How can turnarounds create better profitability for your business? Today’s guest is Tim Murphy, an American business executive and currently serving as the CEO of Boomers Parks (APX Operating Company LLC). He joins Chris D. Roberts to talk about how the right changes can be the key to your business’ success, no matter how small. It’s all about what you can do better and what you’re willing to do to be better. Get important lessons and insights on business, leadership, and developing the right culture. Tim also shares the importance of looking at your numbers, setting your price, and financial literacy for employees. Finally, learn more about how you can create value propositions in the family entertainment center business that will lead to exponential growth without losing compromising your pricing.

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How To Approach Turnarounds To Grow Your Business With Tim Murphy

We are here with Tim Murphy.

How are you doing, Chris?

I am awesome. Thank you so much. You cannot see it but he has got this cool background. It is Boomer and Big Kahuna’s. We are going to dive into all that, but we are going to start by asking how you see and what your understanding is of the word ‘success,’ and how you frame the word success in the life that you are living, whether it be personal or professional.

When you start out a career, you think more of material things, but as you get a little older, it is a matter of how you overcome things. Can you overcome something? Can you turn something around? Can you strive for the goals that you are looking for later in life? I run marathons. I did my 30th in LA in 2022. I started with 265 pounds and dropped down to 183 pounds. Part of it is, “I do not want to take prescriptions as my father did later in life.”

Success is overcoming problems and issues. We all had to live through a pandemic up and down. It is still lingering out there, but we have taken a company and turned it around. It is a matter of overcoming the obstacles in spite of it, “It was a failure. It did not go exactly as planned. How do we get to it? Is there something else we can do? Could we look at it in another way? Can we reframe it? Do you always want to do that in the middle of it?” No. You are like, “I wish that did not happen.”

You say, “That happened. How do we move forward?” I do not dwell on things too long. My life is the journey and getting past it. I am in the middle of my house. I am renting a house in North Orlando and we are remodeling our original house. We moved to California for a year, came back, stayed in a rental house, and we are coming to an end. Finally, I get the move back in and I am like, “There are two more months maybe.”

If you think of all the things, the contractors, things we had to purchase, the lighting fixtures, the hardware, and everything that has gone into this place, you go, “What a money pit,” but it is coming to an end of what we originally visualized. Success to me is the journey. Did you learn from it? What were the failures and the things that did not do so well? What could you have done differently?

The company turned around with Big Kahuna’s and Boomers Parks. We call it Boomer Parks Company. It is called APX Operating Company owned by a private equity firm. It is a matter of, “What do we do? Were the people correct? Did they hear what we said? Did they instill the values? Did they get where we are going with it and the leadership we were working on?” It is not so well sometimes. You’ve got to beat in their head that they try to get where we need to go.

I can say two things. Number one from the previous company was bankrupt, $10 million in loss to a positive $8 million in EBITDA. That was a pretty good swing. 2021 was only nine months open from 2020. The year that we were comparing to 2019 was a loss as well as twelve months of revenue where we ran everything and nine months of revenue and still beat the sales from 2020. That is a positive. Where do you take it from? How did we get the people to turn this company around while we had to get belief and the core values in? We had to get them to understand. It is all about the guest experience.

With the guests’ experience, their price never matters and you become more successful, but along the way, there are lots of failures, starts, and steps back, “We are open again. We are going to close once again. Unfortunately, the next close will lay everybody off, about 90% of the workforce, right before the Christmas holidays.” It makes things tough but you’ve got to say, “I kept smiling the whole time. There is a bright spot here. I am not sure what it is at the moment, but there is a bright spot here.”

Turnarounds: Success is the journey and did you learn from it?

You touched on several things, and I want to step back to something you said. I want the Charging Forward crew to take away from his success, which is great. You talked about weight loss and running marathons, which has nothing to do with what people think about success generally. It is like, “Money. I am building a business or I have got a bunch of cars, toys, or whatever it may be.” You were talking about overcoming something, a challenge, adversity and losing weight. You turn businesses around and help them become successful through lots of different mediums like a change in mindset, change in finances, or structure management.

I love what you said about losing weight. That is amazing. Congratulations. That is not an easy feat. You are putting systems and processes in place to not only lose the weight but also continue to keep the weight off by marathons and such. You are putting bumpers on yourself and saying, “I need to practice this X, Y, Z every day to stay within the success model,” which is great. Plus, it is healthier and everything else. Kudos to you. You look great.

You started diving in. Let’s talk a little bit about exactly what you do. Here is what I would like if you do not mind. I know a little bit about you but let’s start with how you started in the business, what it is you do, and then maybe share an example. You touched on it. We can all attest to the chaos during COVID, the ins and outs, and the government regulations. If you were a business owner and you are still alive, amen because you did it. You specialize in helping turn business around. If you do not mind, let’s start from the beginning. Tell us a little about your journey and then you can maybe give us an example of what you do.

I started in the business of family entertainment centers with my family. My dad was an entrepreneur with so many different businesses like fence business, welding business, and construction business. I am only on miniature golf, arcade, and restaurant. I ended up working at someplace as a kid growing up. I got that great experience. Dad sold out a lot of business. He wanted to retire, move from New Jersey, and go down to Florida. I took a job at Disney World when Epcot Center opened.

I kept going into entertainment. I loved staying. I was with them for six and a half years, then I moved into restaurants. I have been with about 150 brands and 10,000 locations over my 35-plus-year career. I was having fun because I had been exposed to so many things. It used to be when I started my career. You do not want to jump around because that looks bad on a resume. With the exposure I have had by going to so many different businesses, it is things I pull back from. It is like, “I worked for the former Chairman and CEO of Applebee’s.”

