Growing Pains
A Post-Mortem Look at My Now-Shuttered Second Mall Arcade
by Adam Pratt, Arcade Galactic & ArcadeHeroes.com
In the November 2022 issue, I mentioned that I’d be closing the second Arcade Galactic location (opened in 2020). It’s time to delve into that with a “post-mortem” – what went right, what went wrong and why I made the decision. It’s important that I better understand what happened but I also hope this gives fellow operators food for thought regarding their own businesses.
First, you might be wondering why I decided to open a second location, particularly in the middle of the pandemic. I covered that in the November 2020 issue of RePlay so I won’t go into all that now other than to say that I was looking at a Plan B in case things went sour at our original mall location. That arcade was facing some very stiff competition from a multi-million-dollar FEC just down the hall. Also, there were very few malls in Utah that didn’t already have a chain FEC attached to them and since the Newgate Mall in Ogden, Utah, didn’t, I thought it would be a good place to plant another flag. For reference, my original location is in West Valley City, Utah, a pretty generic name for the second largest city in the state.
While I was building out the space in Ogden, there were good and bad omens. On the upside, the mall was much nicer and had higher-profile tenants than West Valley. I pushed to get the empty space next door to Victoria’s Secret, thinking that while the ladies shopped, the husbands/boyfriends might hit us up to pass the time. Also, while I was working on the spot, I noticed foot traffic seemed quite high (better than what I was seeing down in West Valley).
The bad omens were troubles in getting a business license with the city and some issues with keys. Dealing with the city was strange and eventually, we had to get the mall GM to call the mayor of Ogden to convince them I wasn’t opening up a gambling establishment. For some reason, their licensing office assumed that’s what I was doing even though they never even talked to me about it.
Once those hurdles were in the past, it seemed like we were ready to do some great business, perhaps better than we’d seen in our original location!
I was only open for November/December of 2020 but during 2021, I was able to temper my expectations. Consumers were still finnicky coming out of the pandemic. While Utah was on the opposite end of the spectrum from a place like California when it came to lockdowns and restrictions, many behaviors had still changed. As a result, it was difficult to tell what poor business could be chalked up to Covid and what might have been more related to local tastes.
I did discover certain games did much better in Ogden than West Valley, particularly pistol games. An old Konami Jurassic Park III would struggle to make $5 in West Valley but in Ogden it would easily make $60-$80/week. My Luigi’s Mansion Arcade and House of the Dead Scarlet Dawn also did very well and seemed to bring people into the location. Pinball also did slightly better in Ogden, which I think might be due to the lack of local competition in that regard (something that would have changed had I stayed open since an arcade bar with a huge selection of pins opened nearby). Aside from that, I would eventually bring up some 4-player games from West Valley to shore up our multiplayer offerings and those also seemed to earn well.
Even so, something was clearly off. No matter what I did, earnings in West Valley were consistently double or triple Ogden on a month-to-month basis.
What was going on? Some of it could have been size. Ogden was smaller with a bit over 40 games compared to 60 pieces in W.V. Also, the Ogden location faced competition from a “Starcade” movie theater lobby arcade attached to Cinemark Cinemas. (They had fewer games than I did and were closed the first part of 2021, too.) In contrast, while there is also a movie theater in the West Valley mall, we have a synergetic relationship. Since they don’t have their own game room, any time a big movie launched, my location would be busy. However, with competition from the major FEC in that mall, we’ve still seen a negative shift in business. Thank-fully, not to the degree I initially feared. As it is, I’m still busy – or slow – depending upon the quality of movie releases hitting on any given weekend.
Negatively impacting both locations and part of the equation in Ogden has been the mostly poor releases from Hollywood in 2022 and the consumer preference to save money and wait for big releases to hit streaming services.
