.png)
LBX Collective
The LBX Collective aims to inform and educate, create opportunities to connect with industry peers, and to spur collaboration, discourse, and cross-pollination of ideas in the location-based entertainment and experience industry.
Join our online community at LBXGalaxy.com!
Proudly sponsored by Intercard!
LBX Collective
The LBX Show #39 - Special Edition: State of the Industry Guest Gab
Sponsored by Intercard!
On this week's episode Brandon joins Kevin Williams and Adam Pratt for a special edition Guest Gab to discuss the upheaval by major brands in the entertainment industry as they struggle with financial challenges and shifting market dynamics.
• Pinstripes faces bankruptcy protection with potential closure of all 18 locations due to overbuilt restaurants and limited entertainment offerings
• Topgolf being threatened with divestiture by Callaway Golf while facing 8% same-venue sales decline and struggling with gameplay stagnation
• Chuck E. Cheese showing innovation through digital media networks, content creation, and experimentation with new attraction types
• Dave & Buster's replacing leadership after 8.3% drop in same-venue sales and rolling back unsuccessful social bay initiatives
• Elevate Fun struggling to differentiate its massive 125,000 square foot venues from established competitors despite significant investment
• VR and XR entertainment concepts like Sandbox VR and Immersive Gamebox facing challenges with their single-attraction business model
• Market saturation becoming a concern in some regions like Texas, where numerous entertainment venues have opened in the past 24 months
• Industry continues to grow globally despite these challenges, with differentiation and staff training emerging as critical success factors
All right, well, welcome everybody to the LBX show for August 3rd 2025. And we've got a really simple, straightforward show for you today. So we are not going to do News. You Should Know. We're not going to do Open and Shut or any of the other segments that we normally do. Instead, kevin Williams and Adam Pratt as you know, these guys are on a regular basis. They're here, they're running segments either with the Arcade Corner or Open and Shut.
Speaker 2:We got together and we decided to do a state of the industry conversation. There's a lot of turmoil going on in the industry and we wanted to get in front of it and talk a little bit about it. So we're going to just do that. It's going to be a guest gab and we're going to have that conversation and that's going to be basically it, and then we'll wrap up at the very end. So, that being said, coming up right after the break, we'll dive right into the guest gap.
Speaker 2:Intercard is the only cashless system designed, developed and manufactured all under one roof. They introduced cashless technology to the amusement industry and have been leading the way for over 30 years. Cashless systems from Intercard increase customer spending, guest satisfaction and boost revenues by up to 30%. Intercard is so proud to be serving the amusement industry and, if you aren't already part of their global family of customers, they hope you will become one soon. All right, well, welcome, adam and Kevin.
Speaker 2:You know we're all together here and we're not talking about an expo of some kind. So usually, when we all come together for a guest, we're talking about Amusement Expo or IAPA or Bowl Expo. But we got something different to talk about today and this is you know, we're having some conversations in our WhatsApp channel and basically I think we are. We're seeing some movements happening in the industry, especially with some of the larger brands, some shakeups and some other stuff happening, and you know, we just wanted to get ahead of some of the what we feel like is going to be some news and other stuff that's going to happen in the next few months to year, and we just want to get ahead of it and put it in perspective and have a little conversation about it. So you guys ready to dive in here, let's do it. All right, perfect, all right. So, kevin, since you put this deck together, I'll let you lead. You know, hit the mouse button to move us forward.
Speaker 3:But yeah, take it away, all right, so it's my fault then, you get 100% of the blame for everything.
Speaker 2:KWP is down there in the corner, so I don't know.
Speaker 3:Oh no, the situation is as Brandon has excellently laid out. Is that we want to get ahead of? You know, there is, from the positions that we're all in, we're hearing the burbling and the rumor mills and the discussions away from the front, and we really don't want to discuss the rumors. We just want to put a perspective on really the situations that are impacting a number of companies, and so everybody takes this on board with a correct perspective, and one of those, first, of those companies that we've been hearing a lot about is our friends at Pinstripes. Now, just to give the overview, the company has taken on a lot of investment over the years. They have tried to restructure themselves and then we had the announcement that they were actually in consideration of taking on bankruptcy protection Chapter 11, from the US court perspective, and there are a number of reasons why pinstripes has found themselves in this kind of dilemma.
Speaker 2:This kind of dilemma. Yeah, yeah, I mean, I think, a few of these and just as another, there's the possibility that, as a result of their Chapter 11, they actually have said that they might need to close all 18 of their locations completely. They're worried about being delisted from the New York Stock Exchange as well, and so they really are struggling here. And I think one of the things we've talked about I've mentioned it before, I think, on some sound offs and other discussions with pinstripes is they really overbuilt for what they offer from a entertainment or entertainment standpoint. So the restaurant is so large compared to their entertainment components. They really are, I feel, like a restaurant first with a little bit of entertainment, whether it's some small bocce, some bigger bocce or some, you know, mini, I would say like duck pin lanes, and but those are all almost like afterthoughts to the overall bar and the restaurant, and I think that's one of the major issues that they've had. The real estate is just absolutely monstrous for what they actually provide. What's the?
Speaker 4:typical or average size of a pinstripe.
Speaker 3:Between 15,000 and 18,000 square feet.
Speaker 2:It's got to be between 15,000 and 20,000 square feet.
Speaker 4:Yeah.
Speaker 3:They normally comprise at least seven or eight amusement pieces now after positioning themselves, but their main focus has been on their bowling, which is mid-scale bowling, their karaoke, their outdoor entertainment and, of course course, their F&B, and they are held up by some as an example of the problems that the entertainment market is suffering. But we can go into more details about what we mean by entertainment as we move through this. I would just want to make it clear that the management, on announcing that they were evaluating going into Chapter 11 protection, was adamant that they would try and keep the lights on across as many of their 18 facilities as possible.
