Amusement Park Business Plan

Research has indicated that the prime market for a FEC is in urban areas close to neighborhoods with large concentrations of upper- to middle-income bracket population.  Ease of access is important, but street frontage is not a crucial requirement. 

Mr. Randy White, president of White Hutchinson Leisure & Learning Group, one of the leading FEC project developers in the United States has observed, “Just as entertainment is becoming an essential component of shopping centers, entertainment is the backbone of today’s urban redevelopment. Often referred to as urban or location-based entertainment centers, these projects integrate entertainment with retail, dining and cultural facilities to create a resident and tourist destination.”

A seven to ten mile radius is considered the radial market area of a FEC.  However, depending on competition (or lack thereof) a market area can grow to a fifteen mile radius and with easy highway access to a radius of twenty miles from the FEC.

The U.S. Census Bureau, Census 2000, and the Weber County Economic Development provides us with the following demographic information about our area (15 mile radius).

• The population in a fifteen-mile radius is in excess of 500,000
• Median age is 27
• The male/female share is 50% split
• Over 85% are white
• Over 40% are 25 to 50 years old
• Over 75% own or are buying their homes
• Average household size is 3.5 persons
• Average household adjusted gross income is $39,250

4.1 Market Segmentation

I&B Investments’ primary targeted market consists of three main groups. These categories are: 15 to 24 year old, 25 to 34 and 35 to 54 years old. To better understand the size and breakdown of the local population see the following table and chart.

4.2 Target Market Segment Strategy

A full-time public relations coordinator is a vital part of I & B INVESTMENTS’ management team.  The job will require this person to be responsible for assuring customer satisfaction, generating public awareness for the types of entertainment offered at our “FEC,” and attractively promoting the various activities to the public.

Even though, our customers can be considered all age groups, both sexes, all races, all income levels, local residents or tourist to the area.  The most important factor behind our success is simply, THAT A PERSON CAN ENJOY THEMSELVES, while participating in the activity they choose.

4.2.1 Market Needs

Upon reviewing the local demographics of businesses in the Weber & Davis County area, we discovered that our proposed service will be filling a void that has existed for years in the local entertainment market. 

Our primary targeted counties are Weber and Davis. These counties represent two of Utah’s top three counties with the highest personal income levels in Utah (Davis county being #1) which relates to more money available for entertainment.

1999 Average Household Adjusted Gross Income

4.2.2 Market Trends

Historically if a market becomes controlled by a corporate entity, services are cut, prices are raised and core business is driven away as a result of the companies indifference to local customers concerns.  To avoid this happening locally, I&B Investment’s desire is to create their niche in the Utah market before the national chains move in.

The Business Journal of Kansas City -1996.  “During the past five years, large chains like The Blue Eagle Golf Centers Inc., and The Golden Bear Centers, have been buying up various FECs attempting to control the market.”

Parks & Attractions – January 29, 2001, Amusement Business.com (newsletter). “Right now we have 20 locations.  They are all the typical FEC: batting cages, bumper boats, miniature golf, indoor arcades. There have been a lot of things tried and we’ve seen some things fail.  We’ve seen Disney come and go with its Disney Club, their birthday-party type concept, and Discovery Zone has come and gone.” Taken from an interview with Mr. Bill Rameson, a FEC Pioneer and CEO of Palace Entertainment, the largest FEC chain in the world.

Utah’s Amusement and Recreation Industry is projected to employ an increase of 33,080 employees by 2030.  This equals an average of 788 more employees per year being hired by Utah’s growing Amusement Industry.  Source: State of Utah Economic and Demographic Research Database.  

Page 11, of the 2001-2002 industry report complied by the International Association for the Leisure & Entertainment Industry, states that even after years of exponential growth, FECs are still a strong growing segment of the amusement industry.  In 1990, there were only about 250 centers and today the count is around 10,000 to 12,000 with 19% of the establishments earning $1,000,000 to $3,000,000 and 16% making over $3,000,000 annually.

