Vol. IV, No 5, May 2004

In this issue

1. Editor's Corner
2. Baby Boom on the Horizon & Changing Values
3. Apology to the Horses
4. Want to Be a Success in the LBE Business?
5. Getting Wiser to Teens
6. I Did My Homework, I Know My Market Area
7. Summer Foundations Announced
8. Mom-preneuer Speaks
9. Cloning Dinosaurs
10. Kid-Friendly Dining
11. Carbohydrates Take a Toll
12. New Projects

[ Index of Previous eNewsletters ]

Editor's Corner

Regular Leisure eNewsletter readers know that most of my writing is done at about 35,000 feet in the air on planes. This month is different. This eNewsletter is coming to you from about 10 feet above sea level on the deck of SoulShine Resort in the sleepy, little known town of Placencia, Belize. I enjoy writing, so the quiet of the Caribbean tropics with those constant breezes makes for a perfect writing environment.

Belize is a country about the size of Massachusetts with a population of 250,000, and it's located on the Caribbean Sea below the Yucatan Peninsula of Mexico. Placencia is about a 40-minute single-prop airplane ride south of Belize City. You arrive at the Placencia airport, if you want to call it that, on a runway about the width of a double-car driveway, but not as smooth. Don't be mislead by the word "resort." SoulShine has all of seven thatched huts sitting on the water's edge. Placencia is not a town known for partying. It might best be described as rustic and undiscovered. The excitement during the day is a walk into town, or as the natives call it, the village. Lunch is at the open-air Purple Space Monkey, famous for having the first espresso machine and Internet café in Placencia. That's followed by a walk down the street to TuttiFrutti to have some ice cream (the coconut was to die for!). In the evening you can walk the sidewalk, all of 3 feet wide, and dine at De' Thatch on the beach (literally in the sand), by the light of a kerosene lantern, or at the Cozy Corner on the beach. (Click here for some photos of Placencia)

One night we lived it up and went to the Turtle Inn, owned by Francis Ford Coppola and the most upscale resort in Placencia. We sat at the bar overlooking the beach and had frozen pina coladas. A local fisherman pulled his boat up on the beach, cleaned some red snapper right there on the boat, and the cook came down to take them back to the kitchen (of course, that was the one time I wasn't carrying my camera.) That night at the restaurant, we had red snapper steamed in banana leaves. It doesn't get any fresher than that.

One day we took a boat tour about 12 miles down the coast, often traveling through the mangroves, and up the Monkey River into the jungle area. We saw howler monkeys, Proboscis bats (about the size of a half-dollar), giant iguanas sunning themselves in the tree branches and all sorts of other wildlife. The boat ride made us feel like we were on the African Queen. On the way back, we stopped at Monkey River Town for lunch and had curried snook and walked around the town of 215 population. (Click here for some photos of Monkey River) On the boat ride back to SoulShine, we saw dolphins and manatees.

Anyway, back from nature to the real world. This month we have a variety of interesting and thought-provoking (we hope) articles about horses, dinosaurs, children, market areas, destination dining and a possible baby boom. That's all I'm giving away here. You'll have to read the articles to learn more.

Randy White
Editor

Baby Boom on the Horizon & Changing Values

According to The US Mom Market, a nationwide study conducted in September and October of 2003 and recently released by Silver Stork Research, a Generation-Y baby boom may rival the baby boom following World War II. The study found that 92% of women aged 18 to 24 - part of what is referred to as the Generation-Y cohort - are or plan to be mothers, with one in three already mothers. Nearly all the 18 to 24 year olds who are mothers or plan to be mothers plan to give birth by 2008. Given the size of the Gen-Y population, this indicates there could be a 17% increase in the birth rate over the next 10 years. Marta Loeb, president of Silver Stork and the report's author, said, "Never before has motherhood been celebrated as it is today. A new generation of self-sufficient, successful and family-focused women is reinventing motherhood and we are seeing the impact of this change everywhere."