Speaker 4:And another quick question where are most of their facilities located, Like, are they kind of in a particular region of the states, or are they kind of spread out?
Speaker 2:They have been generally spread out, although I want to say, um, you know, at least, uh, mostly on the east coast. I know there's a large location that just recently opened in orlando um, I would say recently, about about a year and a half ago, um, and we went up into that location. Another example of just a massively overbuilt um custom custom building. And just to just to clarify too I did look it up the pinstripes locations average actually between 23,000 and 30,000 square feet. So this is really large for a restaurant. It's for an FEC in general. I mean, that's not large for an FEC. It's a pretty standard FEC trampoline park size.
Speaker 2:But when you think about like a trampoline park, that's 30,000 square feet. They have unlimited volume, kids can come in. They have very little overhead other than staff costs and some other things once kids are in there. So the margins are significantly higher. Where with pinstripes, they're a restaurant and if they're going to pack out their restaurant they have lower margins and they have to pack it out and how many people are going to come in there and do that? One of the other issues is that they've chosen two attractions, their anchor attractions Bowling and Bocce that require a lot of square footage for, again, not very many people, so the revenue per square foot is also going to be lower for their attraction model, in addition to the fact that they've devoted so much of their space to restaurant.
Speaker 3:A common refrain that you're going to hear during the companies we're listing is the guest experience. Really, what is the operator trying to achieve? If you're trying to achieve a restaurant, you focus on the restaurant. A lot of these companies show off their menu, their drinks side. By comparison, their entertainment component is not given the same high level of presentation. You know what are you going to experience from your entertainment spend compared against your alcohol or your food spent. And another aspect here is that some of these venues push their outdoor capability. So we have the Happy Saks, we have the fire pits, but some of those are not really entertainment-based, they're more hospitality-based.
Speaker 4:And if they're in a cold area, sometimes the weather can reduce the revenue potential there quite a bit.
Speaker 2:Yeah, and looking here on the map, it looks like they have at least one location up in Northern California, a couple locations in the Midwest, so in Minnesota, wisconsin and Illinois, and then obviously some in the East Coast, along the East Coast and then the one we mentioned in Orlando. So they are pretty well spread out as well, which is, you know, is also an issue, depending on their model, because you don't have centralized distribution. I mean to have a location all the way on the West Coast and then a number of locations in the Midwest and the East Coast and really nothing. Centrally located is also an issue when you're trying to ship food back and forth and other things, depending on what you're trying to do and even general, you know, to have managers and regional managers and have oversight. It's a lot of travel across a long distance for just 18 locations. It would be much better to be much more centrally located, with those 18 locations initially and slowly expand.
Speaker 3:That the operation hasn't defined its chapter protection at this moment, but just floated this as a balloon towards making a final announcement, tells us that there's still a lot of negotiation going on behind the scenes and, of course, there's always the possibility of a white knight appearing and coming in and acquiring, because we are still in a very heavy M&A, merger and acquisition period for this particular part of the market.
Speaker 2:Let's check out the next one.
Speaker 3:Moving on and, of course, topgolf is a well-known name For many of our viewers and listeners. They will be familiar with the open and shut presentations where I constantly go on about the latest opening of a Topgolf facility. They are owned by Callaway Golf Apparel and Merchandising Golf Merchandising Company and they have decided that they want to divest themselves of the expense and the burden of the Topgolf operation. Now this is a little confusing because originally this was going to be happening at the end of the Topgolf operation. Now this is a little confusing because originally this was going to be happening at the end of the year. And now we've been informed internally that this has been accelerated and that the divesting of the Topgolf's over 110 facilities will be taking place in the next two or three months. Interesting, within that statement, we haven't had a final comment about whether the Topgolf swing suite, the simulation division, is also going to be divested from the Callaway operation or their Tiger Strike facility in the UAE.
Speaker 3:So there's still some nebularity regarding what is going on concerning this. Now, from Topgolf's point of view, they're moving out of the relationship with Callaway. They're going to have to take on a lot of their debt and their burden. They've been restructuring their operation, preparing for this, and they have also started to look at secondary entertainment on top of their shooting golf experience at the moment, such as They've had a relationship with Bandai Namco in the UK to develop something called the Topgolf Arcade, which was physically an arcade room placed in one of their facilities in the UK. They've also had a relationship with Greenspan to put a mini golf component outside the front of one of their facilities, and they also have a pet project towards creating a hybrid version of the Topgolf facility that also has some other entertainment elements. All of these are test projects test balloons.
Speaker 2:Yeah, I think one of the other things to mention is that they have I mean, we mentioned declining sales, but it is a same venue decline but it's 8% year over year. I mean that is a significant amount from same venue sales. And this is another issue where we talk about expansion for pure top line growth. When you're a public company, when you're owned by a larger corporation, you need to keep showing top line growth Even if, when you look under the hood, their existing locations are dropping in revenue year over year. But they keep seeing that top line growth because they keep adding new locations. And it's one of those where the only way they can continue to show growth is by opening new locations. And this becomes very, very dangerous when, all of a sudden, their saturation, they can't open more locations. Well, now they have to deal with the underlying business model and the underlying attraction mix and the underlying decline. You know operations issues that are driving that decline in revenue.
Speaker 3:And part of that. Constant growth is okay when you're part of a larger operation, when you're part of a floated corporation or if you have a very big sugar daddy with deep pockets. But when that sugar daddy decides that they would rather focus on their core business which is a phrase that we're hearing a lot from a number of corporations then that kind of will put a magnifying glass on Topgolf regarding their store-on-store sales capability, and you'll hear that a lot from the e-tertainment problems we're going to discuss.
Speaker 4:Who would be their biggest competitor?
Speaker 3:They have a number of companies now that have started competitive, direct competitive facilities to them. They don't have any in the 100 range to them but they don't have any in the 100 range. I would point more to some of the FEC facilities now, as well as a lot of the lounge, golf, simulator facilities as the kind of competition, the flight suites, the five irons. Though they don't have the same real estate, they do offer the same kind of entertainment to their core audience.
