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That's Eatertainment!
Everything you need to know about food service that builds profit and repeat business

By Randy White

© 2003 White Hutchinson Leisure & Learning Group

We all have friends like this. Bubba's idea of haute cuisine is a big ol' sack of frozen something from Costco, microwaved on high until it's good and dead. He thinks ketchup is a vegetable, and so is pickle relish. He's pretty sure he ate spinach once, but it was hard to tell under all that Velveeta. A balanced meal? It doesn't make his TV tray tip over.

Is Bubba a great guy? Of course he is. Do you love him like a brother? You betcha. We're not gonna try to talk you out of that. But we do have a question: Did you really have to put him in charge of your food service?

If that ticks you off, you better strap yourself in because it gets worse. We're also going to suggest that the only location-based entertainment (LBE) venues that will be profitable in the future are those that draw guests because of, not in spite of, the chow. And we're going to tell you to never, ever, under any circumstances, even the most extreme duress, call it a (gasp!) snack bar.

If you think we're exaggerating, we're not. To give you a sense of how bad most LBE chow is, consider the fact that even shopping malls can boast higher food sales.

They'll eat anywhere but most FECs

Visitors to malls spend significantly less time there, but significantly more money on food and beverage (F&B) than guests at most LBE venues. In fact, many LBE guests plan their visits to avoid grub so foul it'd make a school cafeteria cook pack up her hairnet and slink home.

Research by the International Council of Shopping Centers found that in 2002, visitors to enclosed malls spent an average of $4.70 per visit on food and beverage (F&B). That's an impressive per capita expenditure considering that not every shopper makes a F&B purchase and many shoppers do not visit a mall with the intention of making a F&B purchase. That same research found that the average mall visitor spent an average of 78 minutes or 1.3 hours in the mall per visit.

There is no nationwide research on the average per capita expenditure for visitors to location-based entertainment venues (LBE) such as family entertainment-type facilities. Our company's analysis of many existing centers, however, indicates that the average F&B expenditure is probably less than $2 per person. Yet, the average length of stay is longer than at a mall, anywhere from 20% to 50% longer, from 1.5 to 2 hours.

Instead, people walk out the door rather than belly up to the snack bar. The less time guests are in an LBE, the less they will spend, just not on F&B, but also on entertainment. At mealtimes, many LBEs are nearly empty because potential guests visit restaurants instead.

We're pretty sure we know why they don't eat there

After extensive research that taxed our organizational capacities to the utmost, White Hutchinson Leisure & Learning has confirmed an hypothesis developed over years of hands-on study and analysis: The reason that people don't eat at most LBEs is because the food is skank beyond belief.

Most snack bars would fit just fine in a 1950s bowling alley, and we suspect we've been served frozen burgers of about that vintage. The snack bars and concession stands have a boring selection of food that aspires to mediocrity, served by unenthusiastic staff with a bland presentation and a seating area with plastic furniture in a setting that's one small step above a truck terminal. Big surprise, then, that most guests leave LBEs with money in their pockets that could have become additional revenue and profits.

We believe there are two probable explanations for why LBE owners embrace such lousy food and beverage service:

• The owners and management are intimidated by food service, or
• They consider food service a necessary evil.

We refuse to consider that LBE owners might actually like the grub and think it's what their paying customers prefer. This would be almost as scary as Thanksgiving dinner at Bubba's. ("Turkey fingers, anyone?")

The prevailing attitude toward food service is costing LBEs plenty. Those LBEs who've learned to use food service to their advantage provide lessons for even the most skeptical LBE owner.

Poor chow damages all LBE revenues

What these LBEs don't realize is they are not only losing potential food service revenues, they are also affecting their overall attendance. There is one main reason a quality food-and-beverage offering positively affects attendance: Socialization and food and beverage go hand in hand.

Most LBE guests visit with a group of family or friends. Entertainment is often secondary to their desire to get out of the house and socialize. When the F&B component is missing or miserable, people stay until they get hungry then go elsewhere. Why visit, or visit often, if the LBE fails to meet all your requirements?

A poor food service offering also negatively affects a guest's image of an LBE. The LBE can have the greatest entertainment in the world, but a poor food service component results in a lower image of the entire experience of visiting. A guest's overall rating of an LBE is the sum total of all aspects of their experience and is rarely more positive than the weakest component.