This prediction is consistent with a recent trend of an increase in the U.S. birthrate. According to the Census Bureau, the number of births in 2001 was over 4 million. Since 1950, the only years when there were more than 4 million births were 1955-1960, 1989-1993 and the year 2000. The number of births has been climbing steadily since 1996.

Demographic companies are also projecting an increase in the number of births. One of the most respected companies, Claritas, is predicting a 4% increase in the number of children between the ages of 0-4 over the next five years. As more Gen-Y'ers move into motherhood age, that is sure to increase.

This bodes well for LBEs that target younger children. The market will be increasing. But not everywhere. These predictions are an average for the entire U.S. Our market research in different areas of the country shows that in some communities, typically the more mature ones, the number of children is projected to decrease. Whereas in other areas, the growth in number of children will be at an even greater rate than average.

Society is becoming increasingly educated, which affects how parents, and especially mothers, view children's leisure activities. Between 1960 and 2002, the percentage of the population 25 years or older that graduated from high school has more than doubled, from 41% to 84%, and the percentage of college graduates with four or more years of college has more than tripled, from 8% to 27%.

Younger adults, those between 25 and 34 years old, have an even higher graduation rate than the average graduation rates for all adults: 84% for high school and 27% for a four-year or greater college degree. In 2002, 87% of 25-34 year olds had graduated from high school and 31% had earned a bachelor's or advanced degree.

Educational Attainment - Population 25 Years & Over

Percentage of Graduates

Educated mothers, which includes Gen-X mothers and the rapidly emerging group of Gen-Y mothers, (also called Millennial or the echo-boomer generation with birth dates from 1977 and 1980s to about 1995, depending on which definition you use) are showing a much different attitude about their children's leisure than was exhibited by Baby Boomer parents. Market research by Fischer-Price, the well-known manufacturer of children's toys, found that unlike Boomer moms, who see their children's play and learning as separate activities, Gen-X moms in their later 20s and 30s want their children to learn as they play. This is echoed in research by The Generational Imperative, Inc., a generational consultancy based in Cincinnati, that found Gen-X parents take a very different approach than Baby Boomer parents when it comes to selecting products for their children. Chuck Underwood, its principal, says, "When it comes to toys, for example, they put a premium on those toys that are both educational and fun. Boomer parents tended to separate playtime and learning time. Gen-X moms now make up two-thirds of all moms with infant and preschool children.

20th Century Generation

William Strauss and Neil Howe, authors of the recently published Millennials Rising, also predict there will be an echo boomlet based upon Millennials reversing the 1990s trend towards smaller families. They have also observed that Millennials show a greater interest in family, religion and community and a rising obsession with the safety and education of children. This observation is seconded by Yankelovich Partners, a highly respected market research company. Ann Clurman from Yankelovich describes Millennials as "family-oriented... The yearning for a good marriage is a dominant value among Millennials, and 30% of those surveyed say they want three or more children."

Strauss and Howe's observations about Millennial parents increased interest in their children's education is supported by data from the U.S. Census Bureau. For children of parents with a high school education or less, only 25% of their 6- to 11- year-old-children participated in extracurricular lessons, whereas 50% of children with bachelor degreed parents did so, double the rate. This makes sense, because Millennials are the most college-educated generation of all time. Well-educated parents naturally want to see their children become well educated.

Additional Census Bureau research found a correlation between parents' education and how much their preschool children are read to, a further indicator of parents' interest in their children's education.

Reading to Children 1 to 5 Years Old by Any Family Member

This data is also consistent with the findings from the 2002 National Survey of America's Families, which found that for low-income families, 20% of their children 1-5 were read to or told stories fewer than three days per week versus only 10% of children from high-income families (there is a direct relationship between income and education.) More children of college-educated parents are read to each week and with greater frequency than are children of less educated parents.

