Are Family Entertainment Centers profitable?

Opening a Family Entertainment Center or converting a Bowling Alley or Skating Rink into one is a significant investment that must be considered. Many people ask the question, Are Family Entertainment Centers profitable? The simple answer is yes, but a lot goes into making that happen. Location-based entertainment is a growing trend that can significantly increase profits if executed correctly.

Opening a Family Entertainment Center, or FEC as it is referred to within the industry, requires a significant initial investment and a long timeline. Let’s first define what a Family Entertainment Center is. A Family Entertainment Center is a small indoor amusement park, typically marketed towards families. They also have other names, like fun zones, play zones, family fun centers, or amusement centers.

Generally, within the industry, a bowling center or skating rink that wants to expand typically adds a game room or other attractions. You also have owners who want to take advantage of the low cost of some retail space in shopping malls and open an FEC from scratch.

There is a lot to consider when opening an FEC, including the attractions you’ll offer, whether you’ll serve alcohol and food, the amount of square footage required for your game room, and many other questions.

A crucial aspect of your business plan is site selection. If you are opening a new location, it’s important to research the area. Look at traffic patterns, public transit, local income, and other factors. These will affect your profits. The same is true if you already have a facility; you can’t change much except how you market to the locals.

Breaking Down the Numbers

For this post, let’s focus on the profitability portion of the concept. You’ll need to consider your local market, but an arcade will likely be the most profitable part of your business per square foot, aside from alcohol sales. However, let’s start with the initial investment. The average cost for today’s arcade games is about $12,000 to $15,000. Extreme games are more expensive, increasing the average price per game. This number is based on a brand-new, full redemption arcade game. Arcade games should net you about $3-5 per capita.

Those prices can cause some sticker shock, but there are options to lower the costs, such as buying pre-owned games or financing options that align payments with your business schedule. The average arcade game will generate $200 per week, based on a facility achieving the average expected volume. Many arcades, however, perform significantly better than industry averages due to their above-average volume. Average also assumes the facility has committed significantly to family entertainment, with a current game mix and keeping up with prize trends.

What Does the Math Tell You?

The math suggests that it can be profitable and pay off a game in about a year. That doesn’t even consider the opportunities this brings to your business to boost other areas. Arcades help you diversify your customer base and attract more families, which in turn enables other business areas, such as food.

Marketing people are always talking about Millennials and trying to grab their attention. Research indicates that this group seeks experiences when they spend their money. So, offering an entertainment experience where they can share good times with their friends provides a marketing opportunity you’ll need to take advantage of. Another thing that an arcade can do for you is allow you to throw parties. Hosting birthday parties and corporate events can be a great source of revenue. All of this works together to create repeat customers.

In addition to a game room, you can also add other amenities to diversify your revenue sources and attract a broader clientele. For example, laser tag can be very profitable, returning twice your money within a year.