This is a gentleman that bought Applebee’s with 52 units. It is a grill and bar restaurant in the United States and one of the largest casual dining chains in the world. He retired with 1,300. He has built 100 Applebee’s a year for ten years straight. This was one of my mentors in franchising and restaurants. I have worked for some of the larger brands and some small brands. It got to a point where I was starting to help companies franchise and consult how to turn it around, things you need to work on, and where we can save on costs, labor, food, or whatever it might be.

It is pretty much in hospitality, restaurant, entertainment, and resorts type of business because they have very similar P&Ls. You can tell right off the bat what is in the number and what is wrong. As long as you have got a good understanding of each of the industries and what the competition can be, how do you make it better? You start looking at it and go, “Dad was running these businesses. I got into it because I wanted to see how to make more money in the business.”

When you go into business for yourself as an entrepreneur, which I have had some bad partners that have hurt me, and I have had some good relationships. You learn from each of these and say, “How do I make this better? How do I do this a little bit better?” No one normally goes into a job and says, “How do I make this better?” What they do is they go in and work a job. They work hours instead of saying, “What am I learning from this? Can I get more involved in the operations, IT, marketing, and how they do those things?”

Eventually, little by little, it starts coming to you and you start saying, “I understand what is going on because I kept questioning everything.” My dad ran his business. He had a tenth-grade education and I love him to death. He passed away years ago. He was like, “I got to make it happen for my family.” To me, he was very successful. He had a big house, big cars, and all those things that everyone looked at. Kids used to say, “You must have $100 on the walls everywhere as a kid for wallpaper.” It is like, “Do you think that?” No, I worked very hard.

You do not have a clue what it takes to go through it but you get to see all those aspects of it, the good, the bad, and the ugly. You see that with businesses too. There are no differences from what I saw growing up. Frankly, we were talking a little bit about marathon running. I do not see much difference in marathon running. You have got to do a lot of things to get prepared to run. You got to train, practice, and try different things. You try new food. You got to make sure that you got the right stuff.

Success is overcoming.

When I got into the marathon running at 40, I had never run a marathon in my life, I was like, “I am going to run a marathon this year.” I thought it was shoes and shorts but there is so much more. That is like a business. You have got to understand the dynamics, the people, and what is going to be the buttons that are going to push everything. Being in finance for a lot of years has taught me a lot to look for because of what are the buttons that move things. What are the levers that are going to change the number and the direction of labor, cost of goods sold, controllables, noncontrollables, and what the rent might be like?

I got so into it that I said, “I got to understand the real estate side of this.” I became a real estate broker in the State of Florida. I still am years later. I did it from the commercial side of it, for the businesses I worked with, and to say, “What can we do? How do we have better knowledge when we are going to buy a piece of property and get a better deal, a lease, or whatever we are physically looking for? How can we negotiate that a little bit better or what to look for? What gives you the better sense of this so that you have got a better clue when you are going into it?”

It is the same with construction, dealing with contractors, and building restaurants, “How can we make the box smaller so I can have lower overhead?” It is those types of things. I go back to the parents and the businesses I have been with. It is always asking, “What else can I do?” That sounds like, “You were overachieving and never slept.” Pretty much, but I still do it. The bottom line is, “What do you learn out of it?” There are so many great things you learn out of it, even the good and the bad.

When there is a bad real estate deal that goes down or a bad lease, what could you do differently to put in the contract the next time to make sure that you are protected? Most people stop and be like, “I learned my lesson. I am not going to do that anymore.” That is wrong. You got to keep after it. It is persistence like running a marathon. It is one foot after another, one more breath, and one more day. Keep going through even if it sucks badly and you got some bad data and information. Those are the things that I take out of it. It is persistence to go after and continue to drive that.

Something you talked about, which I want the crew to take note of, was your father was a great mentor and a blue-collar. He was hardworking like, “Put your head down.” He was in the industrial era or probably even sooner. He had that work ethic and willed himself through an awful lot of challenges by sheerly swinging the hammers every day. What you touched on is something that is dear to my heart.

You had a financial background, which I did not but I quickly realized early on how fundamentally important it was to the business’ success to understand the numbers and use the data to drive you. Clearly, you have that background. What is most interesting and what I want the crew to take away from it is even if you are not good with spreadsheets or you are not a CPA by trade or an accountant, you need to follow the data and numbers. Oftentimes, that will guide the success or failure of your business, whether it be emergency fund saving and allocating the proper expense to income ratios.

I will give you one quick example. I am sure you have 1,000 of them, which I would love to hear. The reason it stood out for me is I have a friend who owns a postal place. When he took over, one of the first things he asked me about was marketing, so I came in. I was helping him a little bit. He said, “Can you help me put together a marketing campaign?” I said, “Sure, but let me ask you a question. What are your expenses? What is your income? Can you share a P&L with me real quick? I want to understand where you are financially.” He goes, “I am not sure exactly.”

I am like, “The point I am getting at without even going down the rabbit hole is the first thing on my mind. I want to understand how financially sound the business is because the P&L will tell you everything you need to know. Before I can allocate any suggestions on advertising, I need to know where you are structurally and fundamentally in everything. Before I even know if there is a roof leak, I do not even need to know if there is a roof leak.”

What was interesting is what you touched on. As soon as he showed me that, the first thing I said was, “There are opportunities for additional revenue here that you need to explore, like maxing out your post office box rentals because they were 40%, bringing additional revenue, and free airspace.” It is sitting there before we even think about spending any money on advertising. We deep dove into things but I love diving into people’s businesses. I am sure you are going to test this and I can’t wait to know more about your perspective. What happens is most businesses work within their business. They are not working outside or on their business.