The increase in number of births, parents' increasing interest in their children's education, and changing attitudes about their children's leisure bodes well for children's edutainment and enrichment centers, which have become the rapidly emerging venue of choice for college-educated white-collar parents and their youngsters. That doesn't discredit the continued success of Chuck E. Cheese's in any way. However, CEC has a more blue-collar than white-collar appeal, and there is no way an independent entrepreneur can be successful competing with CEC by trying to imitate its formula. Edutainment and enrichment centers offer educated parents with young children an alternative to the mindless amusement of a Chuck E. Cheese's with fun for children that is also educational and enriching.

Apology to the Horses

To learn more about Spanish purebred Andalusian horses, click here.

Last month we showed our lack of equestrian knowledge by labeling the Spanish horses in Nicaragua as "Aleutian." Our client in Managua quickly noticed the error and informed us these were Spanish Andalusian horses. Our apologies to all our equestrian readers and to the horses, as well.

So to make up for our mistake, we decided to learn a new word and will share it with you: portmanteau. A portmanteau word (a portmanteaux) is a word that is formed by combining two or more words. An example is smog, a combination of the words "smoke" and "fog." Likewise, edutainment is a portmanteau word, combining education with entertainment. American's love portmanteau words. The British hate them, as they see them as bastardized English.

We promise not to refer to children's entertainment centers as portmanteau. For more trivia and other information you never knew you needed, see www.wikipedia.org, a free open-source encyclopedia, itself a portmanteau word, combining "wiki" and "encyclopedia."

Want to Be a Success in the LBE Business?

We'll get right to the point. If you want to be successful in the community location-based entertainment (LBE) business, including such venues as family entertainment centers, children's entertainment and edutainment centers and family fun centers, you need to be in the restaurant business first. That's right. You read it correctly: Yes, you need to be in the restaurant business FIRST.

We don't mean that you first need to operate a restaurant, although that would give you a significant advantage. We mean you have to think of your facility as a restaurant offering entertainment rather than an entertainment facility offering food and beverage. The restaurant component comes first, and the entertainment comes second.

This may seem like a radical statement and a departure from the conventional wisdom in the LBE industry. We don't see it as so radical. The conventional wisdom in most industries, including LBEs, tends to be more analogous to looking into a rear view mirror of where you've been, rather than looking out the side window to where you are or the front windshield to where you need to go. We recently undertook an in-depth study of the community-based LBE industry to identify key factors essential for long-term success and found the conventional wisdom that "LBEs are in the entertainment business" is way off target. Regional and tourist attractions are another story, but even theme parks take food very seriously. Even the terms LBE, FEC and CEC (children's entertainment center) all have the word entertainment in their names as key attributes, which fuels this mistaken paradigm. The most successful "entertainment" facilities combine destination food with entertainment. Both Enchanted Castle in Lombard, Illinois, and Chuck E. Cheese's, each over 25 years old, as well as Dave & Buster's, which is 23 years old, are examples of the restaurant-entertainment formula. There are many other examples of highly successful centers LBEs that follow this formula. The formula works because food is a better driver of attendance than entertainment. Families go out far more frequently to eat than they go out for entertainment. For example, the average American eats out 200 times a year. That's a lot of frequency. The food acts as the anchor and entertainment becomes the impulse sale while the guests are there. And the combination of food and fun has a synergistic appeal far greater than either the food or the entertainment alone.

The idea that you can use entertainment as the anchor for a community-based LBE and place food and beverage in a secondary status as a snack bar or concession stand is the formula for failure. Unfortunately, over the past 15 or so years, many entrepreneurs have learned that lesson at the cost of their life savings, and sometimes their homes and marriages.

Here it is again, put another way. If you want to be successful in the community-based entertainment industry, approach it with the attitude that you must be a destination restaurant that also offers entertainment. Your food and beverage sales need to be at least 35% and possibility as much as 60% of your revenues to have a successful formula. The most successful combination seems to be about 50/50.

