I’m involved with countless discussions about evaluating competition amongst escape room companies as it pertains to owner-operators and the bottom line. Over the years, I’ve noticed a couple significant myths routinely propagated, and I’d like to take a moment to dissect them.
Myth #1: Escape Room Competition is Bad for Business
We can do it together!
I typically see this argument from the more experienced entrepreneurs, though I’ve certainly heard it echoed by a fair share of neophytes. Conventional wisdom in this area comes from basically every other business in the planet:
- Competitors can and will take your customers and your revenue.
- The more competitors, the harder your job will be.
- Being a monopoly, or as close to one as possible, is the ideal.
In many, many, many lines of business, the above is completely true. However, (and this is a recurring theme in my writings), escape rooms are very unlike many traditional businesses. To survive and thrive, we must eschew traditional thinking when it is incorrect.
What makes this myth not true?
- Escape rooms have extremely limited/zero replayability.
- Escape rooms are still very much unknown to a huge percentage of your potential customer base.
Every meal a customer eats at Restaurant A is a meal they don’t eat at Restaurant B. Restaurant B doesn’t have to educate folks about the existence of food. However, escape room players can (and will) experience company A and company B, as they cannot play at both every day. Consider: How many different films does the average moviegoer see? Answer: More than one. Additionally, every marketing dollar spent by either company educates the customer base to the concept of the whole industry, benefiting all owner-operators in the space.
A rising tide lifts all boats.
Myth #2: Escape Room Competition is Good for Business
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Everything I said above is true. However, there’s much more to this story. I typically see this argument from the more novice & naïve entrepreneurs. The crux of what makes this a myth is this:
Escape Room Competition is good…until it isn’t.
In new/underserved markets, a bit of escape room competition is almost certainly a good thing for everyone. In large/saturated markets, competition tends to benefit the larger businesses at the expense of the smaller/newer ones.
This is an area of the business on which I am particularly qualified to speak: Puzzle Break has the dubious distinction of being one of the first escape room companies to have closed a location. We might even have been the very first.
Puzzle Break started in Seattle in 2013. We opened a room in San Francisco in 2014. By 2015, we closed it down. Why? Even then, there was too much competition, we weren’t the dominant player in the region. When we advertised, people didn’t remember “Puzzle Break”, they remembered “Escape Room”. When they later googled to locate their options, they located our more established competitors, and we lost business.
Conversely, our Seattle headquarters was the very first contemporary escape room company based in America and we are an extremely familiar entity. Our competitors’ advertising often gives us a disproportionate boost as they not only educate potential players about escape rooms; they educate potential players about us. By focusing our resources on solidifying our dominant position in the Seattle market, we have been able to grow at a speed disproportionate to our marketing spend.
Let’s look at a different market: As of this writing, a cursory search puts the number of escape room companies in Ontario at OVER 70. No rational evaluator can claim that the opening of the 71st escape room company has a net positive effect on the business of the 64th.
In sum: While a rising tide lifts all boats, the large boats tend to rise faster, and the small boats are in constant danger of taking on water.
-Nate
