Picture this: You and a group of friends are locked in a room filled with mind-boggling puzzles, hidden clues, and a ticking clock. Your mission? To work together, solve the riddles, and find your way out before time runs out. It’s an immersive experience that combines problem-solving, teamwork, and a healthy dose of adrenaline. Now, imagine you started your own escape room business and got to guide others through the same fun-filled adventure every day.
Sounds a touch more enjoyable than your current day job, doesn’t it? Well then, why not make it a reality? In this comprehensive guide, you’ll learn everything you need to know about how to open an escape room business of your own. From market research to sales forecasts and everything in between, we’re walking you through the step-by-step process.
If you’ve been plotting your escape from the 9-5, this one’s for you.
What is an escape room?
An escape room is an immersive group adventure game. Players are placed in a room with puzzles and clues, but no direct escape route. To “win” the game, the group must work together to solve the puzzles and ultimately escape before the time runs out (usually 60 minutes).
Why would you consider opening an escape room?
Since their inception to pop culture in 2007, escape rooms have become incredibly popular due to their unique and immersive entertainment experience. Unlike other experience-based games like paintball and laser tag, people of all ages can participate, making it a fun-filled activity for the entire family—grandparents and kids included! Escape rooms are also a great opportunity for team building, which has made them a popular activity for both corporate and sport-based teams.
With industry growth rates expected to climb, escape rooms represent a lucrative business opportunity for adventurous entrepreneurs.
Escape room statistics
As any savvy entrepreneur knows, it all comes down to the numbers. So, let’s take a look at some growth and demographic statistics before diving into how escape room businesses can make you money!
Escape room growth rates:
- 2016: The number of escape room facilities increased by an astounding 800%
- 2019: Facility growth leveled out at just 2%, and by 2020, pandemic restrictions caused many facilities to close their doors
- 2021: Despite pandemic-related complications, the escape room market was valued at nearly $3B in 2021
- 2028: By 2028, the market is expected to reach $7B
Now, let’s take a look at some escape room demographics:
- 37% of groups have players over 21 years old
- 14% are families with children
- 19% of groups are under 21 years old
- 19% are corporate clients
- 11% are couples
Taking into consideration these growth rate predictions and widespread demographics, the outlook for escape room businesses certainly looks promising. But since we love to crunch some numbers, let’s dive into the numbers to be sure.
Are escape rooms profitable?
According to a 2019 report from Xola, the average escape room location generated $317,571. However, the profitability of escape room businesses varies depending on its location, market demand, pricing strategy, number of rooms, room capacity, and the number of sessions per day.
With so many variables at play, let’s create a hypothetical example to understand the cost-benefit.
For this example, let’s assume you’re just starting out. You have one escape room with the following variables:
- Players per session: 8
- Daily sessions: 8
- Cost per player: $25
To determine your maximum daily revenue, we’ll combine all the variables above ($25 x 8 participants x 8 sessions), for a total of $1,600. Now, to estimate the monthly revenue, you’ll need to multiply your daily revenue by the number of days you’ll be open each month. Assuming you’ll want to be open 6 days a week, your potential monthly revenue will be $38,400 ($1,600 x 24).
Sounds pretty good right? Well, you’ll need to determine your overhead costs before you can decide that. This will include things like rent, utilities, employee salaries, marketing, insurance, game design, and maintenance. These costs can vary considerably based on your escape room’s location, size, operational expenses, and number of employees. It’s worthwhile to reach out to a local commercial leasing agent to get an idea of the operational costs in your area.
Once you have a rough estimate of your monthly overhead costs, subtract it from your potential monthly revenue to assess the cost-benefit of opening an escape room in your area. To be profitable, your monthly revenue should consistently exceed your overhead expenses.
It’s worth noting that a solid cost-benefit analysis doesn’t always guarantee success. It will take time to build the reputation and customer base required to hit these revenue numbers. So, be sure to leave yourself enough financial wiggle room to make it through the first few months.
What type of business is an escape room?
When it comes to legal entities, an escape room business can be structured as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Factors like personal liability, tax considerations, management structure, and number of owners will ultimately determine the legal route you are able to take.
Here’s a brief breakdown of what these legal entities entail:
- Sole proprietorship: This type of ownership is suitable for businesses that are owned and operated by one person. Sole proprietors have full control over their business but are also personally liable for any business debts and legal obligations.
- Partnership: A partnership involves two or more individuals sharing ownership and management responsibilities. In general partnerships, all partners are personally liable for the business’s legal obligations. However, businesses with limited partnerships can have both general partners (with personal liability) and limited partners (with limited liability).
