How to Open an Escape Room Business - Full Transcript

Transcript of How to Start an Escape Room Business seminar presented by Cross Roads Escape Games at the Midsummer Scream 2017 festival. 

Transcript of How to Start an Escape Room Business

A seminar presented at the 2017 Midsummer Scream Festival

Speakers: Madison Rhoades (M:), Luke Rhoades (L:), Founders of Cross Roads Escape Games 

Original content created and posted to the Facebook group Escape Room Startups by Christine Barger (C:) - AKA The Haunt Girl . The original blog post can be found here: Live Escape Room Reviews on the web. 

Disclaimer: The following is a full transcript of a recorded session from Midsummer scream 2017. Please, DO NOT CONTACT THE SPEAKERS. This was a special event. DO NOT CONTACT THEM DIRECTLY! Also, please note they are speaking from their own experience and this seminar should not be considered legal advice. Contact qualified legal representation concerning anything in this video as your circumstances and experiences may differ. 

Introduction: 

M:A lot of boring stuff, I'm Sorry but ultimately important stuff that we didn't know about before we started an escape room, so it's good to know. I'll start it off with a thing.

 

That's our game! So, real quick show of hands, who in here already owns an escape room? A few people, ok. Is everyone else here, who's here as an enthusiast and thought, oh, cool, an escape room panel, I don't know what this is going to be about. A few, ok, alright. And then, how many people are super serious about opening an escape room? Alright! That's what' really helpful because that's what this panel is going to be about.

M: to L: Go ahead and take it away, [inaudible] L: Sure, Welcome to Midsummer Scream, How to Open Your Own Escape Room Experience. Just a quick disclaimer, your experience of opening a business is going to be different than ours. The city you choose may have different guidelines and regulations you must abide by. All we can tell you is what we did, and what we learned from our process in hopes that it will help you. Also we will not be giving away any personal or financial information. The advice and information we give will be given out as a one time thing. We will not be answering questions or emails about opening an escape room outside of this class or our second class at Scare L.A. next week. A big thing about the financial information, too, is that again, your experience is going to be different. So, even if I did tell you what our finances were, it wouldn't help you at all, because it's going to be completely different for you.

A little bit about us and how we got started. M: Yeah, so, we both come from a theater background. I was a set designer and scenic painter and Luke was a scenic carpenter and tech director. Together we were able to, really bring something to escape rooms that I think alot of people might not have. That's the only reason we got into this business is that we went to some escape rooms where it was really low in the scenic level, I'm sure some of you have experienced that. We saw the potential there. We were like, guys, this is theater but without having to deal with drama queen actors. So that's what made us do it. We were like, this is something we can bring to the table. We can up the production value that we seek. 

We opened Cross Roads Escape Games in early 2016. We started the production of it in 2015, in January or early February. It took an entire year to get to a point where we actually opened our doors and had our first customers. 

L: The reason that we're doing this panel, she touched on it a little bit, is that we love escape rooms. M: YUP! We've done 150 together. L: Yes M: A little over L: You're 150 M: You're 150, I'm 154. L: OK, 150, all in the Southern California area which leads me to my other point of why we are doing this. There are a lot of escape rooms out there. It started to be a kind of quick cash grab kind of thing. That boat has sailed. It's not that anymore. I don't recommend going that route. It's kind of a pretty big investment now. We encourage you to think outside the box and bring something new to the table if you're going to do this. We'll go over a little bit more of that as well.

M: A lot of people have approached us and are like "Why are you doing this?" "Why are you putting more competition for yourself by giving people all these pointers on how to open up an escape room?" We don't honestly see other escape rooms as competition, we see them as a really great community where we can recommend to one another because you can't really play an escape room twice, maybe twice but more than that, that's kind of weird. We really like recommending other great escape rooms. Our problem is that there is really not a lot of great escape rooms to recommend. If you're going to open an escape room, we want it to be great. We want to give you the tools you need to make it great so there's more enthusiasts out there. 

L: Compared to the number of escape rooms that exist. There are lot's of great games out there but compared to the number that exists. 

M: The majority are, I think, below what the standard should be and what it's doing is making people play an escape room for the first time, and, they hate it. They're like, "I'm done, no more of those. Did it, checked it off the list, never going to do an escape room again." That's not what we want. We want more enthusiasts. We want someone to do an escape room and go "That was amazing, now I want to escape from a spaceship." or, you know, the next thing. We want you guys to do that, to make the next thing. Not another office, or jail, or something that's already out there. L: And to be successful. 

M: to L: You don't know I pulled this up. This is actually something that I read this morning, posted today from Room Escape Artist.com which is actually a review site of two enthusiasts who've played, I think, over 300 games together. And they recently did this graph, just today, I was like, this would be really good to show. The popularity in escape rooms is rising drastically. One thing that they mention here is that the quality will also have to rise or more will start to drop. Right now there are 120 escape rooms in SoCal, sixty of those are roughly in the Los Angeles area, thirty are in Orange County, thirty of them are in San Diego. Those are just companies, some have multiple locations, and each of those companies have three to five games which I would say is the average. There's a lot out there already. Just be aware of what's there, and that everyone's always looking to improve what they have.

L: We've played 150 games and we have not played at all of the companies in Southern California, and we've only played Southern California. M: Well, since some have closed since then and some have started that we haven't played yet, So that's a lot. L: Pretty big money. M: We've played 150 games, not companies, we're at like 70. L: Right, not all the companies.

