History profit of miniature golf business, go kart track, game room arcade profits

<BODY> <P ALIGN=LEFT> <B><I><FONT SIZE="6"><FONT COLOR="BLACK">REC Enterprises Development </FONT></FONT></I></B><FONT SIZE="6"><B><I><FONT COLOR="BLACK">History</FONT></I></B></FONT><B><I><FONT SIZE="6"><FONT COLOR="BLACK"> And </FONT></FONT></I></B><FONT SIZE="6"><B><I><FONT COLOR="BLACK">Profits</FONT></I></B></FONT></P> <P ALIGN=CENTER> <FONT FACE="Times New Roman,Times,New York"><FONT SIZE="4"><B><I><FONT COLOR="BLACK">FAMILY</FONT></I></B></FONT><FONT SIZE="5"><B><I><FONT COLOR="BLACK"> </FONT></I></B></FONT><FONT SIZE="4"><B><I><FONT COLOR="BLACK">ENTERTAINMENT</FONT></I></B></FO NT></FONT><FONT SIZE="5"><B><I><FONT COLOR="BLACK">CENTERS...</FONT></I></B></FONT><BR> <FONT SIZE="5"><B><I><FONT COLOR="BLACK">...</FONT></I></B></FONT><FONT SIZE="4"><B><I><FONT COLOR="BLACK">A</FONT></I></B></FONT><FONT SIZE="5"><B><I><FONT COLOR="BLACK"> </FONT></I></B></FONT><FONT SIZE="4"><B><I><FONT COLOR="BLACK">WIN-WIN PROPOSITION</FONT></I></B></FONT><FONT SIZE="5"><B><I><FONT COLOR="BLACK"> </FONT></I></B></FONT><FONT SIZE="4"><B><I><FONT COLOR="BLACK">FOR</FONT></I></B></FONT><FONT SIZE="5"><B><I><FONT COLOR="BLACK"> </FONT></I></B></FONT><FONT SIZE="4"><B><I>< FONT COLOR="BLACK">OWNERS.</FONT></I></B></FONT></P> <P ALIGN=CENTER> <IMG SRC="images/gallery/dotbwf2.jpg" WIDTH="430" HEIGHT="209" VSPACE="0" HSPACE="0" ALT="amusement business miniature golf profits.jpeg" BORDER="0" LOOP="0"></P> <P ALIGN=LEFT> <FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3"><B>Inland Family Fun Centers Spring Fr</B></FONT></FONT><B><FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3">om Stand-Alone Activities.</FONT></FONT></B><BR> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">In the early 1980's, many miniature golf business owners and savvy investors began to realize the potential for family fun center profits including miniature golf course profits, go kart track profits, and arcade profit by combining traditional recreational actives. Initially, miniature golf and arcades were combined to form the basis of the modern family entertainment center business. Later, go-karts, bumper boats, batting cages, lazer tag, increased food service capabilities, and even bungee towers found their way into this new profit center. The big three that form the core of the modern family fun center business are: miniature golf, arcades, and go-karts.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">FEC investment has allowed owners and amusement business investors to enjoy substantial profits while building increased equity, appreciation, and tax benefit. Successful FEC's are operated in cities with populations as small as 50,000. Profitable fun centers also exist in smaller towns with adequate greater trade areas. Tourist locations, especially those with year round temperate climates, have been extremely profitable. Ownership increased dramatically with the onset of the 1990's in the US and abroad. Fun centers are growing in popularity as the first choice for family entertainment.</FONT></FONT></P> <P ALIGN=LEFT> <FONT FACE="Arial Black,Arial,Helvetica"><FONT SIZE="3"><B>Mountain-Waterfall nature theme courses Move Inland, anchor modern FEC's</B></FONT></FONT><BR> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Miniature golf has evolved into the popular mountain waterfall/nature theme that remains king of competition today. Previously, these courses were thought to be profitable in tourist markets only. This exotic theme began to make its way into large inland cities shortly after owners of traditional courses began combining arcades with miniature golf business. Functioning stand alone, these new courses swiftly overcame existing competition and seized established markets. Smart owners of traditional courses began to research their options for liquidation and future development. Local businessmen amusement business owners and entrepreneurs quickly took notice of the new miniature golf course business with their long customer lines and high visibility drawing power.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">As time passed, upscale course developers also recognized the potential for collective entertainment. Some of the new courses previously built lacked room for construction of other attractions. Some of these locations were sold and profits reinvested in new sites with adequate land area. In 1991 I began design and built my first facilty that would include a go-kart track, miniature golf, and arcade. I was amazed by the level of business generated.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Can one still operate a stand alone miniature golf facility profitably? Certainly, if you have appropriate location, room for future expansion, and the best product. In fact, initial stand alone construction is more advantageous for some situations. Miniature golf has wide appeal coming from all age groups and is likely to remain the dominate attraction in the somewhat distant future.</FONT></FONT></P> <P ALIGN=LEFT> <FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3"><B>Arcade video games an essential part of FEC operation</B></FONT></FONT><BR> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Game rooms have become commonplace in most entertainment facilities. Through consignment, operators no longer need concern themselves with the high cost of game maintenance, rotation, and other negatives that come with game ownership. These little profit centers can gobble up bags upon bags of quarters in a single evening. Some games occupy as little as ten square feet and can return an unequaled profit margin with regard to in place cost.