Blog/ Venue Management

How to Start a Family Entertainment Business

How to Start a Family Entertainment Business

A family entertainment center (FEC) is a place that provides a variety of games, attractions, and activities designed to cater to a diverse range of age groups and families.

The growing popularity of family entertainment businesses is undeniable, reflecting the increasing demand for wholesome and interactive experiences that people of all ages can enjoy. The global family/indoor entertainment centers market was valued at $30.9 billion in 2022 and is projected to reach $88.7 billion by 2032, growing at a CAGR of 11.5%.

Additionally, family entertainment software has played an increasingly significant role in modern FEC businesses. Technology integration streamlines operations and allows for data-driven decision-making, providing insights into guest behavior and preferences. In turn, this enables businesses to tailor their offerings more effectively and optimize their marketing strategies.

To tap into this booming market, it is crucial to understand the steps required to start a successful FEC business. These steps include comprehensive market research to identify guest preferences and interests, selecting an optimal location, and crafting engaging and unique offerings.

Read on as we go through the steps to start an FEC business and discuss how technology can help venues evolve and secure a thriving future in this industry.

Why consider starting a family entertainment business?

Aside from the impressive industry growth numbers stated above, FECs are fun, active, safe spaces for families to spend time and for everyone to enjoy themselves due to the wide range of activities. 

Presently, there are more than 45,000 FECs across the globe, primarily designed for individuals aged 13 to 54. (Approximately 62% of family entertainment center visitors are between 13 and 54.)

FECs provide a diverse range of amenities, including ticket sales, which contribute significantly to their revenue at approximately 54%. Additionally, food and beverage services comprise around 33% of their income, while dedicated party rooms for private events account for 31%

Physical activity attractions in FECs have also witnessed a substantial surge in popularity, experiencing a 20% increase in the past four years, primarily attributed to the remarkable growth of virtual reality experiences, which have expanded by an impressive 350%.

So if you’re thinking about it, now might be just the right time to open an FEC! Let’s dive into how you can do this.

1. Evaluate the market: understand your audience

Market research is essential for business success. It involves understanding your target market and guests' preferences, validating your concept, and ensuring product-market fit. Key research areas include demographics, guest expectations, competitor analysis, and financial projections.

  • Demographics: Determine your primary audience's age range. For example, as mentioned earlier, most family entertainment center visitors are between 13 and 54. Other demographics to consider include gender, income, lifestyle, and geographical residential location.
  • Guest expectations: Understand what your guests want from your venue and their preferences. Are they seeking fun, family bonding, fitness, or a mix? Once you discover this, tailor your offerings accordingly.
  • Competitor analysis: Research your main competitors to learn from their successes and mistakes, which will help improve your strategy and levels of guest satisfaction. Examine their corporate background, market presence, competitive stance, customer evaluations, and additional insights. You can do this by conducting online research, engaging in secret shopping experiences, and inquiring within your network.
  • Financial projections: Estimate costs and revenues to fully understand your park's potential profitability. Be prepared for a few months of very little income while starting and making a name for yourself. Ensure that you have money kept aside for this period. 
Gathering and analyzing this data will inform your FEC’s business strategy, ensuring it remains enjoyable and exciting for your guests and profitable for you.  

2. Craft your unique selling proposition (USP)

A unique selling point defines your company's unique position in the marketplace, getting at the heart of your business: the value you offer and the problem you solve. A strong USP clearly articulates a specific benefit – one that other competitors don't offer – that makes you stand out.

It’s so important to differentiate yourself in the market. To do this at your FEC, you can create unique games, events, or family packages your competitors don’t have. Do some market research, or learn from guest feedback your venue has received and find out exactly what your guests would love to do at your venue, what’s missing from competitor venues, what themes your guests would like to see, which packages would appeal to them, endeavor to create these things, and ensure that you market them well. 

Once you have your USP and are operational, consider exploring 10 ways to run a more profitable FEC to maximize your returns!

3. Financing your business: options and strategies

The estimated starting cost of an FEC is approximately $385,000, which includes equipment, insurance, marketing, staffing, and rental costs. So, how can you raise this revenue? Let’s discuss.

Seeking a loan

The primary advantage of funding your business with a loan is that you gain complete ownership of your business, including your venue, once fully repaid. This way, you have absolute control over business choices, expansion, and how to allocate profits. When applying for this kind of loan, you will need to show financial statements, a business plan, personal and business credit history, tax returns, business credit references, and more. 