Speaker 2:Yeah, I mean to add on to that. I mean you see small regional competitors where you have a developer who basically copied the Topgolf model. They had some land and they opened up three of these in a region or something like that, and so they kind of keep Topgolf boxed out of that particular area. We do see that happen. Obviously, in Vegas there's Atomic Golf, which has its own issues but was basically a Topgolf competitor.
Speaker 3:Going to the database, companies such as Golf, lounge Drive Shacks. You've said Atomic Golf, but these are all onesies, twosies, threesies, foursies, rather than a hundred facilities.
Speaker 4:But I do kind of imagine that with enough of them out there, it's kind of a decentralized way of competing and chipping away at this revenue. That's maybe part of the challenge there too, since I don't know if anybody's doing anything particularly innovative beyond the original concept.
Speaker 3:It's the McDonald's syndrome, where McDonald's didn't have any competition for a long period of time until Burger King and Arby's and all of the others started to erode their core business.
Speaker 2:Yeah, one of, I think, topgolf's longer-term issues let's say they can solve for some of their same venue sales declines but I think one of the issues that actually is probably impacting them is the fact that their gameplay can't change. At the end of the day, you're swinging a club and you're trying to get it into holes in the ground out in the driving range, and they've tried to do things like integrate Angry Birds graphics into. Okay, depending on where your ball lands and if it goes in a hole, you knock down some Angry Birds on the screen next to you. But that's no different than rolling a bowling ball down a lane, hitting some pins and then looking up at the screen and watching something happen up there. Right.
Speaker 3:So the bowling experience is more immersive than the golfing experience yeah, well, and in it requires less square footage too.
Speaker 2:But also you have um, but you now have, you know, a brunswick spark or you have a neoverse right, and you have other ways to interact with the game and create different gameplay on the bowling lanes. Top golf doesn't have that, and so the only thing they can do is continue to partner with Marvel and Rovio and others to try to have screen changes, and that gets expensive, right with IP, and so you have basically this big, large, massive built facility that you fundamentally can't change the gameplay. So when people come and they play unless they're really into golf and they're there to just swing the clubs then there's a lot less reason to continue to go to Topgolf. So repeat visitation really becomes an issue, and so they have to go to regions where there's high population. But when you start to cross that hundred location threshold the numbers of cities and towns that can support a Topgolf on an ongoing basis that list begins to really get small.
Speaker 3:And we have a situation that we're going to be seeing a lot from all of these companies we touch upon, which is not just the site-on-site decline in revenue but also the major decline in the group visitations, the group bookings, and that Topgolf is a perfect example of a venue that is really visited not by onesies and twosies but by groups of players taking over a bay, and if they're not turning up you've got problems with your model.
Speaker 2:Yeah, I think, before we move on to the next one, the thing I'll say is, if you know what's very likely, I think top golf will be and end up being divested by callaway. But I wouldn't be surprised if callaway does hold on to the top golf swing suites. Maybe you rebrand it from top golf to something else of the callaway swing suite or whatever. But I do think that they'll hold on to that technology and they'll hold on to those suites because that is still a perfect model to introduce the Callaway clubs and have people in there. And, as we've seen, the growth of the not just growth but I would think, near saturation when we actually look at some of the numbers of how many of these golf suite sims are out there. But that, I think, is a much more well-aligned, I guess, growth platform for Callaway.
Speaker 3:Proven growth platform compared to the problems that you have with the Topgolf shooting range experience. And, funny enough, callaway has not so recently invested in a competitor to the Swing Suites lounge simulation business, and so it seems that Callaway sees that as a burgeoning business, maybe where their shooting range hospitality sector is something that they're a little bit colder on. Moving on, and, of course, the big mouse in the corner of the room that we need to touch upon is the situation that CEC, chuck E Cheese Corporation Entertainment, finds itself. It has over 600 facilities in North America, as well as its interests in the UAE and other parts of the East and Latin America. If I'm correct, it also has its investment into the Peter Piper pizza operation and the recently announced and rebranded, restructured Chuck's Arcade.
Speaker 3:But beyond that, this is a company that has exited, within the last four or five years, its own Chapter 11 situation. It has dusted itself off, it has taken new investment and it has maxed its credit card, as it were, out on applying a brand new take on its positioning in the market. And this usually is the most vulnerable period for some companies, where they've rebranded, reasserted themselves and then they need to prove that that direction that they have taken is successful, and there are now a number of issues regarding where Chuck E Cheese's operation sits in the market, along with its employees being arrested on primetime TV.
Speaker 2:Breaking news, by the way.
Speaker 4:To be fair, just one, not a bunch, not just one.
Speaker 3:Just one mouse.
Speaker 2:For those of you who haven't watched it, I'm sure it will pop up sometime in the next few days on your feeds, but you've got to watch the little video of Chuck E Cheese being walked out in handcuffs. It's uh not a great look. Uh for for, just for chucky, she hits and and the uh and you know good old chuck we.
Speaker 3:We have to be mindful that they have taken on board some new initiatives which need to have more time in the oven, literally. You know, these are concepts that they've rolled out. Yet again, they have revisited the jungle gym or the active entertainment play experience. Yet again, they've removed what would have been seen as their most popular components, their animatronics, and gone for a more digital approach. Yet again, they've rebranded their mascots. And all of these have had highs and lows in its application.
Speaker 4:Yeah, because I've seen some people claiming that, oh well, what they really need to do, at Chuck's Arcade, for example, is bring the animatronic bands back. But it's like I mean, the reason they got rid of them is because it's hard to find technicians that you can get to keep them going properly. Because when you don't get an animatronic working properly, like, say, disney level quality, then it becomes more terrifying to the viewers and it just becomes like oh, this is really lame, because you know their eyes are shooting off in different directions or whatever, and it's like I, given everything you've described, it's like I don't think they have the money to do that. Now, as you mentioned trying to do digital, it's like if they can make that work the Vocaloids out of Japan, like Hatsune Miku and others that have pioneered the whole holographic character stuff it's like that can be. If you can get that done right, then that can work.
