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White Hutchinson Leisure & Learning Group, Kansas City, MO, USA

They Get 'IT' - The LBE Killer App

Bill Rameson gets IT (see above article (www.whitehutchinson.com/ news/ lenews/ 2003/ 08/ article105.shtml#article) ), Chuck E. Cheese's gets IT, Dave & Buster's gets IT, Harold Skripsky got IT at The Enchanted Castle, GameWorks is working at getting IT (at least they understand what the IT is), John's Incredible Pizza gets IT. Yet most of the community-based family entertainment industry keeps trying to limp along without IT.

What is IT? IT is FOOD, and taking it SERIOUSLY as an attendance generator.

Sure, we wrote about this in the May 2003 eNewsletter issue (www.whitehutchinson.com/ news/ lenews/ 2003/ 05/ article102.shtml#article) . Are we preaching a little? Yes. Why? Because there doesn't seem to be a choir out there singing about IT and why IT is so critical to the success of LBEs. We're getting darned tired of seeing so much well-intentioned investment money lost, and entrepreneurs dreams turned to nightmares, because they don't get IT.

We call the Killer App Food, Fun & Family or Food, Fun and Friends, (FF&F for short) depending on the market the LBE is targeting. Notice how we put the FOOD first? Ever think about the arrangement of syllables in eatertainment? EAT comes before the (en)tertainment. Good reason. We have found that it's the food and beverage, combined with the fun, that creates the socialization setting 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. Interestingly, the Killer App has been out there, successfully plugging away with a low profile for at least 25 years while the industry persistently chased after an entertainment Killer App. IT hasn't always been called FF&F. Some of the concepts such as Chuck E. Cheese's are better known as pizza and games, eatertainment or restaurant-entertainment.

For all the FF&F examples cited earlier in this article, FOOD represents between 30% to 60% of their revenues. And we'll go so far as to predict that any LBE concept (we aren't talking about tourist-type facilities) where FOOD doesn't represent at least 30% of total revenues is doomed to become road kill. 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, not some run-of-the-mill snack bar or concession stand. We're talking about QUALITY FOOD with all caps in a pleasant dining area and atmosphere to enjoy it in while you socialize with family and friends.

To emphasis the QUALITY with all caps, here are some simple facts from the restaurant industry to show what's in and maybe what's on the way out. The average McDonald's has annual sales of $1.6 million. The average Panera Bread Company, sometimes branded as Panera Bakery & Café, has sales of $1.8 million. And it doesn't have a drive-thru service, where McDonald's does up to one-half its sales. 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. And among all the chains tracked, Panera's spent the least on advertising -- only $842,000 in 2002. Panera Bakery & Cafe, 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. Their total checks run between $6-$9, whereas the average check at a McDonald's is below $5. 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.

We're currently working on three exciting FF&F projects. One 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 over 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 FOOD with a Farm Kitchen, Bakery & Ice Cream Café and added fun with a children's adventure farm and water playground.

So in summary, here's the Killer App formula: Combine a focused assortment of FOOD and FUN in a branded facility with quality-of-place and the families and friends will come (see our Niche Marketing: The Difference Between Hitting and Missing Your Target Market article for additional discussion of focus and our Quality-of-Place (www.whitehutchinson.com/ news/ lenews/ 2003/ 02/ article101.shtml#article) article in our February 2002 eNewsletter link to. That's IT for now.

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