Founded in 2004, Sky Zone landed at No. 160 on the Franchise Times Top 400 list with global sales of $426 million and with over 270 parks in 2022.
Roger Duncan insists it gets easier the more family entertainment parks he adds. That’s a good thing because with 17 Sky Zones in his portfolio, he is the brand’s largest operator.
Duncan is the founder of Ex Nihilo Capital, a boutique private equity firm based in Blacksburg, Virginia. He recently signed a deal to take over 10 existing Sky Zone parks in Florida, Georgia, Illinois, Michigan, Missouri, Wisconsin and Tennessee that were previously owned by Bron Launsby of Heights Management Company.
Launsby founded Nashville-based Heights Management in 2012 and opened his first Sky Zone parks the same year.
Roger Duncan, founder of Ex Nihilo Capital, a boutique private equity firm based in Blacksburg, Virginia, recently signed a deal to take over 10 existing Sky Zone parks.
“Contrary to what you’d might expect, it’s actually gotten easier to manage the parks as we’ve added more of them and grown our business,” said Duncan who, prior to the deal, owned seven Sky Zones with three in Maryland, three in Pennsylvania and another in Wisconsin. Duncan, who has a minority interest in another Sky Zone location, bought his first two Sky Zones in Bethlehem and Timonium, Maryland, in 2017.
“It’s the most scalable-friendly business I’ve come across and, honestly, it doesn’t take much more work to run a dozen parks than, say, five parks. At least that’s what we have found,” said Duncan.
Duncan said the new parks he purchased were all performing pretty well prior to his acquisition of them, but he anticipates a lot of room for growth.
“Obviously, there’s going to be an adjustment period where we are integrating different cultures into our system but, then again, it’s not really that complicated,” Duncan said. “Family entertainment is a fantastic business to be in right now and Sky Zone is a leader in that segment. Once you build it or open one, people are going to come.”
Along with being the largest Sky Zone operator, Duncan is also one of the brand’s most successful ones, with each of his parks averaging between $2 million and $3 million in annual revenue. He said his previous portfolio of seven parks was producing about $45 million in annual revenue, with EBITDA margins of roughly 34 percent. Those figures put him in the upper quartile for all Sky Zone operators, according to the company’s franchisor disclosure document.
Founded in 2004, Sky Zone landed at No. 160 on the Franchise Times Top 400 list with global sales of $426 million and with over 270 parks in 2022. The investment range is $1.6 million to over $4 million.
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“Multi-unit franchise owners like Roger are the backbone of Sky Zone, and he sets a great example of the opportunities within our system as we continue to grow,” said Mike Revak, chief business officer at Provo, Utah-based Sky Zone.
Duncan, who has grown his portfolio mainly by acquiring existing parks, said he owes a lot of his success to assembling a strong and experienced administrative team that oversaw sales growth of 8 to 10 percent in 2023. His staff includes a “trainer” who meets with park managers and is constantly monitoring key performance indicators at each of his parks, which together employ over 700 under his holding company.
Contributing to Duncan’s business growth and success is a robust membership program.
“Sky Zone experimented with memberships several years ago, but it wasn’t until about 2022 that we hired a consultant that had a lot of experience with membership programs and helped us put together our program. That’s when we started see it just take off,” Duncan said.
“Some of our parks are converting as high as 70 to 75 percent of guests into members, which is a pretty substantial amount,” he said. “When you have 100,000 to 150,000 people come through your doors every year to purchase tickets, it adds up really quick.”
Duncan said that as long as parents want their children to get off their devices and away from the TV, his Sky Zones business will continue to grow. Even with 10 new parks added to his portfolio, he said he is not going to stop seeking other opportunities to grow.
“Families need something to do and there is an unlimited potential for growth,” Duncan said. “If you want your kids to play video games, take them to Dave & Buster’s. If you want them to burn some calories, take them to Sky Zone.”