Vol. VII, No. 5, September-October 2007

In this issue

1. Editor's corner
2. Embrace eatertainment – or clone a dinosaur
3. Cyndi Nelson joins White Hutchinson
4. Fewer mothers view full-time work as ideal
5. Meet Randy White, our CEO, at IAAPA
6. Consumers move toward a more sustainable lifestyle
7. Foundations Entertainment University announces next seminar
8. No more ho-hum food
9. There are only five ways to grow your business
10. What's happening with uWink?
11. "The Girl's Guide to Being a Boss (Without Being a Bitch)"
12. New Projects

[ Index of Previous eNewsletters ]

Editor's corner

It's amazing how much can happen in the three months since we published the last issue of the Leisure eNewsletter. Among other things, I've traveled over 35,000 miles to work on new projects, including trips to Eastern Europe and Nigeria, and to Los Angeles to work with a Korean company.

The Eastern Europe trip gave me the chance to visit Odessa, Ukraine. I was pleasantly surprised by the city. It was nothing like I expected for a former Soviet Union city, but far more like a city in Europe.

The Ukraine is a very young country, gaining independence from the Soviet Union in 1991. Odessa is one of Europe's younger cities, founded by Catherine the Great only a little over 200 years ago in 1794. With an estimated population of 1.1 million, Odessa is the third largest city in the Ukraine and is often referred to as "The Pearl of the Black Sea." Its Black Sea location with its warm water port has given it a very international flavor with a unique blend of Russian, Yiddish and Ukrainian cultures.

Odessa is a highly centralized city, with malls, major stores and most restaurants located in the city's heart. The city is simply enchanting with its marvelous architecture. Odessa's history has left the city with some splendid architecture from the 18th and 19th centuries. A number of buildings were done in Renaissance or Classical styles, which was in favor early this century. Some buildings display a curious mixture of different styles, such as French architecture with a distinct Russian flavor, and some are built in the Art Nouveau Style. Its stately classical architecture is set on orderly planned streets lined with canopies of trees and surrounded with green space, giving the city an air of elegance.

Odessa is a walking city. When I was there during the end of summer, the sidewalks were lined with outdoor cafes where people were socializing and enjoying the weather.

Many buildings fell into disrepair during the Soviet area. However, a growing economy and demand for retail, restaurant and housing space in the central city has produced a major restoration movement, bringing many buildings back to their classic beauty.

While most cities are best known for their statues, towers and buildings, Odessa is best symbolized by the 192 steps, known as the Potemkin Steps (or the Odessa Stairs or Steps), that descend 88.5 feet (27 meters) from Primosky Boulevard to the pier. The stairs were designed by Italian architect Franz Boffo and completed in 1841. The design of the Potemkin Steps creates somewhat of an optical illusion, making the steps seem larger than their actual size.  The upper flights are 44.2 feet (13.4 meters) wide while the lower flights are 71.3 feet (21.6 meters) wide.  The stairs' name was taken from the battleship Potemkin, immortalized in Russian producer Sergei Eisenstein's 1925 silent film that recounts a heroic tale from the first Russian revolution.

The Potemkin Steps, also known as the Odessa Steps.

The most famous scene in the film, The Battleship Potemkin, depicts the fictional massacre of about 2,000 civilians on the Potemkin Steps. In the scene, the Tsar's Cossacks in their white summer tunics march down a seemingly endless flight of steps in a rhythmic, machine-like fashion, slaughtering the crowd, including a young boy, as people attempt to flee. His mother picks up her son's fallen body and yells at the soldiers to stop firing. Moments later they shoot her. Toward the end of the sequence, the soldiers shoot a mother pushing a baby in a carriage. As she dies, she falls back against the baby carriage, which causes it to roll down the steps amidst the fleeing crowd. Click here to watch a clip of the famous Odessa Staircase scene.

