Opening an Indoor Playground Business: How Much Does it Cost?
We’ve already discussed the red flags I look out for in an indoor playground business plan, but I wanted to elaborate just a bit more on start-up costs and what you can expect should you decide to embark on this endeavor.
If you want all of the start-up costs you can expect (especially those that will likely surprise you!) I’d love to invite you to join us inside Play Cafe Academy where you’ll not only get ALL the line-by-line details but also personalized support every step of the way inside our students-only community.
If you’re not ready to invest in PCA for your business yet, that’s fine! I’ve compiled TONS (44 pages!) of information here in my free eBook all about opening a profitable indoor playground business.
Now, while the cost of opening an indoor playground vary wildly, it usually comes down to these few different factors that I’ve mentioned previously:
The geographic area. Some areas, like NYC, are just more expensive than others.
The type of play and age range the business hopes to accommodate. Large gross motor play structures tend to be more expensive than imaginative-type play equipment, and the broader the age range the more pieces will be needed.
The size of your ideal space. While the exact location of a business is not usually yet determined in the business-plan phase, I can typically get a feel for the size of space a business owner has in mind, whether it be a 40,000 square foot large complex OR a smaller footprint play cafe like ours.
For our 2,500 square foot space in Western New York, we spent approximately $200,000 in start-up costs. That includes everything from build-out, to working capital, to our website, to our staff’s uniforms.
And to be honest, that is about the minimum amount I would expect in order to open a profitable indoor playground. If you find a space that doesn’t require a custom build-out or if the equipment you have your eye on seems like the price is too good to be true, it’s easy to assume you can get an indoor playground up-and-running for a fraction of what we did.
The scary thing is, you CAN. I just want you to approach this the same way you do when you pull your skinny jeans out of the drawer for the first time in a few months. Just because they zip, doesn’t mean they fit. Just because you CAN bootstrap your business and accomplish an opening for under $40,000, doesn’t mean that you should.
I have seen dozens of these inexpensive business models open and close in the same year, usually due to lack of capital, lack of equipment, or poor customer experience. If you try to renovate an old office or house into a profitable indoor playground, you will be met with obstacles and face an uphill battle when it comes to pleasing your customers.
If you are curious about how we arrived at the $200,000 number, here is a very basic list of things you should consider when calculating your own start-up costs. If you want out exact business plan that WE used to fully fund all of these expenses, you can grab it (plus a 70-minute video training to accompany the plan detailing exactly how to fill it out) for just $27 now.
Legal Fees (Business Attorney)
Rent (first and last month)
Insurance (12-month premium)
Loyalty Key tags and supporting software
Brochures/ Paper Flyers
Paper Goods (Napkins, Cups, Lids, Holsters, Stir Sticks,)
Maintenance (Window washing, etc)
Working capital (very important!)
The key here is to make sure you are getting estimates from REAL contractors in your area who are familiar with the business model and what you are hoping to achieve.
For anything local, like your real estate lawyer, you are going to need to pick up the phone and actually call vendors in your area and get their rates. Believe it or not, many people expect to skip this step and end up shocked at the cost of some of the line-items after they have already signed a lease and committed to a space.
TIP: For lawyers and some contractors, many will also charge a retainer up front, so be sure to ask what that is as well.
Even after you’ve negotiated your lease and exposed any hidden pitfalls or money “traps,” there are still ways to accidentally underestimate your costs. For example, when we were getting ready to open our doors, we underestimated the amount we would need to train our staff. Labor costs add up quickly-- before any revenue even starts coming in. We also underestimated the amount and cost of paper products, inventory, cleaning supplies, and cleaning equipment we would need prior to making our first sale.
This miscalculation caused us to dip into our cash reserve, which was a financial cushion we were hoping to save. I recommend OVER-estimating whenever possible, as this can only have a positive outcome.
Operating costs are also easy to underestimate. For example, when signing our lease, I asked the electric company to estimate the cost to heat our 2,500 square foot space. I knew we would need to heat the cafe most of the year because of our cold climate, so I was careful to get an exact estimate.
What I failed to ask, however, was how our very high ceilings would impact our bill. As a result, our bill is several hundred dollars more per month than anticipated. While this mistake alone is fairly innocuous, if enough of these mistakes pile up they can eat into your profits and leave you facing thousands of dollars in unexpected bills per month. If you want to read more about this and other mistakes we made during our opening (that YOU can avoid!), click here!
The key takeaway is that preparation and careful consideration every step of the way is important to the success of your business. If you are looking for additional guidance in navigating the many “hidden icebergs” in the brick-and-mortar business waters, check out our Play Cafe Academy program, where we give you all the tools you need to open a business poised for success.