They are caught up in the thick of things. Covey says, “They are a day-to-day.” They do not have enough help, resources, or money in the reserve to cover hiring people. They get caught up in this whirlwind or sandbox that they can’t get out of. That is what’s fascinating about what you said because when you look at numbers, you can learn the most basic about numbers. It can help you to succeed or fail your business. Good work ethic, discipline, and all that stuff favor as well. If you do not mind, please elaborate a little bit more on that because that is great.

Turnarounds: Always ask, “What else can I do?”

It is having a basic understanding of, let’s say, restaurants because I have helped restaurants or entertainment companies. There are differences. Let’s talk about those quickly. Both have food, labor, and controllables or things you can control like repairs, maintenance, supplies, and all those things. They have noncontrollables like rent and credit card processing fees, maybe. You can change some of those things but it is only a little bit.

It is having a fundamental and going, “A restaurant has those components but what do they throw off in profit?” I have met so many people that own family entertainment center businesses that I am looking to buy potentially because I want to fix them and do what we do. I got in this for fun like, “You had no real background. You got into it. How do you price yourself?” I kept the price and maybe tweak it every now and then.

One valuable lesson I had from Abe Gustin at Applebee’s was, “Take it to the market. Do not leave money on the table. Let’s make it what the market price is. What is out there?” To do that, you got to know your competition and go survey. What are they serving compared to what you are serving? Do you have something similar or is your plate that much bigger and more valuable? Do you have a signature item or drink that you can’t get anywhere else?

You can charge a little bit more for that. You will get more out of it, but people go, “I can’t take the price.” It is like, “You can.” In a family entertainment center business, if you do not know your numbers and what the competition is, how do you know what you are going to price this? What methodology do you use to price this whole thing out? In the real world, you want all your costs and some profit. That should be in the neighborhood of your price.

You have got waste, different things that go along with it, taxes, and overhead. Those things got to go in but not everybody does that. When I look at menus and I have menus at my entertainment complex as well as water parks, I have a captured audience, unlike a restaurant. My restaurants are dealing with a lot of competition all around them. When you come to my facility, you are going to pay a little bit more for food, beverage, alcohol, and so forth because you are probably not going to leave my park.

If you do, then you are probably not going to come back in or you are going to lose out on the time that you might have to be there so you are going to pay a premium. It is like if you go to Disneyland or Disney World Orlando. I live in Orlando and I have been in California for a year. The bottom line is you are going to pay. You are not going to go out to your car, go down the street, go to the convenience store, go to a restaurant, and then go back into the park.

You are going to pay the extra premium because of the time value of money. That is valuable for your family and you paid for the ticket. You pay a little bit more. In my parks, we do charge a little bit more. We shoot for certain food costs-related items that make it more advantageous and throw more money to the bottom line. If you go to our park, we built and fixed these structures because we took them back through bankruptcy.

We need to get some money back out of this whole deal. If you are not profitable to every single guest, I do not care if it is a restaurant, a business, or whatever it is. You are not going to be profitable in volume. It is so funny how I meet people and go, “If we can market this a little bit more, we can get more volume in here.” You got to be profitable on every single person coming through. If you do not have the value proposition already built-in, you are going to lose money faster. You are not going to get back what you are looking for.

When you are looking at a restaurant or a family entertainment center business, you have got to know, “What is my cost structure? Where am I getting things from?” You always want to save money. You want to figure out, “How can I cut some costs, waste, labor, and things like that? What is your competition doing?” when I was working for Abe Gustin at Applebee’s, I was working for him when he was retired. We had the Central Florida Applebee’s in the Orlando area, Florida.

We were building in nine counties around us and growing. We would look at the competition and physically bring in the plate that they would sell at Chili’s, Friday’s, Bennigan’s, or different places that were similar to us and compare how is our pricing to what the other individual gets. We weigh it. How many ounces are we putting out there? We can’t change the spec because that was predicated on corporate or what it would allow us because we were the Central Florida franchise of the franchisor.

You just learn from each of these and say, “How do I make this better?”

Abe was the franchisor, but he retired. We can’t break the franchise agreement. We have to change things. We compare. It is the same thing with every business, “What does your competition charge?” In my case, it is family entertainment. What do they charge per day and per hour? What do they charge for arcades or food and beverage? Do they even have what we have? Do they have pizzas, hotdogs, hamburgers, and French fries, which a lot of them do?

How do we make it better? How do we differentiate our product and pricing? That is where we played with a little bit where others do not do that. They put their one price out, “This is what you are going to pay,” or they charge us one attraction. I said, “We need a higher check average. How do we wrap this together?” They stay there longer. If they stay there longer, they are going to eat and play more. That is what we want to do.

We want to make areas where they are going to stay there longer. We created this outdoor experience called the Boomer Backyards and an indoor experience called the Chill Zone, “At our water parks, we have VIPs and cabanas. How about we do that in our family entertainment center business?” People want their own space. They will pay you a premium for space in your part for the day. Why not do these things? Let’s think outside the box and create new revenue streams.

When you finally get the competition down and you know your pricing associated with it, what else can you do? How can we differentiate the product? How can we make new things and experiences? I love looking at all kinds of entertainment that are out. You never know where something might come from. There are experiences where they have a map on the whole wall through projection. How could you bring some of that in? Disney does it pretty well. Can you do some of it? It is something we are working on.

How can we create new experiences throughout and keep building upon them? You do not necessarily have to bring in new attractions. A lot of people think, “I got to keep spending more money every year.” It is true to keep taking care of it if you have not taken care of it, which the previous company that was bankrupt did not. We fixed that but you do not always have to put no attractions in if you can keep freshening up with new events and things coming in.

Could we create some eGaming sports competitions? Could we create some new environments within our area that you would not traditionally go to us for? The answer is yes. It can’t hurt to try. When you try, “What did I learn from that?” I have gotten to the point. That is what I ask, “What did we learn from that? Was it good or bad?” I had a whole sheet of numbers of something we did and I go, “We were thinking this park was going to do so much better. Why did not they?”

