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.

If sales at the current restaurant continue at the same pace as the first six months of 2007, the restaurant will be generating annual sales of about $450 per square foot. Not bad at all. Of course, this is just the freshman year. Towards the end of the sophomore year is always the true test for any new concept. With Nolan Bushnell's long industry track record, we believe with the fine-tuning of the concept that will occur, uWink might just have legs.