How to Start an Arcade or Entertainment Center Business

As home video game consoles have gained in popularity, traditional arcades have slowly been on the way out. However, there is still a strong interest in arcade games. If you are considering starting an arcade business, you'll need to put a modern spin on the traditional arcade by offering more than just video games, such as starting an entertainment center. This will be an expensive venture. Before you start, you must have a business plan.

Starting your Arcade or Family Entertainment Center Business

Define your Niche

Your arcade may cater to families, teens, or young adults. While your arcade may stand alone, another option is to open an entertainment center. Entertainment centers, which often include other amenities such as bowling alleys, restaurants, pool tables and laser tag, require a much larger financial investment. You'll need a management team, employees, liquor and food licenses, plenty of parking, and a licensed kitchen. An adult-only arcade may include a bar, pool tables, dance floor, and basic pub fare. A kid-friendly arcade is a much cheaper venture and you won't have to deal with a liquor license, however you will have to ensure that kids aren't on the machines during school hours. You won't need nearly the same amount of size and may only include candy and soda vending machines. However, the majority of your income will come from your arcade games, which means that you will need to have enough games (and patrons) to cover your expenses.

Research the Market

Frequent malls, arcades, bars, and pubs and ask patrons how they would feel about an arcade. Ask them if they currently go to arcades, what kinds of games they play, and what amenities would appeal to them. Start frequenting video game forums and ask members what it would take to get them into an arcade.

Set Your Budget

At a minimum, you will need a variety of arcade games, a cash wrap, and permits for each arcade game, an arcade license, business license, sales tax permit, and federal tax ID, in addition to a location.

Find a Location for Your Arcade

Start with a popular mall for a small arcade. An adult-only arcade would do well in a strip of bars or downtown. Since the majority of your customers will be young adults, consider a location near a college. Your arcade must be a minimum distance from schools, churches, and residential neighborhoods.

Contact your local zoning authority. Your arcade may be subject to a number of rules such as hours of operation, the placement of simulated gambling machines, window tinting, the types of games you can have, and the amount of games per square foot. Gambling is forbidden within any arcade.

Get Your Permits

Obtain permits for starting an arcade or entertainment business. Start by registering and incorporating your business at your county clerk's office. Then visit your local licensing department to obtain an arcade license. You'll also need a sales tax permit and federal tax ID. Permits must be affixed to each game. You will need a liquor license and food handler's permit, if you intend to sell food and alcoholic beverages. Commercial kitchens are subject to regular inspections. Contact your health department to set up an inspection. Purchase liability insurance and worker's compensation insurance.

Purchase Equipment for Your Arcade or Entertainment Center Business

Purchase equipment for your arcade or entertainment center business. Purchase popular classic arcade games such as Galaga, Street Fighter, and Pac Man HERE. Purchase modern games such as Dance, Dance, Revolution and Street Basketball, along with popular shooting and racing games. Steer clear of arcade games that offer a multitude of games, as they may be in violation of copyright laws. Purchase restaurant furniture, flatware, condiments, kitchen accessories, ranges, refrigeration, hood ventilation systems, and bar equipment. Visit food suppliers to purchase ingredients for your menu.

Visit malls, movie theaters, and Chuck E. Cheese restaurants and peruse online arcade forums to get an idea of the latest, popular arcade games.

Advertise

Start advertising your arcade business in your city's family magazines. Find these at libraries. Contact the editor to have your family-friendly arcade listed under the entertainment section.