Institutional investors unfamiliar with eatertainment and experiential entertainment concepts often group them with restaurants and all the challenges that entails. These concepts, however, are far different and, ultimately, rank much better in the risks versus rewards equation.
Why?
Today’s consumers are hungry for experiences, so much so that they place it above pricing and are willing to pay a premium for a great experience. Even, and sometimes especially, during economic downturns, they look for the intangible value an experience provides, including emotional connections and active participation.
Many of these concepts are also scalable and can adapt to changing markets, providing guests with options that may more readily align with their budgets. Let’s look at what this means to investors and those in the business of delivering exceptional experiences.
The Changing Market and Experiential Entertainment
A report conducted by Solomon Partners found the demand for site-based, experiential entertainment at record levels. As consumers begin to rethink how they spend their dollars, the expected trend of staying closer to home and creating “staycations” is just beginning to emerge.
According to a recent report by Bankrate, since Labor Day, the year-over-year growth rate of airport travel has slowed to a crawl with diminishing demand after experiencing post-pandemic record increases. Their recent travel survey also found that over 80% of holiday travelers are changing their plans, choosing to travel for fewer days, selecting more affordable accommodations, or driving instead of flying.
Like travel, dining out is considered a discretionary expense. And, like travel, it’s seeing some flattening out in sales. And then there’s dining with added experiential entertainment. In 2024, Sevenrooms gathered information from thousands of consumers and over 750 global operators to uncover current dining habits.
One of the key takeaways was that customers would pay more for an elevated dining experience. In the U.S., one person will spend up to $63 more. In Australia, that number jumps to $97. Additional data showed that experiential dining drives over 35% more revenue than traditional reservations. In the U.S., more than 660,000 upgrades and experiences sold in 2023, according to Sevenrooms’ analytics. These experiences generated over $33 million in revenue, with an average revenue increase of $85,000 per venue.
Recession Resilience and Entertainment
History tells us that during economic downturns, consumers look for affordable, high-value experiences and activities close to home. When people start taking a closer look at their budgets, it’s the large luxury goods that are the first to go by the wayside. Counter to that is the local entertainment alternatives that experience an increase in spending.
In the past, these alternatives consisted of mini-golf, bowling, movie theaters, and arcades. Today, with advancements in technology, these alternatives have become high-tech experiences on steroids with global cuisine and craft cocktails.
Concepts like Puttshack’s high-tech mini-golf game saw their annual revenue reach $15 million as of November 2024. As an eatertainment concept, customers remain for longer periods, contributing to their balanced revenue stream that sees about 55% of their overall earnings coming from high-quality food and beverage sales.
Bowlero, the largest bowling center operator in the world, with most of its locations in the U.S., features craft cocktails, hand-crafted pizzas, and gourmet burgers. The third quarter of 2024 saw their revenue hit $260.20 million, bringing the total revenue over the last 12 months to $1.19 billion. This figure represents a 12.45% gain year-over-year. The company’s founder and CEO, Tom Shannon, shared this with Solomon Partners, “If you have inflation, high gas prices…it’s easiest for (consumers) to spend close to home. Not getting on an airplane…not paying exorbitant hotel prices…not getting in the car and traveling long distances.”
Competitive Social Entertainment and EMERGING
At EMERGING, as the leading growth equity for restaurant entertainment concepts, we’ve witnessed the competitive social entertainment boom firsthand. As a strategic growth partner for some of the leading brands, such as Puttshack, Batbox, F1 Arcade, Flight Club, and Immersive Gamebox, we’re excited to help take these entertainment concepts to the next level. To learn more about our process or to schedule a consultation, contact EMERGING.