“Maybe we did not give them enough information or we did not have enough signs out. We did not have it on our video boards. What do we do the next time? Did we learn from that?” If you do not change what you are physically doing and you are expecting a different result, that is called the definition of insanity. You are looking for a different result with the same process every single time.

I have had a lot of owners I have consulted for thinking, “If I do the same thing I am doing, I am going to get a different result.” It is like, “You are not. You got to do something different and get something from the guest and the team member. What is it you are going after? Do you want new franchisees? What is it we are looking for out of this?” It is funny because when I have consulted in the past, I go, “What is it you are looking to do?”

I worked for private equity. Private equity ultimately is going to sell this business somewhere down the road. I do not know when but somewhere down the road. If it is valuable enough, the price is right, and they are going to make some money out of it, that is great. I have invested interest. Hopefully, it will be a great thing when that day happens. The bottom line is, “What do you want to do?” Know your expectations. If you are going to take a business over, restaurant, retail, hospitality, or entertainment, what is it you want to do?

“I want to run this for my kids.” Is it going to be around long enough for your kids? Are you going to be profitable enough? Do you want to take vacations? Do you want to put money away? What is it you are looking to do with this? You can create wealth with these things or operate as a business, sell off the asset of real estate underneath it, and do a sale-leaseback. There are a lot of different ways of approaching it but it is always like, “What do you want out of this?” “I want to make more money.” That is great. What are you willing to do to make more money? That is where the differentiating point comes.

Turnarounds: You have to be profitable on every single person coming through. If you don’t have the value proposition already built in, you’re just going to lose money faster.

Some people hate change. I love change. At the end of the day, my team would say, “I love change because we are going to change things constantly. We are going to look at things in a new way.” It drives them nuts sometimes because it is like, “I can’t keep up with the other things you have already said to change.” You have to stay ahead of the curve.

If you do not have some changes, it is not going to get there. When you take a look at this, numbers are going to give you what the story is but ultimately, what is your outcome? What are you looking for? I knew I needed to go turn this company around. I had eight locations when I took over. We turned everyone much more profitable in a short period with four times closing with the pandemic. We are going to be not too far off. Maybe it is 80% of what we did in 2021 or more on top.

That is spectacular in this environment, for sure. I do not even know where to start. There are so many amazing little golden nuggets out of that point you were making. I am going to start with this, though. Charging Forward crew, here are some of the takeaways from what Tim said. We are not going to dive too deep because I will be in this interview for a long time. It was so amazing so let’s start with this.

When you are running your business, it is important to strive to hit market price points and to create signature products that you can offer a premium for. I agree with that. We are in the multifamily syndication space. We are an equity company as well. We raise capital with private investors, buy assets, and renovate them. There is a lifetime value to a customer. You have to add services and amenities to the properties, and then you raise rents.

There have been instances where we bought properties at $550 in rent when we started. Two years later, they were producing $1,000 a month premiums, which is astronomical, but the tenant base, the environment, the income, and the amenities that were added supported that. It is identifying early on where the opportunities are and then taking them to the max. If you would have said, “In two years, you are going to be $1,000 a month in rent,” we would have thought you were nuts.

As you keep testing the market and adding things, you realize it is the consumers that decide, but you are the delivery vehicle. Something you touched on, which is important, and I want the readers to take away, is you help people identify where the value propositions are within their organizations or in your organizations by using the numbers and following the data but also getting on the ground and pound side of things and using competitors’ information.

I will say competitors. We are all in this business together. It is not a big deal. We need competition and it is not a bad thing. You use that to then gauge if you are above or below the curve and then identify areas of opportunity, which is something we touched on. Do you have any specialty products or anything that would draw people into your organization versus others that they are willing to pay a premium for? It is so critically important because every business has a value proposition.

It could be you are closer to the apartment complexes than the other guys. You offer bigger meal plates because you have a relationship with the supply house. You get better rates based on volume because you have 8 locations versus 2, but they were not utilizing that when you took over because they had four different vendors for some reason or another, or cousin Vinny works for the chop shop. That is why they are buying those steaks instead of, “We can get it for $0.07 a pound less.”

I love what you said there because there was so much in that. That is what is needed in teaching others how to be successful, “Let me show you a different way to look at things.” You do have value. You just may not have identified it yet within your organization. Here are a couple of quick questions along the lines of what you said. One is, what would you say, in your opinion, and it could be 1, 2, or 3 examples, is the top thing or process that you have implemented that has made a significant change?

We will say, “The most significant application of some system or processes has made a change in an organization.” On the opposite side of that, what is the number one constraint you have seen that either owners or operators put on themselves or face when trying to change their business model from failure to success? What do you see that works and has not worked in a model that you have taken over?

Take it to the market. Don’t leave money on the table. Let’s make it what market price is.

I would have had a different response earlier in my career. The number one thing in both ways that you learn from is the people or the culture that you are physically setting up in your business. You got to get them to believe in what you are doing. When I took over private equity, we did a stalking-horse bid on purchasing the eight locations. There were eight others but there were certain things we looked at during the bankruptcy of what we would and would not buy or needed to go back to. That was on the previous company.

We needed to analyze and say, “Is this of any value?” As we go into it, there was Tim against, at that time, 650 employees. During the summer, we go much higher than that. They did not believe that we would achieve higher sales. We could charge what we were going to charge. We could do different things but there are certain values you have to bring into the company we believe in. What are the beliefs you have as the leader or owner of the company? What do you want to get across?

You can operate any way you want underneath a private equity firm as long as you get results at the end of the day. What do you want to lead as? The answer to my question would have been different early on. I would have done this, that, or the other but it comes down to the people who got to make the change. You can live with the values, instill those values within the team, and teach them that because, frankly, the previous company was not doing that.

