Two decades ago when our company conducted market and financial feasibility studies, the studies were very straightforward. There were basic standard family entertainment center (FEC) formulas and all we had to do was evaluate the size of the overall population within the trade area, evaluate any direct competition, which back then was minimal, and apply per capita spending to the population to determine revenues.
Well, today it's a whole new world when it comes to conducting a feasibility study for an entertainment-oriented venue. A lot has changed over the span of several decades. The number and types of FECs and other location-based entertainment (LBE) venues has expanded. From an original generic formula with a little bit of something for everyone, FECs and LBEs have evolved into multiple concepts targeting distinctive niche markets. The bread and butter of bowling centers, league players, has all but disappeared. The Triple Revolution of the Internet, social media and mobile digital screens has introduced entirely new forms of leisure time and discretionary spending competition to entertainment and social destinations. We now also have retail-tainment offerings with retailers such as Cabela's, Bass Pro Shops, Sheels, Disney Store as well as lifestyle shopping centers and malls offering entertainment, much of it for free. Consumer's values have evolved. We now have new generational cohorts of Millennials and Gen Z that behave and spend their leisure time and discretionary incomes differently than older generations. Consumers have evolved into foodies. Quite simply, there have been major disruptions to the competitive entertainment landscape that has severely cut into the market share of FECs and LBEs.
Due to decreasing and stagnant incomes, we've lost a large share of the middle class as potential customers.
Today, in many situations, a market area that supported an FEC or LBE just a few years ago will no longer support one today. Today, market feasibility requires a denser population within the market area and one that is concentrated with the target population niche. Market feasibility has become much more refined than just looking at the total population. FEC or LBE projects that might have been feasible in many markets five or so years ago are no longer feasible today.
The rules of what works today are dramatically different than in the past. Today the food and beverage components may in fact be a more important anchor than the entertainment itself. Today venues have to become fun, social gathering spaces, not just where you go to roll a ball, shoot a virtual gun, play a game or drive a vehicle.
As a result of all these changes, the formula for a successful future proof FEC or LBE has changed dramatically and is still evolving (see our article in this issue A paradigmatic shift for entertainment venues; the entertainment is now secondary). Accordingly, feasibility studies can't be what they used to be. There are no longer stock formulas you can plug into any market. Today, a feasibility study needs to evaluate the particular trade area, its demographics, its socioeconomic/lifestyle composition, the competition and develop a tailored offering to attract the best opportunity niche market segment in that trade area. Today feasibility studies are really the art and science of developing a unique brand offering that is a fit to its trade area and to today's and tomorrow's competitive entertainment landscape. Today feasibility studies must identify and develop a white space experience offering that will succeed in a particular trade area. Very important to the entire process is understanding trends, not what worked in the past, but what concepts will future proof the LBE based on the pace and direction of leisure time and spending trends.
This is the reason our company spends extensive time and money conducting analysis of trends in leisure time and spending, as well as cultural research. Only with this knowledge can we guide our clients in developing successful FECs and LBEs that will have long-term future success.
Unfortunately, many entrepreneurs and industry professionals continue to try to plug stock old FEC and LBE formulas into their feasibility studies. Today, the stock formulas from even a few years ago are square pegs trying to fit into round holes, the round holes being the new and rapidly evolving competitive entertainment landscape. You can't design for the future by looking in the rear view mirror. That is a formula for failure, as old formulas rarely fit today, and are for sure not future- proof based on the direction where all the trends are pointing.
Make sure that when you hire someone to do your market and financial feasibility study, they have extensive experience in the FEC and LBE industries and they are totally in tune with the new entertainment landscape, the new consumer and what exact concept, what brand identity it will take today and in the future to attract a particular segment of the new consumer in your trade area to your venue.