How to Start an Arcade for Entrepreneurs
5 Minute Read
Does the sound of a pinball machine make your ears perk? What about the excitement of players competing against each other to win a game? If you answered 'yes' to these questions, you might be thinking about how to start an arcade and what steps you need to take to become and remain a success. Well, the answer might surprise you.
Starting an arcade is great for an entrepreneur looking for something new and exciting, and it could become very profitable if a success. However, with all the experiences and attractions you can add to a location, running an arcade differs from day to day.
Be sure to continue reading for our guide on steps to take and tips you need to know when starting an arcade.
Step 1: Create a Business Plan
If you're serious about opening an arcade, you will need to develop a business plan to help you get started. A business plan is essential in setting your goals and ideas to ensure success.
You'll need to figure out your business finances and see the best ways to get funding for your project. In addition, what other attractions will you have? Do you envision your location as a more miniature classic/old-school style arcade or a large family entertainment center that might include a full restaurant with a bowling alley, laser tag, and other prominent attractions? These are crucial decisions to consider when building out your business plan.
If you don't already have one in mind, start brainstorming location ideas for your arcade. That way, you will know the rent prices and can include them within your business plan and budget.
It would help if you also outlined how you plan to get business licenses and permits within your business plan. While arcades are not considered gambling, you will want to make sure you're obtaining the correct permits so your business can run legally.
Step 2: Find the Coolest Arcade Games and Machines that Fit with Your Type of Location
After you've done all the work to outline your business goals, you get to do the fun part of choosing the equipment. Of course, your arcade won't be any fun without unique arcade games and machines. Be sure to look for new releases, classics, or even VR arcade games when looking to stock your arcade. You can even try it before you buy it. Numerous amusement trade shows and expos worldwide allow operators and owners to get exclusive sneak peeks at the latest games and play them before investing in them.
You have some options when it comes to buying arcade equipment. You can choose between buying new equipment, investing in some used arcade equipment, or looking for the '80s or 90s classic arcade machines. There has been a trend toward creating classic arcades to take advantage of childhood nostalgia - be aware of everything that goes into keeping older machines up and running, like finding parts and technicians specializing in fixing those types of machines. There is a community that loves to work on these machines and bring them back to life and if that's your passion, go for it. However, newer titles would make more sense if you focus more on the business side.
It's essential to have the right mix of games to ensure you're profitable. There are three basic categories of typical arcade games with many more subcategories: Video Games, Redemption Games, and Merchandisers. An essential part of the decision-making process is the percentage of your space allocated to the specific types. Check out our post on the different types of arcade games for a more detailed analysis.
Step 3: Research Your Competition
Business in this sector is competitive, so make sure you find who the competitors within your area are and what makes them stand out or what they might lack. One of your first goals should be to research their arcades and see how they're operating and what their assortment is. By analyzing the competition, you can find the best way to attract your target market. For example, you might find that you can improve the arcade lineup and bring in more clients than your competition.
How Profitable Are Arcade Games?
How much does it cost to purchase arcade games, and how much profit can you expect to make? How many games can I fit in my location? Here you'll find some basic industry averages to help set your expectations, but you must understand your specific needs and market.
Average Per Game Budget: $12,000-$15,000
Big-time titles and extreme games are more expensive and causing the average price per game to increase. This number is based on a brand new, full redemption arcade. Costs can be reduced to fit the project's budget using used games. Also, choosing the extremes carefully can help meet the budget requirements.
Average Per Game Revenue: $200/Week
This is based on a facility achieving average expected volume. Many arcades do far better than industry averages due to higher volume. Average also assumes the facility has committed significantly to family entertainment, with a current game mix and keeping up with prize trends.
Average Per Game Space Allocation: 65 Square Feet
Extreme games are becoming more prevalent, causing the square footage for games to increase while decreasing the overall game count.
Start an Arcade in Your Area
If you're trying to develop a business opportunity to bring enjoyment and fun to your community, an arcade is a great way to go. This has been a basic outline for starting an arcade. If you have any questions or want help with getting started, Betson has team members that know the industry inside and out and can help you with the layout & design of your floor plan, game room mix, and more.
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