A wide shot of the massacre on the Potemkin Stairs	The boots of the Tsarist soldiers shown marching down the Potemkin Stairs	The baby in the carriage falling down the Potemkin Stairs
Scenes from the movie, "The Battleship Potemkin." Click to see movie

I can vividly remember the Potemkin Steps scene when I viewed the film during one of my film history classes back in my days (many decades ago) attending the School of Television, Motion Pictures and Radio at New York University. The film is still considered to be one of the greatest action films ever made.

During the end of October I will return to visit other parts of Eastern Europe and Russia. Hopefully I can give that trip some coverage in our next issue.

In this issue of our Leisure eNewsletter, we continue to cover developments in eatertainment and feature what's happening with the new adult restaurant-interactive game concept uWink.  We also continue our coverage of the at-home moms' market with research on some mothers' declining interest in full-time work. Green and sustainable are now established trends, but as our story below illustrates, the location-based entertainment industry is slow to catch on. And for anyone interested in basics how-to's for growing a location-based business, don't miss  There are only five ways to grow your business. Enjoy.

Randy White
Editor

Embrace eatertainment – or clone a dinosaur

Eatertainment is the 500-pound gorilla in the success formula for today's location-based entertainment facilities - but much of the LBE industry has yet to embrace high-quality food and beverage. Find out why White Hutchinson has long promoted eatertainment as the key to LBE and FEC survival. 

We continue to be amazed how most of the location-based entertainment industry doesn't get it. They keep cloning dinosaurs by thinking the formula is entertainment, entertainment, entertainment. When it comes to food, they still talk about snack bars, concession stands or even vending machines.

We took a look at seminars the International Association of Leisure & Entertainment Industry (IALEI) scheduled at this past September's FunExpo and found that of 33 seminars, only two were about food and beverage, and one of those was on vending machines. Only 6% of the seminars focused on food and beverage. Definitely sends the signal that IALEI and FunExpo, sources the industry look to for education, are still stuck in the paradigm of not considering food and beverage very important to success.

Well, do they have it wrong! As any regular reader of this eNewsletter knows, we have been trying to wake up the industry to understand what it takes in today's world to have a successful, profitable location-based leisure venue. Notice we didn't use the word "entertainment." That's because our company's industry research shows that with rare exceptions, an entertainment focus doesn't work. What works is a leisure experience that combinations entertainment and food and beverage. This is called eatertainment or restaurant-entertainment. We define eatertainment as the combination of destination dining with entertainment or edutainment, with food and beverage representing between 40% and 70% of total revenues.

History has demonstrated the eatertainment formula is not only successful, but has legs. Peter Piper Pizza is 34 years old with 135+ stores. Chuck E. Cheese's, with 520+ units, just celebrated its 30th anniversary. Dave & Buster's has been churning out profits for 28 years.

Walt Disney Parks and Resorts' division Disney Regional Entertainment owns and operates nine ESPN Zones.  Bowling lounges, such as Lucky Strike, are rapidly spreading throughout the country. All these concepts depend on a blend of food and beverage and entertainment, neither of which dominates.

Nolan Bushnell, the creator of Chuck E. Cheese's, continues to get it. His newest adult concept, uWink, focuses on food and beverage and games, not much different than his Chuck E. Cheese's formula, other than the target market. You don't have to teach that old dog new tricks (sorry Nolan, no offense). He knows what works. (See separate story below on uWink for more.)

Even some of the original entertainment-focused companies have finally figured it out. GameWorks struggled for years with a predominately gameroom concept. Its new owner, Sega Entertainment U.S.A. Inc. (SEUI), is now ratcheting up the food and beverage format with its new World Sports Grille concept. The new concept will have 15,000 square feet of dining space and 5,000 square feet dedicated to games (notice the food focus). Five existing GameWorks incorporate Arena Sports Bar & Grills with food and beverage sales representing 50% of total revenues. The new World Sports Grille is expected to eventually be incorporated in all the facilities and generate even higher per capita dining tabs than Arena Sports Bar & Grills, which is around $12.75.

