New Year, New Entertainment
Entertainment concepts have long since adopted an “everything under one roof” approach that packages some combination of food, drink, movies, bowling, arcades and other games into a single destination.
But competition in the space is growing, and owner-operators are facing mounting pressure to offer an ideal mix of activities that keeps people onsite longer and boosts return visits.
What that combination is varies from market to market and even site to site. But without question, the breadth of games and activities offered at entertainment centers in Texas is expanding and evolving.
What’s Hot, What’s Not
Virtual reality (VR) shooting games and driving simulators, axe-throwing arenas and elevated food and beverage (F&B) components are among the key features that are driving traffic to entertainment centers and the retail properties that house them.
Movie theaters and bowling alleys are evolving as well. According to Jeff Benson, CEO of Dallas-based Cinergy Entertainment Group, it’s very unlikely that new theaters in large and mid-sized markets will ever be built without certain features.
“The movie business has changed a lot in 20 years, and I doubt you’ll ever see another theater built without a bar, recliner seats and dine-in options,” says Benson, who founded dine-in theater concept Movie Tavern in Fort Worth in the early 2000s prior to starting Cinergy. “The theater business has competition from Netflix, streaming and on-demand services, so we have to keep pushing the envelope to keep people coming into our buildings.”
In addition to movies and bowling, all Cinergy centers offer various combinations of bowling, arcade games, ropes courses, and escape rooms. But Benson says that one key activity at the company’s most recently opened, 90,000-square-foot center in Amarillo — laser tag — will likely be removed from the Copperas Cove center and from the company’s prototype.
Benson expects laser tag to be tabled in favor of a combination of new and old world — axe throwing and VR experiences — when he opens a new Cinergy in the Dallas area. He notes that his existing centers in Odessa and Midland have some of the highest usage rates of Hologate, a VR concept that includes everything from first-person shooting to snowball fights.
“Virtual reality is going to make this current generation question laser tag, unless the activity itself gets an overhaul and becomes more augmented reality than just a maze and beams,” says Benson. “When you put on that VR headset and you’re transported into Assassin’s Creed, it’s another world and it’s just so much cooler. We’re probably going to build out lounges in our new centers that have a multitude of VR experiences, and that looks to push laser tag out the door.”
Neil Hupfauer, an entertainment veteran who co-founded Dallas-based Main Event Entertainment in the late 1990s, has served as a consultant to Cinergy since 2015. A couple years later he founded Corky’s Gaming Bistro, a 14,000-square-foot venue near Dallas-Fort Worth (DFW) International Airport in Grapevine.
Escape rooms are a major attraction at Corky’s, which boasts an array of modern and classic arcade games with familiar characters like Donkey Kong, Pac-Man and The Simpsons. But in Hupfauer’s view, it’s the axe-throwing feature that has contributed most to the concept’s success.
“People who come to Corky’s usually cite the axe-throwing as the main activity that brings them in,” says Hupfauer. “It’s so engaging and interactive, and that’s really what the industry as a whole is moving toward — anything that provides that social experience.”
What Will Last?
Mitchell Roberts is founder and CEO of EVO Entertainment, which owns and operates entertainment centers across central Texas. Like Benson, Roberts views the dine-in theater model as the new standard for moviegoing, and agrees that VR is an activity that is quickly rising in popularity in favor of laser tag.
“VR is still fairly new, and we expect to start seeing true, standalone VR experiences,” says Roberts, who at 24 possesses the unique perspective of both an owner-operator and a millennial customer. “But with every activity, you have to ask yourself, ‘Is it real or just passing through?’”
Roberts, whose grandfather founded Cinemark Theaters, has taken the theater concept and expanded it to include bowling, dozens of arcade games and a full restaurant and bar. EVO Entertainment has locations in Kyle and San Marcos and will open a 75,000-square-foot center in Schertz in February.
Roberts points to escape rooms as an activity that captures the fickle tastes of consumers as well as a common pitfall owner-operators can fall into when curating a mix of attractions.
“Escape rooms blew up when they first originated and were implemented all over the country,” says Roberts. “But then the bubble popped and the novelty wore off fairly quickly. So you have to be careful in what activities you invest in or get creative with your spaces so that they can support other types of attractions.”
