How much does it cost to set up a gaming lounge?

While a previous generation spent their leisure time - and plenty of money - in the pub, these days they are more likely to escape the stresses of everyday life with an hour or two on the latest games.

That means setting up a gaming lounge is becoming increasingly popular. Many are bars aimed at young city professionals, with a high disposable income who want something from the traditional pub environment. Others have no alcohol licence and gain their revenue from pay-to-play, and from basic refreshments like coffee and snacks.

But, as with any other business, you need to look carefully at the start-up costs, location, licensing requirements and marketing strategy - and at how you will find the funding you need.

What are the costs?

Setting up a gaming bar or lounge can mean high upfront costs. Of course, like any other business venture, getting the financial side right will be crucial to success. So what do you need to make the most of your gaming lounge or eSports venue?

Premises

You need plenty of space that’s easy for potential gamers to get to by public transport - some will want to drop in on their way home from work, so being close to a station in a commuter town could be ideal. A town centre location will be a must, and people don't want to use a venue that is hidden away down a back alley. If you take on a ground floor unit it could be expensive because you will be competing with retailers for the best premises.

Remember that you may need planning permission for any change of use - as well as a gaming licence - from your local authority.

Fortunately, there are empty shops and redundant pubs in many towns, with the size and location you need for your gaming lounge. Plus, it may be possible to acquire these on a lease.

Empty or not, you may still need to budget £20,000 to lease prime location premises with the space you need - although costs will vary across the country. Empty high streets might mean there are bargains to be had.

Leasing can be the simplest way to provide premises if you are starting up. But you will still be at the mercy of a landlord - which could mean rent increases and insecurity. Hence once you have established your business, you might want to think about buying your premises.

A Commercial Mortgage could give your business security and help you secure a valuable asset for the future. Prices for buying a property will vary across the county - a suitable high street property in London could easily cost £1 million, whereas a similar property in the North of England might cost a quarter of that.

Whatever the purchase price, a Commerical Mortgage might let you spread it over 20 years or more.

However, you can’t just move into your premises. Your customers may be gaming enthusiasts - but they will demand comfortable surroundings as well as the top titles. Fitting out your lounge as a comfortable and welcoming place to relax is key to bringing in a constant stream of people.

A quality interior will cost money. Talking to a specialist interior fitting company could be a sobering experience, and six-figure costs are not uncommon for a large lounge. The fitting company may be able to offer some sort of finance deal - but, again, it may be possible to get a better deal yourself which will help you refurbish and fit out your lounge.

Machines

You need to provide the latest machines and the most on-trend games, which means that your costs can be high. The latest Namco Time Crisis machine - which sports dual 50-inch monitors - can cost upwards of £23,000 installed. Lesser machines will be correspondingly cheaper, but most modern games will be £10,000 or more to appeal to keen gamers, and even a change machine can cost £1200+.

To provide a range of machines, from coffee table-style consoles ideal for drinkers to activity games like boxing and golf swing simulators, will mean substantial investment in excess of £200,000 for an average-sized arcade. Asset Funding solutions can provide the most cost-effective solutions when you need to equip your lounge.

Asset Finance includes solutions to let you buy outright or lease the gaming equipment you need.

With Hire Purchase - as the name suggests - you are hiring your equipment until you’ve paid enough to purchase it outright

You’ll normally pay a deposit, plus fixed monthly repayments. When you’ve made all the repayments, your business will own the equipment outright. This can be ideal for durable items that you will want for the long-term - such as change machines or even items like seating.

Leasing gives you flexibility. You can regularly update your equipment to ensure you’re always working with cutting-edge games. It can be the most affordable way to bring in the latest games systems - even high-cost items - and let them pay for themselves with the revenue they create.

You may be able to reduce costs by selecting good, pre-owned gaming kit, and some gamers will actually seek out retro games such as old style or even vintage pinball. Many suppliers also offer used and refurbished games, but you don’t need cash to buy them. Asset Finance can be set up to provide funding for used gaming equipment.

Your bar and catering

Once you have customers coming through the door, you will want them to stay. Your gaming lounge will be a place to socialise as well as play - and that means providing food and drink. Alcohol, hot drinks and food will mean people will stay and play for longer and there is profit to be made with every cup of drink and bar snack you sell.

In fact, costs may be lower than you might think. Getting planning permission for an alcohol licence might require the help of an advisor at the cost of £2,000 but, once gained, you may be able to set up a basic bar and kitchen for as little as £30,000. Remember you will need to provide male and female toilets, which will take up valuable space, as well as need building work.

Again, Asset Finance may be able to help with the equipment costs, while an Unsecured Loan might offer a simple way to get the installation work done.

Staff costs

You can’t run your gaming lounge alone. You will need trustworthy staff simply to keep your business open long enough - especially if you are running it as a bar.

Even school leavers expect the national minimum wage of £170 a week. This figure applies to all 16 to 18-year-olds. People 25 or over will be legally entitled to £8.21 per hour, and an experienced bar manager will expect at least £20,000 a year.

You will also need to deal with utility costs - your electricity bill will be high - and there will be council tax to pay. You will also need to deal with some high maintenance and insurance costs.

These costs can add up to a substantial drain on your cash flow, especially in your early weeks and months. But one solution can be Working Finance. These are flexible, short-term loans designed to keep you afloat while you build your gaming lounge business, and paid back as soon as your lounge or bar is generating sufficient revenue.

The right tactics for your funding challenges

Whether you have already opened for business or not, establishing a successful gaming lounge will require a sizable financial commitment and external funding will be vital for most people, but it is entirely possible for you to make your venture a success.

If you are planning a start-up, your limited trading history will cut you off from some funding opportunities, but one answer can be to create a cashflow forecast which includes all the costs and a realistic profit forecast.

If you want to know more about your funding options then let us help. Not only do we know all the lenders in the UK market who might be prepared to help start-ups, we even know the funding solutions that have been developed specifically for the gaming sector, including finance for gaming tech.

Calling us now could be a winning strategy for your gaming business.