Next year SEUI will roll out a new dining-and-entertainment brand designed specifically for families with young children. The new concept is reported to offer a more adult-friendly menu than Chuck E. Cheese's (watch out, Mr. Chuck E!). 

Ben Kitay, SEUI's president, said the goal of its strategic changes is to better position the Sega brands as dining destinations, not just places to play games.
"We determined our stake in casual dining was not sharp enough," Kitay said. "We needed to elevate the dining experience, let more people know about it, and deliver unmatched quality and guest service."

Even the 100+-year-old cinema industry, in partial response to falling its falling attendance of 1.6 billion in 2002 to 1.45 billion in 2006, is moving in the direction of making food and beverage a destination driver rather than just an impulse purchase at the popcorn and candy counter. Several new movie-eatery concepts have opened in the past few years, indicating consumers are shifting their entertainment spending on cinemas to first-run movies accompanied by pizza, burgers, steaks and cocktails.

The nine-unit Movie Tavern opened its first dine-in theater complex in 2001 in Fort Worth, Texas. Jeffrey Benson, president and chief executive of the Movie Tavern chain, said, "We think it's the future of the movie business. For as long as there have been movies, people have talked about dinner and a movie." When it comes to Movie Tavern's food and beverage offerings, Benson said, "It's very much a casual-dining type menu. There are 63 items plus desserts, including steaks, pasta, egg rolls and pizzas. It's a very much down-the-middle, casual-dining menu." Benson indicates meal tabs generally run $10 to $15 per person.

Movie Tavern offers a dinner and a movie experience.

Another growing chain, Alamo Drafthouse Cinemas, operates eight restaurant-cinemas. Studio Movie Grill has five dining-cinemas. Brian Schultz, founder and co-owner of Studio Movie Grill, says this about their concept, "We're trying to provide an upscale, comfortable, inviting environment where you can come relax and get a meal and a great film all wrapped up in a 2-and-a-half-hour period."

Regal Entertainment Group, operator of Regal, United Artist and Edwards cinema chains, has formed a joint-venture to open Cinnebarre cinema-restaurants. The first 31,000 square foot unit debuted in Ashville, North Caroline at Biltmore Square Mall in July. There are plans to roll out about ten move in the next three years. Cobb Theatres has partnered with Taubman Centers, Inc., one of the country's largest mall and shopping center development and management companies, to open a dining-theatre venue at Dolphin Mall in Miami, Florida. The 20,000-square-foot unit will have five digital screens with a tapas-style in-theatre menu, with wine and cocktails. National Amusements, Inc., operators of 1,500 movie screens worldwide, is planning to open Cinema de Lux locations with in-theatre food service and an attached Chatters Bar & Grill restaurant.

IPic Entertainment is planning a different take on dinner and a movie with a single venue that combines upscale cinemas, a high-end restaurant and lounge, and other types of entertainment. The approach is to offer a one-stop destination for a night on the town.

The first IPic will be 38,000 square feet and is under construction at Bayshore Town Center in Milwaukee, Wisconsin. The six theaters will have 6-foot-wide love seats, digital projection and no pre-show advertisements. Tickets, expected to cost $15 to $16 for evening shows, will include popcorn and valet parking. All moviegoers will get an assigned seat, and after 6 p.m., all guests must be 21 or older.

CEO Hamid Hashemi said, "Think of this [IPic] as a country club environment where you will see and be seen and go to socialize, make new friends and see old ones."

IPic plans to offer a one-stop destination for a night on the town.

The entertainment complex will include a 200-seat Ovations restaurant offering what IPic calls "casual chic dining," a 120-seat Sequel bar, a nightclub-style Pinstrikes bowling center with 11 lanes and live performances.

