Miniature Golf- how does it relate to supporting attractions?
AL: In earlier discussions, we spoke of weighted factors and how they affect the miniature golf course development. I presume one way to offset some of these is to expand the concept and add multiple activities such as a small fun or family entertainment centre. I have noticed a trend in this direction where many persons with free standing courses are adding other activities. Also many persons looking at the miniature golf business see it as only one component in the group of activities. Is this true and what is the importance of the miniature golf course to this equation?
WH: I almost always recommend at least one or two secondary attractions to complement miniature golf. While there is no question in my mind that miniature golf is the anchor attraction, the addition of secondary elements to create a "fun centre" is beneficial for several reasons. First, by including other elements, we have increased the potential for per capita spending; second, we have extended the length of stay at the attraction, thereby extending the geographic coverage of our effective market area; and third, we are able to operate more efficiently by spreading fixed costs over more elements. I have often used the analogy that a fun centre is akin to a shopping centre, where the miniature golf plays the role of the department store to draw in the patrons, who then engage in impulse spending on other elements.
AL: This brings up an obvious question: what are the types of elements to combine with miniature golf for these centers? First let’s discuss outdoors. We talk to people daily who see the combination as miniature golf, baseball batting cages, video and redemption games, child play elements, go-karts and other items. At the same time we have a lot of persons who believe that a driving range, miniature golf, baseball batting cages and other elements are the right thing to do. I do not think the ideal formula for this mix exists but I would like to hear your ideas.
WH. I agree there is no set formula; however, I do have a rationale of sorts for formulating development programs for fun centers. I always start with miniature golf, with the number of holes contingent on attendance potential. I want my miniature golf to equal approximately one-half of the throughput potential of the overall fun centre. This will allow me to create a 2.0 to 2.5 hour length of stay. Next, I add the arcade and snack bar, since these are indoors and-during slow periods-can be staffed by the same employee who is dispensing the golf clubs. In a resident market, I will usually recommend some space in the main building for birthday parties, which can be big business. Beyond these elements, I will recommend one or more go-kart tracks, several batting cages and, maybe, bumper boats. I have recently completed an assignment where we combined the elements cited above with a golf centre, with an indoor and outdoor driving range. I don't see a lot of synergism in this concept, but it does make some sense in terms of shared facilities and staffing. Also, I am not a big supporter of the idea of mixing "wet" and "dry " elements because of the swimsuit problem. However, I recently completed a study in which I recommended two water slides and a small leisure pool, along with the dry fun centre elements. In this particular case, we were dealing with extremely hot summer weather. Our thinking was that the water slides would he a strong draw during the heat of the day and any business spun off to the dry elements would be a windfall. During the evenings, when the dry elements are in full swing, the water slides could be converted to use specially designed boats, thus creating a different ride experience for people in street clothes.
Our miniature golf expert, ARNE LUNDMARK, attempts to answer that question in discussions with amusement industry consultant WILLIAM HARALSON.
AL: You have raised a number of interesting ideas here and I would like to express several thoughts. You indicate that you are looking at a throughput for golf and other activities which might create a 2.0 to 2.5 hours length of stay. I believe miniature golf during peak capacity will give you 45 to 60 minutes and sometimes more. During off peak hours it might be 25 minutes to 45 minutes for one course. If you only add a game room and snack bar is that sufficient to pick up the extra time or will other activities be needed? What amount of length of stay can they contribute?
WH: We have been researching this question quite a lot lately. We look at it this way:
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What we have done in this exercise is illustrate how each element of the family entertainment centre contributes to length of stay. For example, in this case we are assuming that miniature golf takes 60 minutes to play, that 90 per cent of all attendees will play miniature golf an average of 1.1 times during their visit. Thus, among all attendees, miniature golf represents an average length of stay of 59.4 minutes. By contrast, go-karts. with a length of event of six minutes, will be used by 50 per cent of all attendees an average of 2.5 times. Thus, go-karts contribute 7.5 minutes to the average length of stay. For all facilities combined, the average length of stay is one hour and 53 minutes. During the market study, we will project attendance and derive our "design level" attendance figure, which we will assume to be 300 attendees. Now, if we assume the four activities shown above, plus 30 minutes for standing in line, watching, etc., we can calculate facility capacity needs as follows:
| Percent of Length of Stay | Required Capacity | |
| Miniature Golf | 52% | 156 |
| Go-Karts | 7% | 21 |
| Batting Cages | 4% | 12 |
| Arcade Games | 10% | 30 |
| Subtotal | 73% | 219 |
| Watching, standing in line, etc. | 27% | 81 |
| Total | 100% | 300 |
What we are saying in this analysis is that to accommodate
our design level of 300 people, we will need two golf
courses. 21 go-karts. 12 batting cages and an arcade room
with at least 30 player positions. As to the mix of video to
redemption, we usually recommend a 50-50 split in a residential
market, with the redemption games purchased. We do not generally
recommend redemption games in a
tourist market because of the lack of repeat clientele.