Roberts adds that EVO’s center in San Marcos, which spans about 40,000 square feet, has flex space with non-fixed furniture and audio-video capacities, enabling it to serve as an auditorium, conference room, screening room for new movies or even as a space for private parties. As entertainment evolves and more activities become available, having this flexibility of space will become increasingly important.
Hupfauer of Corky’s echoes Roberts’ view on escape rooms, noting that there is a large contingent of potential consumers who lack familiarity with the activity. Still, escape rooms are burgeoning at such a rate that they’re changing as they grow.
“Escape rooms are going through an evolution wherein mom-and-pop concepts are falling by the wayside to more professionally managed, capital-rich concepts,” says Hupfauer. “Those are the ones that are flourishing, but there’s still a big portion of that market to be captured.”
The Role of F&B
Regardless of which activities an entertainment concept hangs it hat on, the inclusion of a full-service kitchen and bar is critical. As such, operators are investing more in their F&B offerings, often bringing in chefs and mixologists from corporate chains to raise the quality of their food and drinks.
“Food is the driving portion of the experience that you as the operator can control, and in that sense it’s a differentiator,” says Roberts of EVO, which grinds it own burger meat, batters its chicken fingers by hand and makes 99 percent of its food from scratch. “We believe in the old expression that the laughter is loudest where the food is best.”
Benson of Cinergy points out that entertainment operators face the challenge of providing quality food that can be prepared quickly at price points that are consistent with the overall brand and concept.
“F&B is a big deal for everybody, and it comprises about half our revenue,” he says. “It’s never going to be gourmet because you have to serve hundreds of people per hour. But you’re also competing with casual restaurants where people could eat before coming to your center, so you have to have differentiators. For example, we do a lot of drink specials for ladies nights, holidays or sporting events.”
While F&B is always more than just window dressing to the games and activities, some concepts cite this element as the critical driving force that brings people in — everything else is just complementary to the food and drink.
Punch Bowl Social is perhaps the epitome of this model. The concept, which is in the process of opening new venues in Dallas, Fort Worth and Austin, offers craft beverages and modern cuisine with artisanal ingredients to differentiate itself from the competition while still offering activities like arcade, mini-golf and karaoke.
Punch Bowl Social’s founder and CEO, Robert Thompson, says that 90 percent of the company’s revenue stems from F&B, whereas his competitors usually only draw about half their revenue from F&B.
“Our model was born out of the missing emphasis on the culinary side of the equation,” says Thompson. “Nobody in the ‘eatertainment’ space was taking a restaurant’s point of view; they were focused on the gaming.”
Thompson says that five Punch Bowl locations now have VR parlors that have proven popular, and that customers have responded positively to indoor mini-golf as well. The latter will be incorporated into the company’s existing venue in north Austin.
Larry Leon, principal at Dallas-based Venture Commercial, which specializes in tenant representation for retail, restaurant and entertainment users, points to several new entertainment concepts that have sprung up in DFW as evidence of how diverse the space really is.
At Grandscape, a 433-acre mixed-use development in the northern Dallas metro of The Colony, a 110,000-square-foot Andretti’s Indoor Carting & Games is under construction and set to open this year. Kidzania, a concept that allows children to do activities that simulate actual adult careers, is taking about 70,000 square feet at Stonebriar Centre in Frisco for one of its first U.S. locations. In nearby Plano, Crayola Experience has opened a 60,000-square-foot store at Shops at Willow Bend featuring more than 20 crayon-themed activities,
Leon’s firm also represented Oklahoma-based HeyDay Entertainment, which offers bowling, laser tag, VR, mini-golf and a ropes course, in its expansion into Texas. Construction of HeyDay’s 42,500-square-foot venue in Denison is underway, and the venue is expected to open in August. Denison, which is located near the Oklahoma border, will also be getting an Urban Air trampoline park in the coming months.
“The entertainment sector in DFW is moving toward saturation,” says Leon. “There are a lot of operators, especially those with electronic games and VR, and they’re reaching the point of having to think about what else they can offer to get people to come in.”
—By Taylor Williams. This article first appeared in the January 2019 issue of Texas Real Estate Business magazine.