The fastest growing eatertainment concept focused on the family market is the big box, family pizza buffet-entertainment mega-centers that first surfaced 20 years ago. There has been a rapid expansion of this industry segment in the past few years. John's Incredible Pizza Co. has been successfully operating units in California for 10 years and continues to expand with new stores.  American's Incredible Pizza Co. is rapidly expanding its franchise stores, and other single operators and chains continue to appear. It's no wonder, as this form of eatertainment generates sales per square foot at multiples of what's produced by traditional entertainment-oriented indoor family entertainment centers (FECs).

White Hutchinson has been very active with the development and design of family pizza buffet-entertainment centers, sometimes called pizza buffet FECs or family buffet-entertainment centers (FBEC). The first FBEC we designed and produced was StoneFire Pizza Co. in the Milwaukee area. The first FBEC designed to target the upscale white-collar family market, it introduced many new concepts to the FBEC industry, including stone-hearth ovens, Asian wok stations and a discovery play dining room. The store has enjoyed phenomenal success, with lines of families waiting to get in sometimes stretched hundreds of feet along the front of the building in the winter. If families are willing to wait outside in the Milwaukee winter, you know the experience inside has to be good.

StoneFire Pizza Co. in New Berlin, Wisconsin

We are now designing the second StoneFire Pizza Co. that will be 53,000 square feet, located in Kenosha, Wisconsin, midway between Milwaukee and Chicago. The unit will incorporate a number of innovations and firsts for FBECs (sorry, but we need to keep details confidential until the facility opens). We are also working for clients developing other FBECs in Kansas City, Missouri, an upper Midwest metropolitan area and the Middle East. 

StoneFire Pizza Co. #2 under development in Kenosha, Wisconsin

Cyndi Nelson joins White Hutchinson

We are pleased to announce that Cyndi Nelson has joined our firm as Business & Procurement Manager. Cyndi just relocated to Kansas City from California and has a diverse and extensive background that makes her a great match for White Hutchinson.  For the past six years, she was General Manager for the Santa Lucia Conservancy in Carmel, California.

Prior to that, her career included:

• Start-up and Restaurant Manager, Baja Cantina Grill & Filling Station, Carmel;
• Manager for Retail Operations at the Chateau Julien winery, Carmel;
• Conference Service Manager at The Inn at Spanish Bay/Pebble Beach Resorts;
• Director of Catering and Sales, Stonepine Estate Resort, Carmel Valley, California;
• Start-up and Business Manager for Hullaballoo Restaurant, Salinas, California

Cyndi has a BA in international studies from the University of California-Davis and is fluent in French, Spanish and English.

Fewer mothers view full-time work as ideal

New research shows that working full-time outside the home is beginning to lose its appeal in the minds of mothers of young children. That goes for both moms who work away from home and those who don't. What does this data mean to location-based leisure venues? Read on to find out!

Generating business during the daytime weekdays has always been a challenge for community location-based leisure (LBL) venues that depend on the surrounding resident market. Children are in school. Parents are working. Some LBLs actually stay closed until school is out. Leaving an expensive physical plant idle so much does not help profitability.

One daytime market, much more significant than most people think, is stay-at-home moms with preschool children, plus mothers who work part time or work from their homes. We call this market "at-home moms." These mothers have the opportunity to take their children to LBLs during the day.

The research shows that during the past decade (1997-2007), full-time work outside the home has lost some appeal with mothers. The trend holds true for both mothers who work full-time and those who don't.

Among today's working mothers with children under 18, just 21% say full-time work is the ideal situation for them. That is down from 32% who said so back in 1997. Fully 60% of today's working mothers say part-time work would be their ideal, up from 48% in 1997.

There has been a similar shift in preferences among current stay-at-home mothers with children. Today, just 16% say their ideal situation would be to work full-time outside the home, down from 24% in 1997. Nearly half (48%) of all at-home mothers now say not working outside the home is the ideal situation for them, up from 39% who felt that way in 1997.