For more great information about the amusement industry and the positive upward tread, there are two main industry magazines that provide current industry statistics.  They are Play Meter Magazine and Vending Times.  The 2001 census of the Industry, by Vending Times is the 54th in a series that dates back to the dawn of the modern era in vending.  It is based on a mailing to 12,000 operating entities that yielded 1,206 usable replies.

Fun Center Sector Remains Robust as Operators Pace Expansion Strategies – Vending Times,  January 2002.  “A complex but promising growth opportunity confronts the fun center market in 2002.  Family entertainment centers, location-based entertainment sites, arcades, and game rooms all stand to create larger customer bases and have a solid chance to cement greater customer loyalty if they invest wisely to create the kinds of experiences that players actually want to have.”

4.2.3 Market Growth

As the population ages the potential market size increases and with the type of entertainment offered at our facilities, we are confident that our customer base will continue to grow and remain stable for the foreseeable years to come.

The market for a modern FEC center in the Weber/Davis County area is superior to most, partly due to the tremendous population growth which has occurred during the past five years. With the overwhelming majority of the population living and working within 15 miles of our first selected site. Additionally, there is not an FEC of this type within 50 +/- miles.

Population Growth:  In the 10 year period of 1990-2000, Weber County experienced a 24% increase in residents, closing the millennium at 196,500 and this rate of growth is projected to continue through 2020.

Utah’s Resident Population

4.3 Service Business Analysis

We requested Dr. DeeVon Bailey, of Utah State University, Professor of Economics to study our area and industry, then report and publish his findings.  We requested Dr. DeeVon Bailey to publish his finding because, we wanted his non-bias review and we felt that informing the competition about his findings was a good thing.  Here is an exact copy of that report,

Preliminary Assessment of the Economic Multipliers for

Amusement Companies in Weber County, Utah State University

By DeeVon Bailey, Ph. D.
Department of Economics
Utah State University
February 1, 2002

Dear Mark,

This document provides you information on the various economic multipliers you can use to assess the impact of your proposed business.  The multipliers I am giving you were generated based on information from Weber County during 1998 (this is the latest information we had). 

We were able to get information on two types of amusement companies – 1) Amusement and Recreation Services (ARS) and Membership Sports and Recreation Clubs (MSRC).  I suspect that the first category, ARS, more closely fits your situation than the second. 

The economic information and the economic multipliers were generated by IMPLAN, an internationally recognized input-output model that is widely used.  Dr. Donald L. Snyder generated the information for us.  The following table presents some of the base economic information for ARS and MSRC in Weber County in 1998:

Let me interpret this table for you.  In 1998, ARS had $17.111 million in total sales in Weber County and employed 830 people.  The employment number is a person count and not full-time equivalents.  You need to divide the employment number by perhaps “4” to get the full-time equivalents (jobs).  Total compensation is employee income plus proprietor income plus rental income plus interest income generated by the business type. 

So, in the case of ARS total compensation was $5.128 million of which $1.820 went to employees (wages and salaries) and $3.552 million went to owners (proprietors) as net profit.  Indirect business taxes are basically sales taxes generated by the business types according to Don Snyder.  So, ARS generated about $866,000 in sales taxes during in Weber County in 1998.  Total value added is basically total sales less what would be equivalent to the cost of goods sold. 

So, in 1998 ARS generated $17.111 million in sales of which $11.366 million could be attributed to the value added by labor, management, etc. by persons in Weber County.  This suggests that ARS made purchases of about $5.745 million (17.111 – 11.366) from sources outside of the county to be able to generate $17.111 million in sales.

Economic Multipliers for Weber County Amusement Industries

The following are some of the key economic multipliers you should use to judge the impact of your proposed business.

Type and Value of Multiplier

The interpretation on these would be as follows:  The output multiplier of 1.50 for ARS would indicate that for each $1 in sales for this industry that an additional $0.50 is generated in sales in the County.  For example, if your business generates $1 million in sales then that $1 and an additional $500,000 would be generated in sales for the County each year for a total of $1.5 million after the multiplier effect.