M:  We don't have to keep this here, this is scary. Definitely a great article to read from Room Escape Artist. They also have cool and great critiques of each of the games they review. One thing I love about them is that they don't give it a star rating. They don't go like, this escape room is 5 stars. Because they change every year, something that was 5 stars last year might not be this year. They just come out with, like a short-comings area too, it's like, this is what I think that this escape room can improve upon. It's nice, it's refreshing.

M: Kind of going back to the handout I gave you guys. Beginning steps. These are the baby steps that we had no idea how to open an escape room when we first started. There was a lot of researching online and figuring out what your first steps are. 

First steps to opening an Escape Room

M: Your first step is going to become a business entity. Whether that is an S Corp, LLC, C Corp, that's totally up to you guys what you want to be. I'll let you know that we are a C Corp. The reason why is that our accountant told me to. I have no other information than that. To become a corporation, a lot of people might say, oh, you need to go to LegalZoom or something like that. That's not necessary. You can do it yourself. It's just the articles of incorporation sheet, a one-sided sheet, super easy to do.  That's what will give you your business entity. That's what is going to be taking in all the money and save you if you are ever sued, first step.

M: Next is to find a location. This is really hard. This took us six months. Mostly because at the time, no one knew what an escape room was. Funny story, we, for a long time, people thought we were this sex dungeon. And then we showed them a video of it, and they were like, "Thank you so much for telling us!" People, when you say you are going to lock someone in a room, they're going to say "No, thank you. That sounds like a liability." They want a dry-cleaner, or a deli, something that they're familiar with, same thing with the city. Once you start saying that we're this new kind of entertainment where you lock people in a room and they have to solve puzzles. They're like "No, no, no, that's O.K." So, Choose your words carefully, and be as specific as possible so that they don't start thinking it's something else.

L: One good way to explain your escape room to the city is as a sort of class. They know what classes are, like karate classes and dance classes and stuff like that. Describe it as a class, you sign up for a time period, you go and do the class at that time period, (M: Only so many people can be in the class.) Yes, it's not Disneyland where everybody and anybody is coming whenever they want. It's a select group of people at a select time. Explain it as a class, as a type of class, and that will make sense to them. That is something I learned the hard way.

M: For finding a location, there are pros and cons to a lot. One of it is going to be, who can take you. True story, the only reason we are, where we are, is because they are the only place that said yes after 6 months of searching. Luckily, we like it but we were desperate, we'd take anything. 

M: You can choose a commercial property, an industrial property, or a business park, all of those have pros and cons. A commercial property will probably cost you much more in rent, I also want to say watch out for triple net, it's additional rent they'll charge you X3. (L: To trim the hedges.) So, it could be like, oh, your net is 500, but it's triple net, so it's actually an additional 1500 a month. Watch out for those fine print, it definitely deterred us from a few locations. If you have a commercial property, you'll probably have an easier time with permits, just because it will allow you to have more parking. So, you have that pro-con like, O.K., cool, less time working with permits, but higher rent cost. It's up to you to decide. 

M: An industrial space, which is what we really wanted, allows you to build your own sets. We have the hex room, which is what you saw here. It has a very unique design where there's actually a hexagon room, We realized it's not something we were going to find anywhere, so we'd have to build it ourselves. We have to have an industrial property. We have to be able to build these sets from the ground up and not use spaces that are already pre-built. That was awesome, having an industrial space because we can make something unique. The problem is though, then you go through a lot more permits because it's mostly for, you know, manufacturers and stuff. Zoning's going to be different. You're going to get a conditional use permit which we'll talk about later. Your parking might be limited. 

M: The last one is a business park which we've seen a lot of escape rooms in, I'm sure you guys have too. It has the cheapest rent but a limited amount of space. You don't have any street exposure, which I think is getting more and more popular with escape rooms because people are driving by and going "Oh, that's that thing my friend talked about."  Even if it's not the same company, there like that's the thing, and they'll just go to the one they see. But it is the cheapest, and if you're kind of nervous about this business venture and where it's going to go a lot of people prefer going a cheaper route, seeing how it works out for them and expanding into a bigger location. Again, your choice. Looking back on it now, for us, we wish that we went bigger first. We did try to play kind of in the middle for us. But, we're now running out of space and we don't want to go through this whole process again.

M:  Next is to talk to your city to see what they require. You find the space. You have a person who's like "OK, yeah, I'll take an escape room." Now go to your city and see how hard it's going to be to actually make this work. Some cities might just say, absolutely not, we don't want that type of business. It might be zoned as something that you cannot have an escape room there, or any kind of through traffic because it might have a blocked off parking area, who knows. Then also, the conditional use permit which might be a make or break for some of you if you want to go that route. 

M: Once you have it settled and the city doesn't seem too terrible. To give you an idea on cities, they're all so different. Los Angeles doesn't really care too much about parking, I'm sure we all recognize that. Anaheim, where we are, cares so much about parking. Street parking does not count. You have to have actual parking spaces. There's a point where they thought where our space was 3000 square feet that we could fit hundreds of people at a time so we would have to have our own parking structure which would cost millions of dollars. We were like this is way out of hand. Be clear with what they need. (L: But the parking in Anaheim is great!) 

