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- [00:00]
A
So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM, Bloomberg Audio Studios, podcasts, Radio news.
- [00:38]
B
Dave Hoffman would certainly say that's the solution. He's the CEO of the indoor Trampoline Park Sky Zone. Hundreds of locations around the US and they are growing and building more. He joins us from Dallas. Dave, good to have you on the program. You've got a great background, includes Dunkin, McDonald's and more. You have a history in franchise business as well. For those who haven't been to a Sky Zone, describe the experience and who it's for.
- [01:02]
C
Yeah, and look, we are the leader in active and social play. And like you said, we've got actually nearly 300 locations we're focused on and I don't know if people know this, but we're focused on kids 6 to 14 in a particular park. If you can kind of imagine this, just think they're, they're 40,000 square foot boxes, so quite large. We'll have 20 to 25 attractions in that indoor park. And like you said Tim, while we're known for trampolines, we've got everything in there now from dodgeball courts, which are amazing ninja courses, multi story mega slides, basketball and soccer courts, zip lines, you name it. We've got a lot going on in there. And our, really our thesis here, or what we're trying to do is we're all about active and social play and we feel both of those are important social in today's environment, especially in a post Covid world and everything that's going on with technology. We want to be the place where kids can come build confidence, burn off energy with their friends. And so everything we're doing is about the power of play.
- [02:05]
D
Well, Dave, I can imagine that this must be one of the biggest seasons for you all, being that it's summer vacation season for all the students, all the kids. What's it been like for you all as of late?
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C
Yeah, I think, you know, as an operator for 30 plus years, as you mentioned up front, I think you're always looking for a tension in the marketplace and how you can solve that tension. For the consumer. And so look, nothing new. Just would you guys continue to report on here? The tension for our offering would be, you know, the consumer's wallet is under pressure. Yes, some prices have come down, but the family wallet is certainly under pressure. And so how do you make it easier for the families to use you and give the, you know, their son or daughter child the summer that they deserved? And so that's the tension that we've been trying to solve. We think we came up with something that works for us and it's going to be an ongoing strategy for us. But this summer, we call it the, you know, summer of sky zone. It's anchored by our seasonal pass. And, and when I talk about the seasonal pass, it's, you know, that's one type of price point that we have. And to your previous guest, we want to be the leaders in affordability and accessibility. And again, that's, if you, if you draw that line in the sand, which we have, then there's other things that you can go down. But this, this summer pass, essentially it started in April, but you can still buy it now. And if, just think if you buy it now, it's, you pay one month, you get a second month free until the end of the, until the end of August. And so we think that's very compelling for, for the family wallet, it's selling about 80% over last year. So I think that speaks to the tension again that's in the marketplace and then the offer and how well this offer has been received. But it's not the only thing that we try to do there. We've got our, obviously our monthly memberships. If you're jumping two times or more and just think that's a dollar a day, which we think is a great investment in your child for a dollar a day. The annual past. And then we pulse in things like this weekend. I'm, I'm really excited. We're doing a, a clever, cute little play on our 250th birthday. And it's red, white and bounce. We've got a price point dedicated to 1776. So it's $17.76, which for a two hour jump ticket, a one time jump ticket, that's probably one of the best price points in the industry. And we're giving away a bunch of tchotchkes and food and things like that at the same time. And you know, as you move through July, we've always got these things where if you don't want to be a member and you just want to come one time. World Jump Day is coming up July 20th. Who knew? Just like National Donut Day back in the day. But World Jump Day is something we're going to do a takeover of. And so we're always on our calendar. We're always trying to pulse in things so people will try us. I think when they try us, they like us, they love us, and they come back.
- [04:53]
B
You were, you know, a thing or two about donuts because you were president of Dunkin US from 2016 to 2018, and you were also CEO at Dunkin from 2018 until it was sold to Inspire. So you know about Donut Day. Let's get back to trampolines, though. And about. I want to talk franchising here. Close to 300 locations in more than 40 states in the US are, are any of those owned and operated by Sky Zone or are they all franchise owned?
- [05:21]
C
No, we're 50% company owned, 50% franchise. I tend to move towards tipping that mix more into franchise. I've run Both in my McDonald's Duncan days, as you know, but I am a believer in the franchise system and in working with small business owners. And look, I'm really proud. This year we were named one of the top 10 investments by franchise Times. So something, you know, is really resonating with our small business owners. And I think they do an amazing job on a company this size, getting into those communities and serving those communities really well.
