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8 Reasons Why Escape Rooms Fail

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(Last Updated On: January 19, 2019)
The Escape Room industry in the United States (we’ll not discuss elsewhere) is both new and booming, so there are not a lot of Escape Rooms failing. However, as Bust often follows Boom, in all likelihood the Escape Room Industry will be facing this inevitability.

An escape room can fail, so what can an entrepreneur do to avoid it?

Entrepreneurial lack of planning

Failure to plan is rife in every field. Because who becomes attracted to Escape Rooms, this lack may be a leading cause of failure. Many early entrants started an Escape Room because they had become vigorous aficionados of games. Makes sense. If Escape Games were not fun, who would want to do another, let alone start one?

During the early days, say four years ago, there were few escape rooms in the U.S. Money from them fell into pockets. Though our economy had begun recovery from the 2008-09 devastations, many clever, well-educated, and 401-K rich individuals had difficulty securing employments like those they once had. Being individuals used to figuring out how to do things, they began taking the future into their own hands. (Let’s face it: we’re talking nerds who game, program and/or build stuff)

Coincident with the times, entrepreneurialism began to spring up. No accident that cable shows such as “The Profit” and “The Shark Tank” became highly-watched. Differing from “The Apprentice,” where viewers rooted for individuals to fail, these newer shows promoted the potential of multiple successes. The idea that anyone could build a widget and make their way out of the swamp was appealing.

The idea was no less appealing to people who saw an Escape Room as a great way to not be discounted or stymied. And they were right.

However, many jumped feet first into the game without proper planning. Fortunately for early adopters, the developing wave of Escape Game awareness kept them afloat and afforded each time to learn all they had to learn.

That era has passed. The single most constant notion in entrepreneurship is that one must research, research, and research. It is okay to make a gut-level guess, but prove the guess right before spending a dime. It’s called due diligence, the effort made before starting. Few, back then, made the effort.

Escape Rooms successful today may be in for an awakening, and not just because Escape Rooms are proliferating like dandelions. Those who are in business and want to remain so should be designing the replacement rooms as soon as they open the room one day to be replaced. Those who want to enter the field better look much farther down the road than being king of one’s small domain. One effort a person can make to avoid this failure is to get involved, thoroughly involved, in an entrepreneurial program.

Failure to recognize the state of the industry

What, exactly, is the state of the industry, especially considering that it is undergoing rapid growth? A comparison to earlier industry growth patterns is in order.

If any models may teach something, two recent “spurt” industries can: antique shoppes of the 1970s and computer centers of the 1990s.

Note: Some of this is personal to this author, for two reasons.

  1. My parents dragged me into the antique business in 1969.
  2. I entered the computer business as a desktop publishing consultant in 1989, after a twenty-year career in dedicated computer-generated typesetting.

A housing boom during the 1960s resulted from the Baby Boomer phenomenon. This boom was further fueled by returning Viet Nam War soldiers eligible for GI Bill-guaranteed mortgages. Young people wanted living accommodations, and they needed to fill them with inexpensive items. They raided Mom’s and Grandma’s houses, and Granddad’s garage. The antique craze was on.

They frequented auctions for nostalgic items, as well as yard- or tag-sales. Seeing salvaged stuff flying off tables and shelves for good dollars, antiquers turned back rooms and failing businesses into Antique Shoppes. These flourished for about a decade. Not many around today and most will be found tucked somewhere on a nostalgically-themed, rehabbed town-center.

Same with the computer craze: In 1972 this author met his first typesetting computer and fell in love. I became a user, then trainer, then consultant and salesperson for computerized typesetting. Resizable type was a rage in the late 70s, and typefaces were appearing faster than movie sequels.

However, the world changed in the early 80s when Steve Jobs began putting out graphic-centric computers costing a tenth of dedicated typesetting machines. Soon copier businesses followed with affordable small printers printing digitized type, using a language called Postscript.

Suddenly, PCs were purchasable everywhere.

Small shops opened in every strip mall, selling PCs well until 1993. That’s when Sears carried DOS-based PCs. For this consultant, that move provided a good consulting year. Soon, though, everybody had an uncle or brother-in-law who could “do” what I had been doing. (They couldn’t, and I became a busy person fixing their fixes.) PCs broke, needed upgrading, and/or replacing, and small shops handled the volume well until the Internet gained traction. With ordering order plug-and-play components online, shops and trainers became less and less numerous.

