Since the mid-1990s, indoor playgrounds have continued to grow in popularity. Over time, indoor play areas have quietly developed into a legitimate industry, with a variety of options for children and their parents. While some indoor playgrounds cater to the youngest visitors, namely preschool-aged and under, others include activities for children of all ages and in some cases, adults as well.
So, how viable is the Indoor Playground Business? With increasing concerns about childhood obesity, many parents are looking for a fun, safe, and controlled environment for their kids, where they can be physically active; run, jump, and climb without the worry of serious injury, and where they can play hard, without parents having to worry about their security and safety. The indoor playground market fits that niche perfectly and has only continued to grow in recent years.
If starting an indoor playground business seems like a viable option, we will explain, step by step, the best way to move forward!
Find Your Niche
There are different versions of indoor playgrounds.
Many cater to the youngest children, from toddlers to preschool, while others focus more on preteens through adults. Although some indoor playgrounds focus solely on physical activities, like:
Others include additional attractions, such as:
- Video games
- Skee ball
- Other competitive features
Before moving forward, it is important to find a niche, or a focus.
Perhaps you’re interested in opening an indoor playground with a focus on rock climbing or zip lining; or maybe a sports-oriented indoor playground, with some organized games, such as indoor soccer or dodgeball is closer to what you’re considering.
Still, other indoor playgrounds focus more on gymnastic activities, such as trampolines and tumbling.
To truly create a viable business, it is important to pick one area of specialty, and be the best at it.
By offering something with a unique area of focus, that’s a little bit different than other indoor playgrounds, you can target a specific customer base. You can also focus on the community at large, and provide something that other, similar businesses, do not.
Investigate the Competition
Indoor playgrounds are plentiful, but each one seems to offer something slightly different.
While some focus on gymnastic style play, others focus on different amenities, such as virtual reality video gaming, or go-carts, or a carnival style playground model where kids can earn tickets for prizes.
When considering a new business, it is important to understand the local competition.
Whatever the niche of the business, it is important to also provide something better, and different than direct competitors.
It’s important to understand who the competitors are, and how to outperform them, whether you provide:
- Longer hours
- Lower entrance fees
- A better variety of activities and gaming options.
Planning, Planning… You’ll Want to Have a Plan
Before starting any business, it is important to create a workable plan that outlines every aspect of the business. You need to make decisions that address:
- What is the main revenue stream?
- Aside from admissions, are there other viable ways to create revenue for the playground?
- What services can be included?
- Will there be food served? If so, will there be hot food to order or vending services?
- Will the facility have the capacity to host children’s parties?
Exploring the different amenities within the playground design and creating a business plan that outlines the various revenue streams, can help a small business owner:
- Secure funding
- Estimate overall costs
- Determine what type of supplies and staffing will be necessary once the business is up and running.
You’ve Heard it Said, “Location, Location, Location”
When trying to create a commercial business, whether it’s an indoor playground, a deli, or a dry cleaner, it is important to find the right location.
First, you will want to consider the demographics in the surrounding area. For an indoor playground, it’s important to find a location that is easily accessible for families, perhaps:
- In a commercial area
- Close to schools
- Well established neighborhoods.
The right location can make a business, and conversely, the wrong location can break a business.
Take the time to research an area thoroughly, find out why previous businesses have failed, and make sure the location makes sense for the type of business envisioned. It is important to find a location that is:
- Convenient for families
- Perhaps accessible by public transportation
- In a location deemed safe for children and families.
Once a location is selected, it is time to start advertising.
While, it may seem too soon, it is truly never too early to start advertising an upcoming business venture.
Simple steps, like:
- Placing a sign at the chosen location alerting those passing by of the upcoming business
- Creating a Facebook and Instagram page to track the progress of the playground, from start to finish
- Creating a dedicated website to alert people that an indoor playground is “Coming Soon”.
Any kind of upfront, pre-opening advertising will help create excitement and anticipation surrounding this business venture. In addition to the passive advertising techniques listed above, consider some direct marketing as well, things such as:
- Mail pieces to the community
- Including discount coupons for admission
- Perhaps a free drink, for all guests who arrive on opening day.