- [05:54]
B
So who are your. Who's the typical franchise franchisee? My dad was a franchisee of a different company, so I know how this works. You know, you have the support of a huge brand, you own and operate it yourself, then let's say 5, 10% of the top line ends up going back to the parent company. So just give me the profile of who the franchisee is, where the opportunities are geographically. And it seems like something that is capital intensive in terms of the size of building and the actual equipment that you need. So how do you support franchisees with that?
- [06:34]
C
Yeah, it's a lot in there, Tim, great question. You know, we've got a lot of single park franchisees in some of the smaller cities, so this isn't about opening up. And I'm very sensitive to not building on top of franchisees. So if you run an amazing single park in your community, I want that, I want that franchisee to be just as successful as somebody that has 8 to 10. I think our largest franchisee is probably somewhere in the 15 to 20 range right now. So it's a wide spectrum. And look These are people that have been in multi unit 4 wall in the past and they identified this opportunity in terms of sort of the uniqueness of trampoline parks. And a big part of it is their belief in, and this is in total sincerity, their belief in active and social play. And so they really were running other businesses and they like this offering. The margins are incredible. So of course high fixed costs as you said, Tim. So the you have a high fixed cost build but our, you know, our margin profile profiles out for wall in the high 30s, low 40% range. So again, initial big investment because we take down some of these decayed, bankrupt big boxes. They're all snowflakes. You have to convert them into a Sky Zone. So it's a little bit like Tetris where you're going in and laying out these different attractions. You never know what you're going to find behind the walls. So there's a lot. It's not as cookie cutter as what I've done in the past. And so our teams, our development teams and franchisees do an amazing job of taking these decayed bones in some of these communities and repurposing them. And you know, we could go through the list of some of these bankrupt big BO boxes, but I love what we're doing and this is a story that never really quite gets out there, but how we're repurposing and I think improving the face of some of these decayed bones that are in these communities and making them approachable again and accessible for those particular communities.
- [08:36]
D
Wow. Dave, we talked a bit about the deals that you all are offering at Sky Zone. I'm curious, as we continue to talk about franchisees, what have you been hearing from different people leading specific locations across the nation? What has been their sentiment about consumer traffic and the brand, really?
- [08:57]
C
Yeah, well. And you know this. Well, Nora, like anytime you get into live entertainment, there's always gonna be, you're always gonna be fighting on a frequency game. And so for us, not only has everyone embraced the price point and this idea that, you know, affordability and accessibility and again, if you put that as a strategic pillar, and that's been one of my pillars for my 30 plus years, then you start opening up your creativity to say, okay, how do I think differently about just a binary, you're a member or you've got a jump ticket and how do you open it up and give people optionality? And so that is one of the things. We've got a group within our franchise community. I love it. It's our Franchise advisory committee and we work closely with them on the pricing, construct and how we ought to be thinking about this, the marketing deals, how we pulse that in. But the other piece that is really super important is programming. And so you can have great attractions, you can have great price points, but the kids and the parents want programming. And so our GLOW parties on Friday and Saturday night have been fan favorites. They're running all summer long fan favorites for the older kids, we're running sky cup in parallel to World cup right now. So you got great three on three soccer matches, inside viewing parties, all kinds of soccer, football takeover within the parks as well. Birthday Like a Boss is a new upgraded birthday experience that we've introduced. So besides just compelling price points, great variety, you have got to, in order to get frequency, you've got to have really good programming to get the kids excited about coming back over and over again. And so that's been a big push for us as well is to make it, make the programming more different. And, and then I think if I could just one last thing is one of the things that I focused on again over my career is kind of operating with a healthy paranoia around your brand. And so how do you keep evolving? And I've always loved the saying, hey, if you don't like change, you're gonna like irrelevance even less. And so how do you keep evolving your offering? And so we've introduced Skylabs in our company. It's our innovation arm. It's a dedicated team with franchisees on how do we evolve the power of play in our parks. And some of this is you don't want to get away from your knitting, which is active play. But how do you bring wearables, other types of gamification in there that complements active play? And so that's a big part of you're going to see us continue to peel things off. We're working with PhDs in childhood development on all of this. And so again I'm really, I think all of that is how we're going to continue to evolve this offering for, for our guests going forward.
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B
All right, next time join us. Dave from maybe the ball pit at one of the sky zones.
- [11:46]
C
Absolutely, will do.
- [11:47]
B
All right, Dave Hoffman, have a great long weekend. Appreciate you taking the time and joining us on Bloomberg Businessweek Daily. He's the CEO of Skyzone, joining us from Dallas, formerly of Dunkin McDonald's and more.
- [12:01]
E
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