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 hot trend and can increase profits if done 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 amusement park, usually indoors, marketed towards families. They also have other names, like fun zones, play zones, family fun centers, or amusement centers.

Generally, within the industry, you have a bowling center or skating rink that wants to expand, and they add 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 the ground up.

There is a lot to think about when opening an FEC, including what attractions you will offer, whether you’ll serve alcohol and food, how much square footage you should have for your game room, and many more questions.

An essential part of your business plan is site selection. If you are opening a new location, it’s critical to research the area and the traffic patterns, mass transit, the local income per capita, and other factors that will affect your profitability. 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 think about your local market, but an arcade will be the most profitable part of your business per square foot, aside from alcohol sales. But let’s talk about the initial investment first. The average cost for today’s arcade games is about $12,000 to $15,000. Extreme games are more expensive, causing the average price per game to increase. 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, like buying pre-owned games or financing options where you make payments aligned to your business. The average arcade game will bring in $200 weekly based on a facility achieving the average expected volume. Many arcades, however, do far better than industry averages due to 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 tells you it can be profitable and pay a game off in about a year. That doesn’t even consider the opportunities this brings your business to boost other areas. Arcades help you diversify your customer base and bring in more families, enabling other business areas, like food.

Marketing people are always talking about Millennials and trying to grab their attention. Research shows that this group is looking for 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.

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