The Nemesis Club and Soda Jerk
“Our concept consists of two complementary experiences: The Nemesis Club, offering epic escape game adventures, and Soda Jerk Co. Milkshake Bar,” says Dustin Smith, who co-owns the business with his wife, Kylee. They originally conceived of The Nemesis Club as the primary attraction, with guests “sneaking through” Soda Jerk Co. on their way to play an escape game and then, at the end of their 60-minute adventure, guests would sit in a “secret lounge” to celebrate or commiserate over a delicious dessert made in the Soda Jerk Co. kitchen. “For Soda Jerk Co. to fully contribute as both a really fun entrance and a truly desirable dessert option, we completely developed the Soda Jerk Co. brand, interior design, menu — the whole restaurant concept,” Smith says. “But even though we were completely in love with what we were creating, we really thought that Soda Jerk Co. would see very little counter traffic aside from guests to The Nemesis Club.” In fact, he shares, their initial financial projections included exactly zero dollars in revenue from the Soda Jerk Co. counter.
Dustin and Kylee Smith, co-owners of The Nemesis Club and Soda Jerk
The game rooms is where the Smiths expected to draw the revenue. Their grand opening had been planned for spring of last year, and they expected to have three of the attraction’s five escape games ready for the grand opening of our first location in Desert Ridge, which is the number of games they had projected would be required to hit a breakeven revenue target.
“But then COVID threw us some major curveballs,” says Smith. Citing labor and materials shortages as the biggest challenges, he relates they started swinging hammers on their tenant improvements mere days before COVID lockdowns began. “We felt the COVID squeeze very early,” he recalls, noting that not only did building supplies not arrive and but subcontractors called out with COVID symptoms. And on down the supply chain, as the scenic artists and technology suppliers notified the Smiths of delays and rising costs due to their own labor and materials supply issues. “Despite our best efforts to keep the project on track, the expenses grew and the timeline slipped by days … then weeks … then months, quickly eating into our build budget and operating capital reserves.”
By mid-summer, Smith says, they knew they’d need to pivot to survive — which became not just a jog in direction but actually a complete reversal of plans. Their first change was to scale back the escape game build plan by completely cutting one of the three initial games. A month later, they realized the second game would have to open sometime after the first rather than concurrently. “And then,” he says, “in September 2020, recognizing that the first escape game was still months from completion, we set a grand opening date for Soda Jerk Co. in October. We turned all of our attention to the business that was meant to be a secondary source of revenue and that would deliver tighter margins — the less desirable business model in many regards.” With that reversal, Smith says they hoped their unique, carefully crafted dessert concept would be interesting enough to get customers venturing out enough to sustain the business until they could get games open.
“Despite the enormous effort we invested in the pivot, we couldn’t have predicted how positively the community would respond to the opening of Soda Jerk Co.,” Smith relates. “Guests raved about our milkshakes in reviews and on social media. Our line wrapped around the building. We suddenly had a list of new problems — good problems, like how to house so much inventory, how to increase production speed, where to seat all the guests, and how to quickly triple the size of our team. In fact, all work on the escape games halted for a number of weeks while we learned to run a high-volume shake bar!”
The first escape game — EVIL Robots — opened this past February, and Smith says it has had a very positive public response and is meeting their revenue goal for one game. The second game is anticipated to open in a few weeks. “But Soda Jerk Co. will continue to be our primary revenue driver this year,” Smith says. “Not bad for a secondary concept that didn’t even make it into our initial projections!”
The Economic Roller Coaster
Since The Nemesis Club and Soda Jerk opened while COVID restrictions were in place and public anxiety was still relatively high, Smith says they have no experience to judge exactly what the COVID impact has been. But their revenue has been more a steady climb than a peaks-and-trough roller coaster. Says Smith, “We’ve seen traffic steadily rise as immunity increases and consumer confidence grows. But,” he adds, “it’s difficult to say what the biggest contributing factor is — growing consumer confidence, better brand awareness or the tourism season.”
Staying Strong and Moving Forward
“Despite Soda Jerk Co.’s success, the scope changes COVID forced restricted our revenue potential,” says Smith. They considered the High Street location to be their prototype and had ambitious plans for growth. But, in addition to the pivot described above, they have had to keep operating costs as low as possible “while still delivering a premium product and experience.” One of the areas that has impacted is staffing. Instead of hiring a manager and other people into supervisory roles so they could continue developing processes and start scouting new locations, the Smiths have continued to manage the day-to-day operations themselves — while their tiny game development team has carried more of the production load than originally planned. “We knew those decisions weren’t optimal for long-term growth, but it was a matter of survival,” Smith explains.
Although noting he and his wife have been working 18-hour days, six days a week, for more than a year, Smith says, “We wouldn’t dare complain about it, because we’re thrilled to be living our dream of running our own business.” But, he says, their family has paid a price. “We bring our kids to the shop as often as possible, but they definitely need more Mom and Dad time.”
All their exploration around growth screeched to a halt, too, in the short term. Long-term seems to be a different story, as Smith says they are constantly getting requests from consumers and developers all over the state and even across the country to bring both Soda Jerk Co. and The Nemesis Club to their neighborhoods. Expansion is certainly in their sights, but Smith says COVID has made that economically impossible to contemplate for a while.
“While things haven’t gone perfectly, we’re thrilled to have one thriving business model, with another growing steadily,” Smith says, expressing optimism about the future of their business and noting that people love both experiences. “We haven’t started advertising for The Nemesis Club yet, but the secret is out. We’re fully booked most weekends. We’ll open the second game in a couple of weeks. Then we’ll start working on our expanded lounge space and another game. By this time next year, we should have five games open and at least one new location under construction. Then the next location, and then another. The next few years are going to be really fun!”
The Nemesis Club and Soda Jerk is one segment of the June 2021 cover story “Fun Is Our Business: Survivors of a year that’s been anything but fun.”
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