Revenue to Attraction Cost Ratio: 3 Questions to Ask Yourself

When it comes to deciding what new attractions to add to your amusement park, water park or FEC it can be difficult for some people to gauge. How much revenue each attraction can generate in a day, a month and a year – so what do you do? Compared to cost. How long will it take in the best case “and” worst case scenarios, to pay for the attraction?

1. What do you need to factor into the decision?

• Installation: labor to install, electrical, concrete, etc.?
• Labor to operate
• Overhead costs?
• Expected profit margins

2.)??Is the ROI worth it??

For example, if you only make 5% or $.05 for the attraction when you normally make 30% or $.30 on all your other attractions, you probably should look at other attractions to install. Just having something new that does not contribute, may not be worth the effort if it's not contributing to profits in a similar profit margin.

3.)??What is the “Revenue to Attraction Cost Ratio” for this new attraction?

“Revenue to Attraction Cost Ratio,” is basically known as the payback period. If you paid $1 million for an attraction and you get back $100,000 in revenue the first year (or 10%), then your payback is 10 years to pay for the cost of the attraction. If your revenue is $500,000, then your payback is 2 years. Ideally, if you really want something that pays you back $2 million, then your payback period is 6 months.??

Most investments should be in the 6-24 month range, this is your Revenue to Attraction Cost Ratio.?A good method is to buy attractions for around $25,000 and you generate $1,000 per week so you have a 25-week payback.??

Here is an example, we have a new arcade game right now that costs $25,000, it will have a cost payback of 14 weeks. This is a great return! The shorter the period, the better the return!

Getting new attractions is a must to keep up with competition and keep your guests from getting bored in your facility. By answering these 3 questions each time you’re ready for a new addition, you can narrow down your choices to make your business a solid profit. Take out the mystery and make a strong investment, that is the key to making a good choice when it comes to deciding on the latest trending attractions.

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07-09-22

?Tim Murphy is CEO of APX Operating Company, dba Boomers Parks, under the ownership of Cerberus private equity ($55B assets). Boomers Parks owns six family entertainment centers and two water parks with locations in California, Florida, and New Jersey.

As CEO of Boomers Parks since 2020, Tim took these eight parks from bankruptcy to profitability in just a year – in the middle of a global pandemic. When Boomers acquired these parks, they were operating at a $10 million loss. Tim transformed the customer experience and added new revenue streams to generate a 180% increase in revenue in 2021 (and on track to be a 250% increase in 2022).?

Tim launched his 35+ year career at Walt Disney World and has since served more than 150 entertainment, restaurant, and food & beverage brands across more than 10,000 locations in C-suite and senior positions.

?Additionally, Tim is a Board Director with Coney Park, Happy City, and YuKids - Family Entertainment & Amusement Parks, part of The Carlyle Group ($275B assets), a private equity firm that operates 150+ family entertainment centers and amusement parks in Latin America.?

?Tim has worked with top-tier entertainment and restaurant brands including Disney, Rebounderz Trampoline Parks, Darden Restaurants (Olive Garden, Bahama Breeze, etc.), Red Lobster, Jimmy John’s, Applebee’s, Sonny’s Bar-B-Q, Denny’s, El Pollo Loco, Hardee’s, Golden Corral, and Firehouse Subs.?

Tim has overseen more than 35 purchase transactions involving over 1,200 restaurants, stores, and park locations.?With extensive experience in buying and selling businesses, handling negotiations with buyers and sellers, and creating strategic partnerships to build strong brands, Tim has facilitated deals ranging from $11 million to $350 million+.

?Tim is a member of IAAPA, CAPA, FAA, AAMA & WWA. He is a licensed commercial real estate broker in the State of Florida. Tim earned a BS/BA in Accounting from the University of Central Florida and?an MBA in Finance from Orlando College.