Let's take a look a Chuck E. Cheese's, a chain of 466 locations that attracted 42 million kid-visits in 2003 and consistently makes money. Yes, Chuck E. Cheese's has a love-hate affair with many parents, but you can't knock a basic formula of food with fun that has worked for 25 years, (with constant updates.) The company reports that the food and beverage category represents 67% of sales. If you adjust out the birthday parties, food and beverage (F&B) is probably about 60% of total revenues. Here's what the company said in its 2003 annual report:

"The combination of a meal occasion with family play time is what differentiates our concept and contributes to frequency," says Mike Magusiak, president of CEC Entertainment (the name of Chuck E. Cheese's company). He continues, "Frequency is important to growing the business, especially because our target market is such a well-defined niche." The CEC annual report goes on to say, "Frequency is one of the keys to success in the restaurant/entertainment business. When you look at the statistics, it becomes clear why building guest frequency is one of the fundamental areas of focus for CEC Entertainment."

The above statement explains the fundamental keys to success in the LBE industry - frequency with a well-defined market niche and the combination of a destination meal occasion restaurant with fun. That's exactly why Chuck E. Cheese's considers itself to be in the restaurant industry, not the LBE industry.

So why do so many LBEs continue to get it wrong? Why so much LBE roadkill? We believe there are three basic explanations for the perpetuation of the myth that entertainment comes first and food service is secondary.

First, entrepreneurs continue to copycat existing concepts, many that are 15 years old, or more. It's amazing how many entrepreneurs will see a fairly new center on a busy weekend during its honeymoon period, a center with only a snack bar and not a destination meal occasion restaurant, and therefore assume they've just seen the formula for success. These entrepreneurs then go off to clone those dinosaurs.

Second, LBE developers are intimidated by food service and look for a simple no-brainer solution. Quality food service is very complex and should intimidate a novice. But that is no excuse for not incorporating it into the business. Creating a destination food facility, a destination restaurant, takes expertise and an experienced F&B manager. Most LBE entrepreneurs don't take food service seriously, or they want to avoid its challenges, so they take the easy route rather than the road to long-term success.

Finally, the LBE industry trade associations contribute to the myth that food service can be approached with a simple solution of a concession stand. Just visit the IAAPA convention or Fun Expo and you will find the trade floor populated by nacho and cheese, popcorn, frozen pizza, soft pretzel and similar snack bar food suppliers. You won't find a full-service restaurant vendor, with the exception of one or two franchisors. Yes, IALEI has attempted to put some emphasis on food with a restaurant village area at Fun Expo, but still, the vast majority of the trade show is filled with entertainment vendors, making entertainment attractions the focus of attention.

We have never run into an LBE operator who isn't a member of IAAPA, IALEI or both. However, we have also never run into an operator who is a member of the National Restaurant Association, the trade association for the restaurant industry. (Surely there are a few.) Our company is a member of the National Restaurant Association. We aren't sure if any other LBE consultants, designers and producers are. That says a lot to us about the attitude the LBE industry has about food.

So the bottom-line advice we offer is simple. Whether you are an existing LBE operator or are planning to be, get serious about food, very serious. In fact, get so serious that you think of yourself as a restaurant first, a destination dining facility, not as an entertainment center. If you drive frequency with food, your guests will also spend money on the entertainment. The converse formula of trying to drive frequency with entertainment is rarely successful.

Getting Wiser to Teens

If you market to teenagers, there's a new book that should give you some good insights into the teen market and how to reach teenagers. Peter Zollo has pulled together information from his firm's (Teenager Research Unlimited) twice-yearly syndicated TRU Study and qualitative-research studies in this updated, expanded and revised 435-page edition of Getting Wiser to Teens: More Insights into Marketing to Teenagers, 3rd ed.

I Did My Homework, I Know My Market Area

Successful community location-based entertainment centers (LBEs) require multi-million dollar budgets for development and sophisticated management. Yet we are continually amazed by how many entrepreneurs start down the road of development with the lack of knowledge needed to get even the beginning basics right.

We recently received an e-mail inquiry from a woman who said she and her husband were planning to develop an FEC in a small town with a population of 3,500 people. She said they had formed an LLC, their business plan was complete and they were looking for financing. We replied that an FEC was not feasible in a town that small. She then replied that they had "done their homework," as they had 200,000 people living within 15 miles.

