On the afternoon of June 19th, we were having record sales for the fifth day in the last ten, with a house full of players for the Modern Horizons 2 release weekend, in a 6k+ square-foot store that was approaching end-of-lease. If you had told me at that moment that the store would be closed for the rest of the month, I would have laughed at you.
Less than 30 days later, we re-opened in just under 2k square feet, in a gorgeous fully-renovated suite on the other side of the same building, where our lease is renewed through 2025 at an occupancy cost so much lower that it's practically operating for free (and for the short term, "practically" is more like "actually").
But wait a minute. Hadn't I posted right here on this blog that I was 95% confident the store would remain where it was through 2022? (Amusing that in that same article, I forecast a "pandemic" as one of the "apocalyptic" scenarios that might throw all assumptions out the window.)
So what happened?
Fire. Fire happened, and a supportive landlord who was willing to work with us to turn a loss into a win.
For a week in mid-June, a heat wave blasted the Phoenix area that was so onerous even we locals were hatin' life. DSG had HVAC interruptions, brief outages, and other unpleasantness. We even shut down the vintage arcade for a few days to try to reduce the power load. Sometime around 7pm on June 19th, the heat blistered our external power junction assembly, and a bad connection arced many amps of power into ignition.
We cleared the store of guests and nobody was harmed. It is testament to the great construction of our building and the safety measures therein that the other power phases continued uninterrupted despite a literal electrical fire burning inches away from their connection points.
Alas, the fire destroyed the entire junction, and replacement took weeks of parts procurement and installation, followed by weeks of city and utility certification before the suite could be used again. (As of the publication time of this article, it was still not done.) DSG faced a potential business outage right in the middle of our hottest streak in company history. In fact, despite being closed from June 19th to the end of the month, June still came within a few percent of being our biggest month ever, and instead sits in second place behind March 2021. The stakes could hardly have been higher.
To our immense fortune, we had already been working on our exit plan from Suite 7, which was approaching end-of-lease, as I mentioned earlier. The other partners and I had spent months sketching out the branches of our potential site scenarios. Through this preparatory work, we had already reached a provisional agreement with the landlord to move to Suites 11 and 12 for our lease renewal, but it was supposed to happen months into the future, closer to the Suite 7 lease terminus. The landlord already had an inbound tenant signed on for Suite 7 who was ready to start construction whenever we happened to be out of the way. We all figured late 2021 or early 2022 would be Go Time.
When the fire occurred and we learned how seriously it was going to disrupt business, we were able to amend the agreement with the landlord to just proceed with the move immediately, and give the inbound tenant a chance to get started and pass through Permit Hell sooner. The inbound tenant was thrilled. I can't disclose their business since that's not my information to share, but the entire DSG crew is looking forward to it being there, and we will be eager customers.
Moving immediately meant doing things on a tight calendar and some extra expense from not being able to slow-walk some of the renovations, but thanks to this spring's stimulus boom, we were positioned sufficiently well to proceed using cash on hand, and insurance is going to defray some of that cost later. And we sharply minimized lost time. I cannot stress how different this move has been from the last one, which ran way over calendar and way over budget and required us to borrow an inordinate amount of money at lousy interest rates. This new move required us to borrow zero dollars and zero cents, and on top of that, again, insurance reimburses some of the expense.
So there it was. We had a plan already in place, and what the electrical fire let us do (or forced us to do, depending how you look at it) is start before we were ready, and finish before we had preferred to, but ultimately move forward right away and reap the long-term benefits of that.
The MTG Forgotten Realms prerelease stood as a pretty hard calendar milepost that we didn't want to miss. Under the original plan, we'd have hosted that and one or both of the Innistrad events from this fall in Suite 7, and then we'd shift all activities to the new suites seamlessly between major dates. Instead, after coordinating with Wizards of the Coast and getting the appropriate permissions, Forgotten Realms became the first event in Suite 12.
We know the new location is smaller. I've been telegraphing pretty heavily here and elsewhere that something like this was going to happen, so it's worthwhile for me to give some insight here on the business aspects of reducing our store footage in this manner and the business reconfiguration that goes along with it.