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Redemption centers, targeted primarily at the pre adolescent, entice customers to spend more in a shorter time frame. Some operators have talent for acquiring unique redemption items. Some of my clients choose to operate non redemption based game rooms, and this approach works best for them. Others recognize redemption as essential to their business. The trick is to know how many games and what type to consign for your market and how to strike a deal with a game company for top line equipment, service, and preferred rates. That only comes with experience. In a well managed game room during peak business hours you'll see all games being accessed with few customers waiting.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">If you plan to have a stand alone miniature golf facility, it's best to have a few popular games located in a holding area. You'll be pleasantly surprised when you open the cash drawers after a busy nights end.</FONT></FONT></P> <P ALIGN=LEFT> <FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3"><B>Go</B></FONT></FONT><B><FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3"> </FONT></FONT></B><FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3"><B>Karts reinforce FEC customer base and increase profits</B></FONT></FONT><BR> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Go-kart tracks were the next attraction to be added to the growing FEC's. They produced about the same gross revenue as miniature golf when operated concurrently in market balance. Go-karts primarily attract a younger and more aggressive segment of the market. However, this selective draw of younger patrons reinforced the customer base of miniature golf, improved game room profits, and contributed highly to FEC mood. Repeat riding exceeded repeat business for miniature golf in a single evening. Go-karts significantly increased overall net profit per customer visit.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Operators accustomed to the low service demands of miniature golf soon realized the full impact of go-kart track operations. Personnel requirements per customer exceed that of miniature golf. Site maintenance may be somewhat less than that of a miniature golf course, but track operations are a fast paced activity. Operators must deal with the racing personality of many participants, combined with constant pit loading and unloading. Monitoring of track operations can be intense during peak business hours. Go-kart maintenance can be significant but will vary considerably by kart make, model, and track construction.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Today's tracks for the modern FEC are typically constructed of concrete or asphalt and can truly be "works of art" boasting superelevated turns, overpass/underpass bridges, and roller coaster straight-a-ways. Go-karts have advanced to a high level of low maintenance and streamline sophistication. And they have significantly widened their target market appeal in recent years.</FONT></FONT></P> <P ALIGN=LEFT> <FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3"><B>FEC Profits</B></FONT></FONT><BR> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Many FEC owners do a tremendous amusement business. FEC gross income for locations of equal market will vary considerably by length of operating season. Most business in non-tourist areas will be done during weekend evening hours. Gross income share for the big three is about the same with miniature golf usually leading in sales.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Owners will experience increased profits in the first and second years of operation due to what is known in industry as "novelty effect" or facility newness. Facilities that service non-tourist markets are most effected. However, many FEC's located in non-tourist markets maintain a steady and profitable business in future years.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">The following is a comparison of two facilities designed and developed by me. One location in the north has enjoyed substantial business through its eighth year of operation. The other facility in the deep south is also very popular. Gross income for the southern facility will approximately double that of the northern facility. Both of these facilities primary attractions are: miniature golf, a go-kart track, and arcade. One has a six month season and the other a ten month season. The northern facility has very small frontage traffic count and must pull more of its business. The southern facility has considerable frontage traffic; It enjoys high visibility and "turn in" or impulse business. Both are located in cities with populations of 50,000 to 75,000 with similar demographics. Both have considerable greater trade area. Neither is located in a tourist location or area with extremely high foot traffic. Both are constructed on land of modest cost by commercial standards. Both have experienced expansion since initial construction. The northern location leads competition. The southern location has no significant competition. And it is unlikely to draw any from a midsize or larger facility in the foreseeable future, due to its design, location, and available market.