The unbelievably lucrative business of escape rooms
Where locking up your customers can lead to 800% revenue growth in one year
You and 10 other people are locked in a room. Words, numbers and pictures are scrawled on the walls, objects scattered. A disembodied voice announces there are 60 minutes remaining to escape. A frenzy sets in as people ransack the room, looking for clues leading to the key that will open the door that just locked behind you. Before you know it, the voice blares out: 10 minutes have passed …
Part game, part theater, part team-building exercise, escape rooms are taking off around the world. And the growth has been explosive. The number of permanent rooms world-wide has gone from zero at the outset of 2010 to at least 2,800 today, according to MarketWatch calculations based on rooms registered to escape-room directories.
Nate Martin, co-founder of Puzzle Break, the first escape-room facility to open in the Pacific Northwest, invested $7,000 of his own money in 2013 to get the business off the ground. He recouped his initial investment within a month. Since then, the business has been profitable every month and, conservatively, is on track to gross over $600,000 in 2015. “Some months are record-breakingly fantastic,” he says. “Some are only very good.”
You’re locked inside with about 10 other people and have to escape. Of course, in an emergency situation, players can get out without a key. Twenty-two percent of rooms say they don’t actually lock the door.
In Dallas, Andrew McJannett-Smith and his wife, Traci, run Escape Expert, which opened in February 2015. “We started with negative income to now bringing in $70,000 a month,” he says.
The concept was born in Japan, spread through Asia, then arrived in the U.S. in 2012. As of Friday, the site Escape Room Directory listed 367 rooms at 138 facilities in the U.S., with more registering on that site every week. Business appears to be booming: At popular locations, tickets sell out weeks in advance.
And it is now making its way into mainstream entertainment: The studios behind Tom Cruise’s coming “Mission: Impossible” film erected escape rooms at AMC Theaters AMC, +0.24% this month for fans to “become IMF agents.” Free tickets for those rooms sold out in New York, San Francisco and Los Angeles in less than 24 hours. Later this month on July 25, the Science Channel is debuting an escape-room-themed game show called “Race to Escape.”
But many room owners and game enthusiasts are skeptical that the explosive growth can continue. And finding the key to success in this weird, new world may be the trickiest puzzle of all.
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… 20 minutes have passed, and, at this point, you’re likely knee-deep in puzzles, exchanging adrenaline-fueled shrieks with your room compatriots …
In most escape rooms, clues lead to a physical key. But the story of why you’re in the room — you’re trapped in a mysterious lab! You’re seeking lost treasure! You’re stuck in a New York City–sized apartment! — and the way in which action unfolds differs by room and location.
“People are looking for a new type of experience,” says Doc Preuss, a producer for Real Escape Games, which has rooms in San Francisco, New York and, soon, Los Angeles. It is run by SCRAP Entertainment Inc., which opened the first escape-game event in Japan in 2007. “It’s cerebral, [and] it’s exciting. The way we design [the games, there are these emotional highs. It’s like a roller coaster. It’s addicting.”
Most games cost $25 to $30 per person for a one-hour game, and typically allow 10 to 12 players at a time. For owners, the chief costs are payroll and rent, plus the one-time expense of building the room out. Some rooms comprise little more than a table with pens and paper. Others involve elaborate sets and technical wizardry. For instance, The Exit Game in Los Angeles has players navigating a laser room.
SCRAP is known for keeping costs low, eschewing traditional marketing costs in favor of organic growth and renting the smallest room possible to ensure tickets sell out. “They feel they have failed if they are not 100% booked out,” says Dan Egnor, an escape-game enthusiast and creator of the Escape Room Directory.
So far, the strategy appears to be paying off: SCRAP says revenues grew by 800% in its first year in the U.S. — a staggering figure even in light of today’s fast growth. The company has been profitable and seen revenue grow every year since then.
SCRAP now has more than 25 rooms across 12 cities in Japan and is opening its second San Francisco location with Escape From the Jail on Polk Street in August.
“They were the only game in town for years,” says Egnor. “Right now, a lot of local people equate the escape room with SCRAP.”
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… 10 minutes remaining. You get the sense that you are on the verge of finishing the puzzle …
Escape-room challenges may be as tricky for owners as for players. The business model presents a host of hurdles: Each room can only be played once, real estate can be pricey, and rooms get beat up as hundreds of players tear through them each week in search of clues.
“You’ve got dozens of people in there every day manipulating every single object in the room, under the pressure of a deadline,” says Puzzle Break’s Martin.
Players in the heat of the moment have tried to climb walls and rip apart furniture. At SCRAP’s Escape From the Time Travel Lab, an employee admitted he once saw a team attempt to wrap duct tape around his colleague in a failed attempt at finding the key.
“It’s difficult to design an experience that looks amazing and can withstand the crushing churn of folks everyday,” says Martin. “We’ve had to be creative with our material design.”
Martin’s business has thrived in Seattle, where it was the first game on the scene, but he shut down a room in San Francisco after finding it difficult to gain a foothold.
“In Seattle, we are understood to be far and away the best escape room. People know us. In San Francisco, they didn’t.”