M: It is. And then there's other places like Irvine. I'm just talking about Orange county because that is what we're most familiar with.  Irvine is actually, they know what an escape room is, and they've realized that they're not dangerous or scary. They've treated it as a class. There's now a form that you fill out to become an escape room down there and it's the fastest way possible. The problem with that is, they have a lot of business interests there so you are limiting yourself as far as space. They also already have a lot of escape rooms established down there. You are already going into a pretty competitive market. To be able to be on the website or on Google when someone types in "Escape Room in Irvine" If you're opening up two years after 10 other businesses it's going to be really hard to be on top of that list. 

M: The lease agreement. The only thing I'm going to tell you is you have to have a conditional use permit. That is something that you have to, it's a whole new process. You have to have a location signed with your lease, to then move onto your conditional use permit. During that time though, they can say no at any time, we don't want your business.  In which case, you don't want to be stuck in a 4-year or 2-year lease agreement. You need to have a clause in your lease agreement saying, after X-amount of time, I can leave if this permit doesn't go through. I'm just saying that to save you guys, to make sure that doesn't happen because you can't open an escape room without a perfect space. I don't know what you are going to do. 

L: We've also heard of a couple of cities that have said no outright to all escape rooms. You might be thinking, ooh, look, there's a dark spot here of escape rooms. Nobody's there, that might be because they're not allowed to be there and you won't get in. Cities can be very, very stubborn. 

M: Just because there's an escape room in the city already, it doesn't mean it is going to be easier for you. It might be harder because during your city hearing they might go "no, no, no, we already have four of these and we don't want any more." Also with the conditional use permit, it has to be done every single time. It's not like, now that there's an escape room here, this process gets any easier. It's the same thing again and again. 

L: Even though we are in Anaheim and have been here for a year and a half we have done nothing to help other future escape room people open up their games. They have to start from the beginning. It's just as painful for them. There's been (M: There's nothing we can do about it, it's just city rule) no change.

Check out my previous post about starting your own escape room business. If you build it they will come... Yeah, not so much Part 1

M: Those are the first steps you need to know, your location, your business, and to know what you need in that location from your city. Now we're going to get into the permits. I'm sorry guys, this is going to be a little heartbreaking. This is the worst part, I cried myself to sleep for months during this process. 

M: The conditional use permit is a C.U.P I have a definition here of it which I know sounds like a bunch of hoopla, but if you read it very carefully, it does make sense. Basically, because we're in an industrial zoned location, it means that we don't have the proper zoning.

L: Essentially what we're doing is using our space for something it was not intended to be used for. That is what C.U.P.s are for. You want to use this space for this, it wasn't initially intended for that, so you have to make sure that the building can accommodate for that. Even though we talked about a little earlier you can do a commercial location. Even though you do that, don't feel like you are out of the woods. The city can still just drop a C.U.P. on you because they are nervous about what you are doing. It can get you around it because of the parking situations and stuff like that and because of fire sprinklers and all that because commercial buildings have all of that and it's gonna help you. That doesn't mean you're out of the woods necessarily on the C.U.P. 

Q: One quick question on the C.U.P. is there a duration on that, can they revoke it after a time. 

M: Yes and no, I will answer that with a few other points. C.U.P. is a process. You have your location. You have your lease signed and then you go to the city and you're like O.K. C.U.P. time. It's very expensive. It can cost anywhere between $3,000-$25,000 depending on what city. You should also take into account knowing what city you're getting into before you're all of a sudden, "Oh, this is the price." It can also take up to 3-12 months to actually get your public committee hearing in which they will approve. 

M: The really horrible part of this whole thing is that you have a lease agreement that you are now paying rent on. You cannot do a single thing to that building until you have your C.U.P. approved. If that takes six months, you have to sit on the building for six months, paying rent, to then get a yes or no and know whether you can actually move forward or not. (L: On top of whatever they are charging you for the C.U.P.) M: It's horrible, that's why I cried myself to sleep. (L: It was rough.) 

M: Just being in this limbo of not knowing and just spending all this money that you've been saving up and you finally get the yes or no and you're out of money. Now you're like great! How are we going to build the escape room. It's also kind of an up in the air of how long it's going to take. They usually give you like "oh, it's 3-6 months, or, it's 6-12 month." That's horrible, that's a lot of time. 

M: During that process, while you're waiting around. They will put together a presentation to give to the public city members and you will go up and they will ask you questions about it. At that moment they will say yes or no. They'll all vote if they want your business in their city and if they want your business at that location. They might say no because of parking. They might say no because they don't want your business or their's too many escape rooms. There's no, I have no way to tell you yes or no, it's up to them. 

Q: You said they will do the presentation, (M: They will do the presentation for you. ) Who's they on that? (M: The city people and they do a horrible job.)

Q: You talk to the city people, and the city people talk to them. 

L: Yes, you will describe what you want to do and what your business is. They put together a PowerPoint, which in our case was 3 pages and cost us $800. M: They break it down for you. L: It was a really expensive PowerPoint. They bring that to the city council and the city council votes on it. 

Q: Thank you.

M: Another thing the C.U.P. does though, is it also does traffic reports. That's really where the big chunk of this money goes into is knowing how many people are passing by your business a day and how many parking spots you really need. Anaheim's really about parking. You can tell, that was what killed us the most. A lot goes into it, but it is a lot of just waiting around. I'm sorry about that. 