Not everyone plays, but everybody eats

A quality food-and-beverage offering can drive attendance at an LBE higher than achievable by the entertainment alone. To achieve this requires an F&B offering that is itself a destination. Guests will come for the food, and while there, spend on the entertainment. It's the complete opposite of the traditional LBE formula of treating the entertainment as the anchor and the food as the impulse. When properly executed, the combination of food and beverage and entertainment take on a unique synergy, where the resulting attendance exceeds what either one alone can achieve.

How does that work? Let's look at you, for example. Yes, you. In the last month, how many times did you go out for a meal? How much did you spend, total? Okay, now think about entertainment. How many times did you go out solely for entertainment? How much did you spend just on that? If you're like most folks, you spent a lot more and went out much more often for food than you did for entertainment. By offering food that is itself a destination, an LBE can tap into BOTH the entertainment and food budgets of their market.

The synergy of combining food and entertainment is not new to the LBE industry. In fact, it's been around for more than 25 years. Dave & Buster's is one of several examples.

Back in the early 1980s in Dallas, Texas, Dave Corriveau owned Slick Willy's World of Entertainment that adjoined James "Buster" Corley's restaurant named Buster's. They both noticed that customers were going back and forth between their two stores, so one day they decided to cut a hole in the wall between their businesses. Sales increased for both, and the formula for Dave & Buster's was born.

The first Dave & Buster's opened in 1982 in Dallas and is still operating successfully. Since then, 31 Dave & Buster's have opened throughout the country. They are highly successful, achieving average sales of more than $200 per square foot. Even discounting the alcoholic beverage sales, 17% of total revenues, their sales exceed $160 per square foot. Many LBEs, especially traditional indoor FECs, are lucky to achieve sales of half that.

Chuck E. Cheese's is another example of the winning combination of food and entertainment. In 1977 Nolan Bushnell created the first Chuck E. Cheese's Pizza Time Theatre in San Jose, California, which combined token-operated rides designed for small children, redemption games, an animatronics show, and that staple of every Stateside kid's diet -- pizza -- into one-stop destinations.

Since then, Chuck E. Cheese's has grown to be a successful chain of more than 440 consistently profitable locations achieving average sales of approximately $140 per square foot. With the exception of a few cinema chains, Chuck E. Cheese's is the largest operator of location-based entertainment facilities in North America.

The restaurant industry looks at CEC as a pizza restaurant or a pizza-and-games concept. CEC is the world's 22nd largest restaurant chain and the 5th largest pizza chain based upon 2001 sales. Their 2001 revenues were $562 million, 10% higher than in 2000. Per-store sales increased 5.09% for the one-year period ending June 30, 2002. Food, which includes a large part of birthday party revenues, represents 67% of sales, games 30% and merchandise 3%.

Perhaps the oldest indoor FEC in the country is Enchanted Castle in Lombard, Illinois, a Chicago suburb. It started as a restaurant with a few games and a nice party room in 1983 and through a series of expansions has grown to 50,000 square feet. Enchanted Castle features a 600-seat sit-down family restaurant with three dining rooms offering food made to order. Harold Skripsky, the co-founder and owner of the facility up until 1998, attributes the restaurant as being an essential component of the successful formula.

There are other examples of successful LBE food and entertainment concepts, including Peter Piper Pizza, Gatti-Lands, Gatti-Towns, Jillian's, and GameWorks. In 2001 GameWorks came to the conclusion that one of the reasons their facilities were performing poorly was the lack of a quality F&B component that matched their targeted market, so they rolled out a new concept featuring a destination mid-scale restaurant. Even Disney has jumped on this bandwagon with ESPN Zone. Can McDonald's be far behind?

McDonald's has, in fact, opened a new prototype restaurant in Columbus, Ohio, that greatly expands their PlaySpaces concept. They are calling it a "Town Center" restaurant. The facility is 11,500 square feet and has 210 seats. It is designed to resemble a town center with an outdoor park and a raised stage and includes a miniature play drive-thru for kids, giant soft foam play equipment shaped like Happy Meal items, a tweens area that includes a karaoke booth for recording CDs and game tables, and an adults area with living-room style furniture and high-back booths.

The restaurant also includes a McTreat Center near the front entrance with a walk-up order window. A variety of McDonald's ice cream treats and desserts, cookies, brownies and pastries, as well as hot and cold drinks are featured. The McTreat Center will feature another McDonald's first - Lazzara specialty coffee, imported from Italy.

The snack bar is dead; long live eatertainment

Our company has come to the conclusion from our research and experience that quality, destination food and beverage is essential to long-term success in the LBE industry. We believe new LBE developers that plan to present their food and beverage as a snack bar or concession stand are doing so at their own risk and that existing LBEs that want to succeed in this millennium will need to upgrade their food and beverage offerings.

