Franchise QB

Episode 98: Curt Skallerup- Founder and CEO, Larks Entertainment

• Mike Halpern • Season 1 • Episode 98

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In this episode of the Franchise QB Podcast, host Mike Halpern speaks with Curt Skallerup, founder and CEO of Larks Entertainment, about his journey from Corporate America to entrepreneurship. 

Curt shares insights on scaling franchises, the importance of volume in business, and building a strong internal culture. He discusses the innovative modular franchising model of Larks Entertainment, which allows for flexibility in investment and offerings. 

Curt also reflects on his previous success with Altitude Trampoline Park and the lessons learned that contributed to his approach with Larks. Additionally, he hints at his upcoming book, which aims to simplify the business landscape for aspiring entrepreneurs.

Takeaways

Curt Skallerup transitioned from Corporate America to entrepreneurship to fulfill his desire to lead.
Altitude Trampoline Park grew to 100 locations by focusing on customer volume and franchisee relationships.
Curt's daughter plays a key role as COO in Larks Entertainment, leveraging their experience in the industry.
Larks Entertainment aims to create a modular franchise model to accommodate varying investment levels.
Volume is prioritized over margin in franchise operations for maximizing profitability.
A strong internal culture is essential for franchise success, with a focus on relationships and communication.
Franchising in a box provides comprehensive support to franchise owners from the start.
Modular franchising allows for flexibility in offerings based on regional preferences and financial capabilities.
Curt's previous experience with Altitude helped shape the structure for a successful private equity exit.
Curt's upcoming book emphasizes that business is more about math than complexity, aiming to simplify the entrepreneurial journey.

https://larksentertainment.com/

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Mike Halpern, CAFC
mike@franchiseqb.com

