The Escape Room Business: Balancing Artistry and Economics

At Sherlocked, we’ve spent over a decade crafting escape rooms that transport players into immersive, story-driven worlds. From The Architect, our first escape room and The Vault, set in a 120-year-old brick bank vault, to our ambitious new experience, The Alchemist, we’ve learned that running an escape room business is as much about creativity as it is about economics.

Escape rooms have become a popular form of entertainment, challenging players to work together to solve puzzles and find their way out before time runs out. For entrepreneurs and business owners looking to open an escape room, the escape room industry offers exciting opportunities alongside significant challenges.

In this step-by-step guide, we share our journey, drawing on insights from our co-founder Victor van Doorn’s conversation on the Future of StoryTelling podcast, to explore the economic realities and creative demands of starting an escape room business.

The Economic Challenges of Running an Escape Room Business

The High Cost of Authentic Locations

At Sherlocked, we believe that the right location is the foundation of an immersive experience. All our escape rooms are located in the iconic Beurs van Berlage, a historic Amsterdam building that “breathes this authentic, exciting, mystery movie kind of vibe,” as Victor van Doorn shared on the Future of StoryTelling podcast.

This authenticity elevates the customer experience, making players feel like they’re truly breaking into a high-stakes vault. However, this choice comes with a steep price. “Our rent is between two and three times as much as the general average for escape rooms,” van Doorn explains, highlighting the financial burden of securing a premium location.

For those looking to open an escape room business, this underscores the importance of balancing location costs with the value of authenticity. A high-quality, atmospheric setting can set your escape room apart from competitors, but it requires a robust business plan to manage expenses.

At Sherlocked, our prime Amsterdam location benefits from the city’s high tourist traffic, allowing us to charge a premium ticket price, depending on team size. Conducting thorough market research is critical to ensure your chosen location attracts enough customers to justify the cost, whether you’re in a bustling city or a smaller market.

Limited Throughput and Revenue Constraints

One of the unique challenges of the escape room business is the limited throughput of players per session. Unlike theaters or amusement parks, which can host large audiences, escape rooms thrive on intimacy and teamwork.

We cap our teams at six players for The Alchemist, as van Doorn notes: “Six is kind of the maximum where you, in one glance, can see what everyone’s working on.” This small team size fosters collaboration and ensures a cohesive experience, but it restricts revenue potential, as fewer tickets can be sold per session compared to other forms of entertainment.

Staffing further complicates the economics. At Sherlocked, we prioritize immersion by assigning one game master per team, avoiding the cost-saving approach of having one game master oversee multiple groups. “We go for the less financially efficient route of having one game master watching one game,” van Doorn says.

Additionally, The Vault involves roles like a walkie-talkie accomplice and an in-game actor, sometimes requiring up to three staff members for a single group of five or six players. As podcast host Charlie Melcher humorously remarked, “I’m worried for you, Victor,” emphasizing the financial burden associated with maintaining such a high staff-to-customer ratio.

For entrepreneurs launching an escape room venture, this highlights the importance of having a detailed business strategy that takes into consideration restricted capacity and elevated personnel expenses. Financial projections should include strategies to maximize bookings, such as offering multiple daily time slots or targeting corporate clients for team-building events. Exploring funding options like small business loans and grants, or a loan from a bank or credit union, can help cover startup costs, including props, set design, and technology for puzzles and challenges.

The Trade-Off Between Production Value and Profitability

High production value is at the heart of our escape rooms, from the intricate sets of The Vault to the ambitious storytelling of The Alchemist. “We’ve never invested as much money as we have or as much time, and time definitely is money, in a production as we have with The Alchemist,” van Doorn shares.

This commitment to creating unique and captivating experiences elevates our escape rooms but comes with financial risks. Our focus on artistry often leads to higher costs, as Victor admits: “Being a badly disciplined creative, I’m always going to spend all that money on the production.”

For example, we earned more from dismantling a project for Google than from building it, a reminder of the financial pitfalls of prioritizing creativity over efficiency. We delayed The Alchemist’s opening to perfect its climax, a decision that prioritizes quality but extends the timeline to profitability.

For those looking to open an escape room, this highlights the need for careful budgeting. A step-by-step approach to allocating funds for props, technology, and marketing, while reserving capital for unexpected expenses, is essential. Market research can help identify your target audience and the escape room market’s demands, ensuring your investment in production value aligns with customer expectations.

Opportunities in the Escape Room Industry

Building a Reputation for Quality

Despite the economic challenges, a strong reputation for quality can drive success in the escape room business. At Sherlocked, our first escape room, The Architect, continues to sell out almost daily, years after its 2014 launch. “We have such a good reputation and we’re in such a good location in a city that has a lot of visitors all the time,” van Doorn explains. This sustained demand shows how a qualitative, immersive experience can offset inefficiencies and keep customers coming back.