However, the downside is that this process may span many decades, and if your business does not thrive, you also bear the entire risk and, consequently, any repercussions.

Seeking investors

Attracting investors can expedite capital infusion and spread the risk among those who invest. Investors can reduce your personal liability, providing access to unique benefits, such as valuable industry relationships and cost savings, especially if they have experience in the attractions sector.

However, securing investors often entails giving up partial ownership, which is particularly challenging for startups with unproven track records. Despite this, it can be a mutually beneficial partnership between entrepreneurs and investors if successful.

To attract business investors, start by networking within your existing connections and seek introductions to potential investors. Explore options like angel investors, venture capital firms, crowdfunding, and online investment platforms. Participating in pitch competitions, accelerator programs, and maintaining a strong online presence can also help. Prepare a compelling pitch and be ready for due diligence. Seek the right investors who can provide not only funding but also valuable expertise and connections to help your business grow.

Alternative options like bootstrapping, using personal funds or involving friends and family, and exploring lines of credit, which charge interest only on used funds, are also worth considering. Remember that line of credit interest rates can be higher than business loan rates.

Physical and technological equipment

Once you have your start-up money, you must consider how to spend it best. The equipment you require will depend on the type of venue you run, but whatever you choose, ensure that you invest in high-quality equipment that is maintained regularly to ensure the safety and well-being of your guests. 

Next, you'll require venue management systems to operate your FEC efficiently. Opting for an all-in-one cloud-based solution is highly recommended. These cloud-based systems enable real-time monitoring and operational adjustments from anywhere, reducing stress and costs associated with venue management.

Ensure that your chosen system provides online and in-store ticketing, robust POS, guest feedback tools, digital waivers, group and party booking capabilities, multi-venue management tools, reporting and reconciliation features, and any other essential functionalities that enhance the efficiency and growth of your venue.

ROLLER is a cutting-edge, all-in-one venue management solution designed for growing attractions. Our platform is carefully designed to eliminate guest experience hurdles at every stage. It helps operators save time, boost revenue, and provide exceptional guest experiences.

Our platform equips time-strapped operators with a comprehensive toolkit for marketing experiences, serving guests, promoting your venue, increasing conversions, and efficient operations management, all accessible through a unified central dashboard. Click here to find out more.

Case study: How Ninja Warrior UK achieved over 3 million bookings in 4 years

A notable FEC and ROLLER customer is the growing network of Ninja Warrior UK Adventure Parks. 

Ninja Warrior has used ROLLER’s powerful reporting to track essential milestones in their growth journey and has recently surpassed over three million bookings in just four years!

Using ROLLER, Ninja Warrior UK has grown through:

  • Expanding their product range and easily offering new products through ROLLER’s POS system.
  • Increasing spend per head by upselling add-ons in-store and online.
  • Booking more parties and groups with an intuitive and seamless online party booking process.

Learn more about Ninja Warrior UK’s journey with ROLLER here.

4. Legal considerations and licenses

Before opening, it is crucial to be well-versed in your venue's legal and regulatory requirements. It is highly advisable to engage a lawyer to ensure thorough compliance. Legal experts can assist in identifying the necessary permits and licenses, provide guidance on safety regulations, and offer insights on achieving compliance.

Here are some general legal documents required for operating a FEC:

  • Business license: A business license from local government authorities is a mandatory legal prerequisite to ensure lawful operations.
  • Employment agreement: An employment agreement outlines the contractual terms between employers and employees, covering aspects such as wages, benefits, and job responsibilities.
  • Insurance: Liability insurance is indispensable for shielding businesses against potential legal liabilities.
  • Safety guidelines: You should establish clear safety guidelines and prominently display them within your venue to ensure all guests are aware of safety protocols.

Additionally, liability waivers may also be required depending on what kind of FEC you operate.  A liability waiver is a critical document that guests must sign before participating in activities. It acknowledges their awareness of associated risks and releases your venue from liability in case of injuries.

These documents are essential for legal compliance and safeguarding your FEC, its guests, and staff.

Read this next: How to manage risk at your attractions venue

5. Choose the right location

In real estate, one universal truth prevails: location is paramount. Similarly, when it comes to the attractions industry, selecting the right location is critical for the success of your FEC. 