Speaker 3:So ABBA Voyage, done with Chuck E Cheese, would be a great approach, but you know, as you said, do they have a bottomless pit of money to be able to invest in that. I have a secondary concern regarding a number of the companies we're discussing, which is that they have an executive board or a group of C-suite specialists that come from a hospitality and even sometimes a retail background, but they don't have an entertainment background and while the pizzas may have improved in quality and pricing and the layout of the facilities is much more stylized like modern retail, if the entertainment hasn't improved, then this becomes a one and done, if not a one and no done.
Speaker 2:I think. So I'm maybe a little bit more bullish on CEC than certainly the others that we've talked about and we're going to talk about. This is probably the one where I feel like has at least a culture internally it seems to be of experimentation, of willing to try things out. Now they may go all in on things, maybe a little bit too soon. So the little mini adventure parks and trampoline parks and things that they've implemented that are obviously targeted at three to eight-year-old range, but they are at least trying new things. They are trying new digital floors and again, I'm not advocating the fact that these things are going to solve their problems, but I do think that at least they are throwing shit on the wall and seeing if it's sticking, and I appreciate that. And then they are leveraging what the assets they do have really well, for example, their 3,000 screens that they have across all of their venues.
Speaker 2:This is, you know, they recently and we talked about this on the show they recently launched this EC Media Network and they are now leveraging their own content and their own media network for advertising.
Speaker 2:So having advertisers come in and advertise along across their own controlled media network from their own screens within all the locations. That's a revenue generator that sits on top of their actual venue revenue as well. And then their relationship with Future Today that they connected with to basically get their content off their screens and into the homes as well. Right alongside Cocomelon and Blippi and Ryan and Friends and others, this is their own content that they're creating, getting out into homes, hopefully getting kids to get excited about Chucky and then coming in and then seeing interacting with a Chucky in real life. So this is almost like the Disney approach to developing their own IP and content that gets the kids hooked, excited to come in and meet those characters and hug those characters in person and then have some arguably better food than Chuck E Cheese certainly had when we were younger, when we were taking our kids to Chuck E Cheese.
Speaker 4:They didn't have Chuck E Cheese when I was a kid point too and I agree that I I really do appreciate places like this that do have that innovative and creative streak through them which I think, up to this point, nobody else has that for them. But, um, you know they don't have to pay anybody a license. You know they're not paying disney for mickey mouse or marvel or anybody else on anything which can get very expensive very fast and they get very controlling with a lot of that stuff. So that also allows them more of that freedom there. And so, yeah, I do think they have perhaps the best chance of keeping it going and pulling out.
Speaker 4:And there was another thing that they did not too long ago. I think it was birthday cakes, uh, that they were, um, getting into, or was it ice cream? I can't remember exactly, but still it was like the end. That was one of those innovative things that they were doing where it's like, hey, they're leaning really into the party side of it, which you know for pretty much every entertainment venue out there. You know, parties are a lifeline and so you might as well play that up and, you know, see what works in that regard, and maybe you'll come up with an even better revenue stream.
Speaker 3:Agreed that it is the innovation and the investment in innovation that singles see out, especially what they've achieved with Chuck's Arcade initially. That shows a level of investment in innovation. And you know what I keep on saying to clients all the time rather to build your own brand than someone else's brand, it's much cheaper and, as our friends at Topgolf have seen, even having the best movie IP promoted in your facility doesn't guarantee success. Moving on, and, of course, one of those companies that has thrown open its heart to the industry and to its investors to admit that it's done wrong and it needs to sort its situation out Now. Dave Buster controls both the 160 Dave Buster facilities as well as the 60-odd main event facilities.
Speaker 3:The interesting point here is that, as we've seen with a number of companies, they have gone for a major change of their C-suite operation.
Speaker 3:They let their CEO go and they've admitted to their investors that they are rolling back a lot of the decisions that were made under that tutelage double whammy situation here, where they have also seen, if my memory serves me right, a 7% drop on their site-on-site business, which was quite considerable and actually started one of the major panics in the investment community regarding e-tertainment losing its gloss.
Speaker 3:That said, we can say that the Dave buster's operation has invested in innovation where they can. It's just that maybe that innovation that they invested on was badly led or badly directed by the financial situations. My, you know I use a lot of these companies as bellwethers against how the industry is doing and I am fascinated to see that they are constantly still rolling out facilities, because this juggernaut cannot stop its rollout, especially as a traded company. As Brandon was saying, part of their sign of success and constant revenue is by constantly opening new venues. The question is is how many of these new venues still employ some of the attributes that we saw from the previous management? Can that be stopped and turned around?
Speaker 2:Yeah, just to put some numbers to it, the first quarter saw an 8.3% decrease in same venue revenue as well from the prior year first quarter, and so they're in a very similar place to Topgolf.
Speaker 2:The only way to show continued growth is to continue to open new locations, and this is a situation where we talked about the social bays and social components that they've attempted to add and that they're now rolling back and not including in future locations.
Speaker 2:So they say anyway and I think it wasn't necessarily that that was the wrong direction it was that it was poorly implemented in those locations where it was added in and it was poorly branded. So the issue there is that people know Dave and Buster's to be a place to go watch sports, get some mediocre food and play games right, like that is, I mean, and I know they've made improvements and drinks right, you know, have drinks that go along with all that, the, the the social lubricant. But you know David Mustard has made some improvements on their food. Their drink menu doesn't seem to be significantly improved, but but that they they went and then shoved in the social bays and did nothing to rebrand or change the, the model, and try to make a social entertainment venue, when really they've just been a sports viewing venue that also has some games, and that has historically been what Dave Buster's is.