This is the Franchise QB Podcast, where we empower entrepreneurs to win big in franchising. We huddle up weekly to educate our audience about the most successful small business model ever created. Franchise it! Welcome to the Franchise QB podcast. I'm your host, Mike Halpern, a 20 year industry veteran and entrepreneur. My mission is for listeners to achieve their American dreams of creating wealth and independence through franchise ownership. Every week we speak with franchisees, franchisors or vendors that support the industry. Thank you for joining us and let's get started. Joining us in the huddle today is Curt Skallerup, founder and CEO of Lark's Entertainment. Welcome to the show, Curt. Thank you, Mike. I appreciate it. Thanks for your time. It is great having you here. So I'm going to talk a little bit about your background. Back in the 80s, you graduated from college and jumped right into corporate America with a large company called Ryder Systems, which is an American transportation and logistics company specializing in truck rental and leasing. Everyone's kind of seen the trucks out on the road. fleet management, supply chain management, and transportation management. After 30 years, various roles at Ryder, you founded Altitude Trampoline Park in South Lake, Texas in the Dallas area back in 2012. Fast forward to today, 13 years later, there are 100 parks on three continents. A huge success story. You exited Altitude and founded Lark's Entertainment, the franchise concept we're going to discuss today. Curt, take us back 15 years and why you decided to leave corporate America to start Altitude. I appreciate it, Mike. Yeah, the main reason that I went or left was is that although I was an officer at Ryder for the last uh X amount of years, I didn't uh at the pedigree become the CEO and wanted to be a CEO and a leader. and all those kind of, and it's hard to recognize when you all, when we think we're so good at everything. But the humble part about it is, is you recognize what you have and what you don't have. Ryger was an absolute fantastic learning place for me. It was a great 30 years. I mean, it literally was not many people get to retire from there and I had the opportunity and I actually left there to go run another company that I prior to Altitude, but I ran a company for a couple of years and did that. turn them around and sold them and then started altitude. Yeah, I interview a lot of people, very few have 30 years with the company. So what was the kind of moment where you said, all right, you know, I've retired with Ryder, I'm going to go start this trampoline park. I mean, that's a pretty big leap. So what was the kind of impetus there? It was actually a big leap. It was a neighbor that came up and his son had come up with, because I loved corporate life and all the nonsense that comes with it. It was great. It was a great fit. I call it a marriage. uh And my neighbor came up and said that he had been with a, had gone to a trampoline park in St. Louis and we should open one up. And, you know, we knew each other from drinking beer and having a beer every once in a while. Didn't know him real well and certainly had no interest in it. And a year later I said, hey, you know, we'll look into it. A year went by. And he gave me some statistics, you know, there was only 20 open at the time and of course it blew up to a thousand and and finally we opened our first one up probably two years after the first time we had it and and And then we're gonna be we were gonna be a franchisee to somebody and the guy wasn't I Didn't feel that the guy was very interested in really growing his business. So we started off. That's cool Yeah, my kids are now, I have a senior in high school and I have a freshman in college. But when they were that age, like back in 2012, the trampoline parks were huge. They, I mean, they were just kind of forming in the DC area where I live. And just the growth has been crazy over the last decade or so. So a question for you, Curt, know, altitude, for example, costs $1.6 to $2.9 million per location. I know it varies with if you own the real estate and how big the footprint is. I know that's not an easy business to scale and you got it to 100 units. So in your view, what is the key to scaling a franchise? What was funny was is being able to show really EBITDA cash to the future franchisees. And generally when we would open a store, this is silly math, but pretty accurate. If you open a store, you'd get 20,000 to 30,000 customers who go in. They walk in, they say, this looks easy. We would play it down how easy it was and be friendly. And they'd be like, if he can do it, I can do it. And that was very much of our model. one of the things that in thinking about having the discussion today, I'm kind of a 24-7 guy that they'd call me at midnight, I'd pick up. If they called me at six in the morning, I'd pick up. So we really developed a relationship and trust and... uh At the end of the day, as you know, we had to get fairly wealthy people. We put a SBA arm to our, we'll talk about it later, but we put kind of a financial arm, an SBA arm into our company and we did all the accounting for many of our facilities and we would underwrite people and we quickly knew whether or not they could qualify. And we also knew that if they had half a million dollars, we could scale them into probably $1.5 million in an SBA loan. and literally had pockets. you had $300,000, we could put you in a 30,000 square foot if you had this. And we literally had some algorithms that went to it. Yeah. Well, I want to talk a little bit later about your private equity exit, but I do want to learn, like, so you did it, right? You had this great company, and then you're doing it again with Lark's, which is the subject brand we're talking about today. um Why did you decide to do it again? ah I think part of it is I was fortunate. My daughter