Being curious, we checked out her town on a map and found it was a small town located more than 10 miles outside a mid-sized city. We then checked to see where a 15-mile radius was from the town and low and behold, it took in most of that mid-sized city. We looked at the current residential density between the town and the city and found the area in between was basically countryside. The small town was not a suburb of the city. We also ran a drive-time computer simulation to determine how many people lived within a typical drive-time of her town. Using that data, and factoring in that people from a mid-sized city do not drive through undeveloped countryside to visit an FEC in an outlying town, we simulated a probable market area for the FEC. Well, the results were completely different than theirs. No longer were there 200,000 people. There were only 23,000 people, which is not enough by any stretch of the imagination to support an FEC.

So where had this couple gone wrong? (We hope they'll figure it out before they get into serious trouble by actually developing the FEC.) For whatever reason, they made a very mistaken basic assumption - they tried to use a rule of thumb that the market area for an FEC is a 15-mile radius. First, circles do not define market areas. This is a basic mistake made by just about everyone in the FEC industry, including almost all the feasibility consultants. Consumers don't have some sort on internal programming that makes them chose their destinations based upon perfect circles at some fixed distance.

Randy White, our CEO, has been doing market studies for consumer destinations for over 30 years. He says, "There is a multiplicity of factors that determine the market area for any FEC. They include the actual site and its attributes including visibility, access, and adjacent uses; competition; patterns of travel; psychological and geographic barriers; the location of major nodes of shopping and restaurants; the perceived pleasure or displeasure of driving; drive times and neighborhood identities. I have had the opportunity to plot the market areas for many existing consumer destinations and FECs, based upon existing guest data, and the market areas are never circles. They are odd shapes like amoebas. They may go distance X in one direction, and twice distance X in another and only half distance X in another. I have seen market areas vary on average from 3-20 miles, but most are 7 miles or less. Determining the market area for any project requires years of experience in studying the dynamics of consumer behavior and understanding how all the market factors interplay."

There's a second mistake most entrepreneurs make after incorrectly determining the market areas for their planned projects: They don't know how to properly interpret the demographic composition of the market area into the best mix and into projections of attendance and per capita spending. There are no rules of thumb for what is feasible based upon overall population. Interpreting demographics and socio-economic data (even more important than demographics) is more of an art than a science, and it's based on years of experience. Factors that need to be looked at and analyzed for both the primary and secondary market of a FEC include: number and increase of children by age; number and increase of families; family incomes by average, median and income ranges; parents' educational levels and employment; socio-economic/lifestyles of families with children; types of housing, plus others. There is a complex relationship between all these factors that results in a project's feasibility. If it is feasible, what plan will be most feasible, and how should it be right-sized (properly sized) for that market?

This is not a job for novices, especially when so much money is at risk. If you are planning a project or planning to renovate or expand an existing one, make the investment of retaining a qualified feasibility expert in the LBE industry to perform your feasibility study. Find one who doesn't define market areas by rule-of-thumb circles, which will be completely off target. It will be the best investment you make if you want to be successful, instead of becoming another example of industry roadkill.

Summer Foundations Announced

The May Foundations Entertainment University was a great success, and Foundations is gaining an international following. In May, our 45 participants included seminar attendees from Cyprus, Nigeria, Dominican Republic and the Bahamas. The tour of Paradise Park gave everyone a chance to see both a family entertainment and children's edutainment center, including many behind- the-scenes places, including a safe cash counting room, a costume-changing area and the back of the kitchen. The optional tour of the year-old Advanced Laser Tag also gave attendees interested in laser tag a chance to see a real facility in action.

We're repeating Foundations this summer on July 20-22 in Kansas City, Missouri, including the tours of Paradise Park and Advanced Laser Tag. You can save $100 by registering before June 27. Don't get caught in the same situation as the entrepreneur in the preceding article. Learn the fundamentals of the business before you jump in. As we say, "Businesses don't plan to fail, they fail to plan." Foundations will give you all the essentials to plan a successful LBE.