What are some of the values we have? There is honesty, integrity, transparency, social responsibility, strategic partnerships, and innovative risk-taking. We are going to take risks on things we are going to do and be innovative but it is also educated. It is having the guests and the team first but it is the team over the guests. I do not mean, “Bend over and give them every single thing they are requesting,” but identify the things that are going to make them move and get them in the right direction to understand it.

I go out to the parks all the time. I sit and stand wherever the guests are. I talk to the guests. I want to know what we are doing in each part. All eight parks are different. There are different demographics and different locations. All the other ones we are looking at to potentially acquire will be in different places. There are similarities. A farm town is a big city. It depends on where you go. If you do not have the right team and culture and you are not understanding and believing in what you are doing, you are not going to get anywhere.

You can have the greatest ideas all day long but you have got to do this with people. You can cut costs. You can come up with things. There are some people I know that are good at cutting costs but they can’t implement it because the team will not buy the BS that person is selling. As I have shown people, this is how we are going to get this. It is going to take place. I am relentless and persistent. It is something I talked about a little earlier.

It is being persistent in explaining the core values of our company to our team and talking about what are we doing with that. How are we doing some of these things? They can believe what we are physically doing and see the results coming through even in spite of bad years of pandemic and what happened in 2021. It is culture. I know some that are in the entertainment industry who all say, “To heck with the culture. It means nothing. You are going to do this.”

It is a type-A personality. They are beating their heads against the wall and trying to get things done or losing the best talent and leaving to go to a competitor. During the Great Resignation, the United States has had, unfortunately, people leave lots of positions. It is tough to get labor. Howard Schultz is taking back over Starbucks. He is going out to 200 locations and trying to get a better understanding and appreciation for what everyone is going through in the field.

If you do not do that and physically go out to your locations and areas, shame on you. You can’t rely on someone else because you do not know until you go there. I am trying to build Disney-like experiences at a fraction of the cost because we are much less than a Disney experience would be, but we want to have some of the greatest experiences. My barometer besides the P&L is what reviews we get. I looked back at reviews and part of this is price sensitivity coming out of the pandemic and things we have taken up.

The thought for us is, “This is going to get better. Keep following. Stay in the course.” At the end of the year, we go, “Where are we now in reviews?” In Yelp, we have gone from 2.9 to 4.4 and in Google, we have gone from 3.9 to 4.4. We have moved the needle for expectations. We are aggressively going after reviews. We want to know what people think, good or bad, because we want to figure out what the things are that we can fix to make the best experience and become what we believe.

Turnarounds: The number one thing that you learn from is the people. The culture that you’re physically setting up in your business, you got to get them to believe in what you’re doing.

We want to be the best FEC or Family Entertainment Center out there and the water park that we have. We are focused on building FECs because there is a lot more profitability there versus a water park. Why? What is the difference? There are a lot more people, land, consumables, controllables, utilities, and a lot less flow-through to the bottom line to EBITDA. In a family entertainment center, you have a lot fewer people. You can control the costs a lot better.

When you see this and look at it, you can’t get to these points or at any of them without the right people. I had to identify quickly after not being able to talk to anybody. I was a consultant on behalf of a private equity firm that is like, “Do you want to run this?” “Let’s do it.” I had not had a chance to talk to any of them but when you see that it was so ingrained in a type-A personality, wrong pricing, and wrong things, you go, “We have got to make a metamorphic change.”

In the previous company, we were focused on 2 to 12-year-olds. They were walked through your parks. 85% to 90% of the people coming through are not 2 to 12-year-olds. They are tweens, teens, young adults, and corporations. Let’s focus on them. That has worked. It is knowing your demographics and competition. You can’t get anywhere without people. If you can get the right values in place, the people understand the values, and you adhere to the values. That takes top-down.

If you are going to put these values out, you got to live it every day. Are you honest? Are you filled with integrity? Are you transparent? I found along the way that some of my team were not. It is unfortunate that maybe they are not. They were not taking care of the guests but we focused on that and have seen the numbers move on the reviews. It is a matter of what barometer we are trying to go after. Are you focused on this? You are not going to get anywhere without the right people.

If you are not a good people person, then get someone to help you because, at the end of the day, that is the key here. You can believe, trust, and think you can trust. There is an old saying President Reagan had said. He is one of the first presidents I ever voted for in an election. He said, “Trust but verify.” I trust my people but I am going to verify this. What a lot of people do in the management positions is say, “I am going to trust them,” but they are not going to check them.

When you check them, you got to do something about it. Where do you land on your chart of values for the company? People are watching you. If the leader does what they say, people are more apt to follow and do what the leader does if they enjoy what they are doing and they want to be a part of something bigger. What I did when it came in was, “For management, you have hardly ever got bonuses. Let me give you a bonus program per quarter that you can earn.” It resets every quarter.

If you screw up one quarter, you got another quarter to work. Unlike some that will do a full year, I try to focus it down because I want them to stay focused on thirteen weeks, “Every thirteen weeks, what are we doing? How are we changing it?” You could screw up a week or two but do not screw up the whole thing. Otherwise, you are going to hurt yourself. What else can I do? Can I do other benefits for them? Can I help them? It is also nice to talk to them. At the end of the day, some people sit in an ivory tower and do not get down on the ground and talk to people.

I have wired and plumbed so many things and poured concrete. Everything you could possibly do in a yard, I will do it at home. I drive my wife nuts because I do too much. I am willing to because I know how to do it. A lot of people won’t even go the extra effort to learn something new or a skill. They are too afraid of change. At the end of the day, you’ve got to be willing to change and be flexible, but you’ve got to hold to something. That does not mean you are always going to be right on every single decision.