If we had our way, the terms "snack bar" and "concession stand" would be banned from the industry's lexicon, an idea originally proposed by Harold Skripsky. To put it another way, we believe that entertainment alone is no longer a winning formula; that the future success of LBEs is in the combination of food and fun, or what some people call restaurant-entertainment and we call "eatertainment."

Our company feels fortunate to be working on several exciting eatertainment projects that will take the concept to the next level for the family market. Projections are that one project will achieve a 50/50 mix of F&B/entertainment and achieve a much higher frequency of repeat business than possible for entertainment alone.

One of these projects is Funtropolis, a 76,000-square-foot, 10-acre facility in Jacksonville, Florida. It will feature a one price, all-you-can-eat pizza buffet restaurant with four differently themed dining rooms seating a total of more than 500 guests, plus a separate quick-casual café-bistro seating 200, combined with both indoor and outdoor family entertainment and children's edutainment. Another is a freestanding, 22,000- square-foot children's edutainment center in the greater St. Louis area that will feature an upscale casual café with seating for 200. And the third is an existing farm market and pick-your-own agritainment facility in New Jersey where we will be introducing upgraded food with a Farm Kitchen, Bakery & Ice Cream Café and added fun with a children's adventure farm and water playground.

There's a reason we design our projects this way. We know that it's food and beverage, combined with fun, which creates the socialization setting that family and friends are seeking. In fact, we'll go so far as to say FOOD without the FUN works (think of all the successful restaurants out there), but FUN without the FOOD doesn't.

For all the examples cited earlier in this article, food represents between 30% and 60% of their revenues. And we'll go so far as to predict that any LBE concept (excluding tourist-type facilities) where food doesn't represent at least 30% of total revenues is doomed. We're telling our clients this: "Don't even think about developing a center unless there will be a major, if not primary, focus on food." And that's quality food that offers guests a great value proposition and meets their evolving sophisticated tastes and their expectations based upon all their other restaurant experiences. Bubba's mystery-meat special just doesn't cut it anymore.

Quality food lures family & friends

Today's guest requires QUALITY FOOD with all caps in a pleasant dining area and atmosphere to enjoy while socializing with family and friends. Don't believe us? Maybe a restaurant industry analysis will convince you.

We'll start with McDonald's, an industry powerhouse with years of experience feeding the public. The average McDonald's has annual sales of $1.6 million. Now let's look at a relative newcomer. Panera Bread Company, if you haven't visited, is a quick-casual chain of 500+ restaurants that sells fresh-made bakery products, sandwiches and salads in a very appealing mid-upscale atmosphere. The average Panera Bread Company, sometimes branded as Panera Bakery & Café, has sales of $1.8 million. And it doesn't even have drive-thru, where McDonald's does up to one-half its sales. The total check at Panera Bread runs between $6-$9, whereas the average check at a McDonald's is below $5.

Research conducted in March by TNS Intersearch in Horsham, PA, found that Panera Bread has the highest level of customer commitment or loyalty, whereas McDonald's customer-commitment was one-half the rate of Panera's. You wanna know what's really amazing? Among all the chains tracked, Panera's spent the least on advertising -- only $842,000 in 2002.

The bottom line of this comparison is that fresh, quality FOOD in a pleasant mid-upscale environment sells and gets customer loyalty, translating into repeat business and sales, and at a higher price point than fast foods. People will pay a little more for a higher-quality product in a facility with better atmosphere.

Boom in babies and homemakers a huge opportunity for LBEs

Maybe one reason that LBE owners offer such lousy food is that they think their typical customer is Bubba, who would eat hay if you'd pop it in the microwave and submerge it in cheese and ketchup. This might've been true in the past, but the LBE owner who expects profitability will focus on delighting homemakers and their children.

You see, there's a baby boom going on. The U.S. Census Bureau and the National Center for Health Statistics project that the number of births in the U.S. will rise from 3.98 million in 2003 to 4.37 million in 2012. And not only is the number of children growing, but the number of stay-at-home parents (homemakers) and families with children is also increasing.

An analysis by the U.S. Census Bureau of two-parent households with a stay-at-home parent who said his or her primary reason for not working was to stay home to care for the children has found a steady increase in stay-at-home parents since 1994. The number of children younger than 15 with stay-at-home parents has increased from 9.7 million in 1994 to 11 million in 2002, a jump of 13%.