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There are still small repair shops, but hardly anyone goes to one to buy a PCs. People go to Best Buy and Walmart, or Amazon.

Here’s the point: Escape Rooms as an industry is much like those two industries. Change is a’comin’. How does a business adapt? Who will succeed?

Possibly, Escape Rooms will follow the path of roadside attractions: they will become agglomerated. This might begin with successful and smart entrepreneurs developing franchise models. However, that model may also have a short shelf life. As roadside attractions lost out to syndicated movie houses, live adventure venues morphed into Disney models: by merging county fairs and traveling carnivals with roadside attractions, then setting them up as intensive experiences, big fixed locations such as Disney and Six Flags became the rage.

Will this happen to Escape Rooms? In all probability, in some form or another, yes.

So, if you are planning to own an Escape Room, how long are you in for? Fast quick bucks and out, or are you eyeing the long-term. Are you preparing for the changes, or are you relying on what’s being done today? The answers will affect you daily.

Too much self-reliance

Starting a business is lonelier than you may think, or want. Many Escape Room developers moved forward with near-total reliance on their own experiences, talents, and resources. There are not many multi-faceted individuals who can successfully design and build rooms, handle clients, deal with bookkeeping and finances, fix gizmos, market and sweep up at the end of the day. Yet many in the business did, and as many continue to do just that.

The key word in the long previous sentence is “successfully.”

Deciding to start a business calls on one’s sense of self-reliance and belief in one’s indomitability. Great for starting, building and erecting, but lousy for maintenance and growth. For the latter two, one needs a team. One thing most untrained entrepreneurs lack is an ability to let others do their thing. They might even find inviting others in to do their thing impossible.

Off-loading accounting, legal work, even wiring makes sense, and who wants to do those unfun things anyway? The “I can do it” sense often develops into “I can do it better than anyone else can because only I understand what I want.”

If a business person, especially an Escape Room owner, can adopt any single mantra, it should be “Get out of my way, me.” Creeping failures to succeed at things leads an entrepreneur/owner to crankiness, desperation, disenchantment, and eventual disharmony in the one place there must be harmony: the business of hospitality.

Too many discounts

The Escape Rooms business has set ticket prices around $28-$30, a few charging as little as $26 and some as high as $60 for an hour’s experience. Inevitably prices will come down because discount jobbers such as Groupon and Living Social have waded in. Operating on the principle that something expensive must be a great deal at half the price, they teach future ER gamers that the base price is an overcharge. Gamers prefer to dump bucks with the discounters rather than support the game rooms.

Newcomers to the business often jump on the discounter train ride too soon, without realizing that they shall receive about 25% of the base rate at best. Sure, Discounters are great for quick exposure, but in the long run, they become expensive. Worse, discounting may set up expectations for experienced gamers who no longer want to pay 25+ bucks to unlock some padlocks.

To combat this decline, ER owners will have to increase their already inadequate investment, spend more on more electronics and glossier, fancier gizmos. The return on investment then diminishes. The feeling one must offer discounts because people ask for them is insidious. You will hear that “Escape the Quandary down the street discounts for birthday parties. Do you?” Your reaction will most likely be one to either match or beat, Escape the Quandary’s offer. Advice: hesitate. Do not devalue your product because of a wincing feeling.

Underfunding

Nobody ever has enough funding, except for that one schmuck you know got a trust fund. Forget them, they succeed on deep pockets, not ability.

So we repeat for you non-schmucks: Nobody ever has enough funding.

However, you must press on with what you have. Many enter the ER business after an after-the-event chat with an ER owner. Each probably dropped at one point that “I wish I had planned for four rooms instead of two. I can’t expand here, but I have a four-year lease, so all I can do is open another place.” Like it’s that easy!

The best course of action is to know to the penny what your ongoing expenses will be. These are signage, heat and air conditioning, electric, booking, and accounting software, business insurance, basic rent and CAM expenses. (Landlords love CAM. Go into any strip mall store and ask an owner about what this is.) There may be others.

One may want to advertise on social media. If possible, reserve 2-3x that expense in your bank account.