M: At the city hearing process you will get a yes or no, hopefully, a yes and then you can move into your next permit which is building permits. These also take a really long time.

M: After you get your C.U.P. then you can talk to an architect and structural engineer to start making plans. They will only accept things by an architect with a structural engineers stamp. Even if you guys are good at drafting or you know AutoCAD you have to have that professional stamp on it. It will help translate our ideas to your architect if you do have these skills but you will have to pay someone to do these things. That's a process as well because they'll give you a draft and you have to go back to them in case you need these things changed. Then they'll get around to making those changes and give you the draft again. This is all while you're still paying rent.

L: Provided if this is if you plan on building walls in your space. If you're using existing walls you get a leg up on this. But if you plan on building a custom game you have to do the building permits and yes. Expect to go through a lot of revisions even though you had a professional draft it up and it's all good and they've checked all the rules and stuff, the city will find problems with it and send it back. It usually takes two weeks by the time you get it from your architect to the city to get it reviewed and it comes back. That's after your first submission is like a 5 week waiting time or something like that. After that, you get two week waiting times. They speed you up a little bit. 

M: I'll just tell you real quick, this process is very frustrating because you will give them this drawing and two weeks later they'll give it back and be like "the square footage isn't on here" and you'll be like, what? Yes, it is, why would my architect give you something that didn't have the square footage on it? So you bring it to him and say "somehow the square footage is missing on here" and he goes "Oh, yeah." So he has to go and draw a circle around the square footage that was on the plans and initial it. Then you go back and go "oh, no, no, no, it was on here guys" They're like "Oh, O.K., we'll get back to you in two weeks." You wait around and they find one more thing that's wrong with it. It's horrible!

L: They had us make changes. Then we came back and they took away those changes and managed to take it back to where it was. My advice would be to have your architect come in with you to the city so when they have these bogus claims that such and such is not in your plans, your architect is there to say "Oh, I know exactly where I put that in the plans. It's right here, don't worry about it." They'll still give you revisions over nonsense.

M: I see a question back there.

Q: Where's the line between I am building a wall and I am nailing these to the wall that is non-structural. 

M: None of our walls are structural. They're all temporary walls that aren't holding the ceiling up at all but you still need a permit for them. 

L: There's load bearing walls, bearing walls, and then there's just walls. You have walls with electrical in them. If you have low voltage, usually you won't have a problem. If you're going to put any kind of high voltage in your wall then you have to get electrical permits and go through a whole other permitting process and all that. It depends on your wall.

Q: If it's not a wall, if you're putting in set pieces and stuff?

M: Set pieces are fine, furniture, all that stuff is totally fine. If you need to take down a wall, you need demolition permits, then you need building permits to put that wall back in. Honestly, it's the city trying to be safe and stopping fires from happening. Unfortunately, the people who work there are just devoted to making your life horrible. 

L: Do talk to your city if you're doing really light building. You can get what's called over the counter approval which is, especially if you're doing a little half wall or something. Something minor, sometimes they'll approve it just over the counter and you can get kind of a same-day, or 1 week kind of a thing. But, different cities all have different policies. 

Q: This process, let's say you're getting a 2000 square foot space to put in multiple games. If you're doing this by stages and only have the capital to do one game first but then you hope to open up the additional games, is this a three step process?

L: Yes, you need to get permits for each additional, anything that you built. If you build, if you're gonna do, if you have a big space and you want to do six games, what I would recommend is that you plan out alls six games and you build all of them at once. Their exterior walls and any interior walls that they need. Then open your first one that you're about to start with. Then you can develop them as you go. The walls themselves, I would recommend doing it all at once. If you're not going to do that, you want to save money, that's fine too, but any additional game that needs walls will require additional permits. They'll come in, they'll do a whole thing.

M: What we did when we found out this process was so horrible. We really quick drafted up, we had a good idea of what we wanted the fun house to be, we built both of those at the same time. Funhouse was totally built. There were bare walls, there was drywall with mud on them. We didn't touch it until we had enough money to actually put some paint in there, and put some props and stuff. At least that process was done. Then we could get to it when we needed it to instead of having to wait on the cities time.

M:  Um, when you're, this is getting your permit to start building. Once you have your plans approved the building inspectors will come in. You have to do this in stages. You'll do your framing first. We're going to do the Q & A at the very end in 10 minutes. You're gonna do your framing first and your framing inspector has to come in and he has to approve the framing. Then next the drywall inspector will come in and approve the drywall. The thing that happens though is that you do your framing and the framing inspector comes in and says "this is wrong." You cannot move forward with the rest of what's right with drywall until the framing inspector has said yes to all the framing. It is a little bit of a waiting game there too. Luke has a really good note to give.

L: Yes, a little cheat that my father taught me, He's a foreman for many years. You build out what you're gonna build. It's sometimes good to leave one brace off that you know that you'll need, or something, that's not painfully obvious but an inspector's going to catch. That way he catches it but he feels like he did his job and says "oh, you place is so safe, just remember to put that brace up and I'll come by next time." When he comes by next time he sees it and is like "Oh, you fixed all my critiques you wonderful person, I'm sure this place will be great!", and you're good to go.

