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WAKING UP AND SMELLING THE COFFEE — THE REALITY OF SEEKING SUCCESS WITH INDOOR KARTING
By Peter F. Olesen, P.E.

The appeal of indoor go-kart facilities continues to increase as more and more facilities are developed around the country. This is especially true in the Snow Belt and in the Pacific Northwest. Unfortunately the list of failed ventures continues to grow as well. Many of these were ill advised in terms of location, market, design concept and related individual circumstances. As the indoor karting industry continues to expand, several realities are becoming obvious. These include the following:

1. For most areas in the United States, outdoor karting holds sway during the warm months of the year. In most areas this extends from April to October or November. During this period, indoor karting becomes less appealing when outdoor alternatives exist. To succeed, added attractions have to be included that can attract added guests during the "off season".

2. As more facilities are still being developed using gasoline karts, the problems associated with operating internal combustion power indoors still have a major impact on operations. While individual communities or other regulatory agencies require varying air quality standards, the necessity for continual air changes results in sizable air handling costs for heating in the winter and air conditioning in the summer.

3. Many state and local fire codes have restrictive fuel storage and handling regulations that seriously impede efficient operations when using gasoline powered karts. These often extend beyond just the fuel storage and refueling operations to concerns involving associated attractions

4. The high cost of establishing suitable facilities has resulted in the selection of less desirable building sites that attract lower attendance due to their location. Some were hard to find because they weren't on main thoroughfares and other were in dingy or less populated locations. A number of facilities were located in older less attractive locations, such as industrial areas where there is little evening activity. For many potential guests this generates a perception that the location is not "safe". While this may not be true, it is a conception that must be changed, which can become a major challenge.

5. The decision to include alcohol in the mix has reduced the appeal of family units and restricted the ability to attract younger drivers. Some facilities have been able to overcome this problem, while others have not. This requires serious evaluation of the relative negative and positives of such a decision.

6. Lack of alternate entertainment venues within the facility reduces the appeal to many groups that might otherwise visit the facility. Single attractions have a lesser ability to expand their market base. Many social groups have varying interests that drive their ultimate entertainment destinations, as well as the time they spend there.

Operating with a narrow target demographic (adult serious kart racing enthusiasts) greatly reduces the potential attendance. Success depends on a sufficient number of new and repeat visits being attracted to the site to provide the revenue required to successfully continue to operate. Having junior programs tends to increase the number of visits, but may not have sufficient impact to turn a program successful.

The establishment of an aggressive group-marketing program to encourage team building and related corporate events can often result in a sizable increase in attendance. To be successful, these events should offer more than just the karting experience. Properly equipped meeting rooms, food services (usually catered) and additional attractions become important elements in being successful with such a program. It also requires a group sales/event coordinator working full time to assure on-going success. This is not an assignment for the average office worker. It requires enthusiasm, positive people skills and marketing ability.

8. Adherence to European kart design standards has a potential for conflict with state and local regulations. This includes the reluctance on the part of many to use roll bars and seat belts. Competition indoors results in a different set of situations than occurs on the typical outdoor competition tracks. The restricted area between track barriers results in anyone being dumped out of a kart being immediately in harms way. This has also created problems for acceptance by some insurance carriers.

9. Failure to properly market the facility constantly as being open to the public and not only for group events. “Build it and they will come” only works in movie scripts and fiction novels. There are many competitors seeking the same discretionary entertainment dollars. When possible establish cross marketing associations with other entertainment venues, where both benefit.

The thrust of this article is that Indoor operations can succeed. To do so requires careful planning and open minds on the part of the developers. You cannot succeed without addressing what the market wants rather than what you personally want. Working with consultants that have experience in the family entertainment market can often result in the development of new concepts that incorporate the initial kart-racing venue within an expanded mix of attractions and karting program. This has been demonstrated more often in facilities that currently do not operate as an exclusive racing venue.