is our COO. She did either have great stories about working with her kids or bad stories. Mine's a good story. She's opened up facilities all over the globe. We thought that we really understood from not going in 2012, not knowing nothing, to really understanding a lot about the business. My goal was and where I thought we were deficient in the trampoline world is that I, and it goes to your point on the last question. So many people would come up and say, I want to do this and they couldn't afford it. They'd get all excited about being able to make half a million dollars or whatever the case might be. And they just didn't have the cash to do that. So my goal was to create a concept that was modular, which is down the road here, that you could open up one that was 10,000, 20,000. You could get one in a tertiary market. It didn't have to be in Dallas or Fort Worth. So if you had $250,000, we could open one without a kitchen. If you had $500,000, we open one. So literally, depending on your income, we could get you in the store. Well, that's really cool. I like that idea. So for any listeners, obviously, Lark's is relatively new to market. Last couple of years, you're going to get into how many units you have in the footprint. For anyone that's not been there, what's the quick overview of the brand itself? The brand is basically, and it's horrible to give a plug to another brand, but I'm gonna, uh it's a Mini Dave and Busters. And in the one we've got a new store opening in Pullman, Washington, it's gonna have miniature golf, it's gonna have uh shuffleboard, it's gonna have uh something called home run dugout, which is a new, um involved type of batting cage, not your old, it comes out of the floor, it's quite new. They won the brass ring at IAPA last year. And another thing called Big Hoops, which is a very engaging basketball thing. So you go there and you've got all these different sports things to be interactive with versus just watching. Yeah. There'll be lots of TVs and all that. So the first one was launched near your backyard in Dallas, correct? Correct. Okay. And when did you open that location? We opened that back in May of... 2024. awesome. So I know you talk a lot about volume and you have to generate a tremendous amount of volume for these businesses to tick, right? These are large facilities, a lot of people, a lot of costs. So why is volume so important and what role does it play in your view? I'll try to be quick on this, Mike, but the volume, I believe in a concept that many don't believe. is that I'd rather have 10 % of $100 million than 50 % of a million. And people always fight for margin. as you know, know, margin's very high up on a P &L, and not to get technical, but, you know, we're more interested in, get all the cost and what's even in what is cash. And one of the things that you do with a high fixed low variable type of business, which many franchises are, again, restaurants are harder because of cogs and all that kind of stuff. But you're exponentially driven through profit. if I get 100,000 or if I get 100 people through there, or my first thousand people in the door, I'll make 20 % margin because I'm basically covering my cost at $15 per person or something like that. My next thousand people, I'm going to make 40 % on my people. God forbid if I get to 3,000. Or three million dollars. I'm making 70 cents on the dollar So you break that up monthly and you know if I get to 180 thousand dollars a month I'm dropping 70 cents on every dollar down to the bottom which is gonna allow you to make to make a great return Yeah, so I run corporate our corporate offices like that. Yep Yeah, so it seems like you have to have the right mousetrap You have to have this entertainment venue that's just so compelling and sticky that people are gonna come out of the woodwork and be consistent to drive that volume. seems like you continue to find brands or create brands that kind of check that box. So let's talk a little bit about something I know is really important to you, which is the internal culture. And I know you have multiple brands. You exited with Altitude. You have something called Altitude H2O. You have Larks. You have something you just launched called Do The Beach. Talk to us a little bit about culture and what that means for you. Yeah, think culture is basically a we all, everybody and everybody even though you might be a finance person or an operations person or a safety person or training person, everybody in our organization is a salesperson. Every minute of every day, you don't get a chance to be crabby. Many franchisees, Mike, as you probably know, they'll have young people calling people back to be able to become a franchisee, and they're asking what's your net worth. We're quite different than that. If somebody asks me what my net worth is on the first phone call, I'm going to be pretty put off. I want to get to know somebody and maybe two, three phone calls down the road. Say, hey, you know what? To do this, this is what we're going to do. So we're going to engage and we're going to get to know the people very well. And I would tell you of the 100 plus stores that we had at Altitude trampoline park, there's probably 90 % that either I keep in contact with today, but we become a relationship. I don't subscribe to the fact I call everybody twice a year, everybody during the holidays. everybody on their birthdays with the list and it allows the partner to be able to say, hey, things are great. And hopefully they say, by the way, you really stink at this. That's how we learn. And it also lets a little steam out of the kettle. We're always annoyed about something. And if we're there to take it in the chin, think it creates a good environment that we don't know everything. Yeah. And also, you know, the franchise owner doesn't know what you're thinking as corporate. You don't know what they're thinking. So