Mall hours also affect profitability and up until the end of last year, the Ogden mall’s closing time was 8 p.m. While that was the case in West Valley too, the way mall security handled the situation was different. In W.V., security allows people to wander the mall after closing time and management allows us to stay open until 9 if we like. Even though nightlife and foot traffic in Odgen dies off around 6:30/7 p.m., security was super strict, often badgering whatever customers we did have to leave as soon as the clock struck 8. Shooing customers out then rolling in a big metal gate that closed off right in front of Victoria’s Secret didn’t help.
Those issues aside, when my lease came up in 2021, I was already wondering if things would be worth pursuing but I decided to give it another year to see if we just needed more time for people to discover us. I signed again and gave it another shot.
The beginning of 2022 was better than the beginning of 2021 in Ogden but as the year wore on, it became apparent that things weren’t working out. Once May hit, we started making much less than the same month the year prior, a trend that continued every month until we closed. We often made a little more than double what our monthly rent was, but it didn’t cover all of the expenses. For some reason, everything was more expensive for us in Ogden than in West Valley, which was odd given that it’s a smaller city. And so, when the earnings started to drop, it showed and it showed fast.
At this time, in addition to lackluster movies affecting traffic, gasoline was hitting record highs and inflation in general was hurting business. A summer with record prices and few movies worth seeing (really, there was just one – Top Gun: Maverick) meant people stayed home or didn’t go out or travel much. Still, I think there must have been something regional going on since we didn’t see the same huge drops in West Valley.
One factor I have control over – and admit I need to work on – is a money-saving measure I’ve implemented at both locations. The malls require we open in the mornings (11 a.m. in West Valley; 10 in Ogden) despite the fact that we often have an empty arcade early in the day. I noticed that if I didn’t turn on every machine, I could save a few hundred dollars on my electric bill each month. I posted signs explaining that this was an energy-saving measure and told people we’d happily power-up any game they wanted to play, but it still confused, and sometimes even offended, customers. One review claimed most of the games were broken down but that wasn’t the case at all.
I’ve also learned that I’m not a great hiring manager. It’s common to have issues with employees but I did make some poor choices. Fortunately, while they lacked in quality, they were at least reliable when it came to opening on time. I think I was probably too hands-off with the Ogden employees, only going up there once a week and rarely working closely with them (though we stayed in touch with instant messaging). The result was that they weren’t as well-trained and focused as they should have been. It’s also possible that through my physical absence, I missed learning about issues that customers weren’t communicating through reviews and such.
Another factor that led to my decision to shutter Ogden is that without good money coming in, I couldn’t hire more people and the person taking up the slack was me. I know one cardinal sin in business is making your business a job instead of another source of passive income, but without the profits, I couldn’t hire someone to give me much of a break. The result is that since opening Ogden, I was working 11- to 13-hour days six or sometimes seven days a week. It becomes even more challenging when someone on the crew gets sick or you want to take a vacation. During this time, my family barely saw me except when I’d take the kids to school in the morning. After two years, it really starts to drag on a person’s mental health, especially when you have two teenagers at home and their mom feels like a single parent.
There are some other things at play but I think this might be the biggest factor going into the decision to close. Had the money been flowing to where I could hire more help and not have to be working so much, then perhaps I’d be writing a happier article. Perhaps if I had relented and brought in redemption for that location, fortunes could have turned around. (By the way, we did have an old crane that did well enough though not as well as my video games.)
Looking forward, I hope that by consolidating all of the equipment into one location we can better compete with the FEC. I’m still leery of that (to the point where I might move if I can find a good spot outside of a mall) but for the time being, I’m focused on making this one Arcade Galactic as awesome as possible. Perhaps that will include installing a card system but that will take a bit of cash.
While this second-location venture was ultimately a failure, I’m glad to have gone through the experience. I’m still standing and hope to retain some of the gained wisdom so I make better decisions in the future, doing my part to keep the arcade spirit alive. I also hope sharing my story can provide some insights to help you and your business’ journey. Here’s wishing us all a prosperous 2023!
Adam Pratt is the owner and operator of Arcade Galactic near Salt Lake City, Utah, and also publishes the Arcade Heroes blog site. He can be reached at [email protected].