Adhering to a narrow target market ("Adult" Indoor Go-Kart Racers) will require a stronger on-going marketing program in order to maintain a profitable level of attendance. For all but very large communities, this could be a tough challenge. There are far fewer potential guests and many other potential uses for disposable income. While leagues have been successful, they require constant efforts to maintain attendance. Group sales, which are another potential source of business, require ongoing efforts, not only to initially attract groups, but to establish and maintain overall programs that will generate repeat business.

For those that choose to include alcohol in their attraction mix, there are further issues to consider. Many jurisdictions have strong regulations regarding the consumption of alcohol and participation in racing programs. Check with your insurance carriers. Also verify the maximum speeds permitted by their policies.

This writer is concerned with the situations he has observed in visits to a number of indoor go-kart racing venues. These include the placement of safety equipment (or lack thereof), unsafe fueling practices, lack of safe air handling systems, marginal track barrier systems, poorly maintained karts, unsafe pit operations, poorly trained and inattentive staff and related issues. This often is the result of the lack of local and state agencies having specific standards and regulations, while in other situations it reflects negligent management. When one takes advantage of the lack of regulations to develop an unsafe operation, they are flirting with disaster. One major liability claim can put the operation out of business.

Because the salesman or manufacturer says something will succeed does not make it so. Proprietary equipment, be it karts, timing systems, barriers, etc., must be viewed in an objective fashion. Manufacturer's sales hype often is at best, marginal in reality. They are selling a product, which means they are very biased in their approach to what may be best for any given facility. We have seen situations where the recommended product was totally unsuited for the specific site and program for which they were recommended.

Many facilities have been installed in buildings that are too small or have physical barriers that constrict good design. They are often designed by the operators themselves or in conjunction with kart sales persons or manufacturers. While some of these survive, the list of failed ones continues to rise. Remember, kart manufacturers and barrier manufacturers have to sell their products to survive and profit. Their primary business is not in developing successful facilities.

The arguments for narrow target markets only work in large population areas that have little competition. Even there, poor site selection, bad facility design, untrained or unenthusiastic staff members and inadequate marketing programs can all result in failure.

Expand Attractions:
It is our opinion that most facilities can benefit from the creation of an entertainment environment that will appeal to and attract a broader demographic cross section of the community. Properly planned this can still include and even feature the kart-racing environment. This may require specific segmenting of some attractions. It is especially true if there is intent to include alcohol in the total mix.

An experienced consultant will evaluate the market, the client's proposed attraction mix, site location and proposed method of operation and then give advice based on his/her experience and expertise. A good consultant will provide advice based on reality, whereas some developers become so convinced that what they personally want and enjoy will work, that they overlook reality. The consultant's ability to be successful in this industry is dependent upon the success of the individual clients served. This reality offers most clients the opportunity to see the proposed venture through an unbiased set of eyes, and to benefit from a separate and experienced viewpoint.

Some consultants offer complete services from feasibility through final design, while others specialize in only feasibility or design. In selecting a consultant, check out their reputation in the industry and with previous clients. Obviously you will get positive references. Check further, if possible. Don't be afraid to ask specific questions.

Regardless of the source of advice, success or failure ultimately depends on the person operating the facility. If no effort is made to create a friendly, entertaining environment, maintain a properly trained staff and a well-maintained facility, well kept equipment and employ an ongoing marketing plan, the best of facilities will fail. These are assumptions made by consultants in their evaluation of potential success.

Once a facility opens for business, the owner/operator must keep in mind the fact that this project is unique in location, customers, staff, management and specific attractions. It is important to evaluate each of these elements in an ongoing manner to identify any elements that need to be modified for maximum success. Each element is unique as is the interaction between them. "It's Okay" is not the response you should have in reviewing any of the elements. Each one should be reviewed in terms of how can it be better or how should it be changed if it doesn't work. Peoples' desires change, the competition changes and your staff and their handling of your guests can change. A better mousetrap exists only until it fails or a better one comes along. Anticipate, plan and act when necessary. Don't wait for failure. Keep a positive attitude, know your guests and communicate with them. Avoid thinking you know everything or that the guests and your suppliers are always wrong. Listen to your consultants, they may have dealt with the problems you incur or may know someone else in the industry that can provide additional input.

