At celebrate every year except for my first we didn’t get to as it was covid and lockdown.
My hubby’s family is so big that I think next year I will be more selective of who we invite as there’s just way too many kids between the two of them (13) plus partners and then the parents.
Maybe you can just ask them what they would want to do and go from there.

We celebrate every year but with differing ideas, not always a big party.

Have a rule of a party every 2 years. I like your idea of an outing with 1-2 friends. Movie, moonlight cinema,

The idea of a “treat” with one or two friends works well for older kids (eg movie and pizza dinner).

Before my kids started school, we just had family gatherings for their birthdays. Then they started school and it was basically what appealed to them. We have had a pool party with pizza, we have been camping, we have had a shopping trip (daughter) to the city, there have been sleepovers (some with just one or two friends, some with more) We even flew interstate once or twice to see family. It all depends on your kids and your budget at the time

We have always mixed it up – sometimes a party and sometimes something smaller.
We have always been guided by the kids – they let you know what they want.

We never did and so far my son hasn’t had any. My nephews get one every second year. Your idea sounds like a lot of fun and I’m sure they’ll love it.