- Limited liability company (LLC): An LLC provides a balance between limited liability protection and operational flexibility. While specific regulations and requirements for forming an LLC vary from state to state, LLC owners are generally not personally liable for the business’s debts or legal liabilities.
- Corporation: A corporation is an entirely separate legal entity from its owners. This option provides the strongest liability protection as it generally shields the owners’ personal assets from any business liabilities. However, much like LLCs, the regulations vary by state.
While most escape room businesses operate as either LLCs or corporations, state regulations vary by state. So, you’ll need to look into local formation, regulation, taxation, reporting, and compliance requirements. For escape room operations, these requirements will include things like permits, licenses, and insurance specific to the entertainment industry.
How to start an escape room business: step-by-step guide
Much like any other business, starting an escape room business is a complex process that requires multiple steps. But don’t worry, this step-by-step guide will walk you through the entire process with actionable tips and helpful resources you can use along the way.
1. Start with market research
Determine whether your region can support an escape room business by considering the following questions:
- Is there a demand or desire for escape rooms in your area?
- Is your market big enough to support your business? How many people would be interested in your escape room?
- What area does your business serve? Where do your customers live?
- Are there any direct competitors in your area? What about other entertainment businesses?
- What’s the average income in your area? Will enough people have the disposable income required to support an entertainment business?
- What do other entertainment businesses charge in the area? Should your escape room be priced above, in line, or below that?
With this information in mind, you can start to determine your start-up costs, potential revenue, and profitability. If you’re not sure what to include in your start-up costs, you can use this handy start-up calculator as a guide.
2. Create a business plan
With all the information you gathered during the market research phase, develop a comprehensive business plan.
This should include your vision, target market, marketing strategies, financial projections, and operational details.
Sound a bit overwhelming? Check out this guide on how to write a business plan.
3. Build a brand identity
A strong brand identity can help your business stand out from competitors, and make marketing decisions easy.
- Select brand colors and fonts to create a cohesive and memorable brand identity.
- Give your escape room business a memorable name. Try not to focus too heavily on a theme (like Harry Potter or outer space) as that will likely change over time.
- Once you’ve chosen a business name, conduct a business name search and register your chosen name with your state’s Secretary of State office.
- To obtain the same name for your website, use a domain registration service like GoDaddy or Namecheap.
4. Register your business
Now that you have a business name, it’s time to register it!
- First, choose a legal structure for your business such as sole proprietorship, partnership, LLC, or corporation.
- Then, register your business with the relevant state authorities through their official websites or use online platforms like LegalZoom or GovDocFiling.
- Once you’ve registered your business successfully, you can move forward with the necessary permits, licenses, and tax registrations.
5. Select a location
Find a location with enough space for your escape room(s).
- You can explore commercial real estate listings on websites like LoopNet or contact local real estate agents.
- To ensure it’s easily accessible to your target audience, consider factors such as foot traffic, parking, lease terms, accessibility, and proximity to other attractions or businesses.
6. Secure Financing
Using the start-up costs you calculated during the market research phase, create a budget for your escape room business.
- Start by researching local small business loans and grants through the Small Business Administration (SBA).
- Next, explore additional funding options. This could include personal savings, a loan from a bank or credit union, or private investors.
- Create a detailed financial plan and documentation process to present to potential lenders or investors. This should include information like your sales forecast, expense budget, personnel costs, profit and loss forecast, projected cash flow, and more.
- If finances aren’t your strong suit, you can find all the information you need to get started with your financial plan here.
7. Build your escape room
Now comes the fun part, building out your escape room experience! Create unique and engaging room themes, puzzles, and props that align with your target audience and brand identity.
- Collaborate with designers, get inspired by existing escape rooms, or utilize online resources like Escape Room Techs for guidance.
- Have a group of family or friends run through the game to gain a better understanding of the flow, safety considerations, and overall experience.
- Don’t forget to have fun and be creative!
8. Hire a team
- Determine your staffing requirements based on the size and operation of your business.
- Recruit an enthusiastic, customer-focused team that will add to the overall experience. You can put up flyers at college campuses in your area, use local job boards and community networks, or advertise on platforms like Indeed.
- Provide appropriate training for game operations, customer service, and safety protocols.
- If you’re feeling stuck on how to recruit, train, and hire staff, don’t worry. Homebase offers all the tools and strategies you need, from job postings, to interview tips, to how to manage payroll.
9. Develop a marketing strategy
- Create a marketing strategy with your target demographic in mind. This should include information like your overall brand strategy, content (video and written), and advertising plans.
- Plan and launch your first marketing campaign: Select online and offline marketing channels based on your demographic. Use search engine optimization (SEO), social media, online advertising, local partnerships, and community outreach to build excitement ahead of your launch.