Learn more and register at www.foundationsuniversity.com

Mom-preneuer Speaks

Speaking of a portmanteau word, we received the following e-mail from one or our readers who identified herself as a "mom-preneuer":

"Just wanted to send my thanks for your newsletter and the variety of industry-related content it provides for all of us. My husband has recently admitted he is a bit entertained with how much I enjoy reading the newsletter and how engrossed I become. Until then, I wasn't aware of just how much I look forward to the newsletter!"

Cloning Dinosaurs

Extinct species end up as nothing but bones.

In a number of articles in our eNewletters we have expressed our opinion that much of the LBE industry suffers, entrepreneurs and corporations alike, by continuing to "clone dinosaurs" - in other words, developing facilities based on models fast becoming extinct. Most LBEs are not unique in that they are no longer in sync with modern consumers. Here's what's happening with retail, and specifically with enclosed malls.

In 1995, 39% of retail dollars were spent in shopping malls. According to Customer Growth Partners, a retail consultancy, from 1995 to 2003, enclosed malls' market share dropped by half to only 19% of all retail spending. Much of this can be attributed to the decline of the once dominant anchor tenant for malls, traditional department stores, which are themselves losing market share to big-box retailers such as Wal-Mart, Target and Costco. Since 1990, department stores' share of total retail sales has declined from 5.5% to 3%. As department stores become less relevant to the modern consumer, so to do the enclosed-roof malls.

Shopping center developers have realized that the future isn't what it used to be and have evolved a whole new breed of shopping center in response. "Lifestyle centers" are achieving sales for retailers of $400 per square foot at a lower occupancy cost than regional malls, which average sales of only $330 per square foot. Lifestyle centers are open-air centers with plazas, lots of landscaping and without traditional department store anchors. What anchors they have are the mid-sized big-box retailers and restaurants. During the past two years, 70 lifestyle centers have been built, versus only about 15 enclosed malls.

Research by the International Association of Shopping Centers and shopping center developers shows the importance restaurants play in increased frequency of visits and length-of-stay, which can increase by as much as 20%. Restaurants also make lifestyle and other shopping centers, including malls, less dependent on weekend and holiday business. Destination restaurants significantly increase weekday evening business, often increasing their percentage of overall business from 20% to as high as 35%. "With people working longer hours and more women with full-time jobs, dining out has become part of the American lifestyle," says Sharon Zackfia, an analyst with William Blair & Co.

The location-based entertainment industry can learn a lot from the shopping center industry, which has quickly reacted to a changing consumer by evolving a new concept of lifestyle centers, as well as changing the tenant mix to use destination dining as an anchor. In today's world, as the shopping center industry has learned, conventional wisdom can quickly become obsolete.

Kid-Friendly Dining

Last month we discussed family dining out in our article Kids Like Going Out [to Eat] with their Families. Because dining is such an essential ingredient of a successful community LBE, (see preceding story Want to Be In the LBE Business?), family- and kid-friendly food service are critical to making an LBE a family dining destination. And as important as parents are to the where-to-eat decision-making process, the children must be won over during the experience or a return visit will be quickly vetoed. Research shows that 79% of family dining-out decisions are influenced by children, and households with kids account for 56% of away-from-home spending on food. Most LBEs target families, which means kid-friendly dining (here defined as, "Mommy, let's go back there!") gets to be a very serious matter when it comes to bottom-line profit.

For years, children were mostly afterthoughts at best in American dining destinations, with the exception of fast food restaurants that catered to kids with soft-modular play areas and kids' meals with prizes. When it came to casual dining, the most families could expect was a box of crayons and a simple children's menu. There is now a growing emphasis on family and children in America, which is reflecting itself in an increasing emphasis in the restaurant industry on the family market, and more specifically on capturing the mindshare of children. The restaurant industry is raising the bar on capturing the family market, and with it, raising the expectations of both children and parents. This results in making the food offerings of many LBEs no longer appealing to families.