M: You laugh, it's real. Our problem is, building it perfect the first time, they have to find something wrong with it.  It's something like, I don't know, this is the story we heard, We nailed down all our boards and we built them on the floor and we put them up. You couldn't see that some two-by-fours were nailed from the bottom because now their on the floor. You had to pin nail every single board so that you could see that this board was nailed to the bottom of the board. (L: My grandfather had to do that when he built his house. Because there was no proof that there were nails in those boards) M: Give them something that's a really easy fix for you. 

M: So that's building inspectors. Be so nice to them, bring them doughnuts. They can make your life hell. 

M: Next is the fire inspection. Fire is hit or miss with every city. Some might require you to put fire sprinklers in and that could cost. Required emergency lights. Ours required emergency buttons that unlocked the doors. If you've seen an escape room that has an emergency key that people use to unlock the door, that is not legal at all, apparently using a key is previous knowledge. (L: That's building code from the state of California, a key requires previous knowledge. It's not a means of egress) M: You have to be able to just push something to leave like a hands-free device. L: If you look back there you'll see those bars. If there's a fire here we all run, we push on the bars and the doors fling open for us. That's what it has to be. 

M: That's what they wanted on all our doors and I'm like, "that doesn't work." If you've played the Hex Room, you'd know that being locked in your room is what make that feel so cool is getting the key out and all that. We were able to negotiate the buttons, emergency exit buttons. In Anaheim, the fire code is that they have to keep the doors unlocked for seven seconds. When you push our emergency exit button it actually unlocks every single door in that game. Which is why we say it ends the game. Because once you press it you can just bump the door and it will open.

L: The fire department loves low voltage stuff. If you can do what you want with low voltage, do it because they love low voltage stuff. They won't bother you.

Q: I have a building background, I do restaurants and stuff, so I was pretty familiar with this. One question that I have that I don't see you addressing is ADA issues. I played the hex room for instance and I see that you have ADA restrooms which is perfect. When you go inside the actual room for instance. 

M: All of the rooms are built so that a wheelchair can make a full circle in there. That was part of our design in there. But with ADA you have to make it so if someone had a wheelchair or is handicapped, they have to be able to experience somehow. So if we get players in wheelchair's we put them in the detectives role because it give them the most amount of room to move so that they can still play the game. 

[Redacted due to spoilers]

M: That's a good point to bring up as well. Once you are going to spend so much money to add these extra walls or do all this building to your space. The cities also require that at least 20% of whatever you are adding to your building goes towards making it ADA compliant, or more ADA compliant. That's why our bathrooms were really easy to make ADA compliant because they were not before. The were actually stalls before. Now they're huge, you could have a dance party in there. True.

M: I would suggest, if you can, make everything ADA compliant. Because they do come, and they do have a right to play your games as well. Do what you can so that you can somehow have them play your games. They're going to be aware that there may be some areas that maybe have stairs that they can't go in but don't just block that off completely for them where the second half of the game can't be experienced. 

L:  As far as ADA, there are a lot of rules. Like a lot, a lot. Like enough to fill this room to the point where nobody knows them all, and to the point where businesses get sued by lawyers who know that. They won't even walk into your space They'll look at your business and they'll say "meh, their's probably something there", they'll sue you because they know that you're probably just going to settle and they'll get your money. ADA, don't worry too much about it that you have to comply with this room full of rules. Do what you need to do to accommodate your guest who is going to be in a wheelchair. You want them to have a good time at your business. As far as lawsuits and stuff, they're probably going to come anyway, so, don't feel like you have to spend millions of dollars to comply with all this stuff. Just do what's necessary to make them comfortable and what your city and your architect are going to tell you that they need in order to navigate your space. You should be fine. 

M: Once that is all done, you will get your final sign off. The inspector will come in and inspect everything. That's usually when they inspect the restrooms and stuff like that, and then you'll get signed off. That is when you can get your business license and maybe even a sellers permit if you want to sell merchandise like T-shirts and stuff like that. Then you can actually start creating your games. That's when it gets really fun. (L: Oh, yeah! We're creating games, that's right!)

Q:  My question is about insurance. When can you purchase the insurance? 

M: You have to get insurance the moment you get your lease signed. It's just a general liability insurance. That's to help the landlord too, in case someone got hurt during the construction.  Once you get employees then you need insurance to cover them. Worker's compensation insurance. Thank you, I forgot to put insurance on there. 

L: Do you want to open it up? M: Soon, I just going to go through this last step. 

M: That's your beginning steps. We basically walked you through all the really hard stuff. I'm sorry if it [inaudible] your dreams. It's very expensive and it takes a lot of time. But, we're proof that it is doable because we did it. We thought we had so much money to start with and it got drained instantly with all these permits and rent and stuff. Honestly, our story is that we just applied for credit cards and loans and that's how Cross Roads was built, with credit cards. I applied until I wasn't accepted anymore. We're still paying back those credit cards today. But, eventually they'll all get paid off and we'll be growing.

M: The last couple of things I have down here are just some great resources for you to have. These are people that maybe I've worked with in the past on other projects or we hired to help us with our escape room. If you want tech in your game there's an easy solution with Fright Props. It's a very user-friendly way to get mag locks to work. (L: Are they here? I didn't get to make my way around, M: No, L: They're not here?)

M: Arduinos, if you're not familiar with them they are basically things to do exactly what you want. I want to touch this button, this button, this button, this button, then that makes this door open type of thing. 

