How Much Does it Cost to Start an Arcade Business?

The main costs of opening an arcade business are arcade equipment, rent and labor. Taking a 1,000-square-meter arcade business as an example, the investment in arcade equipment is about US$140,000 to US$200,000, and the total investment is about US$300,000 to US$500,000. Generally, the investment proportion of arcade game equipment in the arcade business is about 30% to 50%. The specific proportion depends on factors such as the location, scale, type of games provided, and equipment condition of the arcade business.

Below we have listed the 10 most important factors affecting investment in arcade business. We hope it will be helpful to you.

Ten factors affecting investment in the arcade business

1. Initial investment cost of the arcade business

The initial investment in securing a location for your arcade can be one of the most significant expenses. The cost will depend on various factors:

1. Location: The cost of renting or purchasing a space will vary greatly depending on the city, neighborhood, and even the specific street where the arcade is located. Prime locations in busy urban areas will generally be more expensive than suburban or rural locations.
2. Size: The size of the arcade will directly impact the cost of the space. Larger spaces will naturally cost more in rent or purchase price. Consider how much square footage you’ll need to accommodate your desired number of arcade machines and other amenities.
3. Condition of the Space: If you’re renting a space, consider any necessary renovations or modifications needed to make it suitable for an arcade. Factor in costs for improvements such as flooring, lighting, electrical work, and HVAC systems.
4. Lease Terms: Renting a space typically involves monthly lease payments, which can vary based on lease terms such as lease length, rent escalation clauses, and any additional expenses like property taxes, maintenance fees, or utilities.
5. Purchase Price: If you decide to purchase a property for your arcade, consider upfront costs like the down payment, closing costs, and mortgage payments if you’re financing the purchase.

When budgeting for the initial investment in your arcade location, it’s essential to thoroughly research rental and real estate prices in your target area, factor in any necessary renovations or improvements, and negotiate favorable lease terms if renting. Additionally, consider the potential for foot traffic, visibility, and accessibility when selecting a location to maximize your arcade’s chances of success.

2. Arcade equipment costs

Exactly, equipment costs are a significant aspect of starting an arcade business. Here’s a breakdown of potential expenses and considerations:

1. Arcade Machines: The cost of arcade machines can vary widely depending on factors such as the type of game, manufacturer, age, and condition. New arcade machines can range from a few thousand dollars to tens of thousands of dollars each. Used machines are typically cheaper but may require more maintenance.
2. Pinball Machines: Pinball machines can also vary in price based on factors like brand, age, and condition. New pinball machines can range from several thousand to over ten thousand dollars each, while used ones may be available for a fraction of the cost.
3. Redemption Games: Redemption games, such as claw machines and ticket redemption games, can be an essential part of an arcade’s revenue stream. Prices for these games vary based on complexity and features but generally range from a few hundred to several thousand dollars each.
4. Air Hockey Tables and Other Gaming Equipment: Other gaming equipment like air hockey tables, foosball tables, and skee-ball machines should also be factored into your equipment costs. Prices can vary depending on the quality and brand, ranging from a few hundred to several thousand dollars per item.
5. New vs. Used: As mentioned, buying used equipment can significantly reduce costs, but it’s essential to consider factors like reliability, maintenance needs, and warranty coverage when purchasing used machines.
6. Shipping and Installation: Don’t forget to budget for shipping and installation costs, especially if you’re purchasing equipment from out of town or overseas.
7. Maintenance and Repairs: Plan for ongoing expenses related to maintaining and repairing your arcade machines and other equipment. This can include the cost of spare parts, technician services, and regular upkeep to keep your games in working order.

When budgeting for equipment costs, consider the variety of games you want to offer, the quality and condition of the machines, and whether you’re buying new or used. It’s essential to strike a balance between upfront costs and long-term maintenance expenses to ensure the profitability of your arcade business.