So what makes a restaurant or food service kid-friendly at an LBE? That varies, based upon the children's ages. Here, we will discuss kid-friendly for the market of 2- to 8-year-old children.

One thing all children want is to gain control over their lives. They spend the large majority of their day directed by adults, being told what to do and when to do it. A chance to be in charge turns kids on. The first way to give them control is to give them choices, and to communicate the choices to them in a way they can understand. Remember, children don't really start to become competent readers until they are around age 7. Rather than just listing the children's menu choices on the standard menu, nothing is better than a separate children's menu that uses both words and photos to communicate the choices. Having their own menu also makes children feel special and that your facility values them as guests -- and not just as little people who tag along with the real customers.

Many restaurants are now going beyond the traditional five standard children's meals. They are offering children options not only for the main dish, but the side dishes, as well. And restaurants are responding to an increased sophistication in children's tastes. The standard choices of hamburger, chicken fingers, hot dogs, macaroni and cheese or pizza are becoming passé to some younger diners. "Young people today have increasingly sophisticated palates," Red Lobster executive chef Keith Keogh said when the chain unveiled its new kids menu. The young diners at Red Lobster now get a free appetizer of applesauce or fresh carrot sticks and cucumbers with ranch dipping sauce. The new entrees include snow crab legs, grilled mahi-mahi and grilled chicken, all with steamed vegetables (a parent-pleasing nutritional plus). However, Red Lobster has not deleted traditional children's favorites like fried popcorn shrimp, breaded chicken tenders and macaroni and cheese from its kids' menu. Keogh says it makes good sense to mix the familiar with the trendy. "It gives children a chance to self-select food just like adults do, choosing what they crave at that particular meal."

Chili's recently introduced its new children's Pepper Pals menu in its 900 restaurants, which allows kids to select from 11 entrees, seven side vegetables and eight drinks. This gives children a chance to feel a bit more grown-up by making their own meal choices and then allowing them to customize it. "With the abundant entree, side item and beverage options, there are hundreds of different ways to order a kids meal at Chili's," said Wilson Craft, president of Chili's.

Even the Ritz-Carlton hotel chain, typically thought of as an adult rather than a family haunt, has revamped its children's menu. The chefs at the 57 Ritz-Carlton Hotels & Resorts around the world have introduced "Healthy Taste" Ritz Kids Menus. Menus differ by location and include such items as steamed fish with rice and vegetables in Cancun, Mexico, and a chicken-and-veggie kabob in Marina del Rey, California.

The most popular item on the new Red Lobster kids' menu is the snow crab legs. Chef Keogh said, "There are several reasons this tested off the charts. They're unique, fun and you can eat them with your fingers, something kids are really into."

Dipping is a great way to make kids feel in control of their food. Dipping has multiple dimensions of control, including choosing what to dip, mixing flavors, volume and shape. And having their personal dipping cups in front of them gives kids a sense of ownership. Dipping is becoming very hip. McDonald's has joined the bandwagon with its recently introduced Apple Dippers, peeled apple slices with a caramel dip that can be substituted for fries in Happy Meals at no charge (another parent-pleaser since the dip has only 1 gram of fat.) It was McDonald's that first introduced fast food dipping to the world in 1983 with Chicken McNuggets. McDonald's currently sells 4.8 million individual McNuggets per year. That's a lot of dipping!

Children are also showing a growing appetite for bold flavors. When the 365-unit chain Panda Express tested "middle-of-the-road" flavor profiles for children, the company found that kids prefer bold flavors. The favorite entrée for the children's meal was orange-flavored chicken, which the chain describes as "crispy chicken pieces cooked with ginger, garlic and chili peppers...and served with a tangy flavored sauce."

"Kids have a more cosmopolitan palate because [adults] have a more cosmopolitan palate," says Vicki Gelberg, vice president of marketing for the parent company, Panda Restaurant Group. "Like us, they want to try new things... Focusing on the menu to entice children and their parents is a smart move. We see more and more kids interested in bold flavors. Children are discerning customers."