L: Arduinos are super fun! If you like this kind of stuff, it's just a fun little hobby to have. But, honestly, I think that Fright Props has a lot of equipment that you can probably do the things that you want to do with their stuff. I suggest Arduino because it's fun and you can do awesome stuff with it. 

M: They have a starter kit that is $90 and they have step by step instruction sheet. Plan on spending a lot of time really understanding that if you're not really into currents and stuff like that. I know it took a long time for me, but it gives you a good understanding. Then you can start creating stuff from there. That's my alarm. 

M: Scenic painting: Painting makes so much of a difference. Pay a painter. If you're not a painter, don't try and paint things. You can tell, I'm sorry. (L: Lot's of painters out there, and are really accommodating and will make your own work look really awesome.) I have so many painter friends here who would love to paint your escape room. Use them, please, it will make such a difference.

M:  Sound in escape rooms, I think is commonly missed. Please use a sound designer. Lighting as well. Do you want to use practical lights which is like lamps? Do you want to use theatrical lights, you can get some interesting colors in there. Do you want your lights to flicker, do you want them to throb, do you want them to turn off at some points? These are definitely questions you should think about. 

M: The same with set dressing. My favorite thing to do with our sets is we get a lot of props from Goodwill that we redesign. Our lobby table is a desk that I got from Goodwill that we chopped in half and spread apart and put a piece of wood on to make it the size we needed. That's how you get through, especially when you don't have a lot of money. That's the key. Be aware, if you get something from like Goodwill or something and it breaks on you, it's going to be really hard to find a duplicate. If it's an important prop in your game, you need to get it from a place that will always have that. Most of our important props are from Amazon. It's really easy to be like "Oh, this broke. We'll just order another one." instead of going to the store and all that. 

M: And then, videos, you saw our video. I have to say that video has helped gain so many people.  So many people come and play because they see that video and they know what they're getting into and it looks really exciting. It is definitely worth investing in getting a video of your game and showing people what it's like. 

M: Last, just a little bit of escape room etiquette. Please don't do any of these things in your game because we get people who come in and don't know how to do an escape room. This is totally new to them and will do really weird, stupid stuff. Oh, my gosh, we didn't bring that lock that broke! 

L: No, we didn't! Oh, anyway, yes. We had a lock...

M: It's on a latch. It's an example of like. Please don't put like glass and ceramics in your room because they will break. We're like, metal, wood, you can't break that stuff. You can! You can break that stuff. We have a metal latch that someone was like, "I guess I don't want to solve this." They took the lock and they forced their way through it and they totally twisted the thing 90 degrees to where it caused the screws to rip out of the wood.  They did this twice, twice. (L: They actually broke the loop of the lock clean out of the lock.)

Q: Have you seen door knobs missing?

L: Yes! Door knobs get ripped off all the time. You would think a door knob is something that's sturdy, used all the time. (M: You're like, people know how to operate this!) L: I've never opened a door like that in my life but everybody seems to think that's how they work in escape rooms. 

M: Lastly, we'll get to your questions right now. The research here. These games are games that we highly recommend playing. They might be bad games, they might be great games, they might be average games. Each of these games has something in it that we think is really valuable to learn from. Whether they did it really well, or they did it really bad, or they add some kind of unique thing to it. That's what we want to promote, is make yours unique. All of these people on here have something very interesting about them. Play as many escape rooms as you possibly can. We've learned so much by playing ours and we continue to do so. Whether it's something you like or don't like you can take from it.

L: Yes, stay away from what's out there. WE play a lot of rooms and you go into a room and it's all the same puzzles, you've done all of these, and it's, you know. Come up with something unique and creative, playing a lot of games will help you do that. Again, this is not a list of our favorite games. This is a list that you can learn from, that we recommend that you go and play these to learn all sorts of lessons, good and bad. 

M: This very last thing. We are continuing this talk at Scare L.A. next week on Sunday, a week from today. we're going to be talking, now, hopefully, you have all your permits and you're doing good. Then you want to talk about game design, operating things, marketing things. That's what we'll be touching on at Scare L.A. A little bit more fun talk where this was (L: Yea, this was a little doggy downer) M: This was a little rough. We'll open this up to questions and answers if you guys have any. Yes, go ahead.

Knowing what we know now, we may not have ever opened an escape room because we definitely were not prepared, which is why we’re in so much debt because of it.
— Madison Rhoades - Co-founder Cross Roads Escape Games

Question and Answer Period

Q: How much research did you do beforehand to determine what your budget was to even start?

M: That's a good question. With us, personally, we were saving up for a house for a really long time. We found escape rooms and we really loved it and we were just going to use our savings to put into this. We did the math of what we wanted to pay for rent, what are expenses were. We thought we can do this. Then we went into a whole permitting nightmare. These were things that we didn't expect. We weren't aware that these things existed. My parents have opened businesses, but they've been like delis and stuff. The cities have a sheet of paper you can fill out and get your business license the same day. That's not the case with escape rooms. We were caught off guard. Knowing what we know now, we may not have ever opened an escape room because we definitely were not prepared, which is why we're in so much debt because of it. But you get to that point where you have to keep just throwing money at the problem otherwise you're just out all of it.

L: I think the answer is there's never enough research.  Just keep researching all the time, especially for this, because it is unpredictable, especially when getting to the permitting area.

