Entrepreneurs: A Step-by-Step Guide to Starting an Arcade Business

Does the sound of a dance machine make your ears prick up? What about the buzz of racing games? If you answered yes to these questions, you might be wondering how to start an arcade and what it takes to be successful. You might be surprised to learn that opening an arcade is an excellent choice for a businessman looking for something new and exciting. If successful, it can be highly profitable. However, each day in an arcade is different, and a variety of experiences and attractions can be introduced.

Step 1: Design a Business Plan

If you're serious about opening an arcade, you need to draw up a business plan to help you get started. A business plan is essential for setting out your goals and ideas and for ensuring your success.

You will need to calculate your business finances and determine the most suitable financing methods for your project. What other attractions will you offer besides arcade games? Will your arcade be small and classic in style, or will it be a large family entertainment center with a full restaurant, bowling alley, laser tag and other high-profile attractions? These are important decisions to make when developing your business plan.

If you don't have a particular location yet, start brainstorming ideas for your arcade. This will give you an idea of the rental prices, which you can then incorporate into your business plan and budget.

It would also be useful to include in your business plan details of how to obtain business licenses and permits. Although arcades are not considered gambling establishments, you will need the correct licenses to operate legally.

Step 2: The Permit Puzzle: The Most Important Licenses for Your Arcade Dream

Putting up an arcade is a thrilling adventure, yet prior to the joysticks breaking into song, you have to go through the oft-intimidating world of permits and licenses. There is nothing to worry about; it is more of a well-organized treasure hunt than a maze! Here is a guide to steer you:

Local licenses:

Business License: All arcades must have a basic business license from the city or county in which they are located. This is the basis on which you can operate.

Zoning permits: You should obtain a zoning permit to ensure that your chosen location is suitable for an arcade. This will prevent any surprises in the future.

Building codes and inspections: Ensure that your premises comply with all safety and accessibility codes. Your operations will be approved by building inspections.

Specific Activity Permits: Depending on what you offer, you may also require special permits for equipment such as pool tables, laser tag arenas, or food and beverage services.

State and Federal Requirements:

Employer Identification Number (EIN): Obtain an EIN, which will register your business with the IRS. This special number simplifies the process of filing taxes and opens the doors to business accounts.

State Sales Tax Permit: The majority of states will need you to collect and pay sales tax. Acquiring the sales tax permit will make it compliant and will eliminate future headaches.

Alcohol and Food Permits: In case you intend to serve alcohol or food, you will be required to receive extra permits and inspections by appropriate state and local authorities.

Do not forget that the process of obtaining the right permits and licenses is not only about ticking the boxes; it is about safeguarding your business and the safety and pleasure of your customers. Through a little time and effort at the beginning, you will be able to make sure that your arcade can concentrate on what it does best: providing unforgettable experiences to players of any age.

Therefore, get your metaphorical permit compass, study your local treasure map, and start the rewarding process of making your arcade dream come true!

Step 3: Find the coolest arcade games and machines that are suitable for your venue.

Once you have planned your business objectives, it's time to enjoy choosing the equipment. After all, your arcade won't be much fun without distinctive games and machines. Make sure you seek out new releases, classic games and even VR arcade games to fill your arcade. You can even test them prior to purchase. There are numerous amusement trade shows and expos around the world where operators and owners can view new games. They can test these games before buying them.

When it comes to purchasing arcade equipment, there are a few options to consider. You can choose to buy new machines, invest in second-hand arcade machines, or look for retro games from the 1980s or 1990s. There has been a trend to recreate old arcades to cash in on childhood nostalgia. Bear in mind that old machines require a lot of maintenance to keep them operational. This involves sourcing parts and employing competent technicians to carry out repairs. There is a community of people who enjoy working on these machines and resurrecting them, so do so if that is your passion. However, if you are more focused on business, newer titles would be a better choice.

The right combination of games is vital for profitability. Typical arcade games fall into three basic categories and many subcategories: video games, redemption games and merchandisers. You should dedicate a percentage of your space to certain types so that you can make informed decisions. Read our post on the different types of arcade games for more analysis.

Step 4: Conduct Competitive Research

Competition in this business is fierce. Research your local competitors and identify what sets them apart. Also, identify any gaps in their offering. One of the initial tasks you should perform is to research their arcades, observing how they function and what they offer. Through this analysis of the competition, you will be able to establish how best to reach your ideal audience. For example, you may find that you can improve the selection of games in your arcade and attract more customers than your competitors.

Local Landscape: Find out all arcades in your target catchment area. Major chains, local jewels, and even bowling centers with arcade areas—all of them should be mapped.

Target Audience Focus: Are you familiar with your dream customers—families, teens and esports fans? Examine what competitors offer in their own way.

Get Deep into Operations:

Game Selection: What are their games? Are they innovative games or old-school classics or a combination of the two? Examine their diversity, popularity and pricing model.

Ambiance and Experience: Note their ambiance. Is it family-friendly, edgy, or esports-oriented? What do they do with crowds and cleanliness?

Pricing and Packages: Examine their pricing system on a per-game basis, hourly rates, and special packages. Think about providing competitive or special choices.

Find Strengths and Weaknesses:

Competitive advantages: What qualities do particular competitors have? Do they offer exclusive game choices, new themes and outstanding customer care? Find out what their winning formula is.

Weaknesses: Find out where they are lacking. Do they have a lack of game variety, old equipment, bad service or a bad location? These could be your points of entry.

Competitive research is not about copying others or slashing prices. It's all about market knowledge. Your task is to identify opportunities and develop a unique arcade experience that will appeal to your target audience. Used wisely, this information can transform competition into inspiration. This will make your arcade unique and ensure customer satisfaction.

So, get out your notebook, brush up on your detective skills, and prepare for the exciting adventure of competitive research! Your arcade empire awaits!

Arcade Business Profit

How Much Do Arcade Games Earn?

How much would it cost to acquire arcade games, and what profit could be made? How many games could I accommodate in my space? Some industry averages are provided below to help you set realistic expectations. Nevertheless, you should consider your own needs and the market.

Mean per-game budget: $12,000–$15,000

Large-scale titles and extreme games cost more, raising the average cost per game. This figure is for a brand new, full redemption arcade. Used games can be used to reduce costs and suit the budget of the project. Also, careful selection of the extremes can help to meet the budget requirements.

Average revenue per game: 250 per week

This is based on a facility achieving average expected volume. Most arcades perform better than industry averages because they have a greater number of customers. The average also presupposes that the facility is devoted to family entertainment. It must also offer a balanced selection of games and follow trends in prizes.

Average per-game space allocation: 70 square feet

Extreme games are growing in popularity, with arcades allocating more square footage to these games at the expense of the total number of games.

As equipment is a costly barrier to entry, consider financing and leasing opportunities, as well as how used arcade games can help to get your business off the ground.

Open an Arcade in Your Town

If you're interested in setting up a business that will bring fun to your community, an arcade is an excellent choice. This simple guide will help you get started. Betson has professionals who can answer any questions you may have and help you get started. They can help with your floor plan, game room mix, and more.

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