Select the Right Equipment
With the growing popularity of indoor playgrounds, there are many manufacturers of playground equipment to choose from. Quality and durability are important, as is safety. Before committing to any particular choice of equipment, it is important to thoroughly research each manufacturer.
In addition to cost, there are other considerations when selecting a manufacturer:
- Which companies offer comprehensive warranties on equipment?
- Which manufacturers include equipment assembly in their pricing package?
- Do any of the manufacturers have local representation, such as a sales or service personnel, who can assist with questions and simple repairs and replacements?
It is also important to select equipment from manufacturers who prioritize the safety of their apparatus.
When running a business that includes playground equipment, amusement park rides, or sports related apparatus, safety must be of the highest concern.
Any reputable manufacturer should be able to produce paperwork certifying the safety of their equipment. This is a vital piece of the puzzle when putting together an indoor playground.
Understand the True Cost
It is impossible to create admission fees, invest in marketing, or price food items until the true cost of creating and running an indoor playground is established.
Many things need to be considered when determining the cost of the business. Renting a space and buying the equipment is only one small factor.
Not only are there licensing requirements and insurance guidelines; there are also plenty of other administrative and operational costs:
- Utilities, such as electric and water
- Free-Wi-Fi for customers
- Salaries for staff
- Cost for consumable materials
- Cleaning supplies
- Basic upkeep.
It can actually seem slightly overwhelming. By creating a list of estimated expenses, business owners can better manage and understand what drives cost.
Understand Safety Guidelines and Licensing
It is important for business owners to understand the safety concerns, as well as any local regulations regarding this type of business. Since indoor playgrounds can carry some inherent risks based on the physical nature of activities, it is critical to learn all there is to know about keeping customers safe.
Learn the requirements in terms of safety precautions, and any restrictions on the type, size, or height of the play equipment to ensure all regulatory guidelines are being met.
This is also a great time to start:
- Pricing insurance
- Obtaining any necessary licenses or permits
- Hiring any supporting office staff, such as an accountant, business manager, or analyst to assist with:
- Maintaining appropriate paperwork
- Meeting all regulatory guidelines
- Maintaining licensing information.
Invest in Strategic Marketing
This is where understanding the competition really comes in handy. While it is important to understand what your competitors offer that customers absolutely love; it is equally important to understand what customers aren’t getting, or don’t like, from the competition!
It is vital to find the customer’s “pain point”. A pain point is a defined weakness that prevents a customer from getting exactly what they want.
Find that, and marketing is a cinch!
A pain point can be anything. Perhaps competitive indoor playgrounds are charging a high per person rate. This can be an easy pain point to solve, even without lowering prices. Solid ways to address high prices from competitive businesses could be:
- Offering a buy two, get one free rate
- Offering customers a ½ price ticket for a return trip within 60 days
- Offering a separate child’s ticket price vs. adult ticket price
Another big parental complaint about indoor playgrounds is the noise!
They are loud, with plenty of screaming, wild kids.
Creating an indoor playground that includes a quiet space for Mom and Dad could potentially be a huge selling point!
Next, the level of cleanliness.
Everyone has heard stories about how dirty ball pits really are!
Focusing on cleanliness and disinfecting the equipment could easily turn an indoor playground into a parental favor over the competition.
The important thing is to find out what matters most to the parents, and direct marketing to meet their needs and address their pain points! This is an easy way to differentiate a business from the competition.
Hire Talented People
It’s important to pick the right employees. For an indoor playground, ideally, employees should:
- Love working with children
- Be outgoing
It is important to select a few employees that are experienced with basic first aid, in the event of minor scrapes and scuffles.
Think about every area of the business that requires staffing:
- Staff to handle admissions
- Answer customer inquiries
- Take phone calls.
Additional staff to:
- Help run events and parties
- Supervise games and equipment
- Oversee the snack bar.
While some employees can fill more than one role, it is really important to have the right fit.
Turnover in employment is a huge business expense that can, with the right staff in place, be reduced dramatically.
The cost to advertise jobs, interview and train new people, pay salaries, buy uniforms, etc. It all adds up. By picking talented and dependable people, and treating them well, retaining employees is much easier.
The right employees will be equally invested in making the business a success.