You’ve got to be willing to say, “I am not right on every single decision. I know that not anyone is, but at the end of the day, I can pivot pretty quickly.” That is the idea. Can you pivot quickly? The only way you can pivot quickly, in my opinion, is by having the right team that says, “I am with you, boss. Let’s go do this.” That is what you got to be able to do. To answer your overall question in both ways, it is people. You also got to have some good and strong values that you are running by in your company. If you are not, they are not going to believe and follow you.

What I like about what you said was you did not just say it is people. You started with culture. I have an old mentor that always talked about hiring for attitude and training for skill. Similarly, Reagan quotes the people. What it is though is you have to be able to lead by example and get in there. You have the right attitude, energy and enthusiasm. Your passion resonates. I can feel it. You believe in what you are doing. People will want to follow you because you are always smiling, moving, and hustling. That is important.

You want to make more money? What are you willing to do to make more money? That’s where the differentiating point comes.

If you find the right people that buy into your vision for success, you can teach them how to write a manual, run a go-kart track, or whatever it may be. They are more likely to want to do it with a smile on their faces if they know their boss is out there running the bumper boat pond or whatever it may be. I love the way you frame that because culture is important. It is like, “What does culture mean?” Culture is a buy-in. Culturally is an attitude. Culture is all of us together.

It is not just me barking orders at you, handing you a manual, and then leaving for a month to go on vacation. We are all in this together. We are growing it every day and problem-solving. No idea is too big or too small. Everyone counts and matters. Let’s go about it together. That is a great answer. It is funny you dovetailed the answer to the successes and the failures because I would have to agree with you. I would not have said culture but I agree with you.

Oftentimes, owners get themselves caught up in all kinds of challenges. They can’t even see that their employees are struggling or that they are not happy or whatever it may be. That is a great thing to focus on if you are a struggling business. Who here is on board? Who here wants to win? How are we going to do this thing together? Who has ideas on how we can make change even if you are in the thick of what could be a potential failure?

Would you mind quickly sharing with us an example of what you did? You gave us generalities. Give an example of what you did when you turned the business around or maybe some of the stuff you saw. You talked about the price points in the market and all of this stuff. Was there anything else that stood out to you? We went through a pandemic. That is pretty wild. How did you get through that?

Here are specific examples. When I got on board, I sat down with the senior VP of marketing and said, “Let’s go through the overall pricing structure. What do we physically have here? Why are we doing it? What are we going to try to accomplish?” We had low price points. They had season passes in the family entertainment centers and the water parks as well. I have never seen a season pass in a family entertainment center. The idea is the season pass.

You buy something and then come back hopefully a few times. What happened was when you have consumables like tires and gasoline going in the go-karts, you got a lot of consumables. The golf balls are not too much but you got things that break down here and there. That is great. You are going to do a season pass. What I looked at when I saw the previous company was a four-year process. The previous company had it. They put season passes in year one.

They saw some sales go up and then they leveled off and dropped for two straight years. They never put money back in the parks. They could not pay for the parks. It is what I call a Ponzi scheme. You’ve got money but you can’t pay tomorrow. You are trying to hustle the next day to get more and you could never catch up. It was a great building in year one. It leveled off in year two. That is why it dropped because you were not putting anything back in the parks. You are not profitable.

We got to change the pricing structure and kill the season passes. Do people like that? Absolutely not because they were coming in for cheap. Those are the ones that would eat in the parking lot. I watched them when I was consulting. They were eating buckets of chicken out in the parking lots. They were coming into the building and eating. You are not going to sell food and beverage, parties, and groups. We got to change this process.

We do not know what we have to do. It is like, “You do not have to do this, even at the water parks.” We did institute a high premium price annual pass. It makes sense because you are starting to pay for it. You are going to come back and use that pass. When you do, you are going to eat and drink. We put full alcohol in all the locations. These are all good things. We are going to play more of the arcade if it is an arcade location. They might sign up for a party or do a group.

There are different things we can sell when you get off of that but we are going to change this pricing. In addition, we are going to try to move people from the low prices when you are not a season pass. They are so low. Let’s move the needle up on everything. You go, “You just took the price up.” I am. Maybe you package it differently. You have got a different pass that you are giving to them. You combine three things into one. You got a higher price point. What did that do?

Turnarounds: We want to know what people think, good or bad, because we want to figure out what the things are that we can fix to make the best experience and become what we believe to be the best FEC out there.

When they bought it, it was at a higher dollar amount. It moves the check average up. When you move the check average up and it is profitable, you have more profits to put back into the parks. You can spend capital expenditures. That was something we did from day one. I did get resistance, “We can’t do this at that park.” In this park that has two go-kart tracks, charge a little more there, “You can’t do that.” You can do it. When I did it, did we lose?

We are in the middle of a pandemic. Did we get the attendance back during the pandemic? No, but we had a lot of people come in. We were profitable on every guest coming through the door. We were able to pay for labor and increases in labor that needed to take place because they were so low. They could not even get people to come into the parks. We pay market rates. We are better at our parks because we want to get some of the best people in there.

We are now able to hire better managers because it was always the last person up. If you did not do so well, you were fired. That was the previous company versus saying, “Let’s find the right people with the right skills in this market of family entertainment and water parks as well.” It is no different than a restaurant, a hotel, and retail if they have got good skills. To the point you made, if you have got the enthusiasm, I will teach you what you need to know if you are willing to learn this.

What we had that people ingrained was, “I have worked here for many years.” What are you doing with yourself? Why are you still here and not up higher? That is a thing. This is what we want to do. They say, “I do not want to change.” We need to change because we need to do things differently. When you go through that process, what did it do for us? It provided more capital. We moved the cheapest thing you could do. One part was $7.99 to play miniature golf.