Speaker 3:Rather than the excrement at the wall, I prefer the spaghetti at the wall analogy. And that's really what a management previous management that seems to have known a lot about retail food and facility acquisition but didn't understand their core audience's need for entertainment. As it was said in the report by the interim CEO before he was replaced by the new permanent CEO who, funny enough, comes from KFC, the situation was that they hadn't invested in new games for their facility, they hadn't researched the appeal of their new social base and entertainment components with their core audience and they had neglected their midway areas with updates and development. So that's kind of like saying that you're running McDonald's and you forgot to put a burger patty in your burgers.
Speaker 4:Well, I would also throw in one other thing that I got from.
Speaker 4:So there's a very popular Reddit for Dave and Buster's and a lot of Dave and Buster's employees go there and share stuff, and sometimes that includes complaints, and one issue that seems to be pervasive for quite a while is the lack of training on employees Like that.
Speaker 4:Not only are they not researching things like the social base, they're not even really training their employees on it, almost like it reeks of. We don't even know what we're really doing here, so we can't even explain to you the employees who are supposed to sell this to the customers and help them navigate through it as well. So you've got the social base, but recently they also launched some sort of new leaderboard, but they just kind of installed it and nobody working at the company really knows what they're supposed to do with it. And when that's the case, it's like how can you expect it to be successful when your, your, your, your employees are your sales people? I think that's what a lot of fecs tend to forget, and which is funny, given that a lot of the c-suite people are retail, and so this should be kind of top of mind. But I guess that's the public opinion.
Speaker 3:You're hitting the nail on the head. But for the C-suite, if they come from a fast food or a retail background, they understand that the staff are there to do the staff things and the managers are there to do the promotional things. And if the managers don't understand, they can't pass it on to the staff. One of the real fundamental failings with Dave Buster's has been a decimation in their group sales. That was one of the hardest hits of their numbers and part of the reason for that was because the group sales directors the individuals who try and bring in the party groups and maintain the party groups had been shaken up by the previous management and neglected.
Speaker 3:And you hit the nail on the head very well talking about the discomfort from the employees. Employees I can you know as one that has to spend time with the training side as well as the promotion side. You look at what an operation like Andretti's does to get the message across to their staff so they understand what they're trying to sell. They even understand how to play the games that they are trying to promote, compared to what, sadly, some Dave and Buster's, which was a desert where you walk through the front door and what you saw is what you got, because no member of staff understood how to promote it.
Speaker 4:Right, right, or they weren't allowed to. You know, I know somebody. I've known a few people who've worked for Dave and Buster's and it's like they themselves tried to resolve issues fix games, things of that nature but it wasn't exactly their wheelhouse and became one of those things. Well, it's not my responsibility, and so it's supposed to be somebody else's, but nobody wants to raise their hand and take responsibility on that. And again that gets to training.
Speaker 4:When your staff is poorly trained, from management on down, then you're going to have these pervasive issues and it's going to make the locations much tougher thing to become a revenue generator and such. And so I know this is more Beth's wheelhouse and everything, but it stands out to me, not just with Dave and Buster's but some other FECs as well when, especially when, you start seeing a lot of customer complaints on social media and the employees are doing this or they doing that and it's like, well, this is ultimately the root of the problem, is the training issue, and it's like you can have a great vision and you can try innovative things, but it doesn't matter if you're not using your employees to and teaching them, you know, showing, teaching them your vision to implement those innovations.
Speaker 2:Yeah, I think it does come down to a one, I think, actually a lack of really strong cohesive vision. I think that was actually a part of the problem. But then, even when they did have ideas around the leaderboards or they had ideas around the social base, the implementation and the trickle down of that vision and into the training and the culture I think definitely was lacking. And maybe this is the one benefit. As I was thinking about the new CEO coming from KFC, this is maybe the one benefit of a CEO coming from a quick serve restaurant model which is very much built around standard operating procedures and things being trained and handed down and all packaged and rolled out to your franchise locations. This is maybe the one benefit that he can bring that type of expertise into this organization and be able to infuse the vision all the way down into the lower ranks. Be able to infuse the vision all the way down into the lower ranks.
Speaker 3:One of these two of these. If he's not prepared to listen to his staff, if he isn't prepared to observe what the market is doing, then it doesn't matter. But I hope fingers crossed because we're hoping that all of these companies can find a path to return to profitability and it is essential that Dave and Buster's finds that path. And one of the things that I will just end with as a caveat, again, going back to the barometers that I use to observe the success of corporations, markets, we have heard buckets regarding main event. We have heard so little information about how their numbers are doing, how they're positioning their market and how the restructuring of Dave Buster's will have an impact on a main event. Because, to be blunt, if you're buying amusement machines, you're not buying amusement machines only for your Dave Buster's operation. You should be buying Dave Buster's amusement product for all of your operation, which includes Main Event. And we're just not hearing those things, other than recently in Open and Shut, a new opening of a new venue.
Speaker 4:I forget that Main Event bought them out.
Speaker 2:Yeah, I mean, frankly, if you were to reposition or reuse the social bays, if you're removing them from the Dave and Buster's main event, it makes a lot more sense to drop in the social bays and into Dave and Buster's. Oh, yes, no, so even all of the the conductor, virtual arenas. That's a. That's a, I think would be an ideal drop into main events.
Speaker 3:It would be a perfect partner for their laser tag active entertainment you would position it with. You know, we let's not give them too much free consultancy. You know we there are ways to, to to address this, which they don't seem to know, and I wonder if it's because they don't know? It's because they don't know what they don't know? And one thing about C-suites is they do not like to admit that they don't understand the situation in front of them, and many of these individuals don't have an entertainment background. Many of them would not be aware of the problems they've had with rock and soccer, or they wouldn't be aware of the problems that they had with Hungry Hungry Hippos successes that were pushed into failures because of maintenance, operation and bad leadership. But again, we need to move on and we also have to be mindful that Dave Buster's is a traded company and we should be getting more transparency one way or the other about a main event in the coming weeks, no matter how much they may not want to talk about it.