Mothers with children 4 and younger are less likely to say they'd prefer full-time work today (16%) than a decade ago (31%). In 1997, 37% said their ideal would be part-time work; today 48% of mothers with younger children say they would prefer part-time work, 36% would prefer not working outside the home and 16% would prefer full-time work.

Meet Randy White, our CEO, at IAAPA

If you are interested in meeting our CEO, Randy White, to discuss your location-based leisure business or plans, and you plan to attend the International Association of Amusement Parks and Attractions (IAAPA) show in Orlando, Florida, November 12-16, 2007, you are in luck. Randy will be there. However, you won't find him at our company booth. We don't have one. We leave that type of mass marketing for other firms.

Consumers move toward a more sustainable lifestyle

A decade ago, only granola-crunchers wearing Earth shoes demanded environmentally friendly products. Today, droves of consumers are favoring businesses, products and services that are environmentally and socially conscious. Read on to find out how the LBEs industry can cash in on the trend. 

Consumers are changing their buying habits toward a more sustainable lifestyle, both environmentally and socially. Businesses, including location-based leisure businesses, have an opportunity to take the lead within their industries and be the first to deliver and market around the idea that less, or smaller, can be more.

In fact, a report (pdf of report) released in July 2007 by Goldman Sachs, one of the world's leading investment banks, found that public companies that are considered leaders in implementing environmental, social and governance policies to create a competitive advantage have outperformed the general stock market by 25% since August 2005, and 72% of those companies outperformed their peers over the same period.

GfK Roper Consulting released its 2007 GfK Roper Green Gauge® study in August, finding the vast majority (87%) of consumers indicate they are seriously concerned about the environment. The four environmental issues weighing most heavily on Americans' minds are:

• water pollution and rainforest destruction (56%)
• diminishing fresh water supply (55%)
• fuel and energy shortages (54%)
• man-made outdoor air pollution (53%)

The study also found the majority of consumers say they consider a company's environmental practices when making key decisions, including:

• the products they purchase (79%)
• the products and services they recommend to others (77%)
• where they shop (74%)
• where they choose to work (73%)

Another survey conducted by the ClearVision Institute, Gallup, and Yale University found that an increasing number of Americans consider global warming to be an "important threat that calls for drastic action." "One of the most surprising findings was the growing sense of urgency," said Anthony Leiserowitz, principal investigator of the study and director of the Yale Project on Climate Change. "Nearly half of Americans now believe that global warming is either already having dangerous impacts on people around the world or will in the next 10 years - a 20%-point increase since 2004."

Generation Y, also known as Millenniums, who have grown up with increasing environmental awareness, will likely be the most demanding in this realm. They'll also be the most discriminating in choosing which businesses to frequent, based upon the business' sustainable practices.

A recent Maritz Research Retail Group poll of Gen-Y shoppers (18 to 30) entitled "Environmentally Friendly Retail Marketing: All Hype or Consumer Preference?" found that 50% of respondents said retailers' environmental policy and sustainability influenced their shopping behavior. When asked to describe their attitude toward a retailer's environmentally friendly positioning, 46% said they would shop more at a retailer if it was environmentally friendly. Also, 47% of respondents said they would be willing to pay more for environmentally friendly services, products or brands. Of this percentage, 77% cited "care about the environment" as the main reason for their willingness to pay more. Other reasons followed far behind in importance, including "it's the right thing to do" (21%) and "so that people know I'm environmentally aware" (2%). Maritz predicts that this trend will gain more momentum with consumers in the future.

Today, brands and businesses need to compete on who offers "less" in a way that means more to consumers. This is especially important for businesses that want to resonate with female consumers. As well as Gen-Y, it's women, the chief decision-makers in a household, who are most focused on doing business with environmentally and socially responsible companies.

The location-based entertainment industry still appears behind the eight ball on these issues, short of cause marketing to support not-for-profit organizations. It is a great opportunity, just waiting for some location-based entertainment business to move into the limelight and take on a true competitive advantage. 