M: You don't know how much longer you're going to spend paying on rent when something can go through. We actually hired an ex-mayor to fight for us at the city who knew a lot of the loopholes, true story. He was very expensive, but it saved us a lot of time. 

 

 

Check out my previous post about starting your own escape room business. If you build it they will come... Yeah, not so much Part 2

Q: That was the question I was going to ask. Are there any consultants or just people that you know. 

M: There are. This guy, he's retired now. That's why his name is on the paper. Our broker actually recommended him to us. Our broker wanted our lease to go through because then he gets all the money. Definitely, research if you need it. It's definitely good to have someone there to fight for you. If you become [inaudible] with your architect, having them there at all these city meetings is huge. Ours cost a lot of money to get him there for the meetings, but when we did have those we actually got to move forward. Where if it's just us, they'll just belittle you and just talk city speak and you don't understand what they're saying. (L: It is a whole other language. Having someone who knows the language helps a lot.) M: It's great. They'll have their own little [inaudible] in the corner and things get done. Anything else?

Q: Earlier, you said in square footage, you said that bigger is better and you also mentioned that your place is 3000 square feet. Can you give us some idea, with the maze rooms today it seems like people are expecting larger and larger rooms? Where the earlier ones were like 200-300 square feet, now they're getting like 450. Are they even getting to like 600 square feet?

M: Well there's one place at Quest Factory, I think they're called now. They have one that is like a 1000 square foot room. 

C: I think so, yeah. There's a couple of really large ones in this area and the one in Baton Rouge is really, really large too. It's like 8 0r 9 rooms in the game. 

L: Ours are like 600 square feet. M: The Hex is 666 square feet.  L: Our rooms are on the larger side. 

M: It depends on how many people you want to put in. I know some escape rooms that started with a smaller game and now they're regretting it because they have to spend just as much money on staff working a game that they can only get like 3 or 4 people in. If you make a larger game that you can get more people in, then your game design has to change too. It has to be able to allow that many people to be occupied for that amount of time.

L: Don't make a gigantic room just because you think that's what should be done. Whatever size room is going to accommodate your idea is how big your room. I've actually played a really great game that was really, really small and it's one of my favorites of all time. It's a great game and it's tiny. Size depends on your idea. 

Q: I was just trying to get an idea of when you're looking for a location and you're trying to figure out what you're paying for square foot. The data is so different, some people are saying 1200 square feet now can only do one room.

M:  Yes, it's totally up to you. Our recommendation of going bigger is just because this process is so horrible. If you have a space that can host 5 or 6 games you don't have to go through this again. You can just keep putting your ideas into that space, and I think that will save you a lot of time. Yes.

Q: Have you found that escape rooms are more of a destination as opposed to foot traffic?

M: They were. I think that' changing now. There's a lot of escape rooms that are opening up in strip malls and I think it's really becoming more of an arcade type of thing where you see it and it sort of reminds you to go to that. 

Q: What are your thoughts on mobile escape rooms?

A: I think they're great! I wouldn't do one personally. I work with them a lot because we have events at our space. But I don't know how they can actually continue getting customers. I think that's a big problem they have, you don't know what their hours are or what's going on. Having a location that people can go to and ask for information at, we have have people that just walk in all the time and say what is this? I think it's really beneficial having a space to send people whereas the mobile game you have to go to new locations and you haven't done the advertising necessary to get those people to come yet. 

L: Escape Bus is here. Anybody play escape bus today? I don't know if they have any more time slots available but they are here. You can check them out for mobile games.  

M: I saw one over here, I'm sorry. 

Q: You mentioned Irvine has a special class, zoning. In other locations, what's the typical zoning for them to fall under?

L: It doesn't exist. Escape rooms for the most part in cities aren't a thing. So when you come to them and say, "I want to do an escape room," They don't have the legal jargon, they don't have the language to accommodate that idea. Which is why we said explain it like a class so it sort of makes a little bit more sense and they can kind of understand what you're doing. Irvine got escape rooms saying "Hey, we want to open" and they said, "O.K. what is it?" You know, they come they play. Irvine said "O.K. it's a class type of room, here's the form for it. You have to comply with this structure and you are an escape room in Irvine." I think they're the only city that's done something like this. (M: That I know of, yes. That's why their's so many of them there.) 

Q: Once you've built your space, how did you end up attracting people to your place?

M: Advertising. Luckily we have, the street we're on, there's a lot of stuff like the castle park and the trampoline place and their's actually a few other escape rooms on that strip. It seems like a tucked away industrial zone but it's actually highly traveled so we put up big signs, which was helpful in the beginning. Facebook ads, Google ads, I'd say avoid Yelp completely. That's a total waste of money. That's where we put a lot of stuff in.  Even contacting colleges and saying a college student discount. Anywhere and everywhere. Going to things like this. We have a booth at this. 

L: One thing I really like about the SoCal community which seems pretty unique in the escape room world is that it's a pretty friendly, welcoming group of people. We all have a lot of theater people who are all like "Yeah, go see that show, go see that show." We have at our place flyers for games we personally like a lot and we like recommending after our guests have played our games. We like recommending those games, and those games will recommend us after they've played their games because they like what we've done. Just being a part of the SoCal escape room community and hooking up with people who really love your games and helping cross promote is also an [inaudible]. 

Q: Are you finding like Groupon and those things?