The number of families with children has also grown, from 31 million in 1980 to 32.3 million in 1990 and to 34.6 million in 2000. The expected baby boom means that the number of families with children should continue to increase into the foreseeable future.

For LBEs that target the family market -- parents and their children -- targeting that demographic with food can tap into a large potential market. Families with children spend more per household on food-away-from-home than any other demographic segment and represent 40% of all food-away-from-home expenditures. Families with children's total expenditures in 2001 for food-away-from-home was an astounding $98.5 billion.

The 5.3 million stay-at-home-parents also represent an enormous market. They are constantly in search of locations where they can meet with their friends during weekday mornings, lunch and early afternoon to socialize while their children are entertained. Most types of LBEs have little, if any business during these portions of the day.

What it takes to delight Mrs. Bubba and Bubba Jr.

With the right designs and features, stay-at-home parents with their children will visit a children's entertainment or edutainment center as often as every week. Chuck E. Cheese's learned years ago how important this market is. An independent study found that more than 20% of Chuck E. Cheese's customers visit more than 20 times a year. Yes, that's right, 1/5 are high-frequency customers. This data is from independent research, not from CEC.

Visit any CEC mid-day and you will find groups of mothers with preschoolers sitting and socializing while their children play. Many meet there every week. Studies have found that up to 70% of the decisions to attend any entertainment center are made by mothers, not children, so their satisfaction is paramount.
We place a strong focus on the female homemaker market when we design children's edutainment centers for our clients by incorporating Panera quality cafés specifically designed to meet their needs and wants. In fact, we take F&B so seriously that we treat it as one of the most important components of a facility, and it's so important, that the food service is given a unique, distinctive name in each facility. Food-service facilities in projects we have produced include:

• Max's Café - Dinotropolis, Caracas, VZ
• Yummy in Your Tummy Café - Bamboola, San Jose, CA, USA
• Charlie's Diner - Olathe Lanes East, Olathe, KS, USA
• Herd Rock Calfé - Davis' Farmland, Sterling, MA, USA
• LouLou's Café - LouLou Al Dugong's, Dubai, UAE
• Otterly Delicious Café - Totter's Otterville, Covington, KY, USA
• Paradise Café - Paradise Park, Lee's Summit, MO, USA

Our research with families has shown that there is an interest in healthy and high quality food. LBL food service facilities we have produced have included ethnic wraps, branded gourmet coffee bars, thin crust gourmet pizzas (for adults; children still like the classic style), fresh salads, grills, fresh fruit smoothies and specialty menus for children.

When it come to families, we make sure the café areas are both parent and child friendly, paying special attention to the needs of parents with infants, toddlers and pre-schoolers. Picture menus are developed for young children who don't yet read. Child-size silverware is offered as well as spill-proof cups. We give staff special customer-service training for working with parents and children.

Children have always been fascinated by food preparation. That is why in 1997 we introduced the industry's first do-it-yourself cooking for children as young as 3 years old and in 2001 introduced the industry's first do-it-yourself campfire cooking for children.

When providing food service in a variety of cultures and settings, special religious and local practices have to be taken into consideration in the design of the seating areas and the kitchen, sanitation practices, food selection and food preparation.

Sometimes meeting parents' needs means stepping outside societal paradigms. To address parents' concerns about the unhealthy effect of cola and soda drinks on their children, LouLou Al Dugong's in Dubai offers no soda drinks, only fruit juices, including fresh-squeezed ones. This operating decision supported parents in not having to say "no" to their children's choices when they visited the café. The value of children's nutrition and health came first in this facility.

Food rules by which you can prosper

To sum it all up, there are some rules that you can use to drive the development of high-quality food service that will draw guests and keep them coming back.

• No facility is too small to have food service.
• Food & beverage is an essential component of group socialization.
• Food & beverage can drive visits and frequency as much as, if not more than, entertainment.
• Food & beverage increases length-of-stay, per capita expenditures, market draw and profits.
• A well-designed and managed food & beverage operation can generate a 40+% profit after deducting cost-of-goods-sold and labor.
• Ban the words "snack bar" and "concession" from your vocabulary. Think café and restaurant instead.
• The public has high expectations for food & beverage and their expectations are rising every day.
• The public's food tastes are becoming more sophisticated.
• Parents' and children's food and beverage preferences are often different -- to succeed, you need to satisfy both.

Really, we can sum it up even more succinctly that all that: For the sake of all that's good and pure and profitable, for heaven's sake, man... fire Bubba.