Additional reading:

• Shaping the new rules of competition, by McKinsey & Company (pdf)
• Introducing GS SUSTAIN report, by Goldman Sachs, referred to above (pdf)
• 2007 GfK Roper Green Gauge study referred to above.

Foundations Entertainment University announces next seminar

Foundations Entertainment University has announced that its first three-day seminar program for 2008 will be in Dallas, Texas, on February 26-28. Registration and hotel information will be posted to the website by the end of October.

No more ho-hum food

Today's consumers have far more sophisticated taste buds - and higher expectations for restaurant fare - than in the past. Days are gone when diners will keep returning for food that's nothing special. Read an excerpt from Flavor & The Menu magazine that perfectly summarizes this point.  

Sometimes we find something that is written so well, it doesn't make sense to try to put it into our own words. That is the case with part of Cathy Holley, Publisher/Editor-in-Chief's Publisher's Page in a recent issue of Flavor & The Menu magazine. So we're just going to repeat it here.

"Limited are the days when a restaurant can get by merely offering ho-hum fare — increasingly, the American consumer has greater expectations of the flavor experience, and if these experiences are not met, customers won't come back. Not only do they want a better flavor experience, but a growing number of customers are looking to have a closer connection with their food. Often, this means they want to be able to customize their flavor options, as in ‘half caf, half decaf, vanilla-mocha latte with skim foam.' Or, they want to know that the chef, bartender or operator has some connection to the menu items he or she is serving. Whether this is communicated through a farm's name on the menu, a personal story told by the server, seeing a bar chef creating a fresh beverage, or, as Starbucks has illustrated, via a friendly barista brewing a customized hot beverage, customers see that if you care about the food or beverage being served, you also care about them. This attention both to your menu offerings and your customers is paramount to success.
 
"Flavor expectations are being raised in all levels of food service, and in all menu categories. Give your customers a better flavor experience that communicates your connection not only with your food and beverages, but with them, and perhaps one day everyone will want to be the next you."

As we have basically been preaching to the community-based, location-based entertainment industry (see story above), entertainment alone won't drive the repeat attendance it takes to be successful. Only food can do that. You have to be a dining destination to succeed, not some ho-hum snack bar concession stand. And when it comes to what it takes to succeed as a dining destination, what Cathy Holley has said is 100% on target. 

There are only five ways to grow your business

When it comes to growing your business, are you focusing your capital and your energy on things that will provide the greatest return on your investment of money and effort?  For most LBLs, restaurants, and retail and hospitality facilities, the answer is no. Read on to find out how to avoid this pitfall.

There are only five ways for any location-based leisure, retail, restaurant or hospitality facility to grow its business. Unfortunately, most businesses concentrate and make the greatest investment of money and management energy on the ways that offer the lowest return.  What most miss are ways to grow their businesses with the customers they already have — the way that gives the greatest return on investment and effort.

The most effective way to grow any business based on return on effort and cost is to stop defections, or customers who don't return - also known as the leaky bucket. Customers don't return for numerous reasons, but the vast majority of those reasons involve things a business can control. Most businesses spend lots of money trying to attract new customers, while the existing ones just leak away.

The five ways to grow a business, revenues and profits, in increasing degree of effort and cost and decreasing effectiveness, are:

The first three, which focus on existing guests and their experiences when they visit, are the easiest to accomplish and give the highest return on expended effort and investment. The last two are focused on attracting new guests and generate a much lower return, if any at all, on investment, especially in terms of developing loyal repeat guests.

Unfortunately, most businesses mistakenly focus on the last two, assuming they are the best way to grow. In the process, they fail to concentrate on the first three, and most importantly, the first — guests who defect.  Those businesses are constantly chasing after new guests, while existing guests are walking out the door and never returning. 