AL: Another related comment is that a miniature golf snack bar will generally bring in five per cent of gross, sometimes more. This will probably convert to $15 to $30 per capita spending on food depending on the variables. And it will go up with the addition of a games room. What would you expect the games room to contribute to per capita spending in this scenario? Obviously games room size has a great deal to do with this as does the mix of video and redemption games. Is there any formula for determining the size of the games rooms and the mix of redemption to video?
WH: The per capita spending generated in a games room will depend on length of stay and the number of games available. I know of some family entertainment centers that generate in excess of $3.00 per capita. Figures in the range of $I.50 to $2.00 are not uncommon.
AL: With regard to your comments about the wet and dry activity mix. I believe the jury is still out on this subject and I understand the concern about mixing bathing suits and street clothes. Persons in bathing suits in a water park environment are likely to feel that someone in street is intruding on their privacy. As the move to include wet and dry activities continues there still is segregation of wet from dry facilities. We know that miniature golf is primarily a night business except on weekends or in the high tourist season. One idea is to leave the golf exclusively for the people in bathing suits during the day and only for people in street clothes at night. This presumes a location on the site that permits access to the miniature golf for persons not in the water park. Also the idea of two courses, one that is dedicated to wet orientation and one that is primarily dry, appeals to me. I say primarily dry because if the player in a bathing suit feels comfortable on the dry course why not let him go? I am interested in your additional comments on this subject.
WH: I do not have any problem with people playing miniature golf in their bathing suits. My concern is their propensity to do so. I am aware of two water parks that have miniature golf and neither gets much play. The exception at one is group business, which is offered at one of the courses on an exclusive basis. In this case, the park's management hit upon a way to appeal to those in group outings who want something to do other than water recreation.
AL: Obviously as we begin a discussion about multiple elements then length of stay, per capita spending and repeat business are very important. First, give me a brief description of how these items affect business in the above family entertainment centre and then tell me how they can apply to a free-standing miniature golf location. Is there an average hourly per capita spending for multiple attraction facilities and can that in any way be related to miniature golf?
WH: First, let us make the distinction between the residential and tourist markets. In a residential market, length of stay is more critical because it is the major determinant of the size of the market area. I use a formula that says residents will drive a distance that equates to one-fourth the length of stay. Thus, a two-hour length of stay equates to a market area within a 30 minute driving time, which comes close to your 15 mile limit in an urban setting. In a tourist market, this is usually not an issue. Second, with regard to per capita spending, we know we can "get away with " more in a tourist market than in a residential market. This speaks to the issue of repeat visits, too.
Tourists are, generally, willing to spend more on entertainment because they are in a vacation mind set; however, if the same pricing is instituted in a residential market, patrons may balk and show their displeasure by not returning. Some of the same considerations are true of a free-standing miniature golf course, except that miniature golf is usually less expensive on an hourly basis and, therefore, less subject to criticism for over-pricing. I have always maintained that there is a relationship between entertainment value, as expressed as length of stay, and per capita spending per hour. However, that relationship is not linear. If we look at major theme parks we will see that they generate about $3.00 per hour over a 7.5 to 8.0 hour length of stay. On the other hand, shorter stay attractions do tend to generate higher per capita expenditures per hour, although less overall. I think a fun centre should be capable of generating $4.00 to $5.00 per hour for up to 2.5 hours. To achieve these levels, however, the centre will have to be well managed and offer as much diversity of entertainment experience as possible.
AL: I believe it is fairly apparent that a free-standing miniature golf course with only 18 holes still in the northern market will have trouble building per capita spending. After all, this course relies on turning its parking lot reasonably quickly and for that reason usually has a small parking lot. My experience has been with the first addition of anything the length of stay goes up, as does the per capita spending. In this case let’s say a second 18 holes are added. I know that by discounting the price to play both courses and offering a discount to play the second course for those who have just completed playing one round we can bump per capita spending as much as $.50 with an average penetration of 15 to 20 per cent of the guests. I have seen some cashiers who could produce more than 50 per cent penetration rate during day shifts. What else can be done that is simple to improve per capita spending?
WH: Short of a major expansion, I would look at what could be done without additional staff. An obvious answer would be indoor elements. Depending on the length of stay, snack bar sales may be fairly insignificant but can be worthwhile if done in conjunction with the addition of other elements. The games room could be a good addition. If the project is in a residential area, where repeat visits are more likely to occur, a games room with redemption games is a consideration. Another indoor element that would fit is party space.
AL: I assume one of your answers might be food and beverage and maybe gifts. My own opinion is that these items are almost not worth the effort for a free-standing miniature golf facility until more activities are planned. I do not think food and beverage would amount to move than five per cent of sales. How do you feel about this subject and when is the magic point where food and beverage and gifts can be successfully introduced
WH: Our experience has been that not only is total spending a function of length of stay but so is spending for discretionary items. In fact, we have found that what we call "in-park " spending accelerates at a much faster pace with increases in the length of stay than do admissions and user fees. For a very short length of stay-one hour or less-we have found that in-park spending accounts for only 5 to 10 per cent of total spending. By contrast, at a major theme park, in-park spending is around 50 per cent of total spending. A free-standing miniature golf course with a length of stay of one hour is just on the verge of where in -park spending kicks in. Data that I have on existing facilities shows that whereas an 18-hole miniature golf course generates 3 to 4 per cent of its revenue from the snack bar, a fun centre with a length of stay in the range of 2.0 to 2.5 hours can expect the snack bar to account for 7 to 8 per cent of revenue.
