consisted of a huge play structure, a snack bar and a few games. In those years, I was COO of Edison Brother’s Entertainment, a national arcade chain. We thought the concept could benefit from a stronger arcade presence.
Our answer? We took a space (this was the time when most arcades were in malls) adjacent to our Time-Out arcade and installed a children’s play structure. We called this “Party Zone” (how’s that for creativity?) and knocked a hole in the wall to connect the two, expecting 2+2 to equal 5. We quickly learned that 2+2 equaled 3. We actually hurt our arcade business. What did we miss? We didn’t understand that we were dealing with two radically different customer groups. The arcade’s young (mostly teens), male customers looked and saw a kiddie place. The moms and dads, who were the decision-makers for the children’s center, saw a teen arcade.
Homework and critical thinking are highly recommended in your decision process. IAAPA provides those opportunities: to listen and learn in the seminars, touch and feel in the booths, and communicate with peers in the aisles. Hope to see you there!
George McAuliffe has helped hundreds of business large and small develop and execute arcades and FECs. He has personally operated family entertainment centers from 2,000 to 150,000 square feet as a corporate executive, entrepreneur and consultant. He is the owner, with his partner and son Howard, of Pinnacle Entertainment Group. George lives on the Jersey Shore with his wife, Julie. They have three sons, two daughters-in-law and a grandson.