Walking the Tightrope
Maximizing Customer Spending While Driving Repeat Visits
By Howard McAuliffe, Partner, Pinnacle Entertainment Group
There is a fine line between getting the most out of a guest visit and having them come back again. When a family or group of friends go out for a night out, you want them going home feeling good about their experience. That’s not likely to happen if you set up pricing that coerces or tricks them into overspending. While the customer may spend the money that night anyway, perhaps to avoid embarrassment, they might not come back. On the other hand, if you provide a lot of value, they may end up spending a little more but feeling good about it on the way home. Increasingly, providing value to customers will drive spending, but this doesn’t mean you have to offer massive discounting as well.
Challenges we’re facing include the U.S. economy, which is telling us two stories at once. On one side, there is the massive wave of investment in artificial intelligence — data centers, power, software — that’s propping up growth and pushing worker productivity to its strongest stretch in years. On the other, a geopolitical energy shock has driven oil towards $90 a barrel, sending gasoline up a record 21% in a single month and dragging headline inflation back to 3.3%. Family entertainment centers are finding that guests still want to come in, but are counting their dollars more carefully than they did a year ago.
Your Core Guest Is Feeling the Squeeze
Bowling centers and FECs live in the middle of the income distribution — precisely the households hit hardest when fuel and grocery prices climb. Wages are barely keeping pace with expenses for these families, and the savings cushions built up earlier in the decade are gone. The result is what’s called a “K-shaped consumer” – higher-income guests, buoyed by a strong stock market, keep spending freely while lower- and middle-income families pull back. For most operators, the soft spot shows up first at the value tier — single walk-in visits, entry-level birthday packages, the casual drop-in on a tank of gas (that now costs noticeably more).
But the Squeeze Cuts Your Way, Too
Here is the part worth remembering when the headlines get gloomy: When households tighten up, they don’t stop spending on fun. Some trade down to it, while others are more discerning about where they do spend.
The canceled flight, the skipped weekend getaway, the pricey sitdown dinner…those are the expenses that get cut. A few hours at the local lanes, FEC or bar is exactly the affordable substitute that takes their place. This “affordable indulgence” dynamic is why out-of-home entertainment has historically held up better than discretionary retail in soft patches. The energy shock that empties your guest’s wallet is the same force that can send a family with higher incomes looking for a cheaper way to make a memory.
There is a tremendous amount of coverage of the “K-shaped economy.” It generally means the wealthy 10% are increasing their spending while everyone else is spending less. A common statistic is that the top 10% of consumers are responsible for 50% of the consumer spending. If my math is right, that means 90% of the population is responsible for the other 50%.
If you have capacity in your facility, which nearly all of us do, then you can afford to offer great value to these consumers who control 50% of the spending. In the summer, our bowling center almost always has lanes available, and since the cost of goods is very low in bowling, we offer great deals to get consumers in the building.
The same pump price that drains your guest’s wallet can fill your facility — if you give the trade-down family a reason to choose you.
Watch the Cost Side as Closely as the Top Line
An energy shock isn’t only a demand problem; it lands directly on your P&L. Centers are energy-hungry — HVAC for big open rooms, lane machines, lighting, kitchens, redemption games — so utilities will be among your fastest-rising controllable costs this year. Food is a mixed picture: grocery prices have cooled to under 2 percent, which helps your kitchen, but the cost of dining out is still running near 4%, a reminder that foodservice labor and menu costs remain sticky.
Defending margin in 2026 is largely an operations job — energy management, kitchen yield, smart menu engineering — not a reason to panic about demand. We frequently see redemption and crane COGS poorly managed. This area needs to be managed closely to ensure guests have a great experience and your margins are accurate. You can have a great average COGS percentage and still have games paying out way too much or too little.
Labor: Easier on The Wallet, Harder to fill
The job market is in an unusual “low-hire, low-fire” state. Wage growth has cooled to around 3.4 percent, which takes some pressure off your single biggest controllable expense. But the labor supply is genuinely tight, and leisure and hospitality is still adding jobs — meaning you’re competing hard for the same front-line workers. Take care of good people, make sure they are paid fairly, and can get enough hours at your facility.
Be Patient with the Checkbook
New builds, big remodels, and acquisitions are financing-sensitive, and the Federal Reserve is keeping rates higher for longer as it waits out the energy spike. Consensus sees only a cut or two late this year, with a steadier easing path through 2027.
The play is sequencing: do the site work, design and entitlements now so projects are shovel-ready, then close and open into the window when capital is cheaper and the consumer has steadied. A higher-for-longer 2026 will also strain weaker, over-leveraged operators — which can open the door to smart acquisitions as rates ease.
That being said, if you have the cash we still have generous IRS deduction rules, so it may be a great time to invest your cash.
Let the Productivity Wave Work for You
The same AI boom moving the macro numbers is available to your business in practical, low-risk ways: scheduling tools that match labor to real traffic patterns, dynamic and off-peak pricing for lanes and attractions, self-serve kiosks and QR ordering that lift food attach without adding headcount, and loyalty data that brings the still-spending guest back more often. These don’t require a moonshot — they quietly offset the cost and demand pressures pressing on the rest of the building.
If AI creates massive reductions in the U.S. workforce it will certainly hurt us, but that doesn’t mean we don’t learn as much as we can about AI and how to use it to help our businesses.
The Bottom Line
The centers that come out ahead in 2026 won’t be the ones that slashed prices to chase a nervous customer. They’ll be the ones that defended value without cheapening the experience, courted the guests whose wallets are still open, wrung waste out of energy and labor, and kept their powder dry for the rebound.
The trade-down family is coming — the macro is practically pushing them toward your door. The strong will make it through what could be a tough couple of years. Some won’t make it, and the strong will gain market share and grow stronger in the end.
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.