It was not an immediate thing but we did tweak it up over the year. We took it up to $15.99 for the same thing. It is double the price but I got more out of it. It is a no-brainer to do miniature golf, “Here is a golf club and a ball. Good luck.” There is not much you have to do except take care of the maintenance, lighting, and so forth. If you take go-karts, that is a lot of safety and sanitary things. We were talking about the pandemic. It is the additional things you got to put in. We got to cover these costs.

We are in the middle of a pandemic. We got masks and the areas with stanchions between people. We are six feet apart and making sure everything and all hand railings are sanitized. It is a lot of extra time, labor, and money to go into it with all the cleaning chemicals we had to go through. We did price it. When you fast forward to now, we went from a check average of $20 per person from the previous company to the mid-$50. We did something right during that timeframe.

It is more profitable per guest even if attendance is down. In 2022, we are hitting attendance. People are starting to come back. We had a higher check average and now the attendance is coming back. How much more profitable did we go if you did the math from 2019 to 2022? It is almost double the profitability. If you look at our numbers, that is pretty much what took place. It was the belief to get an understanding that if you push, this can happen. You can pay for these additional expenses.

That is us. I have looked at a lot of different companies because we are looking to acquire some. Some were built in the ‘70s, ‘80s, and ‘90s. They are in their 70s, 80s and 90s. Kids do not want the business. They have barely gotten through the pandemic. They had some money put aside but then it hit them and they lost everything. They barely got opened in 2021 and now they want to sell. We have taken our prices up to cover costs and make more profit. Insurance has been an issue for months in the industry.

Luckily, we have an 800-pound gorilla I like to call Cerberus. They helped us make sure that we got it after going to the 51st company to make sure we had insurance because a lot of them stopped writing insurance or the prices went so high. We were in the lower end of that. They went from 30% to 1,000% in increases. Imagine if you had a general liability of $100,000 to $300,000. A lot of these parts do. That is before an umbrella policy on top of it. You have this exposure to cover.

You have got to have it to stay in business or you are going out of business with little claims. It doubled, tripled, and quadrupled. What are you going to do? How are you going to price this? You were not prepared. You did not take your prices up. You did not put stuff back into your businesses then and took it off the table. You probably went and bought a bigger house, more cars, and more toys instead of putting it back in the business or leaving something there for it. We are getting a little more profitable.

You’re not going to get anywhere without the right people.

We can put it back into the business and do more things. We are looking at new attractions and exciting things but we could not have gotten to that point if we had not forethought of getting out of it. We went back to day one and said, “Pricing has changed. We need to get people paying more.” Every dollar more that we can take in is a better higher check average. We can go back into profitability. You have got to control costs and do all those things but that was one thing. We did the same thing in food and beverage.

We can save prices but we also looked at making combos. If you have a burger and you put a couple of sides to it, then you got a higher check average that someone is going to pay for. They are paying more for it. It has the same value to them. It is good for you because you have got a higher dollar amount coming in. As long as you control your costs, it is sold. You can keep more of that dollar flowing through and that makes it much more profitable. Those were some small things that we did.

They are not small things. I love the way you delivered that. Here is why. Your company culture was validated and your value proposition was elevated by the fact that you went in, raised prices dramatically, and continued to increase revenue. It worked in a model where the previous owners thought it would never work or even naysayers. The reason for it is because you start with culture. You go in and get everybody to buy-in. Everyone is excited and fired up.

When someone has to pay $14.99 for mini-golf versus $7.99, and they see someone smiling, they are cleaning, there is a good attitude, the boss is running around with the white shirt instead of the blue shirt, and they know he or she is the boss, then it all starts to make sense to that consumer. They are willing to pay because the value has exceeded the price that you are charging, but most people can’t see that. They are so fearful of losing consumers or lowering the velocity of the number of consumers coming through because the prices are too high.

The bottom line, as you said with the premium product, is as long as you are doing your job and delivering, you have the right culture and environment. The lights work. The cigarette butts are picked up. People pay a premium. Isn’t that a pet peeve? You walk into the front of the store and see cigarette butts and gum. When I worked at a fun center when I was eighteen, that was always my boss’s pet peeve. He is the owner. I never understood it and I did later in life. That is the first thing they see. They judge everything, including your prices based on that facade.

Frankly, do you have a bunch of boxes sitting around that are employees’ stuff or whatever it is? There are eating supplies here and paint cans there. Anyone could see this stuff, the trash, or maybe broken concrete. You fixed something but you left the concrete there. Plumbing parts are broken. Why did you not pick it up and throw that away? Put it behind this. It is something I take from Disney. In Disney, you are going on stage. When you pass the line of the door, the wall or the elevator, you are now going on stage. You are now with the guests and you are performing on stage.

It is the same thought process that you got to have with the guest. If you can’t see that, then why are you here? I will say multiple times, “I do not want someone on the team that does not want to participate.” There are legalities to everything you can and can’t do. At the end of the day, if you are not going to participate, unfortunately, we will go down that path. I would rather have people participate. I will make it a great job and experience for you. You do not always get these types of opportunities.

I have been with some different companies. It is a type-A personality. The ego is so big and all they want to share with everyone is their ego and how great they are. We have done some good things. I have done some good things and I am happy about that. At the end of the day, the whole team has got to buy into that and understand that if they do, the world is going to be quite interesting for them. There are going to be new opportunities and places. At the end of 2022, I want to franchise this business.

We have figured out the pluses and the minuses to this. We can go into almost any market because we went to eight different markets. Two are water parks and six are family entertainment centers. They are in different states but we can go anywhere with this. There are some similarities to this, which goes back to my franchising days. There are a lot of similarities. There are some good intellectual properties here that we have. I do not think anyone has identified that. That is the idea of the owner saying, “How do I take it to that next step?”