For those looking to open an escape room business, building a reputation for creativity and innovation is key. Our escape rooms draw on familiar tropes, like the laser maze in The Vault, while delivering surprises that enhance immersion. “If something is a fulfillment of a subconscious element, something that you’ve seen in movies or stories, and then people get excited by the idea of physically doing it, then it’s in,” van Doorn says. By creating an escape game that feels both familiar and novel, you can attract a diverse audience, from casual players to thrill-seekers.

Marketing strategies are crucial for building reputation. At Sherlocked, we leverage online advertising, social media, and partnerships with local businesses to attract more customers. Highlighting customer reviews and showcasing unique elements, like our authentic locations or innovative puzzles, differentiates us in a competitive market.

Catering to Diverse Audiences

Escape rooms appeal to a wide range of players, offering opportunities to target multiple demographics. Van Doorn identifies our key audiences: “There are people who just want to have fun. There are people who really want to be challenged rationally, in their Sherlock Holmes kind of capabilities. We see people who want to do team building with their company and have a unifying bonding experience.” This diversity allows us to tailor our escape rooms to different needs, from casual entertainment to corporate team-building.

Team-building is a particularly lucrative niche, as escape rooms foster problem-solving skills among participants. The intimate team size of seven in The Vault creates a collaborative environment where players work together to solve puzzles, making it ideal for businesses seeking to strengthen team dynamics.

By marketing to corporate clients, we tap into a high-value segment willing to pay premium rates. Our escape rooms also attract families, tourists, and thrill-seekers, especially in Amsterdam’s high-traffic market. Offering varied themes, like the heist-based The Vault or the ritual-driven The Alchemist, ensures we cater to diverse preferences.

Innovating for Long-Term Success

Innovation is at the core of Sherlocked’s success. When we entered the escape room industry in 2013, many escape rooms were “relatively less immersive, more puzzle-focused and not very story-focused,” Victor recalls. We responded with The Architect and The Vault, prioritizing storytelling and authenticity to set a new standard.

For example, The Vault begins in a parking garage, blurring the lines between fiction and reality to enhance immersion. “The story starts when people are off guard,” van Doorn explains, creating memorable moments that keep players engaged.

This approach requires careful management, as van Doorn recounts an incident where players mistook a bystander for part of the game, leading to a police intervention. “They thought we were doing a drug deal,” he says, but we turned it into a positive by improvising a narrative where a staff member posed as a lawyer to “rescue” the players. Such creativity keeps the experience immersive and memorable.

For new escape room owners, incorporating optional physical challenges, like our cage maze in The Vault, can generate adrenaline while accommodating diverse players. “We try to make it opt in,” van Doorn notes, ensuring accessibility.

Step-by-Step Guide to Starting an Escape Room Business

Step 1: Conduct Market Research

Before launching your escape room business, conduct market research to understand your target audience and local competition. Analyze the number of escape rooms, their themes, and pricing to identify gaps in the market. At Sherlocked, our focus on original locations and storytelling sets us apart in Amsterdam’s competitive market.

Step 2: Develop a Comprehensive Business Plan

A detailed business plan is crucial for securing funding and guiding operations. Include financial projections, startup costs (e.g., rent, props, technology), and marketing strategies. Resources like the Small Business Administration can guide you on accessing small business loans and grants. Factor in the high costs of immersive design to ensure profitability.

Step 3: Choose a Legal Structure

Select a legal structure, such as a limited liability company (LLC), to protect against personal liability. Obtain necessary licenses and permits to comply with local regulations, ensuring your escape room operates legally.

Step 4: Secure a Location and Design the Experience

Choose a location that balances cost and atmosphere. While our historic building adds authenticity, affordable spaces can be transformed with creative set design. Invest in high-quality props and puzzles that align with your theme, as we do in The Vault, where puzzles reflect the narrative of breaking into a family-protected vault.

Step 5: Hire and Train Game Masters

Game masters are essential for delivering a high-quality customer experience. Train them to guide players without breaking immersion, as we do by assigning one game master per team. Cross-train staff to play multiple roles, as we do with The Architect and The Vault, for efficiency.

Step 6: Market Your Escape Room

Develop marketing strategies like online advertising and social media to attract customers. Highlight your escape room’s unique features, such as innovative puzzles or team-building potential, to draw diverse audiences. Encourage reviews to build a strong reputation.

Conclusion: Crafting Immersive Entertainment with Sherlocked

At Sherlocked, we’ve learned that running an escape room business requires striking the right balance between artistry and economics. Our commitment to high production value and authentic experiences, as seen in The Vault and The Alchemist, drives our success, even amidst high costs and limited throughput. By building a strong reputation, catering to diverse audiences, and innovating continually, we create memorable escape room experiences that keep players coming back.

For those inspired to open an escape room business, the journey is a blend of creativity and financial strategy. A step-by-step approach, grounded in market research and a comprehensive business plan, can lead to a successful escape room.

To learn more about escape room pricing and industry insights, explore our offerings at Sherlocked for inspiration. Join us in the exciting world of escape rooms and discover how to create unique, immersive entertainment that captivates players and builds a thriving business.