Having the largest store in the Valley was fun, but in many ways it was overkill, and it absolutely was not cost-efficient. We had a huge and happy player base, and Suite 7 was certainly big enough to accommodate them, but during the long slide of tournament indifference that preceded the COVID pandemic, we discovered that it wasn't necessary to have that kind of capacity, since that river almost never ran bank-full.
Indeed, even at our fullest, we never even reached 50% of our imputed maximum occupancy. Over the years, I had to get really creative to monetize surplus footage, and that's part of why Warhammer and D&D lasted as long as they did despite the organized play deployments for both categories failing to perform sustainably. I had more space than I could fill, so things that were using that space inefficiently got a partial pass. That partial pass finally expired when growing business components started making more beneficial use of that space, such as our TCG singles processing office. It started to make sense to take those categories out of the equation if we were not situated to be top-tier in them.
That said, we are still positioned to serve the lion's share of our everyday player volume from before. Obviously it will be a bit of a pinch at prerelease time, since we routinely seated double or triple our typical FNM player counts for that. We've got about a 48-player max in Suite 12, and we can stretch that from time to time to about 64 players using additional space in our section of the plaza, including parts of Suite 11, once we've had time to set that up. (We only need seating for 32 players to host WPN Qualifier events, if those ever resume.)
More importantly, we are poised to do a far better job serving our players than we did before. Suite 12 has been fully renovated, from newer LED ceiling lights to awesome stone floors, and it's beautiful and comfortable. Our WPN Premium application is already on my itinerary. We hit a jam with the new tables we had planned, our understanding was that they were about three inches wider than needed (good) but it turns out they are three inches narrower than needed (not good). But we still have the eight-footers in place with sweet covers and comfortable space around. And obviously our HVAC system will have fewer cubic feet of space to cool during the hot summers. Meanwhile, singles processing in its entirety takes place in Suite 11 and requires no additional steps from the player.
We have been telling the regulars who ask, that there is a long term plan in progress and it will make sense as the final pieces fall into place. We're definitely at the 80%-85% completion level now, with only a handful of major moves (each containing its own array of sub-moves) remaining to get DSG to where we believe it should be. It should all be starting to make sense now to those of you who have been observing all along, though you'll gain even clearer insight as we push those last few building blocks into place. The recent "Great Narrowing" of DSG's focus from full-spectrum hobby gaming to just video games, Magic, and Pokemon, explained at length in various articles here, was a prerequisite condition to a broader structure of efficient facility deployments, starting with the one we've built now in Suites 11 and 12. We've been working on, as I put it in a previous article, "steering the store's cone of influence to a narrower range of things, so we can craft an offering that is increasingly 'no excuses.'"
Before the move from Gilbert to Chandler, we had maxed out a 2400 square foot suite and had our Tempe location also on lease wind-down at just over 3k square feet. The 2017 lease for Suite 7 was cheaper than both Gilbert and Tempe combined, and also larger than both of them combined. It seemed like it was a complete win on all fronts. Instead, we found ourselves out of position. We had been running a Mario model that suits rural and mid-major areas well, spreading a wealth of categories and play space to cast as wide a net as we could. While we were busy with steep efficiency challenges in an attempt to be better than a jack of all trades and master of none, in our major metro region, laser-focused smaller stores took leaps forward and proved to be running the better structure.
In fact, the Bahr Haters out there now get to experience the one thing they wanted the least: a DSG with near-zero overhead that can exert tremendous competitive pressure on them through pricing, supply, and our ironclad reputation for doing everything above-board. Feel free to throw in the towel and close up any time you're ready. (This is especially sweet after how some of them stoked the rumor mill during our closure suggesting that we were done for. Yeah, you wish.)
Since the impetus for our big move forward amounted to us essentially seizing an opportunity provided by a fire, I couldn't resist the reference to Queensrÿche's masterpiece "Take Hold of the Flame." Indeed, fire or no fire, it was time for DSG to make a definitive move, to hard-shift from the store we thought would be pretty good for many in general, to a store we knew we could make excellent for those who wanted what we were focused on doing. We took hold of the flame; we had nothing to lose, and everything to gain. And so that you can enjoy it in all its glory, here is the best metal vocal performance ever filmed.
