Almost every location-based entertainment venue I have watched close was decided before it opened.
Not by the market, not by the economy, and not by whatever the owner blames afterward. By three decisions made during planning: who is running it, who it is for, and what it pays in rent.
The pattern is the same whether it is an arcade, an axe throwing range, an escape room, laser tag, mini golf, a rage room, or a board game cafe. Open strong, run well for six to twelve months, close.
The low barrier to entry is the problem, not the opportunity
Look at that list again. Every one of those can be built for under $50,000 and some for under $10,000. That is the appeal, and it is also the trap.
A price that low means the people who get in are not necessarily people who know how to run a business. They saw something that looked fun, watched a few videos about entrepreneurship, and liked the idea of putting a title in their bio. What they did not sign up for was scheduling, payroll, policies, complaints, and bookkeeping, which is what the job is.
When I opened my arcade, people told me constantly that it must be the dream job, sitting around playing video games all day. I did play more games than I would have at a normal job. But a mattress store owner does not spend the day lying down, and after the first couple of years I was barely playing games even as a hobby. I was running a business.
That is not a brag. That is the realistic expectation, and it is the part nobody checks for before signing a lease.
There is a version of this that is worse. I have consulted for a lot of groups that were four to six friends opening the next cool thing in their city. All of them had jobs. All of them had families. All of them thought this would be pleasant side income. Try making a single decision with six part-time owners who each imagined a different business. It does not happen, and while it is not happening the rent is still due.
Building for a demographic that is not in your town
I worked with a client in a rural town of roughly 20,000 people, mostly farmers and retirees, about thirty minutes from a city of 400,000 that already had every kind of entertainment venue.
He opened a virtual reality arcade.
The two things that population is least interested in are change and new technology, in that order. The business was never going to work, and the low startup cost is what let it get built anyway. A few thousand dollars of headsets does not make a business. It makes a full-time job that cannot afford staff, which means the owner works every shift.
Before anything else, count the people within a reasonable drive who would actually pay for what you are building. Not who might. Who would. Not everyone is your target demographic is the same argument applied to ad spend.
Rent per square foot the model cannot carry
This one kills the ones in big cities.
Location-based entertainment needs space. A lot of space. Space is exactly what is most expensive in downtown Toronto or downtown Vancouver, and there are very few models in this industry that generate enough revenue per square foot to survive those rates. I have watched venues open downtown to real excitement and be gone inside a year.
The number that matters is what you can earn per square foot against what you are charged per square foot. Run it before you sign.
What has worked for the venues I have seen last is outside the core but not out of the way. A decent area, reachable by transit, with parking that does not cost the customer anything. You give up walk-by traffic and you get to keep the difference.
Everything else is smaller than these three
There are dozens of other ways to lose money in this industry. These are the three that decide it.
An owner who wanted a hobby instead of a business. A customer base that was never in town. A lease the revenue model cannot pay. Fix those three before opening and the ordinary problems become survivable.