Our company has analyzed many existing location-based leisure businesses (LBLs) for clients who wanted to improve sales and profitability.  Consistently, we have found customer defection rates of anywhere from 25% to 50% and higher, meaning 25% to 50% of existing guests abandon the LBL each year. Just to stay even, these businesses must advertise, market and run promotions to recruit large numbers of new guests to replace the ones they've chased away, the ones who never come back (and probably tell their friends not to, as well!).  It's like pouring water into a leaky bucket, as new guests simply replace old ones who've taken their time and money elsewhere. 

There are many reasons guests defect.  It can be because of a bad customer service encounter with an employee, dirty restrooms, broken equipment, poor quality or cold food, excessive noise, unappealing ambiance, uncomfortable furniture, and hundreds of other possibilities.  In fact, in today's world, with so many options competing for guests' limited leisure time, it can be as simple as not offering a compelling enough experience to make guests want to return.

Focusing on retaining existing guests is known as managing for zero defections. By retaining existing customers, you increase sales by generating more revenue from them over a longer period of time. Studies have shown that even a 5% decrease in defections can result in a 25% or greater increase in profits.

The second and third easiest ways to grow a business, which actually are about equally effective, also focus on existing customers: keep them at the facility longer so they spend more money, and get them to visit more frequently. If customers are spending more and coming more often, that means they must be happy with your business.

By focusing on the first three ways to grow a business — on existing customers -- you end up doing a better job of attracting new customers than the traditional route of advertising and discounting. Reducing customer defections and keeping customers happy will usually take care of attracting new customers. Customers who are really happy with your business will want not just to return, but they become your business disciples, telling their friends through positive word-of-mouth marketing to become your customers, as well.

Powerful? You bet! Think about how you choose restaurants to visit. Would you be more likely to visit one with an eye-catching ad in the newspaper or one that a friend praised to the skies? Yeah, we thought so. And just in case you still aren't sure how powerful positive word-of-month from happy customers can be, one online study conducted by Boston-based research firm Chadwick Martin Bailey found that 27% of the U.S. population had eaten at restaurants based solely on the recommendations of friends, neighbors or relatives. In addition, 47% of respondents to the survey said they had recommended full-service, casual-dining restaurants to others during the past year.

A recent survey based on interviews with 90,000 North American retail consumers by the Toronto-based Verde Group in association with the Jay H. Baker Retailing Initiative at Wharton School found that about 45% of customers who experience problems never contact the company. "Organizations that assume no news is good news are at significant risk," according to the report. "Rather than complain, these people spread negative word-of-mouth and then vote with their feet by making future purchases elsewhere."

The survey report also noted that about 70% of customers defect because of service or quality problems that could be fixed with relative ease. Customers believe complaining will do no good, feel that it is not worth the time, do not know where or how to complain, or fear hostility or retribution. About 59% of the survey respondents experienced at least one problem with a product or service over a six-to-12-month period. The Verde Group estimates up to 21% of the typical North American company's revenue is at risk as a result of customer dissatisfaction and defection.

And if that isn't convincing enough about cost of customer defections, a recent survey by loyalty marketing firm Maritz found that more than two-thirds of American consumers (68%) reported they had in the past two years defected or considered defecting from a company they had frequently used. Of those that left a company, 43% cited service experiences as their main reason for doing so. Of those who left, 83% said they had told others about their negative experience.

Reasons cited for defecting were:

1. Poor customers service systems or policies (85%)
2. The poor attitude of an employee (77%)
3. An employee's low level of knowledge about how to help (76%)
4. An employee's lack of decision-making authority or empowerment to help (72%)

Focusing and investing on current customers rather than the ones you don't have realizes the greatest return-on-investment. Yes, it's different than the conventional wisdom that advertising and marketing are the way to go, but an enormous amount of research shows that investing in the quality of experiences your existing guests have is your best avenue to growth and success. 

For additional reading, see:

• Blabbing dissatisfied guests
• Are Your Customers Dissatisfied? Try Checking Out Your Salespeople.

What's happening with uWink?