Speaker 2:So you're saying, as we move on, but you're saying that KFC doesn't have entertainment, that the CEO coming over from KFC has no entertainment. That's weird.
Speaker 3:I'm being sarcastic, yeah, no, no. But also I'll counter your sarcasm with a blindingly obvious observation no one individual can steer the direction of a company. Every CEO that walks into a company brings in his C-suite of executives, and amongst those people are people that know accountancy and gaming and retail and hospitality, and we'll be really interested to see the quality of those people he's brought in. And we'll be really interested to see the quality of those people he's brought in a very high rate of investment, where they are looking at moving forward and establishing their brand in the market, but in a position where they may have suffered some stumbling pains in trying to establish themselves into the market. I'll throw this to you, adam, to give a little bit more of an overview of the problems there.
Speaker 4:Yeah, and so they appeared on a TV show that had that Kevin O'Leary guy from Shark Tank. This show I can't remember Money Court I think it is where two partners come together and they go to court in front of investors and the investors act like judges and whatnot. But they got a very, very large investment, tens of millions of dollars, to be able to invest in these locations. Five have been or so. As it mentions there there's three that are in operation, but five total announced, I think, with one in Miami and I can't remember where the fourth location was supposed to be, but these are ones in Sanford, which is north of Orlando, the other ones in Tampa, florida, and then the third one that recently opened was Jensen Beach.
Speaker 4:The main issue that they've had is with Sanford, because their business model was similar to the round one USA model of finding all of these empty retail stores from closed Mervyn's and Dillard's and other giant facilities that could have a hundred thousand square feet or something close to that, and converting them into entertainment, competitive social venues. And with the Sanford location, which was their flagship first to launch a few years ago, the main challenge is that it did not save the mall, that it was attached to the mall itself ended up closing operations and so the facility itself has still been open. But I saw a post from the CEO of Elevate recently where they're taking the concept and turning it almost into this kind of retail slash business district where they're going to be building hotels and apartments and office complexes and all sorts of things to try and revitalize the whole area and hoping that the Elevate is kind of that anchor to it. But one has to wonder, given that it was an anchor to this mall and it didn't save the mall. So I'm curious to see where that goes. I don't believe that the other two locations have had quite the same issues going there.
Speaker 4:But I do know another thing kind of backtracking a little bit as to what I was saying about Dave and Buster's was training was a problem, and that was one place where I saw a lot of customer complaints and it's like you know, if you guys trained people it would avoid a lot of these issues there. But you had also said earlier, kevin, that you know, just because you throw money at something doesn't make it an instant success. So far that seems to be the struggle, and I guess this is a good case for an up-and-coming company that is getting a lot of money, and it's like what sort of pitfalls can you avoid? And I guess another thing I should also add here that maybe we should have been more clear about at the beginning was we're not dogging on these places, wanting to see them fail. We want to see them succeed. We want to see them succeed, but we do need to recognize, you know, you need to be able to call out certain problems and hopefully that the people in charge recognize those things and get them corrected, because it does affect the entire industry.
Speaker 4:Whenever a big chain closes, that it kind of poisons the well, so to speak, and then everybody starts talking about oh well, then, so all these places are on the out and whatnot, and we're trying to say, no, that's not the case, that there's actually a lot of other problems that are going on internally with these places that have nothing to do with the industry as a whole, as there are others that we haven't mentioned here which are doing just fine, like Round 1 USA. As far as I know, they're not in any sort of dire straits.
Speaker 3:They're looking at continuing expansion and such, and there are others out there Elevate and Andretti's and all the other chains out there that are seeing success. And thank you for reiterating the point, adam, that we're not here just to criticize these people. We're here to observe that there are issues, because part of the reality of life is admitting that there are issues, rather than living in a bubble of everything is fantastic rainbows and unicorns and then suddenly you're declaring bankruptcy yeah, and that puts everybody in a panic mode. Oh, wow, they've been hiding stuff. And also that means that everybody must be hiding stuff and in trouble.
Speaker 3:Entertainment has been called by some investors the trouble son of the entertainment sector, which it is not.
Speaker 3:There are companies in the entertainment sector seeing great success.
Speaker 3:It is just that some companies and to go back to our friends at Elevate is that, even though they have deep pockets and the ability to move fast and break things, that process can cause fundamental elements to be broken and for the guest experience to suffer and they may not get off the launch pad. You know this money is. You know, when you've only got three operational facilities, you're still in a very early stage of development of your concept. Come back to me when you've got 10, three operational facilities, you're still in a very early stage of development of your concept. Come back to me when you've got 10 facilities across the country and then you've got an established brand and you know if you've been in an Elevate facility there wasn't enough USP in their current lines to distinguish them from standing inside an Evo facility or a main event facility or you know one of the other sites that are out there. And these are the kind of things that if you don't understand your market you may trip at this very dangerous stage of your development.
Speaker 2:Yeah, and you know, just to look at some numbers they are typically their typical facilities are one hundred and 125,000 square feet. Their attraction mix is not differentiated from all of the brands you just mentioned, including Andretti. In fact, their attraction mix is probably most closely aligned with an Andretti carding, which also happens to exist in Orlando, for example, and some of these other markets. And so when people are making a decision to go to an Andretti or an Elevate, what are they making that decision on? And Andrettis are typically around 80,000 square feet, so they also have less square footage to have to worry about from a financing standpoint or from an overall cost of sale standpoint. And so this is one of the issues I think that Elevate is going to have, and I think they're beginning to see that already They've got all of this space in 125,000 square feet and then they're coming out. They've barely opened three locations They've announced that they're going to be opening up in Miami and Jacksonville.