Being pro-active is very important. It also includes keeping abreast of the changes in the industry as well as within your target market. Keep aware of possible changes that can increase your long-range success as well as your present bottom line.

Train your staff to understand the importance of preventative maintenance, complete site cleanliness, positive interaction with guests and most importantly, that they are part of the facility team and represent the facility in everything they do on the site. Reward superior performance and correct poor performance. Instill pride in the facility and themselves. A smiling, friendly employee is one of your facility's most important assets. Always treat your customers as guests and make them feel welcome. Repeat business depends on it.

"Failing to plan is planning to fail" and "you never get a second chance to make a first impression" are both important adages to remember.

There are several directions that can be taken to increase the market penetration for a kart-oriented facility. Both can work if the specific environment is compatible. One direction is to expand the variety of entertainment attractions offered in the facility to appeal to a primarily adult market. This can be done without taking away from the racing venue itself. Food service, billiards, mini-lane bowling, adult oriented arcade games, simulators and related elements can be incorporated into most facilities. Leagues, team building programs and related elements can be added. For the operation to succeed, it is important that the marketing program be ongoing and attuned to the local market.

There are a number of attractions that will fit within most family oriented facilities and others are always being introduced. The old standbys will continue to be successful. New ones have to stand the test of time to establish whether they will become tried and true successes or go down in flames. Our advice is to stay with proven elements and let others become the "beta testers".

To target a broad cross section of the community, we recommend that the owner consider bumper cars, laser tag, redemption games, snack bar, mini-lane bowling, soft play and possibly a rock-climbing unit. We also suggest that serious consideration be given to rookie karts to enable the operation to serve the birthday party market during the daytime when the adult segment is very small or non-existent. Remember that the sixteen year old determines where the family goes for entertainment and the three year old says when they leave. In other words, plan at least one attraction geared toward small children. This could include a toddler softplay area, sandbox, small battery powered cars or similar attractions. Another attraction could be a small carousel. There are also many kiddie rides and flat rides for adolescents.

Careful scheduling of league competition into later hours of the evening and avoiding weekend afternoons can also enable the site to better serve family units and younger teens. The broader the mix of attractions, the better the potential revenue.

As a design consultant, we have no vested interest in any specific attraction, mix of attractions or overall facility mix. Our interest is in the success of our clients. Their success breeds our success and their failures will result in our failure. When anyone seeks to enter into a project that involves a sizable investment, it behooves him or her to develop a team that includes one or more members with experience in the industry. Don't look for yes men, but rather seek out people that will give honest answers and have your best interest at heart.

Regardless of your specific concept, may it be successful. Remember all the adages, as they do have merit. Failing to plan is planning to fail and you never get a second chance to make a first impression.

ABOUT THE AUTHOR — Peter is president of Peter F. Olesen and Associates, Inc. of Mount Prospect, Illinois. The firm was established in 1984, and has been continuously involved in the family entertainment industry since that time. The firm offers feasibility, master planning, concept development, final design and construction engineering services for a wide range of facilities including indoor and outdoor concession karts, miniature golf, bumper boat ponds, bumper cars, golf driving ranges, year around indoor facilities, picnic areas and related facilities.

To date the firm has served clients in 37 states, Brunei, Canada, Mexico and Puerto Rico on more than 250 separate projects. Mr. Olesen can be reached at Peter F. Olesen and Associates, Inc., 500 West Central Road, Suite 205, Mount Prospect, IL. Telephone 847-253-1515, Fax 847-253-1532, e-mail pfolesen@flash.net and www.olesen.com.

END

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