10. Open your doors!
- Invite friends, family, and local businesses for a soft launch. This will help you iron out any operational kinks ahead of opening day.
- Open to the public!
While these steps provide a general framework for small businesses, every business will have specific requirements based on their location and circumstances. So, adapt the steps as you see fit and seek professional advice when necessary.
5 tips for running an escape room business
Not to burst your bubble, but the hard work doesn’t exactly end once you crack open those escape room doors. Well, at least it does for your customers, but not for you.
Here are a few tips that will help you streamline operations, provide a memorable customer experience, and ensure your escape room is successful for years to come.
1. Put your customer first
While the success of every business lies in the hands of its customers, this is particularly true for escape room businesses. Why? Well, in some ways spending money on entertainment is a luxury. So, unlike other businesses that provide a service their customers need (like plumbing or landscaping), escape rooms are just for fun. That means you need to create a truly memorable experience to keep your customers coming back for more, and here are a few ways to do that:
- Layer in textures, visual appeal, sounds, and smells to create a truly immersive experience for your customers.
- Invest in high-quality props and ensure everything from the puzzles to the escape route create a cohesive story.
- Regularly update your rooms to keep customers coming back for more.
2. Prioritize quality staffing and game management
Ensure those you hire are passionate about escape rooms, customer service, and capable of keeping operations running smoothly (with or without your supervision).
- Provide thorough training and establish guidelines to help your team deliver consistent experiences and maintain game flow.
- Establish an atmosphere of teamwork and effective communication. Schedule an employee-only game for all the team-building benefits escape rooms have to offer!
- Provide conflict-resolution training.
- Ensure your scheduling and payroll systems are easy to use for both you and your team. An always-changing paper schedule on a sticky note and regular payroll errors mean your top employees won’t be content to stick around for long. A system like Homebase offers easy scheduling, time tracking, and payroll integration, meaning you can spend more time playing games, and less time working.
- Track performance metrics and consider implementing rewards for your most engaging and efficient team members.
3. Plan out the year
- Promote your escape room during peak seasons, holidays, and vacation periods to attract more customers. Ensure that you’ve adequately staffed up and have appropriate training info for new staff. Homebase makes it easy to post job descriptions, interview team members, and offer training docs.
- Consider seasonal fluctuations in demand and plan accordingly. For instance, escape rooms tend to be busier during school breaks. So, either ramp up staffing during this time or consider extending your business hours to make the most of it.
- Offer seasonal discounts and promotions.
- Create themed rooms that align with seasonal holidays and events.
- Work on strategies to maintain demand throughout the year. This could involve partnering with local businesses or running targeted marketing campaigns.
4. Maintain industry standards and safety regulations
- Establish clear safety protocols and ensure your team is trained to handle emergency situations.
- Constantly monitor the state of your escape rooms including props and equipment.
- Carry out regular safety inspections.
- Frequently test and reset puzzles to maintain their functionality.
- Keep tabs on safety standards and regulations like fire codes and accessibility requirements.
5. Put your business out there
- Create and maintain marketing strategies to attract your target audience.
- Utilize platforms like social media and paid advertising to increase your online visibility.
- Connect with your community by collaborating with other small businesses, participating in local events, and offering special promotions for local organizations like sports teams.
- Encourage customer reviews to build a positive online reputation and attract new customers.
While your escape room business may start with a well-thought-out business plan, your success will ultimately rely on the experience you are able to provide your customers. So, stay engaged, encourage feedback, and take it to heart. Your customers will ultimately tell you what they want, all you have to do is listen.
Plan ahead with smart marketing tools, recruiting, and training strategies to ensure your escape room doesn’t leave you feeling like you’re stuck in a room with no key. Get started with Homebase for free today.
Escape room business FAQs
Are escape rooms a profitable business?
While escape rooms have the potential to be a profitable business venture, like any business, success isn’t guaranteed. Factors like location, competition, pricing, overhead costs, and customer outreach will directly affect the profitability of your escape room business. So, do your research before locking yourself into a lease.
How do I start my own escape room business?
To start your own escape room business, you’ll need to conduct intensive market research and create a comprehensive business plan. From there you’ll need to secure funding, find a location, design your rooms (and overall experience), obtain necessary permits, hire a team, and promote your business.
How much does it cost to set up an escape room business?
The cost to set up an escape room business will vary considerably based on location, size, design, and quality of props and puzzles. On average, the initial cost to set up an escape room business can range from $7,000 to $30,000 or more. These costs include renovations and construction, puzzles and props, technology and electronics, marketing, business permits and licensing, insurance, and initial operating expenses. To estimate the specific costs for your own escape room, create a detailed budget based on your local market.