Back in 1998, over 25 years ago, an article appeared in the Harvard Business Review on the Experience Economy. They spoke of experiences as the “next step in what we call the progression of economic value.” According to author B. Joseph Pine II and James H. Gilmore, industry leaders will ultimately find the next stage in business evolution, and competition will lie in staging experiences.
In this business model, companies design engaging experiences that create memorable events, and they charge for it. The key is “memorable,” personal experiences that incorporate the whole of a person, on a physical, emotional, mental, and even spiritual plane. To a great degree, the person’s state of mind determines their experience and the enjoyment or dissatisfaction they gain.
Sound familiar?
Here, we’ll explore how far we’ve come since the Experience Economy began and what the future holds.
The Start of Eatertainment
An offshoot of the Experience Economy, eatertainment is an active dining experience, part delicious and often exotic food combined with entertainment. What was once arcade games, trivia nights, and bowling has transformed into high-tech wizardry that leaves one spellbound. Electronic configurations, algorithms, computers, and sensors work together to make scoring seamless and the game relaxing. Have a drink, some fusion cuisine, and play. The game will keep the score for you.
Where the Experiential Economy Is Headed
Soloman Partners, a financial advisory firm and investment bank, released their Experiential Entertainment Update in September 2024. Despite consumer demand headwinds and declining sales in family entertainment, experiential entertainment concepts sustained growth.
Rober Lavan, Bowlero’s CFO, and Treasurer, shared this on his FYQ4 2024 earnings call, “Our total growth in the quarter was 20.2%, and same-store comp was positive 6.9%. April, May, and June all saw positive same-store growth. While we are hearing concerns in the market and weakness in the consumer, we are not seeing signs of that.”
In Soloman’s original experiential entertainment update in April, they noted the following growth in eatertainment companies since 2019. Puttshack has gone from 0 to 22 locations, with some of the latest openings in Chicago and Atlanta. Flight Club has reached eight units, and Topgolf has gone from 47 to 90 places it calls home. Beat the Bomb went from one unit in 2019 to six in 2024.
Are you curious about the experiential entertainment concept with the greatest growth? Urban Air, an indoor adventure park franchise, topped the charts, going from 62 to 227.
The 2024 JLL CS Survey found that, no matter the generation, a majority of people consider the experience a driving force in their choices, prioritizing in-person activities and unique urban experiences. Interestingly, over 75% reported that their home cities need to “offer new experiences to stay relevant.” That figure rose to 84% when differentiating Millennials and Gen Z.
Investing in the Future: The Emerging Fund’s Strategic Investments
At EMERGING, we capitalized on the rise of eatertainment in its infancy. Today, some of the EMERGING Fund’s investments include Puttshack, F1 Arcade, Flight Club, and Batbox. If some of these names sound unfamiliar, don’t worry, you’ll hear about them soon. Entrenched within each of these businesses is high tech, an experience that brings profound enjoyment, and great food.
- Puttshack: This high-tech mini-golf concept exploded on the scene about six years ago. Expected openings coming soon include Atlanta, Chicago, Baltimore, Minneapolis, Columbus, and Reston. VA.
- F1® Arcade: For Formula 1 race fans, this concept is a dream come true. Participants get behind the wheel of racing simulators while enjoying global-inspired cuisine.
- Flight Club: While Puttshack transforms the mini-golf experience, Flight Club is revitalizing the classic pub game of darts.
- Batbox: Reimagining baseball, Batbox delivers simulated gameplay amidst the backdrop of a high-energy sports bar.
As the hospitality environment has transformed, so have we. Today, we’re focused on the experiential economy, investing in the technology that impacts people’s lives. By investing in the future of hospitality through technology, our goal is to help enhance operations, create exceptional customer experiences, and advance tech-enabled concepts.
To learn more about the EMERGING Fund and its unique approach to investing, contact EMERGING.