3. Interior design and decoration costs

The interior design and decor of your arcade play a crucial role in attracting and retaining customers. Here are some aspects to consider when budgeting for interior design and decor:

1. Theme and Atmosphere: Decide on a theme or atmosphere for your arcade that will resonate with your target audience. Whether it’s retro, futuristic, neon, or something else entirely, your interior design choices should reflect this theme consistently throughout the space.
2. Layout and Space Planning: Plan the layout of your arcade to optimize traffic flow and ensure that all gaming areas are easily accessible. Consider factors like the placement of arcade machines, seating areas, and any additional amenities you plan to include.
3. Lighting: Lighting plays a crucial role in creating ambiance and highlighting key areas of your arcade. Invest in a lighting design that complements your chosen theme and enhances the gaming experience for your customers.
4. Furniture and Fixtures: Choose furniture and fixtures that are durable, comfortable, and in line with your arcade’s theme. This may include seating areas, tables, counters, and display shelves for merchandise or prizes.
5. Wall Decor and Signage: Use wall decor, signage, and graphics to enhance the visual appeal of your arcade and communicate important information to customers. Consider incorporating artwork, murals, or branded signage that reinforces your arcade’s identity.
6. Flooring: Select flooring materials that are durable, easy to clean, and suitable for high-traffic areas. Depending on your budget and aesthetic preferences, options may include carpeting, hardwood, laminate, or vinyl flooring.
7. Budgeting and Prioritization: Determine a budget for interior design and decor and prioritize your spending based on areas that will have the most significant impact on the overall customer experience. You may need to allocate more funds to key areas like lighting, flooring, and theme elements while being more conservative with decorative accents.
8. DIY vs. Professional Services: Depending on your expertise and resources, you may choose to handle some aspects of interior design and decor yourself or enlist the services of professional designers, contractors, and decorators to bring your vision to life.

By investing in thoughtful interior design and decor, you can create a welcoming and immersive environment that enhances the overall experience for visitors to your arcade.

4. Cost of utilities

Utilities are essential ongoing expenses for any business, including an arcade. Here’s a breakdown of the utilities you’ll need to budget for:

1. Electricity: Arcade machines, lighting, HVAC systems, and other electrical equipment will contribute to your electricity consumption. The amount of electricity used will depend on factors such as the number and types of machines you have, as well as the overall size of your arcade.
2. Water: If your arcade includes amenities like restrooms, sinks, or drinking fountains, you’ll need to budget for water usage. Additionally, if you offer food and beverage services, water usage may be higher due to cooking, cleaning, and dishwashing.
3. Heating and Cooling: Proper heating and cooling are essential for maintaining a comfortable environment for your customers, especially during extreme temperatures. Budget for expenses related to heating in the winter and air conditioning in the summer. The size of your arcade space and the efficiency of your HVAC system will impact your heating and cooling costs.
4. Gas (if applicable): If your arcade uses gas for heating, cooking, or other purposes, budget for gas expenses accordingly. Gas usage will depend on factors such as the efficiency of your appliances and the frequency of use.
5. Trash and Recycling: Don’t forget to budget for waste disposal services, including trash pickup and recycling. The frequency of trash collection and the volume of waste generated will affect your disposal costs.
6. Internet and Phone: While not typically considered traditional utilities, internet and phone services may be necessary for operating your arcade. Budget for monthly expenses related to internet connectivity, phone lines, and any other communication services you require.

When budgeting for utilities, consider factors such as seasonal fluctuations in energy usage, changes in utility rates, and any energy-saving measures you can implement to reduce costs. It’s also a good idea to monitor your utility usage regularly and look for opportunities to improve efficiency and reduce waste. By accurately budgeting for utilities, you can ensure that your arcade remains operational and comfortable for your customers while managing expenses effectively.

5. Arcade maintenance costs

Budgeting for maintenance and repairs is crucial for keeping your arcade machines and equipment in optimal condition and ensuring a positive experience for your customers. Here are some considerations when budgeting for maintenance and repairs:

1. Regular Maintenance: Arcade machines require routine maintenance to keep them functioning correctly and prolong their lifespan. This may include cleaning, lubricating moving parts, replacing worn components, and conducting diagnostics to identify any potential issues before they escalate.
2. Spare Parts: Budget for the purchase of spare parts and components that are commonly used in arcade machines. This may include buttons, joysticks, power supplies, monitors, wiring harnesses, and other replacement parts. Having spare parts on hand can minimize downtime and ensure prompt repairs when needed.
3. Repair Services: Allocate funds for professional repair services from technicians or companies that specialize in arcade machine repair. Whether it’s troubleshooting electrical issues, repairing damaged components, or performing software updates, having access to skilled technicians can help address more complex problems effectively.
4. Warranty Coverage: Consider investing in extended warranties or service contracts for your arcade machines, especially if you’re purchasing new equipment. Warranty coverage can provide added protection against unexpected repair costs and may include benefits such as priority service and discounted parts.
5. DIY Repairs: Depending on your level of technical expertise, you may be able to perform some repairs and maintenance tasks yourself. However, it’s essential to weigh the cost savings against the risk of causing further damage or voiding warranties by attempting repairs without proper training or tools.
6. Budgeting for Emergencies: Set aside a contingency fund for unexpected repairs or equipment failures. Despite regular maintenance efforts, unforeseen issues may arise that require immediate attention and additional resources to resolve.
7. Tracking Maintenance Expenses: Keep detailed records of maintenance activities, repairs, and associated expenses to track your spending and identify any trends or patterns that may indicate areas for improvement. This information can help you make informed decisions about budgeting and resource allocation in the future.

By budgeting effectively for maintenance and repairs, you can minimize downtime, extend the lifespan of your arcade equipment, and provide a reliable and enjoyable experience for your customers. Prioritize preventive maintenance and proactive repairs to avoid costly breakdowns and disruptions to your business operations.

6. Staffing costs

Staffing costs are a significant consideration when operating an arcade business. Here’s what you should factor in:

1. Hourly Wages or Salaries: Determine the hourly wages or salaries you’ll offer to your employees. The rates will depend on factors such as job responsibilities, experience, and local labor market conditions. Common positions at an arcade may include game attendants, cashiers, technicians, and managers.
2. Employee Benefits: Consider providing benefits such as health insurance, retirement plans, paid time off, and other perks to attract and retain quality employees. While offering benefits can increase your overall labor costs, it can also contribute to employee satisfaction and loyalty.
3. Payroll Taxes: Budget for payroll taxes, including federal, state, and local income taxes, as well as Social Security and Medicare taxes. These taxes are typically calculated as a percentage of employee wages and can vary based on factors such as income level and jurisdiction.
4. Training and Development: Allocate funds for training and development programs to ensure that your employees have the necessary skills and knowledge to perform their jobs effectively. This may include initial training for new hires, ongoing skills development, and opportunities for career advancement.
5. Uniforms and Work Equipment: If uniforms or specific work equipment are required for employees, budget for the cost of purchasing and maintaining these items. Providing uniforms can help create a professional image for your arcade and ensure consistency among staff members.
6. Scheduling Software or Systems: Invest in scheduling software or systems to efficiently manage employee schedules, track hours worked, and monitor labor costs. This can help optimize staffing levels based on customer traffic patterns and minimize overtime expenses.
7. Seasonal Variation: Consider how seasonal fluctuations in business activity may impact your staffing needs and costs. For example, you may need to hire additional staff during peak periods or adjust staffing levels during slower times to control labor expenses.
8. Legal Compliance: Ensure compliance with labor laws and regulations regarding minimum wage, overtime pay, employee classification (e.g., full-time vs. part-time), and other employment-related requirements. Non-compliance can result in fines, penalties, and legal liabilities.

When budgeting for staffing costs, it’s essential to strike a balance between providing competitive compensation and benefits to attract qualified employees while also managing expenses to ensure the financial sustainability of your arcade business. Regularly review and adjust your staffing plans and budgets as needed to align with changing business conditions and objectives.

7. Marketing and advertising costs

Indeed, marketing and advertising are essential investments to attract customers and promote your arcade business. Here are some key considerations when budgeting for marketing and advertising expenses:

1. Advertising Campaigns: Allocate funds for advertising campaigns to raise awareness of your arcade and attract potential customers. This may include digital advertising (such as social media ads, search engine marketing, and display ads), print advertising (such as flyers, posters, and newspaper ads), and outdoor advertising (such as billboards and banners).
2. Online Presence: Invest in building and maintaining a strong online presence for your arcade. This includes creating a professional website, establishing profiles on social media platforms, and actively engaging with your audience through content creation, community management, and online promotions.
3. Signage and Branding: Budget for the design, production, and installation of signage and branding materials to promote your arcade’s identity and attract foot traffic. This may include exterior signage, indoor signage, directional signs, and branding elements like logos, colors, and themes.
4. Promotional Events: Plan and budget for promotional events and special offers to incentivize visits to your arcade. This may include hosting grand opening events, organizing tournaments or competitions, offering discounts or coupons, and partnering with local businesses or organizations for joint promotions.
5. Community Engagement: Allocate resources for community engagement efforts to build relationships with your target audience and foster a loyal customer base. This may include sponsoring local events, participating in community festivals or parades, and supporting charitable causes or fundraisers.
6. Marketing Collateral: Create and distribute marketing collateral such as brochures, flyers, business cards, and promotional materials to communicate your arcade’s offerings and benefits to potential customers. Consider both digital and print formats based on your target audience’s preferences and behavior.
7. Marketing Technology: Invest in marketing technology tools and platforms to streamline your marketing efforts, track performance metrics, and optimize your campaigns for maximum effectiveness. This may include customer relationship management (CRM) software, email marketing platforms, analytics tools, and advertising management platforms.
8. Public Relations: Consider budgeting for public relations activities to generate positive media coverage and enhance your arcade’s reputation. This may include issuing press releases, pitching story ideas to journalists, and cultivating relationships with local media outlets.

When budgeting for marketing and advertising expenses, it’s essential to prioritize activities that are likely to yield the highest return on investment (ROI) based on your target audience, market conditions, and business objectives. Regularly evaluate the performance of your marketing campaigns and adjust your strategies and budgets accordingly to optimize results and maximize the impact of your marketing efforts.

8. Software and POS systems cost

Investing in point-of-sale (POS) systems and software is essential for efficiently managing transactions, tracking inventory, and monitoring performance in your arcade business. Here are some key considerations when budgeting for software and POS systems:

1. POS Hardware: Allocate funds for purchasing POS hardware such as cash registers, barcode scanners, receipt printers, and payment terminals (e.g., credit card readers). Choose hardware that is reliable, user-friendly, and capable of handling the volume of transactions in your arcade.
2. POS Software: Invest in POS software that is specifically designed for arcade businesses or entertainment venues. Look for features that enable you to process transactions quickly, manage inventory effectively, track sales and revenue, and generate reports to monitor performance. Consider cloud-based POS solutions that offer flexibility, scalability, and remote access capabilities.
3. Inventory Management: Choose POS software that includes robust inventory management features to track stock levels, manage reorders, and monitor product performance. This can help you optimize inventory levels, reduce stockouts, and minimize losses due to shrinkage or theft.
4. Integration with Arcade Management Systems: If you’re using specialized arcade management systems for functions like ticket redemption, game tracking, or customer loyalty programs, ensure that your POS software integrates seamlessly with these systems. This can streamline operations, improve data accuracy, and enhance the overall customer experience.
5. Security and Compliance: Prioritize security features in your POS system to protect sensitive customer data and prevent unauthorized access or fraud. Look for POS solutions that comply with industry standards and regulations such as the Payment Card Industry Data Security Standard (PCI DSS) to ensure compliance and minimize risk.
6. Training and Support: Budget for training sessions and ongoing support services to ensure that your staff are proficient in using the POS system effectively. Look for POS vendors that offer comprehensive training programs, user manuals, and responsive customer support to address any technical issues or questions that may arise.
7. Software Updates and Maintenance: Factor in ongoing expenses for software updates, maintenance, and subscription fees associated with your POS system. Regular updates are essential for ensuring the security, stability, and functionality of your POS software and should be included in your budget planning.

By investing in reliable POS systems and software tailored to the needs of your arcade business, you can streamline operations, improve efficiency, and provide a seamless experience for both customers and staff. Prioritize features that align with your business goals and objectives, and select vendors that offer responsive support and ongoing updates to keep your POS system up to date and optimized for success.