AL: In the last discussion we talked a little about multiple activity centers. I am very interested in the indoor Market as it relates to free-standing miniature golf and or family entertainment centers with golf as only one facet. We are seeing many companies planning family entertainment centers which are up to 100,000 square feet. Miniature golf seems to be a principal element of most of these. Can you explain why?
WH: Aside from what I have previously stated, I would suggest that they are included because of their broad market appeal. If we compare miniature golf to, say skating or bowling, I think we would find that miniature golf has a much higher rate of participation. And I think the reason for that higher participation is the perception of what is expected in the way of performance. Anyone can "play " miniature golf, without fear of seeming inept; the same is not true of skating or bowling, where you are expected '.a exhibit a certain level of skill or risk derision.
AL: In these indoor markets the miniature golf facilities range in size from 4,200 to 14,000 square feet, which is 4 to 14 per cent of the space available on large facilities and, many times, as much as 40 to 50 per cent of space in small facilities. Most of three are tenant type operations where the operator must pay for capital improvements as well as pay monthly rent. Let’s assume that there is some price break on rent levels because these large facilities are serving in the capacity as a traditional large anchor store. Is there any formula to determine potential levels of investment per square foot which can be supported in this type of operation:
WH: In the situation that you describe, where the golf course operator is a tenant in a shopping mall, for example. I simply treat the rent as a line item in my operating expense budget. Presumably a feasibility study has been prepared or someone has estimated attendance and revenue. From there, we can estimate our operating expenses, including rent, to determine our gross operating income. Since we are renting, we will not have land costs in our development budget; however, we will have the cost of the course plus furniture and fixtures and presumably we know how much these will cost. From this point, we can tie gross operating income to investment to determine our return. We can then play "what if with our rent expense to determine how much we can afford and still meet our investment objectives. Depending on what that number turns out to be, we can determine how much square footage we can afford. In this regard, it should be noted that, while a linear correlation can be drawn between the square footage of a retail store and its sales, the same is not true of miniature golf, which might perform just as well in less space.
AL:
Let me just cover one other aspect of this in a different
way. If you had 100,000 square feet of indoor space how much would
you allow for miniature golf? How about 50,000 square feet? What
about 20,000 square feet?
Keep
in mind that the concept of the miniature golf course changes with
size. The ability to go high is somewhat
lessened and portable courses take 3,000 to 4,000 square
feet. Some courses require more space than others. Some
clients like the broad expanse of green space while others
want every activity as small as possible. How does the
correlation of space and income which yon mentioned
figure in these scenarios?
WH First, I would have to address the feasibility questions, in general—level of market support, income potential, etc. I have never had a situation where we recommended 50,000 square feet for indoor miniature golf and I would have to feel very strongly that it would work before recommending it. I even have trouble with recommending 20,000 square feet. However, as you know, I have a different relationship with a client than you do. The client can tell you what he likes and you do not have to agree with him to give him what he wants. In my business, telling a client what he wants to hear is not in his best interest or mine.
AL: Along this line our company, Adventure Golf Services, has developed a reasonably inexpensive way to build a miniature golf mountain over the top of game or other amusement operations where a high ceiling is available. This has the effect of reducing the rent per square foot for the golf and whatever is underneath. How would this construction technology affect an investor's decision making?
WH I think the concept you describe has merit. In fact, I can see how you might turn the two-level operation to your advantage with a little imagination. What about a hole that starts upstairs and ends below?
AL: For clients who ask, I have indicated I am against a
free-standing indoor miniature golf facility unless it is
accompanied by other activities. I am speaking about the
situation where someone wishes to convert a 5,000 to 10,000
square foot building into a miniature golf facility. What is
your opinion of the feasibility of this scenario? Does indoor
miniature golf alone, in a small indoor facility, have that
much drawing power? Also, how would you compare the feasibility of
this same facility which might contain three to
five activities along with miniature golf?
WH I would probably counsel against a free-standing indoor miniature golf course simple because I see no justification for such a venture when more viable options are available. I would certainly be more comfortable with the extra elements to augment the miniature golf.
AL: How do you feel about a free standing miniature golf facility within a mall? I know that some have done well and others haven’t. What makes one successful and one not, from a feasibility point of view?
WH: I have got to believe that the same factors apply to a mall situation that apply elsewhere. How much traffic does the mall generate and what are the demographics? Where is the facility located within the mall? How much "curb appeal" does the facility have? How is it being managed and promoted? In addition, are there any special conditions that a mall location might imply? For example, I once worked on a mall project that was required to observe the operating hours of the mall. This meant that the project had to open at 10 am every day of the week throughout the year, except Sundays, when the entire mall was closed.
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