that communication can really solve a lot of problems before they boil over. um You just mentioned something that differentiates you in terms of your culture and the way you approach your candidates, as well as the owners that have been accepted into your system. What else makes your franchise system different than... I think the fact that our core, I mean, if you go in any of our meetings, the number one thing is that we are all about store count. What we care most about is that when we start a brand or we help a person do a brand, I'm not interested in open three stores. As you well know, Mike, you've been in the industry a long time, is that you can make money at 10, 20 facilities and you also know that only 3 % of the people get over 50 stores and very few get to McDonald's and Planet Fitness. But if you get over 50 to 75 to 100, to your point, five guys, 50, I mean, that's a lot of, but that's a small, small percentage. And our goal is that there isn't one person that we have come through our desk or that comes through our call that's qualified that I don't call personally. within the first week or two weeks of them being built through the process. To me, it shows that I, as the CEO, is very, very involved and that I want to get to know them and I'm not hiding behind a wall. And secondly to that, I'll quiet down, but secondly is the CEO should be the worst job in the company oh because we're the ones that should be taking the punches, our, don't hide from things. I want to lean in and I want to get to know people. I don't want to be surprised. I want bad news early, you all those old cliché things. I got you. So, yeah, so, you know, these are really massive projects like ever since you got into franchising, you're taking on these big construction projects with lots of equipment and lots of moving parts. um I'm sure a lot of people that come to you, yes, they get excited about the volume and the margins, but they want to make sure that their hand is being held and that they're kind of joining the right company. So how do you describe your franchising in a box? Franchising a box is really, really critical to some of the questions you asked a minute ago. Is franchising a box in the first week that we call somebody, we have construction on the call, we have real estate on the call, we have finance on the call, and we have operations on the call, and we'll give them some type of marketing spin. So these people are, the goal is, Mike, is to get them integrated into our system and quickly into real estate. If somebody's hooked into real estate and they think we're helping them, All of a sudden they feel obligated to do business with us. And if we're saying, look, Bob will come help you find five sites in San Diego, and we're spending time, many franchises, know, charge for that fee. We don't charge for that fee. We go out and we use through AI, we use a great demographic study. We'll give them something within a zip code, tell them what the demographics might be. And all of a sudden they're like, you know what? I'm getting a lot of value from these guys early. We think we'll stick around. So we don't want them. as you know, a lot of times my best franchisee's cousin might be the real estate guy or, you know, some of that happens, but we prefer to give them the kit. Everything they need, we're going to give them. Yeah. And I like the flexibility that you referenced before with what you call modular franchising, where you're not just like, it's this way. If you don't have this, we're passing on the site. We're passing on the franchisee. Tell me like why you kind of implemented modular franchising into Larks? It goes back to, again, something we talked a little bit ago. It goes to cost and it goes to regionalization or region areas. Some people may not like, I'm kidding, but some people may not like water, so you can't put something water in there. Some people may not like Miniature golf or they don't like it or they may not like shuffleboard. It doesn't fit in the Northeast or the Southwest or the Northeast or Northwest. uh So we give them a plethora of options that we have in our portfolio and we'll say, hey, these are things we're looking for and what can you afford? And then we'll balance that and tie into what we think and maximize the revenue to give them an opportunity to make money. And it's fun, it gets them engaged. No, I think it's smart to look at it from the standpoint of the capitalization of the franchise partner as well as the... culture of the market because like you said, it's a big country and there's a lot of different places where some things work, some things don't work. And there's some things that always work right across the board. Exactly. So Curt, tell us a little bit about how you structure your companies to achieve the private equity exit just like you had previously with Altitude. Well, one of the things that we did was once we put on the accelerator and had growth, uh foundationally, we make a very We make it easy at a very simple P &L. We keep our AR to a minimum via ACH. so I had signed franchise agreements for 118 additional facilities in towns. So we looked like we were bigger. We didn't look like we were bigger, but we had all this growth and we had another 62 additional leads that we were working on to grow. So when they bought us, we were a hundred and some units, but we could have been 300. Yeah, I got you. So there was that kind of pipeline of business that kind of made it really attractive because not only have all these humming away, but you have another 20, 30 % that are kind of in the hopper. So tell us a little bit about the back office of your franchise system, kind of the backbone of helping franchise owners because these are big projects and they're going to need a lot of support. What's the back office look like? Well, we would, we break it off very simply in project management