If 32-year-old Hungarian native Akos Gabossy succeeds in building the biggest franchise of escape rooms in the United States, he will have Chuck E. Cheese’s to thank for it.
For the uninitiated, escape rooms are a form of entertainment in which a group of people, usually four or five friends, have to solve a series of puzzles and find hidden clues that lead them to the key that allows them to escape a room or series of rooms.
Gabossy explains that escape rooms generally borrow themes from blockbuster movies, with zombies and pirates being particularly popular. Think of it as a tiny piece of Disneyland that you have to find your way out of in an hour or less.
What’s Gabossy’s connection to Chuck E. Cheese’s? Gabossy was a 17-year-old transfer student in Los Angeles when his host parents took him to the Texas-based franchise that combines entertainment with pizza for kids
“I was completely inspired by that place, “ Gabossy says.
So inspired that when he returned to Hungary and finished his university education, he landed a job in a bank, where he connected with investors who backed a series of amusement and entertainment projects Gabossy spearheaded.
Realizing he was making other people wealthy, Gabossy decided after about a year that he needed to start his own business. Escape rooms originated in Budapest, Gabossy said, gaining a great deal of popularity. Gabossy launched PanIQ Escape Room in 2014 to capitalize on the trend.
In 2014, PanIQ opened its first escape room franchise in the United States in Hollywood, and today has franchises in San Francisco, Silicon Valley, Phoenix, Houston, Dallas, Nashville, Chicago, New York City, Washington, D.C., and Miami, with new locations planned for Atlanta and the Bahamas.
“We like to be in large metro areas where people like to hang out, close to bars and restaurants,” Gabossy said. “We connect our experience with dining afterwards.”
PanIQ has 12 franchised escape rooms in the United States, with four under construction. Gabossy says he’s selling about one franchise a month, for a one-time fee of $25,000 per franchisee. PanIQ collects a 6 percent royalty on the monthly revenue generated each franchisee, who will have to spend between $250,000 and $350,000 to build their PanIQ escape rooms.
“If the location is right and everything goes well, they should look at a very good return on investment,” Gabossy said.
The entire PanIQ Escape Room operation will bring in about $4 million in 2018, and Gabossy expects to grow by 50 percent in 2019 to $6 million in revenue.
“The market is very interesting,” Gabossy said. “There are escape rooms now in every major city in America and 99 percent are operated with independent investors. I don’t want to insult anyone, but they are mom-and-pop businesses.”
Gabossy concludes that escape rooms are not currently a mainstream business, but he aims to change that with PanIQ, which he sees as the gold standard of escape rooms, with better technology and better special effects for its customers.
Gabossy received a giant vote of confidence in the form of an $850,000 investment from Hiventures, a venture capital fund backed by the Hungarian government. Now he’s looking to raise a second round of capital of between $5 million and $10 million from American investors.
Together with the escape room he’s trying to land on the Las Vegas Strip, that kind of money would go a long way toward establishing PanIQ as the mainstream business Gabossy envisions. So far, Gabossy is finding negotiations with Las Vegas landlords challenging, but he’s not giving up.
“I’m looking for a prime time location to be the first company with an escape room on the Strip,” Gabossy said. “We’ll have a minimum of six rooms in Vegas, and one will be three times larger than normal. It will be a whole different level, very high tech and very expensive for us to build. That’s part of the marketing strategy.”
Take that, Chuck E. Cheese’s.
