Why should bars and restaurants add competitive socialising activities to their venue?

July 4, 2024

Major city centres have seen a significant increase in the opening of competitive socialising venues. Operators like Flight Club, Roxy Ball Room, Boom Battle Bar and Whistle Punks are just a few of the growing number. Offering a fun night out with premium drinks, quality food and competitive activities for groups of friends to enjoy.

These activity venues have been able to flourish and grow, post-Covid, whilst other hospitality venues have struggled. Many venues have looked to diversify their offering, with bowling centres, soft plays, leisure centres and holiday parks bringing in a broader range of activities to increase dwell time, maximise spend per head and encourage repeat visits. So, how can more traditional pubs, bars and restaurants get in on this action? But more importantly, why should they?

The Historic Problem

Traditionally leisure venues (particularly large Family Entertainment Centres & facilities like soft play centres) have been priced out of the high street. The yield per square foot for a large bowling centre is too low to afford the occupancy costs in the centre of town which forced them to occupy larger buildings in out-of-town retail parks or industrial estates.

This resulted in high streets being mainly occupied by retailers, and to a lesser extent bars, restaurants and other commercial uses – such as office space. However, the economic downturn following Covid magnified the impact of online shopping in the retail sector leaving high streets struggling. When combined with rising labour costs, increased cost of sale and soaring utility rates high street hospitality venues in particular were left floundering.

The net result is that in recent years both hospitality and traditional leisure financial models have failed to grow at a rate which matches, let alone exceeds, soaring inflation rates, leading to a profitability squeeze which has resulted in some high-profile failures.

The Change in Customer Behaviour

Post-Covid there has been a significant shifting in customer behaviour – particularly a surge in consumer desire to engage in experiences. This is strongly evidenced by the way competitive socialising venues often outperform hospitality in terms of customer visits and profit generated.

Secondly, today’s customers are more transient. Groups are happier to spend time in multiple venues in one night to ensure they can create the exact experience they seek. Previously customers tended to stay in the same venue, or at least a very close geographical area for their night out – often simply opting to head to a specific bar / pub / restaurant for the night, unless on a traditional uni student pub crawl!

Guests also have higher expectations. The emphasis on providing quality food has never been greater. The demand for an increased range of alternative F&B options has surged with the rise of Veganism, environmental consciousness requiring locally sourced produce and a cultural move towards low & no drinks.

These shifts in behaviour have created a difficult trading environment, but also a huge opportunity for pubs, bars and restaurants well positioned to leverage their F&B expertise. Traditional hospitality venues who pivot their offering by adding competitive socialising activities to embrace the consumer need for experience can maximise their potential as a go-to destination.

Why are Competitive Socialising activities the solution?

The main reasons are:

The Competitive Socialising operating model results in improved yield

Competitive Socialising provides an extended trading pattern

Competitive Socialising monetises both the product AND the space that operators have to sell

On the last point here, bars and restaurants charge for their F&B but they don’t charge for the use of the space. Competitive Socialising venues are charging customers for their F&B AND for the use of the space, by charging for use of the activity.

You might be losing a couple of tables but whilst customers are using the activity you are getting revenue from their F&B as well as the activity. Whereas, without the activity you aren’t getting any revenue for the space their table occupies.

Competitive Socialising: Operating Model

The traditional hospitality operating model generally looks fairly similar to the below. Obviously, there’s a lot of variation across different sectors, and of course we would all like to be saving a few % on the CoS and Labour elements in particular, but this is a good starting point for comparison.

So how would a venue based around Competitive Socialising differ from this? Well, unfortunately pivoting from a hospitality venue to a competitive socialising venue isn’t going to make a massive change to your labour or occupancy costs. Some activities, such as AR darts incur a monthly charge which will slightly increase your operating costs. However, the main shifts will occur in the Cost of Sale area, which in turn makes a big impact to your profit.

Once your equipment is installed there is next to no additional cost of sale regardless of how much the activity is used. Of course, for every pint or burger you sell you have a cost of sale, which increases directly in line with the quantity you sell. However, whether you sell one game of bowling or 20 games of bowling there is exactly the same cost of sale – and it’s extremely minimal. Assuming the venue has a 50:50 split between activity revenue and F&B revenue; you would therefore have a model which look a bit more like the below.

The inclusion of activities, therefore, reduces your Cost of Sale and increases your profit. It is this alternative operating model which has allowed competitive socialising venues to more successfully withstand the impact of rising inflation – a 20% ‘guide’ profit % is far more robust than a 10% one.

Competitive Socialising: Trading Patterns

If you just looked at yield per square foot you would be led to believe that a restaurant is the best use of space within a venue.

However, when you consider the trading patterns of different types of venues, the picture can be very different. Here, we’re considering some quite vanilla hypotheticals – not all bars, restaurants or any other venue types are the same, but we need to have a starting point for the comparison.

A restaurant will have a lunch peak and a dinner peak, with a few hours of some very minor usage either side. However, before 11am, between 2pm & 4pm and after 10pm they are pretty empty or closed for service prep. In general reaching capacity for up to two-three hours per day.

A bar will tend to have no to low occupancy before 2pm. There is then a gradual build, peaking at around 10pm, staying full for an hour or two before dropping off after 1am.

A competitive socialising venue hugely increases the trading window. Typically having solid occupancy levels from midday rising to full by 4pm and sustaining this until around 10pm before demand slackens. This broad trading pattern significantly improves the contribution potential (when considering yield per square foot & trading saturation patterns) of the venue. We would expect to see a competitive socialising focused venue have a yield potential of c. 30% greater than a bar and c. 10% greater than a restaurant.

Competitive Socialising: An emerging sector

However, 10% is pretty close – and opening a restaurant is cheaper than a venue with bowling lanes. Why not just open a restaurant?

Well, in short – there are a lot of restaurants in the UK, and by comparison very, very few competitive socialising venues. So, in order to reduce your competition and leverage your existing F&B expertise, why not consider entering a complimentary, but sufficiently different sector which – while growing quickly – is still fractionally small compared to that of traditional hospitality.

Making the change work for your business

The data and our experience both show that adding activities to a venue is highly profitable. Whether you are carving out space within your main venue, transforming an underused function room or creating a new venue the addition of experiential, social activities can transform your business. However, it’s possible to get it wrong. You can’t just add activities and expect them to sell themselves!

Getting the right activities, implementing a pre-booking facility and deploying a comprehensive marketing strategy to educate your customer base is essential. Thankfully, our team are experienced and can help you model the financial impact of different activities, plan the perfect location for each game and train your team.

Whether you’re looking to dive in completely with a radical overhaul, looking to bring in Duckpin Social bowling, create a karaoke room, erect a batting cage, add some mini golf or are just dipping your toe with a couple of lanes of AR darts, some shuffleboards or a pool table we are happy to help you review your options and find the best mix for your venue.