The indirect business taxes multiplier for ARS is 1.57.  This means that for every $1 in sales taxes generated by your business that an additional $0.57 in sales taxes will be generated in Weber County.  For example,  if your company generates $10,000 in sales taxes an additional $5,700 in sales taxes will be generated by other economic activity in Weber County as a result of the economic multiplier effect (57% * $10,000).

The total value added multiplier for ARS is 1.48.  This indicates that for each $1 in economic value generated by the business above the costs of inputs purchased from outside of the County would generate an additional $0.48 in value added for the County economy.  This roughly means that if gross profit for the company is $1 then gross profit in the entire county will increase by $1.48 million (this figure includes the $1 in gross profit for your business and the $480,000 that would be generated for other businesses in the County)

The employment multiplier for ARS is 1.17.  This suggests that for every person you employ in your business that another 0.17 jobs will be created in the county.  So, if you employ 50 people then, besides your 50 jobs, another 8.5 jobs will be created in the County (0.17 * 50).  Remember that these are jobs and not full-time equivalents since many of these people will be part timers.

4.3.1 Competition and Buying Patterns

The Amusement Industry is unique in that it has little inventory.  Yet, should the need arise there exists a large network of suppliers for everything in the facility.  All of these sources ship overnight which reduces the requirement for a large on-hand inventory.

“Being locally owned, you can design and operate your facility to be connected with the community and fine-tune to meet their needs.  You have to be part of the community to be successful.” – Economy Affects FEC Biz – October 01, 2001 Amusement Business.com.

I&B Investments is a business focusing on family entertainment where there will be sports and activities that all ages can participate in and enjoy as individuals or as a group.  It is where grandparents can take grandchildren of all ages (it makes a great date night or family outing).

The simplicity of the activities enables anyone to experience excitement without having to know how to play like a pro. Miniature golf and other related activities (that require minimum strength and athletic ability) are some of the highest-rated family participation sports in the United States. 

By far, the most significant factor to affect the FEC business in the forthcoming decade is the dramatic growth of the 25 to 44 year old segment of the population. This age group represents the prime segment of the population that enjoys playing in tournaments.  Our FEC will be high-tech, totally computerized centers.  Pro play will be offered in the facility year round, increasing the profits for the center.

Competition in the amusement industry in Weber County is considered mild at best and most venues are remotely located.  Our first choice of locations is superior and offers us an edge against future FECs or similar services.  We will create our niche in the market place by being the first FEC in the surrounding area, but to keep our competitive edge we know we have to choose the right location. 

Experts say, “If you require a big grand opening or spend a ton on advertising your center, then you are not in the right location.  The public just needs to be able to see your location, make it look fun and they will know where you are and when to come.”

4.3.2 Main Competitors

Page 7 of the 2001-2002 annual industry report, complied by the International Association for the Leisure & Entertainment Industry, points out that there are NO TRUE FEC’s registered in the Rocky Mountain area and our research confirms this. This provides a prime awaiting customer base and helps assure that our facilities will be in command. We will be entering the market place as the leading company for amusement and entertainment to the area.

The other local, single activity establishments will not have much of an impact on our potential customer base, especially in the winter months when most of the local amusement businesses are closed.

None the less our facility will be competing with other established recreation and amusement activities for the consumer’s dollars. These venues are: movie theaters, bowling centers, roller skating, sports venues, theme parks, golf courses, fitness centers, night clubs, ski resorts and etc. Yet, none of these amusement activities truly compete with our facilities, because at our proposed facility we will offer more entertainment options custom-fit to the community and tourist.

Locally there are only two miniature golf courses (both built in the 1980s) and about ten golf courses. Many items like upgrades, new equipment, new attractions, websites or even having a fax machine, have not been a priority to some of these establishments. In others words, because there isn’t much competition, the existing venues do not see any reason to make customer satisfaction a priority.

I&B Investments will be the first of its kind in the area to address our underserved market, understanding that price is not the public’s only buying criterion. We at I&B Investments believes that customers want to feel a holistic process of having fun and they expect prompt service. Combine that with a clean environment and properly working equipment and we are ensured that our customers will come back again and again.