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">But you say, how much will an FEC gross? A 36 hole upscale miniature golf course properly positioned in a non-tourist area can gross up to $350K annually at peak, possibly more. What about overhead? An overview of one business plan reviewed by me gives a good example of FEC tolerance to overhead cost above industry norms: The existing facility was in operation of a small traditional minigolf course and arcade. It was under new competition. They were losing the battle to a new upscale FEC located near by. Prior to this competion the accountants report showed a modest but attractive annual profit. The interesting thing was the grounds lease cost. Apparently these cost were calculated as a percentage (slightly less than 50%) of gross revenue. Annual grounds lease cost was over $225K at one point. At its listed annual minimum it was above 195K. This average amount of lease debt service will support a land purchase and development cost of approximately 1.81 million over fifteen years @ 8.5% interest compounded monthly. You can see the lucrative potential when combined with skillful land acquisition and development. This tiny FEC was able to support a grounds lease cost well in excess of facilities many times larger and still provided a handsome profit for its owners. </FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">FEC owners enjoy a business that requires little exchange in inventory and low service cost for most activities. One person can can handle $3.000 in business in a single evening on a miniature golf course. Properly planned, a FEC should provide generous profits well beyond recapture of Investment. Some developers have made fortunes; I have seen it happen. However, due to the level of investment required, the complex nature of FEC development and an ever changing world market, there are no guarantees of success even when attempted by experts experienced in the recreation industry. <I>"Loose </I></FONT></FONT><I><FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">c</FONT></FONT></I><FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2"><I>annons"</I> rarely succeed</FONT></FONT><I><FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">, rarely</FONT></FONT></I><FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2"><I>. </I>FEC's supply a commodity that will always be in demand with all people.</FONT></FONT></P> <P ALIGN=LEFT> <FONT FACE="Verdana,Arial,Times New I2"><B><FONT SIZE="3">Future trends for family entertainment C</FONT></B></FONT><B><FONT FACE="Verdana,Arial,Times New I2"><FONT SIZE="3">enters</FONT></FONT></B><BR> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Future trends for development are towards expanded food service capabilities among others. Surveys indicate many attendees are on their way to eat out or have already done so when arriving at an FEC. Large FEC corporations have proposed mergers with national restaurant chains in hopes of seizing related market sales.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">The personal computer is having an increasing effect on arcade operations. This translates into bigger and more sophisticated video/audio technology expense for game manufacturers. Consignment of equipment is the prevailing trend for owners. Facility market location should play a larger role in number and type of equipment provided.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Miniature golf trends indicate constant movement towards maintaining development of upscale courses through more efficient methods of construction, facility maintenance, and operations. Upscale construction has provided a measure of market security for many owners. Early site designs in industry were earmarked by an abundance of retaining walls and sheer vertical gunite rock faces. In some cases this was to compensate for poor slope analysis or lack of land area. The theme concept was new and little research had been done. This can translate into much higher cost and less realism with regard to natural atmosphere.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">  A number of natural theme design variations have appeared over the past few years. Some have excluded the majority of landscaping by substitution with structural and/or other artificial ground covers. Some may exhibit duplication of older design practices with regard to topography, rockwork, and land planning. Low maintenance landscaping combined with refined land planning and topographic design can provide a preferred alternative in many cases in our opinion. Indigenous and slow growing plant materials, natural appearing rock formations, and a balanced landscape may prove to hold the competitive edge. Our research and experience indicates this will serve owners as a value investment in many situations.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Future industry go-kart trends include new high speed straight tracks. Scaled down dragsters with horsepower ratings in the hundreds compete in quarter mile runs. Multi tiered wooden tracks are also being built over storm retention and other areas when land use is limited. European indoor racing is growing in popularity and has recently become a topic of much debate. However, current "state of the art" construction remains advantageous for most locations in our opinion. Today's tracks are at their highest market evolution without entering areas of higher risk management. They offer relatively safe family entertainment with more appeal to varied age groups. However, a lap on a go-kart track should be a three dimensional experience for the rider. It should be balanced in length and horizontal curve. And it should provide a vertical experience that's not choppy or unsafe. The combination of vertical curves and superelevation should be one of "harmonic motion", a mark of expert design.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">Family entertainment is one of the fastest growing global industries today. Keen attention to planning and design, especially in the early stages, will in many cases separate the successful from the vulnerable.</FONT></FONT></P> <P ALIGN=LEFT> <FONT SIZE="2"><FONT FACE="Verdana,Arial,Times New I2">If you are reading this text your browser does not support frames. However, you can still enjoy the site. Just click on the link below and you will be taken to our contents page. 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