You are not going to get to that point unless you have got the right team following along with what those things are and getting the price even though that, to me, is trite. A lot of my team members would go, “I can’t afford that.” I did not say you had to afford it. If you were working at Disney, can you say you could afford to go to Disney every day? No. I could not either. Disney does not want that either. They want someone who is going to drop a bunch of money, stay in their hotels, and get an average person. It is probably $300 a head per person. They are happy about that.

Turnarounds: Teaching the team financial information is key. A lot of them don’t understand the profitability of the financial.

If it is not more than that, they are going on cruise ships or whatever it might be. That is what the difference is. You are not going to do this every day. Are you saying to me, as a team member, “Any place I go is not good enough? I want them to drop the price to $29.99 a day.” That is great. Do you know the cost? It is so funny because teaching the team financial information is key. A lot of them do not understand profitability. I do not think most of the folks are even seeing the financial statements in the businesses I have been in. I have taught that in a lot of restaurants.

Let me show you how to make a bonus. If you do these things, this is how you make a bonus. When they understand that principle, they go, “That is how you do it.” Did you realize it is not that much money that goes to the bottom line in a restaurant? In a fast-food restaurant, you are throwing off 5%. In a good location, maybe it is 10%. That is what has to go cover the debt. It is corporate G&A. How are you going to do this? “I got to be very tight on margin.” You have to be tight on costs. That is when the wake-up call comes. It is the financial information that they truly understand. That is the reason why I am going to go out to the field because I am like, “This is what I did in the past. I will do it again.”

Teach them because it is not that hard to teach the concepts of accounting and understanding what a P&L means. Most people do not know it. They think, “You are taking in all this money.” You are right. This park has taken in $8 million, $12 million, and $5 million. It is fantastic. Do you know how much goes to the bottom line, how much debt needs to be paid on this, and what it takes to cover all these expenses? They don’t because they think, “I saw that come in. I took that money.” That is not a freebie.

Everyone is rich.

There is a lack of financial education that is out there, unfortunately, in a lot of these types of businesses. It is very beneficial to teach them because if you teach them, they are going to understand it.

That is so important. I am so glad you brought that up. We will end around here. We could talk shop all day. I love this stuff. Something you said that I have never heard anyone talk about, but I believe in this is the financial literacy piece and getting everyone to buy into the proforma or the business plan. It is critically important. I love the way you framed it. You say, “I go out in the field, show them, and explain to them.” You are right.

Most of these folks may never be entrepreneurs. They may never own a business and understand. If you can explain to them how a business works and that there are very thin profit margins, mistakes made, shrinkage, or spillage, it can make or break a business. When you have that, you can oftentimes get buy-in from at least the majority of your people. It builds trust with them because they feel like you are putting them in the know. They feel like they are part of the process.

I love the way you framed it because I have had similar conversations with property management companies because I am an entrepreneur in several different companies. One of them is an acquisition company. We buy these larger assets. You hire a property management company and pay them to go and execute your plan to a certain extent. Oftentimes, you do not realize, especially when you are starting, that they are not sharing all the nuts and bolts. They hire someone to go, collect rents, and put a tenant in there.

They do not know you need to test market rents, additional income generated through different means, and all these different things that help generate revenue and profitability. That can make it a better environment for the tenants in general. They are just there to manage and oftentimes do the bad stuff, which is collections, which nobody likes. The tenants and the owners do not like it. It is so important. We also do something similar with the very ground-level maintenance guys and property management-level people. We get them to buy in as well.

We will share with them the P&Ls and say, “Here is where we need to be in year three. How are we all going to get there together?” We bonus them at the ground level. Sometimes, the bonus levels are too high and out of reach. There is no incentive for them. You mentioned it earlier. It is like, “You’ve got to take care of these people.” That was one heck of a way to end. I love your enthusiasm, Tim. You are amazing. You are doing great things. How can our audience members find you? If someone wants to learn more about you, where could they go?

If the leader does what they say, the people are more apt to follow it and do what the leader does.

They can connect with me on LinkedIn and Facebook, but LinkedIn, to me, is one of the best. I have two LinkedIn accounts. I maximized the one on LinkedIn and now I am on my second one for entertainment and restaurants. You are welcome to connect with me at Tim Murphy, MBA or Tim Murphy, CEO. Reach out and connect. I usually take most people.

Thank you so much, Tim. Guys, please smash that subscribe, leave us a review if you enjoyed the interview, and share it with your friends so you can share all this amazing knowledge that Tim shared with us. Tune in next time. Thanks a lot.

Thanks, Chris.

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I have said this before but we had an absolutely spectacular interview with Tim Murphy. This is a good one. Tim runs a bunch of water parks and fun centers, and he is a wealth of knowledge. He shared a ton of great information I know you are going to enjoy. I always highlight two takeaways. There were many but here are two of them.

One of the things he talked about was hitting market prices when you take over a business or start a business and making sure that you are checking out your competition so that you can bring your revenues up to maximize the amount of income you can bring in. He also talked about identifying signature products in your organization that you can charge a premium for and might differentiate you from other businesses in the marketplace.

We did a deep dive into this. It was great. The next thing we talked about that I wanted to highlight was how he felt the number one thing that businesses that are struggling fail to identify and/or when you go into a successful business are the culture of the organization. What he focuses on is building out or upon a good culture in an organization. If you have good people, you can teach them things. That can help you build out your business and maximize profits. I thought that was amazing. We dove into that as well. You are going to enjoy the show. I can’t wait to share all this great knowledge with you. I will see you there.

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About Tim Murphy

Tim Murphy is an American Business Executive currently serving as the CEO of APX Operating Company LLC (dba Boomers Parks) in North America owned by the Cerberus private equity firm.