The Experience Dollar is Alive
Our Own Numbers Show Where It Went & How to Win It Back This Quarter
By Howard McAuliffe, Partner, Pinnacle Entertainment Group
Using broad consumer data is important to understand what is happening in our industry, and what might happen in the future. However, it always requires context, fine tuning and having a deep understanding of our business. There is a lot of talk about how high-income earners are driving the economy, but that is just part of the story.
The Federal Reserve Bank of New York does publish a series showing high-income households outspending everyone else since 2023. That part is real. But be sure to read the footnote on the Fed’s own chart: “Numerator does not capture services, such as airlines and hotels.” The Fed’s series measures retail spending excluding autos, and it doesn’t measure services at all.
So, I went looking for the services number and instead found the bigger problem…
We’re Not a Service, We’re an Experience
Getting your lawn cut is a service. Getting your hair cut is a service. A family driving to an FEC on a Saturday night is something else entirely, and it behaves differently than a haircut. Nobody skips a haircut for six months because the mood turned. The Experience Economy is a book written by Joe Pine and James Gilmore that in many ways began to truly define this distinction.
Federal statistics don’t make that distinction. The Bureau of Economic Analysis has a line called “recreation services” that adds your game floor together with streaming subscriptions and veterinary bills. The CPI version is worse. There, cable, streaming and pet care carry over a third of its weight. When somebody tells you that “recreation spending is up,” they may be telling you the vet raised his prices.
Two free sources get close to our business.
The Bureau of Labor Statistics publishes monthly employment for amusement parks and arcades as its own line. It comes out the first Friday of the month with its jobs report. In a labor-intensive attendance business, headcount is a reasonable indicator for traffic, and right now it’s flashing yellow. The broader arts, entertainment and recreation sector has shed roughly 43,000 jobs since May, three straight monthly declines. The arcade line itself runs a month behind the headline, and its July reading was down 6% from a year ago. The wallet shift is already showing up in payrolls.
And, Census reported about two weeks after month-end that food services and drinking places were up 5% over last year in July. They call it a point and a half after menu-price inflation. It isn’t an FEC, but it’s the same wallet on the same night out, and it absolutely is a direct indicator of a street operator’s traffic.
For arcades in dollars, there is no public data available, so I’ll share some insights from our data.
What 100 Arcades Are Saying
We track arcade revenue at more than 100 client locations – same stores both years – sitting inside bowling centers, pizza concepts, theaters, resorts, malls and sports facilities. Here’s what we see in 2026 so far, but with the theater-anchored locations set aside for now (more on them in a moment).
January was down 4.3% against last year. February, March and April stayed negative, then May swung to plus 3.9%. June held positive, and July – preliminary, with about two-thirds of locations reported – is running plus 4.3%. While the survey data was getting gloomier all summer, the cash boxes turned.
Before anyone celebrates, look at the breadth number: Fewer than one location in three is actually up for the first half of 2026, and the median location is down about 4%. The average turned positive because the best-run locations, many of which continue to invest in their facilities, are pulling away from the pack, not because the tide came in.
The anchor matters too. Arcades inside bowling centers ran flat for the half and were up 6% in July. Arcades inside pizza concepts were down 5. Locations anchored by a single activity – for example, trampoline, sports complexes – were down double digits. The closer the anchor sits to food and a night out, the better its game room held.
Now, the theaters. Arcades in our theater-anchored locations grew 4.6% in the first half, the best of any group. I’m deliberately setting them aside, because the pattern is lumpy in exactly the way a film calendar is: up double digits in March, April and June, and flat to down in between. That’s a strong slate of films filling lobbies, not an arcade trend. But don’t skip past what it proves. Give a family something they’ve decided is worth the trip, and they show up and spend on everything around it. The experience dollar didn’t die. It’s being focused on good value.
“Everyone” Is Trading Down
One more piece of context for the quarter. The Fed’s July Beige Book reported trade-down behavior everywhere: Richmond saw “trade downs and tradeoffs” across “all consumer income levels,” Atlanta found “shifts toward value among higher-end customers,” and New York flagged that “sales were lackluster at mid-tier attractions.” If you run street locations, Kansas City is your paragraph – goods spending fell while “restaurants and drinking establishments continued to report growth.” Your locations’ traffic should be relatively steady, whether you capture your share is up to how well you operate.
And on Aug. 25, the Conference Board reported that consumers plan to cut spending on movies and amusement parks over the next six months while restaurants and bars stayed a top-three intention.
Four Things You Can Control
Gas averaged $4.07 the week of September 1, up 89 cents in a year. You don’t control that. Here’s what you control by New Year’s.
1. Split the number you’re already looking at. Our panel’s average looks fine while the median location is down – the same thing can be true inside one building. Strategize to get more people in your door that have disposable income and work to drive spending with this group by providing value. People will spend more for better value.
2. Build a real bottom rung. When trade-down reaches every income level don’t ignore customers with less or little disposable income. These customers may be willing to shift their behavior to get the price they are comfortable with. Provide your best values on items with low cost of goods and at times when you are slow. I don’t mind charging less for my bowling before 5 p.m. because it is the slow period and my costs are mostly fixed.
3. Sell the ticket, not the membership. The data on memberships in family entertainment is lacking from what I can see. If you want to try a membership program, start small and measure it closely including its impact on your staff and the guest. Many membership programs drive a lot of discontent and not a lot of sales, though they sound good on paper and in print. Provide a great experience at a good value and customers will pay for it.
4. Sell your holiday parties now! Many companies have a lot of employees working from home, and budgets are still there for holiday parties for companies and teams. Provide a great value this year, and market it now to make sure your holiday calendar is full.
Our 100 arcades already told you the important news: The families are still coming, and they’re spending with the operators who gave them a reason. Be the reason.
I welcome your feedback, positive and constructive alike. Email me at [email protected].
Howard McAuliffe loves to imagine and implement new products, business models, and ideas, and is CEO and president of Pinnacle Entertainment Group Inc. He’s an industry veteran who got his start in the business when he was just 16 and has 20 years of expertise in product development, as well as FEC and route operations. Howard’s wife Reem and young son Sami are the center of life outside of work. When he’s not working, Howard can be found enjoying the outdoors, hiking, fishing and mountaineering. Traveling anywhere new or to old favorites like the American West is a passion. Readers can visit www.grouppinnacle.com for more information or contact Howard at [email protected], he welcomes positive as well as constructive feedback and counterpoints.