M: We haven't done Groupon, I know a few escape rooms have. I think Groupon could be beneficial if you have two games because maybe only one of them is a discount. People play them and are like "This is great" and they come and play the other one full price. The issue is a lot of people have just one game and they have a Groupon. I don't know how that makes a lot of sense. To be aware though. Groupon will ask you to charge 1/2 price for your tickets. Say your tickets $30, the people buy it for $15 and then Groupon will take around 30-50% of that $15 so you're making maybe $7 a ticket now. You're really doing it just to get people in and hoping that they'll come back for your other game. We've never done it. I think that sounds like a horrible strategy. I'd rather people just play the game and recommend it to their friends and more people should come. Some people think it's a good idea and it's working for them. 

L: You can control how many tickets are purchased on Groupon. Again, it's an individual to your situation. 

M: My problem is that I also feel that it devalues escape rooms. Someone plays this one escape room for $15 and they think like "That was awesome! This is what I get for $15?" So when they play another escape room or maybe it's the second one at that location and they've paid double the price now and it's not double the experience, you hurt yourself.

Q: I just have a question that you may not have the answer for, but, I have noticed when I look at Los Angeles and cities in general. The escape rooms tend to be clumped together. They're all in Hollywood, they're in Anaheim, there's some starting out now in Tarzana. They're all clumped together and I know some of that is because people are franchising. 60 out has 5, and Maze rooms has 7. Do you see an advantage for that clumping, or do you see a disadvantage if you were to open one in Pasadena?

L: A lot of that clumping has to do with what's kind of happened in Irvine where the city came up with a formula. There's the Sky Circle near Irvine has 6 or 7 companies. (audience: There's more, C: There's like 15) L: When I say Sky Circle, it is a circle, this street can fit in this building. It's the same business park that all of these companies are in. It has to do with where you can open and what locations you can find.  I think that's where the clumping comes from. I don't know that escape rooms really want to be next to each other, it's that they're being forced to be next to each other. 

Q: I have two questions. First, how often do you like kinda see, I know that Cross Roads has kind of took over for their escape rooms? Do you think it's a good idea to yearly change over rooms?

M: It's up to you. We've actually changed the Hex room quite a few times and I say this mostly because Hex room is like our baby and we're never done with it. We keep having really cool ideas where we're like " Let's just add that this week" and we just throw it in there. It's up to you. I think it's really fun to keep doing it but it's also delayed us on opening a 3rd game. I think it's important to know when your game has become outdated and when it needs to go out. We've had a few critiques happen with our fun house game is that it has too many locks in it. At the time that's what was expected with escape rooms and it was on par with everything that was happening. Now that more tech has been added to escape rooms. We are going to need to come around to that and do a revamp. It's also about focusing your energy. Right now ours is on our third game. Once that's done we want to come back and fix up our other ones. 

L: I'm under the personal opinion that a room can last around 5 years, especially if you keep updating it. The same idea, the same kind of thing. (M: Updating the puzzles. Not touching the theme entirely just keeping it up to date tech wise.) L: I feel that you can keep around for at least 5 years and you'll still get people coming in. Also, you're getting new customers, who, 5 years ago, were in middle school or high school. I know that there's a general fear that people, you know, "I have to replace this entire room after this year because people don't want to do it." There's a lot of people out there. There's a good 20 million people around this area. The odds that you get to them all is not very likely. 

M: We have time for one or two more questions. 

Q: Could you give me an idea, a ball park, I don't want to get into specifics obviously, but a realistic startup cost? 

L: A Million Dollars!

M: Yea, I can't do that because it is so different. It depends on if the space your opening is only 500 square feet or if you're thinking of opening something that's like 1500 square feet and on. (L: Like we said the permitting and the city that you're trying to go with it's gonna fluctuate wildly.) M: Do you need a C.U.P.? That could be $3000-$25000, it's impossible to tell you. 

Q: How do you feel about a shorter escape room like a 15-minute escape room. We've been to the Hex room. Naturally, the understanding is that you've had people walk in and you explain what it is and they come back and make a reservation.  Due to the foot traffic, what are your thoughts on a shorter escape room where it's more availability and higher turnover? 

M: That's up to you. Say this small room only holds two people and it's a 15-minute room with a 5-minute reset. Now that's 20 minutes out of an hour that you have two people in. You can do two more after that for the hour so you get six people in for that one hour.  You have a game master that has to reset three times, that's your max, 6 people for the hour. Or, you could have a larger game that takes the full hour but you can get 10 people in there. It's more of like a business strategy of where you want to invest your money.

Q: Yeah, I get it. My question is not that that would be your only puzzle. Have multiple puzzles that's maybe a precursor lead in or something like that. 

L: We have a  fun puzzle in our lounge area next to our lobby. Sometimes we'll have people do that. It's just a jar of candy. You solve one puzzle and you get the jar of candy, and people love it. That;s fun.

M: I don't know if it's worth investing in that entire space for just that one little group. You also have to have a staff member to monitor that. Other people have those puzzle boxes that you have to get into. It's 3:30 I can fit one more in but it has to be a burning question, burning question? (L: It has to be burning though, it has to be on fire.)

Q: When are you going to open your 3rd room.  

M: Fall! We're saying fall. We're not setting a deadline because then we rush and it's not perfect so we're saying fall.

L: We're experimenting with a very complex design, so, yeah.