One of the most common questions I get from my students inside Play Cafe Academy and from prospective owners inside my inbox is: how do we make money? So, variations of this question might be, What are our revenue streams? How do they compare to one another? Is there a “right” model to make the most money when operating an indoor playground or play cafe?
And my answer, for my business, is simple. We focus on parties. That is where the majority of our revenue comes from and our birthday party packages are high-end and high-margin, so they are a very profitable revenue stream for our business and we are proud of the experience we give all of our party clients.
We know that as long as we put in the time and energy required to create the best party packages that leave us booked-out on a months-long waiting list, our business will thrive.
Do we have other sources of revenue? Of course. I do not like to have a lot of “dead” time at our facility, meaning that I don’t like to have a lot of time where we are paying rent and utilities and insurance when we are not bringing in income.
So, yes, we are open for open play 6 days a week and we do birthday parties Friday, Saturday, and Sunday. We also have classes or events several nights per week, we do drop off hours in the summer, we accommodate groups and field trips, we sell retail, etc. On any given day we have approximately seven streams of revenue flowing into our business.
Here’s the thing: all of those revenue sources come secondary to parties. In fact, I like to say that we treat open-play as an “audition” for parties. You cannot come to our facility to play and leave without knowing we host the BEST, most premier parties in the greater Rochester area. There is signage, pamphlets, posters, and our staff is trained to educate customers on our offerings and book parties on-site.
However, this is just one way to operate an indoor playground or play cafe. I firmly believe that as long as you choose just ONE main focus and revenue source as we did, and consistently thrive in that ONE area, you will be successful. The goal is to become the “go-to” source in your community for your focus and to allow all other streams of revenue to become secondary so your spotlight source can shine.
Here are the six main areas you can choose to focus on.
If you have a very large facility and can accommodate many families or children at one time, you may choose to focus on filling your indoor playground to capacity every single day. Ways you can accomplish this is becoming a sought-after field trip destination, reaching out to moms groups for special pricing, or becoming involved with the homeschool community and creating a unique and educational experience for them when they visit. Most homeschool groups have budgets to work with and allocate some of that budget to field trips and enrichment opportunities.
This is the model most owners assume is the “correct” option. However, unless you have a very large capacity and are centrally located between large cities, this may put you in danger of closing quickly.
Focusing on open-play will make your business the most seasonal out of all the options and therefore most in-danger of irregular revenue. Sure, there will be months of BIG numbers, but there will also be months when you struggle to get folks in the door and be forced to ramp up other sources of revenue.
One method I have seen be successful is a membership model for indoor play. This means that memberships are the main focus, with some indoor playgrounds being ONLY open to members. Visit New York City or any heavily populated urban area and you will find several indoor playgrounds that utilize this model successfully.
In this model, members pay a set monthly fee and are subject to contracts which prevent them from suddenly canceling.
As long as you have the population and the marketing efforts to sustain a constant flow of new members, this is something you should absolutely consider to remove some of the seasonality from your business.
As I mentioned, this is what we chose in my business as our main revenue source. Through social media and word-of-mouth marketing (which we strategically employ) we have become the go-to destination for 3-and-under birthday parties in our area. Families will drive up to 60 miles to celebrate at our facility.
This is because I studied the competition in the area and designed our packages to be truly unique and flexible. We have the time to customize each package and communicate directly with each client because we MAKE it a priority. None of our competitors go that extra mile.
I also designed our entire facility around the needs of families with young children. For example, the average first birthday party has about 10 children but 50 adults. Our facility not only accommodates parties with a large number of adults, but with our espresso bar and comfortable lounge, the adults actually frequently say they enjoy our facility as much as the children do!
This has been key to our success and we are currently on a 3-month long waitlist for parties. An option to increase birthday party revenue is to begin offering a mobile party service where you decorate or entertain at outside facilities. This can allow small facilities, like ours, to have multiple events happening at once, potentially doubling revenue during each slot.
Many indoor play spaces function primarily as a retail toy shop, with BOTH online and in-person sales. The Happy Lark is a great example of this. The indoor play space functions as a convenience and attraction to attract buyers to their shop. Once the owner gets families in the door to use the play space, she hopes that her unique selection of boutique toys and excellent customer service will establish her as the go-to source for gifting and toy shopping.
Her sleek website and easy-to-use online sales platform certainly accomplishes this and you can easily tell this is a focus. Even as a non-local, you can browse and make purchases from the company’s unique and curated selection of toys and apparel.
A business that focuses on their food and functions primarily as a restaurant can also be successful in un this industry. Lemon Tree in Los Angeles, for example, is a high-end restaurant with an indoor play space for children.
They pride themselves on their food selections, which can be enjoyed whether or not you have children. While they also do events and parties, they are known locally for their food service and unique dining experience.
Some facilities choose to offer drop-in care for working parents or parents who just need a little break. Wiggle and Work in Los Angeles is a great example of this business model. It operates like a daycare but parents stay on-site, so it is really like a co-working space with childcare built-in. This model can focus either on memberships or occasional care.
As the number of companies who allow their employees to work from home increases, the need for flexible childcare will increase as well. I expect more indoor playgrounds to focus on this model in the future.
Some indoor playgrounds choose to incorporate an accredited preschool into their facility or focus primarily on educational classes. Some may even receive state or federal funding for their educational programs. These facilities tend to focus on one style of learning, such as the Montessori method.
While the demand for these programs are high and parents are willing to pay for them, these businesses will need to follow curriculum guidelines and adhere to parental expectations, which comes with a great deal of pressure.
Even facilities who are NOT accredited will face plenty of competition and will need to constantly rotate and evolve their classes and curriculum to stay relevant as the go-to source for educational value.
The Little Gym is an example of a hybrid between this model and the open-play membership model. They focus on gross-motor classes but members pay monthly regardless of the number of classes they actually attend.
While they have found success in this model, they are consistently needing to hire and train the best staff and educate them on their teaching method to stay at the forefront of their niche.
As you can see, there are several different indoor playground models to choose from. The biggest mistake I see most facilities make is that they believe they can focus on ALL of the above and be successful. However, these facilities often do not last long, or leave the owner working 60-hour weeks every week to maintain all of their different revenue streams.
Even if the owner has a full staff to assist with their business, focusing on several different aspects equally will confuse potential customers and leave them unclear of your mission or focus, which will cause you to become an afterthought.
As long as you choose ONE main focus and dominate that niche locally using methods I outline inside Play Cafe Academy, you will become top-of-mind for anyone in your area needing the services you provide. When you have a clear message and focus, those who have never been a customer will begin recommending you to those who DO need your services.
I asked 7 Play Cafe Academy and Play Maker Society members what is working RIGHT NOW in their businesses to attract customers and grow sales. I want to send you their answers in my FREE newly updated 2023 "What's Working" Guide!