Room Escape Artist

“We’ve seen a few months this year with noticeably lower sales than the previous year. Following the discourse on escape room owners groups, we aren’t alone. What are your thoughts?”

This question comes courtesy of a RECON Los Angeles Champion guest.

RECON Los Angeles takes place later this month. Champion tickets are sold out, and there are only a couple of General tickets available.

A Disclaimer

I’ve spent a lot of time on this and I’m going to walk you through my analysis and thought-process.

I’m not an economist, and I have no formal training in doing this kind of analysis.

And even economists and analysts usually do better work in hindsight. It’s always tough to see the picture when you’re in the middle of it.

In the end, I hope that the journey we go on is helpful.

Asking Around

It’s difficult to get firm data on this subject, but talking to a variety of owners from a number of countries has certainly confirmed that a lot of owners have seen sales dips, at least in Q2 2024. If there was a trend amongst the owners who have not reported significant dips, it was owners of very high-end games. And it seemed that owners in markets that don’t get much tourism were hit the hardest.

I want to be clear: my research, if I can even call it that, is anecdotal, but it tracks:

• Notable games sell to locals, tourists, and escape room tourists.
• Tourist-fed markets have locals and tourists.
• Smaller markets only sell to locals.

The fewer pools you’re pulling from, the less opportunity there is for others to even out your sales.

Copying From A Big Company’s Homework

As a small business owner, when looking at issues like this, I like to copy off of the homework of giants… because they have a lot more data, and their data is scrutinized and analyzed by countless professionals.

Take, for example, McDonalds, which saw a 1% sales drop in Q2 2024. A 1% sales drop for McDonalds is probably a financial loss that is greater than the entire escape room sector. In that same report, McDonalds noted that $5 meals sold above expectations.

To add to the picture, companies like Unilever, Starbucks, Mondelēz, Southwest, and Whirlpool are all reporting that Americans are not spending on goods like they used to. One broad conclusion that these companies seem to be making is that, “People saved up during the COVID-19 pandemic, but those savings are now depleted.”

That said, these companies, and many others, also jacked up their prices, many in dramatic fashion since lockdowns lifted. When enough companies do that, a reckoning is inevitable.

It’s worth noting that that same report noted that “Americans are still spending on experiences,” which also seems to track with my quick and dirty research that destination games and companies in tourist markets are weathering the storm a bit better.

What Does A Sales Dip Mean?

A sales dip can only mean a variety of things, and it’s often difficult to discern… but here are a few options:

The Market Has Shifted

One possibility is that people are no longer interested in escape rooms, or a specific style of escape room. The medium has become passé, and it’s time to evolve or die.

These kinds of things tend to happen gradually and then very quickly… but there is usually something taking its place.

Video game arcades saw a gradual shift as home consoles started claiming bits and pieces of the market, and then after a few years of slippage, the bottom fell out suddenly and violently.

Movie rentals went through a similar process with streaming.

I don’t think that the market has shifted. It’s possible that this is the beginning of a shift, but it would happen gradually first, and at different speeds in different places. It doesn’t seem to match our current pattern.

You Have Exhausted Your Market

It’s possible that you, specifically, have exhausted your total addressable market.

For any business, there is a pool of potential customers. It’s possible that you’ve reached all of them. Everyone who might be interested in your work has either played everything that they will with you, or disregarded your services.

There are escape room companies that are in this boat. Those companies fail all of the time… but those are not long-standing, healthy companies who are noticing a year-over-year dip. Those tend to be companies that struggled from day 1, or companies that have some other major internal problem.

You may be in this particular situation, but this kind of thing isn’t part of a global trend.

It’s Temporary Due To Economic Conditions

We’ve endured a few years of inflation, and the brutal but necessary efforts to combat it through higher interest rates. The way that inflation is typically fought is by inciting a bit of economic hardship with the goal of staving off greater long-term pain. It’s not dissimilar from exposing yourself to poison and radiation to kill off cancer. The process sucks, and if it doesn’t kill you, you probably get to live longer and better down the line.

In the grand economic scheme of things, escape rooms are small and subject to forces much larger than us.

A few years of inflation, particularly on necessities like food, are brutal on middle and lower income families. This reduces discretionary spending and makes people more careful and picky with how and where they spend.

This feels like what escape rooms are currently enduring.

What’s A Business Owner To Do?

Let’s start by assuming that this is a temporary setback due to market conditions, because it seems likely.

There are a handful of options available, which might fit different businesses, depending on their current situations:

1. Cut Business Hours, Cut Spending, and Hunker Down – Endure by spending less on staffing, and commit less of your time to daily operations. Use the newfound time to take a break and recharge, or put that time towards improving your business… or both.
2. Offer Deals – Even out your sales by offering deals or running events for your softer days of the week. If you’re going to do this, the key is to find ways to bring in new business that otherwise would not walk through your door. If you’re just cannibalizing business that would typically pay full price, you’re probably making a mistake by doing this.
3. Buy Someone Out – When times get tough, many business owners want to sell, often at discounted prices. If you have cash on hand, times of economic distress can present an opportunity. This may sound harsh, but for an owner looking to get out, you are likely doing them a favor. Do your due diligence and buy wisely.

Regardless of what you choose, my advice: Remember that you’re selling an experience. Do that. Make a killer experience and then sell it as such. Track your repeat customers. If you aren’t getting enough repeat business, you need to improve your experience (or open another game, if you only have one).

I have no idea how long this will last, and anyone who tells you that they know for sure is probably selling something that you don’t want.

What I can tell you is that we deeply believe in escape rooms and their potential to entertain and bring people together. We’re not going anywhere.