Furthermore, plan that whatever you think it will cost, it will cost more. Often half-again as much more. If you plan on a commercial space, (and you should) please go see the building inspector before you sign the lease. Check with other tenants as appearances may be deceiving. Hate for you to find out the landlord has your space up for sale.

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Bathrooms and lights

Bathrooms

Ray Kroc of McDonald’s is known to have said he became successful because he insisted on two superlative elements: Clean restrooms and good lighting. Following his example will not hurt. Not following definitely will.

Any ER with paper on the floor, overflowing waste bins or outdated appliances will lead to failure. Sticky or dirty surfaces, especially any place where a client may touch intentionally, must be cleaned and kept clean. Although it is unwise to encourage or engage in discussions about the problems of competitor ER locations, clients will drop stories, especially if yours are far nicer.

The client who leaves is the client who comes back. If they do not come back, it won’t be for the room they just did. It will be for the bathrooms they just used.

ADA-compliance cannot be overlooked. You may want an ADA expert to approve your plans, of the restroom is not designated ADA-compliant. An architect can do this, but they are expensive. Perhaps a phone call to a nonprofit agency that assists the handicapped will prove less expensive. And, if you are smart about making your rooms ADA-accessible as well, you might have a new client.

Lights

Lighting of the facility hallways, restrooms and lobbies should be inviting. Bright is not always better; focused and directing is.

Room lighting should enhance the story and ambiance. Glaring fluorescents give people headaches, yet because they are in place and working, ER owners continue to employ them. If a room is going to fail, guaranteed it will fail because it gets a bad reputation.

Advice: To save money, contact any college with a theatrical department and ask if they have a student who wants to intern for the development. Some may do it solely for the credential. They might even clean the bathrooms.

Lack of hospitality

Probably nothing kills fun like the lack of consideration. The Escape Room business is not about games; it is about hospitable venues that host games. More businesses will fail unless this becomes the norm, but — again anecdotally — we hear more often than we care to that some rooms are merely hosted by kids who shove clients toward the rooms, spew forth the story as rote, and seem more insistent that a waiver be signed than directions be given. Sad state of affairs, and it will surely destroy a business.

Hospitality does not begin and end with the human face of the Escape Room. Websites, especially booking methods, should also be hospitable. Is it easy to book? Is it even easier to understand what a room has to offer? Surprisingly, may ER owners turn to cookie-cutter web development sites such as WIX and Squarespace, which will save a deal of money, but may wind up costing income.

Bad websites and complex booking procedures lead to booking abandonment.

Insufficient marketing

Escape Rooms traditionally rely on social media as the be-all and end-all of marketing. These are good, but not all. Inconsistency throughout the marketing efforts mixes and muddies the message. Often an email campaign will have too many calls to action or none. There should only be one, with maybe an “oh, by the way,” hint that will appear in a subsequent, but not too soon, email blast.

Sending too many e-mail blasts will lead to blocking.

Sloppiness is also a killer insuring Escape Rooms failure. Poor grammar, bad spelling, wrong phone numbers and mispunctuated email addresses (Oh how common this last is!) murder the best intentions.

Does not end there. Everything presented to a potential client should have one intention, bringing them in. But too often cleverness or campiness overrides the message. Owners may be too in love with their image, more proud of what they feel reveals them than what does reveal their rooms. Happens. Not good.

Parting Words

There are so many more elements that can close an Escape Room, most of which will close any business. Location may be one of them, but not as much as it may for an ice-cream dispensary. Adequate parking is a good thing; inadequate parking or unlit zones will definitely keep customers away. Dirty windows, debris on the sidewalk, all plague regular business.

Advice: Study your favorite place. What do they do that you can do?


About the Author

Charles Bechtel is at present the owner and operator of Escape Rooms PHX in Mesa, AZ. He is 65, married to Manuela Mary Bechtel, with two grown daughters and three granddaughters.
Professionally, Charles has been a published author of numerous books, both fiction and nonfiction, owned and operated his own publishing & consulting firms, and even had owned a charter fishing operation out of Cape May, New Jersey. Click here to check out some of the books authored by Charles.

During his consulting days, he specialized in developing new products for the newspaper industry and developing what had then been the industry-altering desktop publishing replacement for many composition firms.

He has years of marketing experience, wearing many hats on both the production and administrative sides of publishing.


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