group that would literally we had four or five people that would help and be on weekly calls with all of our stores in opening. the last year in 2018, specific with Altitude and with Larks, is we opened 38 facilities in one year on a very complicated basis with multiple construction, but we had all these project management groups that would deal with each franchisee, and then they had people working for them. We had our operations group that had worked for Courtney. and they would have, I don't 8 or 10 people working for them. Another 15 trainers that would come out of the stores. We had our financial group that basically had a, not only our financial guys, but we had, I don't know, I think it was 11 accountants that we did all of the accounting for a lot of our stores, which by the way, we charged for, but it also gave the franchisee a lot of wind. We'd give them quarterly reports saying, hey, by the way, your overheads are too high. payroll is too high, this looks funky. And then they'd explain it to us, they'd say, this is why. But in an able to try to help the franchisees succeed, it really helped. We did K1s, we did all the rest of that. And through all those things, we would actually make more money as a installment. So if we were $3 million store, 7%, we'd make $150,000. If you added services on, we might make $200, $210,000 per store, which is a high. a high intake per store we open. Yeah. And obviously the units can support it, which is why it made sense. So what do you focus on now, Curt, as the CEO? VLARCs is, tell us a little bit about the footprint. How many are open? How many are coming soon? And what's your vision look like for the brand? We have three stores open, finally. The one in Dallas, we have the one in Cleveland, and we have one in Kansas City. And we have a new project opening in Pullman that's in construction right now. We have uh one looking for uh in Tulsa, and uh four or five other miscellaneous projects. Now that these stores have been open a year, we're able to give them good financial data, which gives people a lot uh of uh comfort. And as you know, Mike, being in the franchise, we have a lot of people just waiting to be able to get to where we are now. And we've got a pipeline of probably 30 or 40 people waiting to make sure, what do they want to do on the modular franchising basis? Now, it seems exciting. It's like people want to see that item 19 proof of concept, and they want to talk to the owners and see these are all heavy hitters that are putting a lot of capital and kind of force behind it. And then all of a sudden it gets exponential. I you saw that with the altitude concept. And Mike, not to interrupt you, but one more thing was the We opened one up in Northport on Saturday and it literally had 3,000 customers through the door. Much easier concept, not a big kitchen, but again, all kid flow through. Yeah, I saw a picture that looks amazing. How many square feet is that? mean, it looks like... About 22, 21 and a half, 22,000? Gotcha. But I guess you're used to those big footprints. Yeah. Also, Curt, you have authored a book that's going to be published soon. Can you tell us anything about the book or is it all top secret? No. Yeah, we're pretty open, come on. The book is complete and it's basically one of the, it may have a more aggressive name by the time it leaves the publisher, but it's basically uh called volume, the pathway to profit. And everything that I do has a lot of volume to it. I just believe I'd rather get it back more than not. even down to the sales process. But real quickly, the book is about that business is much easier than we think it is. It's more math than it is calculus, and everybody wants to make it. We've all sat on boards and being with big companies, and we all want to make ourselves look more important. At the end of the day, business is about math. It's much easier, and it's a lot more fun if you're doing your thing. we just want to create this culture. I've just been part of too many organizations that I call it the suit and tie. I was the suit and tie guy for 30 years and loved it. But this doesn't have to be done with screaming at each other. And it can be much more down to the street. So I think it'll be a good book and hopefully it'll be out in the next three or four months. Well, congratulations on almost getting the book published. I will pick up a copy once it's published. and I'll post the link to Amazon. this has been great. Anything else you want to add to the mix before we wrap up today? No, Mike, really appreciate it. It's nice talking to people that have a lot of franchise experience. I've done quite a few of these that might be more food and all that kind of thing. So uh it's great to talk to somebody who's got very more specific questions. So I appreciate you reaching out and appreciate me having me on. Yeah, thanks for the compliment. And if anyone listening would like to connect with Curt. and his team to learn more about becoming a Lark's franchise owner, contact me at FranchiseQB.com or on X @QBFranchise QB. I'll get you connected. Thank you so much, Curt, for taking your time to get in the huddle with us today. Thanks, Mike. Appreciate your time. got it. Thank you for listening to the Franchise QB podcast where you're at the helm of your future as a franchise owner. If you enjoyed the content, please rate the show and recommend it to anyone that might be interested in franchising. Make sure to visit FranchiseQB.com to subscribe to my newsletter and for an actionable playbook to go from walk-on to legend in your new business. Follow us on Twitter @QBFranchiseQB and join us every week for a new episode. See you next time. Visit franchiseQB.com to take the next step of your journey towards wealth, independence, and franchise ownership. And remember, when working for the man gets old, you must do something bold. Thank you for listening.