Speaker 2:Those are the other two coming soon locations and they are already I don't want to call it a pivot, but already adding in this Elevate Eats component, which is their food hall, that they're trying to add in again to try to fill in this space that they have acquired for these things, because otherwise An unproven concept Already.
Speaker 2:Elevate Fun is an unproven concept, and then to come in and add an Elevate Eats also on top of that, to now try to manage a food hall alongside an entertainment facility, I think is really beginning to stretch. We'll begin to stretch them thin and again I'll reiterate too that we are, we're bringing up these, these things, uh One, because we want to see the industry as a whole succeed, and but we need to also be very real about the issues that some of these individual brands are facing or we believe will face. But also as a cautionary tale for those who maybe own and operate one or two locations in their particular area, and these are things that just if Elevate Fund is going to deal with some of these issues, or Chuck E Cheese or Pinstripes, these are issues that you may have to think about and be very open and willing to confront inside of your own operation, even if you're just running a single location.
Speaker 3:No man is an island. We are all part of an international industry and if we do not keep an eye on what the Joneses are doing, if we do not ensure that we keep relevant, then we will all fall together rather than the hope is of seeing us all rise. Some notable mentions of companies that are in interesting positions and having to make some hard decisions. One of those, of course, is our friends at Immersive Gamebox. They claim over 100 facilities either operated or franchised. Some of those are actually installations of their immersive Gamebox installations within other people's properties, such as their partnership with Gravity Max in London. But they have gone through quite a troubled situation. They had to take on major investments and were near enough acquired by an investment fund to reposition the company, change the C-suite management and move forward is one that depends very heavily on its properties that are licensed IP, their relationship with Netflix, their relationship with some of the other movie brands, as well as having some of the children's brands, such as Paw Patrol as content that is available.
Speaker 3:And they're a company now that's trying to define themselves in a market that is trying to understand where XR you know, augmented and mixed reality entertainment fits into the general entertainment locale. The next one, of course, is Sandbox VR, working very hard to achieve their 200 facility rollout. Very strong partnerships with franchise Now they're focused more on a franchise model than a self-operation model as well as their relationships with IP holders. They have established a very strong relationship with Netflix, which will be expanded with the opening of the Netflix house and their involvement. And then, at the end of this kind of rundown of the XR, notable mentions is we have Dreamscape, which was the poster boy to virtual reality, been holding on by its fingernails. It received vast amounts of investment, equal in some cases to what Sandbox and the Void received. It has now fallen down to only two facilities still open, while trying to pivot into edutainment.
Speaker 4:That makes me wonder what happened to Hologate.
Speaker 3:I know they didn't have facilities necessarily if we, if we listed all of the vr and xr products that are um in the interesting, notable stage, we'd be here for a lot longer. Let's aim by ialpa time in our post-mortem at ialpa. Let's list the companies that don't exhibit at ialpa.
Speaker 2:Yeah, I think really what some of these are struggling with is that there are, or at least tend to be Immersive Gamebox being maybe an exception here, because they have dropped in some of their actual cubes.
Speaker 2:We'll call them into other facilities as well as operating their own facilities, but these really fall into that same bucket that we've talked about, even with social entertainment, which is the single attraction model.
Speaker 2:The difference here is that it's single attraction, and while immersive game box is at least somewhat collaborative and has that social component, sandbox VR does have a social component, but you've got something strapped to your face and it is still disconnected in a way that just doesn't work the same way from a social entertainment standpoint that others do, and they don't have a good F and B component to them either.
Speaker 2:So you come in, you maybe get a drink from a drink bot and that's it and sandbox VR, and so they don't have the full social entertainment model. So people are coming in only for the entertainment, and unless somebody is really into VR for example with sandbox VR they're not going to repeat visitation, is going to struggle, necessarily need to play it again, even if it's a different game, and so this is where the independent individual locations are really going to struggle if they continue to be independent on their own, which is why we've seen Sandbox VR try to partner with Atoka Social in the UK Again, weird mix, but this is at least their attempt at realizing that they cannot continue to run and operate this type of model independently.
Speaker 3:Either these operations need to partner with an existing entertainment facility or partner with a destination that requires a mix of entertainment and has a dedicated audience. So our friends in Dreamscape, their pivot to a re-add facility has proven a success because they partnered with a mall operation, Again, their Geneva facility, which is one of the earliest sites that's still operational. I have never really found the special source or the key reason why they have survived, where the LA facilities and all of the others failed. And remember Dreamscape had a relationship with AMC, the cinema chain, so you would have assumed that they would have been able to have pivoted into the entertainment sector, which they haven't done. Sandbox seems to be pivoting in that direction and I wouldn't be surprised if Immersive Gamebox is pivoting in there. And that kind of leads me to the how do you turn your super tanker kind of approach.
Speaker 3:You know how do you address these problems away from the. You know the, the machinations of the fighting in the c suites and the changing of the guard. You know there are major situations happening. We've touched upon uh calloway now divesting themselves of the door and you know having the knife of Bronte pushed in their backs as they were helped out of the door and just to give an idea to our audience of the wider implications, in the fast food sector, we are seeing the divesting of operations. They're cutting the dead wood.
Speaker 3:So you know, an operation as large as SPB Hospitalities has now decided to just cut loose 60 venues of its old Chicago pizza pub chain Funny enough, a pub chain that was just about to start experimenting with social entertainment components. This is really where we are now, where it isn't a time for experimentation, it's a time for definite hard activities and we're in a market that offers a lot of opportunities. That's really what I would like to conclude with this part of our session. We have an exploding market. It is broken down into key areas of success and we need to build on those, and I would appreciate your comments on the areas of growth that we're seeing in this market.