What do you get when you cross a restaurant with the latest gaming technology? The answer is uWink, a cyber café and entertainment venue for grown-ups. It's the brainchild of the man who invented Atari and Chuck E. Cheese's. Read on to discover how the flagship store in the Los Angeles area is faring after a year in business.

In previous issues of the Leisure eNewsletter, we have been following the development of uWink, the latest creation by Nolan Bushnell, known principally as creator of the Atari home video game system and the brain behind Chuck E. Cheese's.

uWink is Bushnell's cyber café creation for adults using the latest interactive entertainment technology. Rather than the typical hard-core gamer dark stereotype, it might be described as a Zen garden-like bistro. According to Bushnell, the majority of revenue is generated by food and beverage sales, not gaming.

All charges for food, beverage and games are handled with an RFID-enabled plastic card that keeps track of the tab. You pay on the way out. Food and beverage orders are placed with touch screens at tables that also are used for games. There is no wait staff, only runners who deliver orders (there are bartenders).

The best way to understand what the uWink experience is all about is to view a video (click here to view).

The first, and currently only operational uWink is a 5,400-square-foot unit that opened in the Westfield Promenade Shopping Center in Woodland Hills, California (greater Los Angeles area), on October 16, 2006. According to filings with the Securities and Exchange Commission, the store cost $1 million to build — $400,000 for leasehold improvements; $375,000 for technology, furniture and fixtures; $180,000 for soft costs and initial inventory and $75,000 for licenses.

Bushnell said the store had about "$200,000 in mistakes" and the size is way too small. "We've experienced significant wait times. A proper size would be anywhere from 6,500 to 10,000 square feet, with around 8,000 optimum."

For the first six months of 2007, the restaurant had sales of $1,240,000 with a cost of sales of $394,000 (31.7%) and selling, general and administrative expenses (includes salaries and benefits) of $530,000. The restaurant has an executive chef, six managers and 64 full- and part-time staff.

uWink has announced it will open new uWinks in The Promenade at Howard Hughes Center in Los Angeles, California; the Hollywood & Highland Center in Hollywood, California, and the Galleria Dallas in Dallas, Texas. The company has also entered into an area development agreement for three franchised restaurants to be developed in Miami-Dade County, Florida, and has formed a partnership with Jefferson Partners, a leading Canadian venture capital firm, to develop uWinks in Canada.

uWink is a publicly traded company (stock symbol UWKI.OB) formed in 2000. In 2002, uWink bought a Utah-based publicly traded company in what is known as a backdoor listing or reverse takeover. This allowed uWink to go public without all the complications of its own initial public offering.  uWink has filed a registration statement with the Securities and Exchange Commission for a proposed new offering of up to $15 million of its common stock and warrants to purchase shares of its common stock.

"The Girl's Guide to Being a Boss (Without Being a Bitch)"

For years, the location-based entertainment industry has been fueled by testosterone. But increasingly, women are moving into upper management of LBEs and are even becoming owners. Just in time, a new book offers a fresh take on women in leadership. Read a review.

We are glad the location-based entertainment industry is getting away from its male-dominated roots, with more and more women managers, and even owners of their own start-up businesses. This new book, The Girl's Guide to Being a Boss (Without Being a Bitch), by Caitlin Friedman and Kimberley Yorio, is most timely. The following is from a review of the book in Publisher's Weekly.

New Projects

Children's play, discovery & enrichment center - Lagos, Nigeria
Designing preliminary plans and preparing financial feasibility for a 4,000 square meter indoor-outdoor children's play, discovery and enrichment center to be constructed in Lagos, Nigeria.

Cinema, bowling, dining and entertainment center - Texas, U.S.A.
Designing preliminary plans for an integrated movie, restaurant, bowling and family entertainment center to be located in presently vacant store space in a shopping center.

Experiential-retail - Eastern Europe
Working with an Eastern European retailer to integrate children's and family entertainment, edutainment and enrichment components into a new store concept.

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