"We don't have any hard data, but the spicy trend is pretty broad across age groups," says Jeffrey Davis, executive vice president of Sandelman & Associates, a food research and marketing company based in Villa Park, California. "It makes sense that younger people are adventuresome eaters and into spicy food."

Panda Express' research also counters the myth that children are averse to almost any vegetable. "Noodles with wok-fried vegetables is very popular," Gelberg says. "Children will pick out cabbage but they eat all the broccoli. Kids' palates are more experimental, but they still want to have it the way they want it."

Besides choice and control, kids also love fun. This is an area where LBEs could take the lead, and we aren't referring to the entertainment attractions. Fun food means many things to kids. It can be a strange color, i.e., Heinz's purple and green ketchups. It can be something that grosses out adults, like worms in pudding. It can be colorful, like multi-colored cubes of Jell-O. It can be a happy face made with vegetables on a pizza. It can be a kid flavor like bubblegum. It can be animal shaped, like fish-shaped ravioli (to kids, it's just a kid-friendly variation on spaghetti with a little sophistication.) It can be special funky-looking dishes for children's food. The options are unlimited and very easy to execute.

Troy Thompson, executive chef at Jer-ne in The Ritz-Carlton, Marina del Rey, says, "Sometimes with kids it's not what they eat, but how it looks, that can make them more willing to try something different," he explained. Thompson's new "Healthy Taste" Kids Menu items include entree choices of either "ants on a log" (celery stuffed with peanut butter and studded with raisins) or a chicken and veggie kabob, served with air-popped popcorn, fresh fruit, and low-fat yogurt.

Other things that create kid-friendly dining destinations include:

• Décor that keeps kids attention.
• Immediately serving a snack or appetizer (young children don't want to wait for the main meal to satisfy their hunger.)
• Giving kids something to do, and not just crayons, which has become passé with kids.
• Not dumbing down the children's menu with silly names.
• Training staff how to interact with children and not talk down to them or defer to their parents.
• Making children feel competent and in control with ergonomically and anthropometrically child-correct furniture, self-serving areas, trays, dishes, straws, etc.

Yes, children have clout went it comes to where their families dine out. And it takes some special effort to please these youngest diners. But doing so can win their hearts, and along with it, return visits and dollars from their parents.

Carbohydrates Take a Toll

Over the past year, we have been giving coverage to the changes in consumers' diets and how the restaurant industry has been proactively responding with new menu selections that are low in carbohydrates, fat, sugar and calories. The changing eating habits of Americans are starting to take a toll on companies that are out of sync with these consumer preferences.

New World Pasta, American's largest pasta manufacturer, recently filed Chapter XI Bankruptcy due to decreasing sales and earnings. According to Jonathan Braatz, who follows the industry for Kansas City Capital Associates, a unit of Oppenheimer & Co., the explosion of interest in low-carbohydrate diets such as Atkins and South Beach has taken a significant bite out of pasta sales. This year, pasta sales are down 7% over the year earlier period. "And it doesn't look like it's hit bottom," he says.

A recent darling of Wall Street, Krispy Kreme Doughnuts, is seeing a decline in its earnings. It recently lowered its forecast for 2004 by 10%. CEO Scott Livengood blamed, in part, "increasing consumer interest in low-carbohydrate diets, which has adversely impacted several flour-based food categories, including bread, cereal and pasta." It probably doesn't help Krispy Kreme's sales that the trademark product, its Hot Original Glazed Donut, packs 200 calories, of which more than half are fat.

New Projects

Greater Chicago Area
Assisting client with initial concept development and site selection for an edutainment café.

Fredericksburg, Virginia
Assisting Celebrate Virginia, a 2,400-acre master planned mixed-use development in Fredericksburg, Virginia, that includes the East Coast's largest power center with 2.4 million square feet, a tourism hub, a golf resort, and an office campus, with feasibility of family-based entertainment venues for the project.

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