Speaker 2:Yeah, I mean I was going to give Adam a chance he had unmuted so I was like, oh, I don't know I'm going to jump in Go for it, but I mean, obviously, the LBE market is the location-based entertainment market is still continuing to explode.
Speaker 2:I mean, this is why, on a regular basis, every single week, we have openings and closings, but more like, significantly more openings than we can even talk about.
Speaker 2:So we're seeing openings globally, not just here in the US market, but globally on a consistent, continual basis, and we're seeing chains successful as well. So you know, again, I think we're not trying to paint some doom and gloom picture at all. What we're trying to do is say, hey, there are some real challenges and real issues that some of these large chains have, you know, are dealing with and if they had experience that we can learn from and hopefully that they learn from to help elevate the entire industry. And so there are significant opportunities, especially in social entertainment. We're seeing lots of experimentation there. I think we're going to see some fallout from that as well. So we're going to see issues with again the same single attraction model issues that some of these, like Flight Club and Electric electric shuffle and others, are going to run into. But they will evolve and I think that we will continue to see some improvements in the overall location-based entertainment market.
Speaker 4:Yeah, I guess part of my hesitation was I, as I did have a negative thought is that I the danger I still see amongst all this is just the market saturation is the thing that I worry about, like that's what I'm seeing here locally, like right now, here I'm in Salt Lake city, utah, for those who don't know, and there's quite a few FECs and there's a brand new one. There's a chain of movie theaters known as Megaplex that's owned by the company who used to be the company that also owned the Utah Jazz, and they own a bunch of other stuff. But they've just started their own big game room concept. They've built out one of their bigger theaters and put in something kind of like a Dave Buster's type game room in there. And for me, where I operate an arcade, it's like I'm one of the few people left that's just a small arcade guy and I'm not part of a big chain or anything. But as I'm looking at future options and I was expanding into FEC, it's like wow, there's quite a lot of competition. But I think that gets to your point of what can be done to continue market growth and I think that I guess Chuck E Cheese's is the one to look at. What innovative ideas can these chains do to differentiate themselves?
Speaker 4:Like we mentioned, we mentioned elevate. The problem is is you don't know if you were, if we had the star trek transporter, just beam you straight into the middle of the room. Would you know that you're in a different facility from another one? I know it's like there has to be ways to for every company to distinguish themselves and, as I've run my arcade for the past 17 years, that's what I've always tried to do. Is you know what? What am I doing? That's different from my competitors. And it's like I don't necessarily want to be a monopoly because to me, in this industry, we we do need each other. As you mentioned, kevin, no man's an island and it's like the more facilities that are out there, the more products there are, the more people that are employed, the more that everybody can, better, that everybody can do.
Speaker 4:But at the same time, I still need to differentiate myself.
Speaker 4:I try, I have to put myself in the shoes of the consumer and we can't forget that in this industry is like when you're going if you want to go out and have fun and entertainment with your family, what would be something that's positively memorable for you, what would you, what do you want to experience that you take away a good thing from, as opposed to wanting to leave a one-star review, and so I think that's what the entire industry needs to maybe constantly be re-evaluating.
Speaker 4:And also, when it comes to things as mentioned, training, I think a lot more facilities needs to focus on that, because if you're a CEO or you're the C-suite of the company, chances are you're probably not coming across your customers too often. It's your employees that are going to be doing that, and so how are you training them so that they're providing that fantastic customer experience that is also aligning with your vision of innovation and your vision of entertainment as well? And so, yeah, there's definitely plenty of opportunities there. I guess the question is are those in the C-suite realm open to those things to be able to take advantage of them and move the ball forward?
Speaker 3:We're looking at an industry that has a proven formula. This is a very successful industry that has decades of operation. We have been entertaining guests for a very long time and we can trace back a rich history from our carnival and theme park and attractions backgrounds towards what we offer in the location-based entertainment sector. But that proven model, that proven business plan, is dependent on, as Adam has touched upon, well-trained staff that can interact with our guests and, as Brandon has touched upon, that also requires a level of business fortitude and acumen that you can drive the growth of your business.
Speaker 3:And we are at a point now, as you said, of saturation. You know bubbles can expand for only so long and my concern and I am using, as I've said in many of our sound offs and open and shut I am using Texas, the state of Texas, as a barometer, because I have never seen so many entertainment facilities open within the last 24 months in one state than that we've seen in Texas. We have seen competitive, socializing, fecs, location-based entertainment, active entertainment facilities, we have seen all of the gambit and some escape rooms and mission rooms, and the issue is, when the bubble contracts, we will then start to see certain types of operations either merge or move off or have to change their business, and it is now how they change their business model to suit the changing economic and audience landscape. That will help all of us grow and protect ourselves for our future.
Speaker 4:Awesome.
Speaker 2:Well, I think that is a good place to end for our special edition guest gab and we hope everybody enjoyed it. And, you know, looking forward to seeing you guys on. It'll either be IAPA or it'll be another one of these where we have to hop on and talk about it. So looking forward to seeing you guys on. It'll either be iapa or it'll be another one of these where we have to hop on and talk about a topic.
Speaker 1:So looking forward to it if you run a location-based entertainment brand and want to attract more visitors, check out radius. They use real-time location data and customized marketing strategies to help brands like yours stand out. Radius can boost your foot traffic and build a loyal customer base. Plus, they're offering a complimentary local market analysis to show you exactly how they can help you grow Curious, visit Radiusco and ask about your free market analysis. That's R-A-Y-D-I-U-S dot C-O.
Speaker 2:All right. Well, that wraps up our different edition of the LBX show this week. So stay tuned for SoundOff number 84 with Kevin Williams on Tuesday. This is coming up on Tuesday, the August 5th, so I was going to say the 29th, but that would be in, that would be behind. So August 5th is the next sound off with Kevin Williams, number 85, excuse me, not 84. I'm getting it all wrong here. But anyway, this is Brandon Wiley signing off. Stay tuned and keep kicking ass.