Use Social Media for Promotion
Social media is an incredible tool.
Studies indicate that nearly 80% of Americans use some type of social media app. (Source: Social Media use in America)
Using social media to create excitement prior to opening is only the beginning!
Creating regular updates, focusing on different aspects of the business, and offering small benefits, such as a reduced price one day a week, free beverage refills, or other little perks through social media keeps followers interested in the organization.
Plus, customer reviews are a great way to get free, positive advertising!
Creating regular social media posts and encouraging customers to leave comments about their experiences is the best free advertising in the world!
How Much Does It Cost to Build an Indoor Playground from the Ground Up?
This question is a bit hard to answer, as prices can vary tremendously depending on what the business offers.
However, there are certain factors that can create fluctuation in a pricing model. Let’s take a look at what they are and discuss each one in detail:
- Age Range of Targeted Customers
- Type of Activities Offered
- Liability rates by location
Obviously, opening an indoor playground in Los Angeles or New York City will cost a lot more money than opening one in Topeka, Kansas!
For the most part, indoor playgrounds require a large space, so in midsize to large cities, large spaces come with a premium price. It is important for potential business owners to research rental and purchase rates based on square footage in the targeted location.
Sometimes making a small change to a different zip code can save a good deal of money.
Taxes and rental rates vary widely depending on locations.
Location is one of the most important factors when creating a business, however, what may be considered a great location for a supermarket, may not be the best location for an indoor playground.
When considering costs, it is important to weigh the cost factor against the benefits of the selected location. For example, building an indoor playground off of a main thoroughfare, but close to well established family neighborhoods may cost less and work in favor of the business.
It is more important that kids and their parents find the location convenient, rather than ensuring that it’s on the busiest road in town.
Size of the Total Space
The size of an indoor playground can vary dramatically.
Playgrounds designed for toddlers and preschool-aged children can be considerably smaller than those that are designed with older kids, teens, and adults in mind.
For example, an indoor playground built for toddlers and preschoolers could be housed in a 2000 square foot space rather easily, including areas for parents to relax, a snack bar, and other amenities.
Conversely, a large scale, family size indoor playground can require spaces larger than even 15,000 square feet. It all depends on:
- The type of activities included in the playground
- The focal activities provided
- The demographic the business is designed to serve.
Age Range of Targeted Customers
Age range will dramatically affect nearly every aspect of an indoor playground. From the overall size, to the types of services offered, to the number of customers serviced daily.
Age range is probably the single biggest factor in determining what an indoor playground will look like.
Oftentimes, playgrounds designed for younger children operate almost like a traditional ‘Mommy and Me” class where parents and kids can pay an hourly rate for activities that are group led.
Since toddlers and preschoolers tire or need naps, this is a customer base that will not be spending all day inside, so creating 2 hours ‘appointment’ times can encourage a steady stream of patrons all day long and increase daily revenue over a more free form style of service.
The operating hours can mimic a basic workday in many cases, thus cutting costs in terms of salaries and staffing.
Obviously, indoor playgrounds catering to older kids and adults will need to operate longer hours and provide a variety of activities designed to keep kids and adults engaged and having fun for several hours at a time.
Types of Services Offered
While the age range of the targeted customer base will dramatically affect the size of the area needed, the customer demographics affect costs in other ways also.
The older the patron, the more extreme some of the activities need to be. For example, when attempting to appeal to older teens and adults, attractions such as indoor ziplines and indoor go-karts are much more expensive to design and run, but they bring in more revenue as well.
Admission prices can be based on general activities, with specialized services, such as ziplining, virtual reality play, and bowling, for example, charged separately from general admission.
Using this kind of a pricing model, the business can cater to both wealthier families as well as the more frugal. Offering a la carte services is a great way to build value and create additional revenue streams.
Additionally, indoor playgrounds can make money in other ways as well. Consider including an arcade.
Arcade games are easy to maintain and are easy money-makers.
Catering children’s birthday parties with a variety of package deals and services is also an easy extra revenue stream.
Watch which activities pull in the money. Then you can rotate out the activities that don’t create a significant revenue stream and bring in new ones!
Liability Insurance Costs
This is another tricky area.