9. Cost of obtaining necessary licenses

Absolutely, obtaining the necessary licenses and permits is crucial for operating an arcade business legally and compliantly. Here are some common licenses and permits you may need to obtain:

1. Business License: A general business license is typically required to legally operate any type of business. This license grants you permission to conduct business activities within a specific jurisdiction. The cost and requirements for a business license vary depending on your location and the type of business structure you choose (e.g., sole proprietorship, partnership, corporation).
2. Entertainment License: Some jurisdictions require businesses that provide entertainment services, such as arcades, to obtain a separate entertainment license. This license ensures compliance with local regulations related to noise, occupancy limits, and other factors that may affect public safety and quality of life.
3. Gaming License or Permits: If your arcade includes gaming machines that involve wagering or the opportunity to win prizes, you may need to obtain specific gaming licenses or permits. These licenses are typically regulated by state or local gaming authorities and may have strict requirements regarding the types of games allowed, age restrictions, and compliance with gaming regulations.
4. Building Permits: If you’re making any structural changes to the property or renovating the space for your arcade, you may need to obtain building permits from the local building department. This ensures that your construction or renovation activities comply with building codes and safety standards.
5. Health and Safety Permits: Depending on the services and amenities offered at your arcade, you may need to obtain health and safety permits from the local health department. This may include permits for food service if you plan to sell concessions or snacks, as well as permits related to fire safety, sanitation, and hygiene.
6. Zoning Compliance: Ensure that your arcade business complies with local zoning regulations, which dictate the types of businesses allowed in specific areas and any restrictions on operating hours, signage, or outdoor activities. Obtain any necessary zoning permits or variances to operate your arcade legally.
7. Alcohol License (if applicable): If you plan to serve alcohol at your arcade, you’ll need to obtain an alcohol license or permit from the appropriate regulatory agency. This typically involves meeting specific requirements related to alcohol sales, service, and responsible beverage service training.

It’s essential to research the licensing and permitting requirements specific to your location and industry before starting your arcade business. Failure to obtain the necessary licenses and permits can result in fines, legal penalties, and potential closure of your business. Consulting with legal experts or business advisors can help ensure that you navigate the regulatory process successfully.

10. Insurance cost

Insurance is a critical aspect of protecting your arcade business from potential liabilities and risks. Here are some key types of insurance coverage to consider:

1. General Liability Insurance: General liability insurance provides coverage for third-party claims of bodily injury, property damage, and advertising injury. This type of insurance is essential for protecting your arcade from lawsuits and claims resulting from accidents or injuries that occur on your premises.
2. Property Insurance: Property insurance covers damage or loss to your arcade’s physical assets, including the building, arcade machines, furniture, fixtures, and equipment. It provides financial protection in case of events such as fire, theft, vandalism, or natural disasters.
3. Commercial Property Insurance: Commercial property insurance is similar to property insurance but tailored specifically for businesses. It may offer additional coverage options and higher coverage limits to protect against a broader range of risks.
4. Business Interruption Insurance: Business interruption insurance compensates you for lost income and extra expenses incurred if your arcade is forced to close temporarily due to a covered event, such as a fire or natural disaster. It helps cover ongoing expenses like rent, payroll, and utilities during the period of interruption.
5. Workers’ Compensation Insurance: If you have employees, workers’ compensation insurance is mandatory in most states. It provides coverage for medical expenses, lost wages, and disability benefits for employees who are injured or become ill while performing job-related duties.
6. Cyber Liability Insurance: Cyber liability insurance protects your arcade against losses resulting from cyberattacks, data breaches, and other cyber threats. It covers expenses related to data recovery, notification of affected individuals, legal fees, and regulatory fines.
7. Commercial Auto Insurance (if applicable): If your arcade owns or leases vehicles for business use, such as delivery vans or maintenance vehicles, you’ll need commercial auto insurance to cover liability and property damage in case of accidents.
8. Umbrella Insurance: Umbrella insurance provides additional liability coverage beyond the limits of your primary insurance policies. It offers an extra layer of protection against catastrophic events or large lawsuits that exceed the limits of your other insurance policies.

When shopping for insurance coverage for your arcade, work with an experienced insurance agent or broker who understands the unique risks and challenges of your industry. They can help you assess your insurance needs, customize coverage options to fit your specific requirements, and find policies from reputable insurers at competitive rates. Regularly review and update your insurance coverage as your business grows and evolves to ensure that you remain adequately protected against potential risks and liabilities.

Conclusion

The total arcade business cost can vary widely, but it’s not uncommon for start-up costs to range from tens of thousands to hundreds of thousands of dollars, depending on the scale and ambition of your arcade business. It’s essential to conduct thorough research, create a detailed business plan, and consider all potential expenses before starting your arcade venture.