Where you establish your FEC will play a big part in its revenue potential. In general, pricier locations often result in quicker profitability because of increased pedestrian traffic. Your selection of a location also hinges on whether your family entertainment center will be indoors or outdoors. Outdoor venues often demand larger plots of land, whereas indoor FECs, such as trampoline parks, require spacious areas with sufficient room for multi-level, high-ceiling structures to ensure safety.

Consider the following factors:

  • Lease or purchase? The decision comes down to what works best for you and how you prefer to pay for a location. Of course, leasing comes with rental costs, while purchasing will likely include applying for a loan.
  • Population density: Is there a large portion of your target demographic nearby? Remember that the closer you are to them, the more likely they will visit you.
  • Accessibility: Easy access is vital. Your location should have well-maintained road infrastructure for convenient car access. It's also advantageous if your venue is accessible via public transport, ensuring inclusivity for those without vehicles.
  • Space requirements: Firstly, your space must adhere to all relevant industry, safety, zoning, and legal requirements for your location. Secondly, ensure that it has what you require to turn it into the kind of FEC you have in mind and that there is room for possible future expansion, too.

6. Hiring and training staff

Employ enthusiastic team members who prioritize customer safety and satisfaction. Comprehensive training programs should encompass safety protocols, customer service, and emergency procedures.

Moreover, ensuring that your staff feels content is crucial to enhancing the guest experience. Regular check-ins and support for your team are essential for them to excel as impressive business representatives.

When hiring staff, view your job descriptions as a marketing tool and formulate them to attract high-quality applicants, be deliberate about diversity and inclusion, read candidates applications analytically and consider the quality of their cover letters and responses, and finally, as a trial run, consider having your shortlisted candidates complete a test project of a task they would commonly perform at your venue if they were a team member so you can test their suitability. 

Read this next: 10 Tips To Help Retain & Hire Seasonal Workers

7. Marketing and promotions

Hiring in-house vs. agency

Depending on your available resources, including CapEx and ongoing operational funds, you can bring a marketing and branding expert in-house or outsource the work to an agency. Each approach has its advantages and disadvantages.

Hiring in-house offers the advantage of having a dedicated team solely focused on marketing and branding, leading to faster and potentially higher-quality results. However, it may entail higher short-term costs.

On the other hand, working with an agency provides expertise and can be cost-effective initially. Nevertheless, ongoing agency fees might accumulate over time, making it potentially more expensive as your business expands.

Many businesses start with an agency for cost savings and efficiency and gradually transition more responsibilities in-house as the business grows.

Digital and traditional marketing

Digital marketing has emerged as a pivotal platform for marketers in the past decade. Utilizing tools such as social media and email marketing, you can craft highly focused campaigns that precisely target your audience and enhance the value and return on your investment.

Despite the rapid progress in digital marketing, it's crucial to acknowledge that traditional marketing still holds relevance. As you develop your digital marketing strategy, remember that television, radio, and billboards remain effective channels for conveying your message and boosting brand awareness.

8. Challenges to anticipate and overcome

As rewarding as running a family entertainment center can be, there are some challenges you might face, too.

Seasonal fluctuations

Venues like FECs have certain peak and busy periods like weekends and school holidays, so they can be subject to seasonal fluctuations. 

A solution can offer discounts and promotions for off-peak periods to attract more guests. More effective than this, though, is to partner with a third-party reseller. ROLLER has partnerships with third-party resellers like Groupon, which means that ROLLER customers have a much broader audience than if they were selling on their own because multitudes of people use these websites.

Changing guest preferences

In recent years, changing guest preferences have significantly impacted the family entertainment industry. Today's guests seek more immersive and interactive experiences beyond traditional forms of entertainment. They are increasingly inclined towards experiences that promote physical activity, such as adventure parks, trampoline centers, and obstacle courses. 

Furthermore, a growing demand for technology integration is growing, with virtual reality (VR) and augmented reality (AR) attractions gaining popularity. Customers also value convenience and flexibility, with mobile app-based bookings, cashless payment options, and personalized experiences becoming the norm. To stay competitive, you must keep an ear to the ground for new trends and invest in technology that can support and grow your business.

Join the business of creating family entertainment memories that last forever

With the right location, market research, USP, staff, equipment, management systems, marketing and branding, and vision, you can make your FEC business a success and a place where families keep coming back for many years.

We wish you every success and are here to help with any venue management needs — contact us today!