Liability expenses to insure an indoor playground will vary widely based on location, along with the size and scope of the activities and services offered.
While insurance rates and maintaining liability insurance for a large scale indoor playground may seem daunting, the type of services offered should drive up costs for customers at a similar rate.
That is why it is important to keep an eye on popular activities, and quickly move out attractions that aren’t paying the bills.
Additionally, liability rates can vary dramatically between different insurers. It is very important to obtain at least 3 or more quotes when deciding on insurance.
Also important to note, there are usually different factors that can affect rates as well, such as special consideration or discounts provided by insurers. For example, some insurers will offer discounted rates to minority or women-owned businesses. Additionally, just like car insurance can be affected by certain safety factors, so can liability insurance for an indoor playground.
It is very important to take the time to review all quotes and discuss all options for providing liability for your business.
What About an Indoor Playground Franchise?
Another option for starting an indoor playground business is owning a franchise.
While at times, franchising can lower overall investment costs, it isn’t a guarantee. However, with a business model that is fairly complex, an indoor playground can be somewhat daunting for many small business owners.
Franchise ownership provides business owners with all the perks of owning and operating their own business, but with the strength and backing of a well-known name.
Benefits of a Franchise
There are many benefits to investing in a franchise, especially with a business like an indoor playground. In reviewing franchise operations for a mid-range indoor playground that services children from about age 2 to age 12, they offer several benefits to their franchise owners, such as:
- Market Research
- Lease Negotiations
- Professional Installation
- Design and Equipment
- Training and Support
- Discounts on Equipment and food/beverages
- Territorial Protection
A well-established franchise already understands the market, and as such can provide new business owners with a wealth of information. For companies that have a long standing history, market research will consist of factors that as someone new to the industry, may not have even thought about!
A large scale indoor playground company understands the value in terms of rental space, and they know exactly what it should cost to rent a building for their franchises.
Taking into account some of the market fluctuation in different areas of the country, franchise owners can rest assured that they will not be taken advantage of in terms of leasing prices. The franchise company should be true experts.
Oftentimes franchise companies partner with a specific group of builders around the country or region to handle all of the builds and installations for their franchise owners. This allows the owner to sit back and let someone familiar with the equipment complete all the necessary installations.
There is no need to reach out to several installers, obtain quotes, customer feedback, etc. They can simply get the job done.
Design and Equipment
Again, franchise companies have the benefit of experience. They know what designs are most appealing to customers and they know which equipment and attractions are guest favorites. There is no guesswork here for the franchise owner. No worries about removing and replacing equipment that is not popular, as the business model has already been established.
Training and Support
It is hard to overestimate the benefit of good training and support.
Understanding an industry, the market, and demographic serviced by the business, not to mention what works and what doesn’t, is truly key to the overall success of a business.
With a successful franchise, owners have the benefit of being trained on what works! Previous owners have already gone through the trial and error, so the hard work has been done. Good franchise companies will offer ongoing support, particularly in the first couple of years, as the business owner truly gets up to speed.
Whether it is equipment, rent, or food products, buying in large quantities usually means deep discounts. When working with a franchise business, the individual business owner gets the benefit of a large company’s buying power, even though they are only buying for their location.
By using specific vendors already contracted with the franchise, owners will pay well below cost for items.
Again, plenty of research has taught franchise companies what a territory needs, and doesn’t need, to be successful. As a franchise owner, you can be guaranteed that you won’t be crowded by additional franchise owners, as each territory is already defined.
A well-recognized name and a good reputation are fantastic advertising. Franchise owners get the benefits of a familiar name, national advertising, as well as local support.
While they choose to increase advertising through social media, or on local radio, having the national support of a network of established advertising is almost like money in the bank.
What Playground Business Will You Start?
Ultimately, it is up to each individual person or business owner to decide what works best for them.
Many people prefer to have the support of a well-known company backing them as they start their own business endeavor. Other people want complete autonomy to create their own space, recognize their own vision, and have the freedom to do business however they choose.
Each method has its own risks and rewards. Either way, the indoor playground industry has continued to grow and develop over the past 2 or 3 decades and shows no signs of stopping any time soon!