Claustrophobia operates more than 150 escape rooms united under one brand, making it the largest escape room franchise chain in the world.
The company was founded in Moscow in 2013, and in three short years, it has expanded into more than 50 cities around the globe.
Nowescape is pleased to present this interview with one of Claustrophobia’s founders, Bogdan Kravtsov.
Tell us about yourself, your background, your education, and what you did before entering the escape room industry.
I am a mathematician, but in fact I have three degrees in different fields.
How many escape rooms do you currently operate and where?
According to our website, we operate around 150, but I have lost count myself.
We own five escape rooms ourselves, and they are not the best ones.
In addition to this, we co-own around 10 rooms.
All other Claustrophobia Escape Rooms operate under franchise licenses following our guidelines.
Where is your “must see” escape room located?
The best escape rooms in the world are here in Moscow. The best escape rooms in Moscow are the ones operating under the Claustrophobia brand.
The reason is simple – our top priority is quality.
By quality we mean that every little detail, every prop is well thought through. We demand relatively high budgets from every franchisee.
So the best escape rooms in my opinion are:
How did you end up starting the Claustrophobia franchise?
In 2013, I went on a trip to Budapest, which was the European capital of escape room games at the time.
When I came back together with my two friends, we decided to open our first (and Moscow’s first) escape room.
We designed our first escape rooms ourselves.
The initial calculated budget per room was just about $15k USD. However, when we started building our first escape rooms, the budget went up to $40k USD per room.
Our initial calculations showed that we are going to get back our investments within first six months.
The reality was surprisingly different.
We earned our investments back within first six weeks.
Our first visitors were so excited, many of them wanted to open their own escape rooms in their different cities.
This is how we came up with the escape room franchise idea.
Our first franchise escape rooms were open just three months after our launch. Demand was so high, that some escape rooms were open 24/7.
What was the hardest part of starting your business?
All my life I have worked in front of the computer, hardly doing any manual work.
When opening our first escape rooms, we had to learn how to use the tools, paint, etc.
So in this sense, the manual work was interesting, but it required a lot of time since we had no experience.
We obviously made many mistakes, and one of the things I have learned by now is that you have to always think about your clients as small children who need to be protected from themselves.
For example clients might pull an electric cable, which is not part of the game.
In the client’s mind, an escape room is 100 percent safe and proven, while in reality that’s almost never true.
Another thing which is hard is the advertising. In the beginning, it was new and it was easy, but later we realized that it is actually hard.
I think only 10 percent of Moscow’s population knows what an escape rooms is.
Look, when you advertise a fridge, all you have to do is put a picture of a fridge, tell how energy efficient and quiet it is, and add the price tag. That’s it. Everyone knows what a fridge is.
However, when you start advertising an escape room, before you get to the deal, you have to tell a story: What is it, why, how, what to expect, etc.
This requires time, which is usually beyond the average person’s attention span.
We have discovered that the best advertising for escape rooms involves storytelling. Bloggers, videos, magazines, celebrities, and very important – word of mouth.
What was the easiest part?
I just said that manual work was the hardest.
Well, in addition to this, it was also fun. So I consider that to be easy and hard at the same time.
To be honest, the easiest was marketing our first escape rooms.
We got so much media attention that our first escape rooms were completely sold out.
With the first rooms, it took us just six weeks to get our investments back, but then we have opened [other] escape rooms which paid back the investments in just three or four weeks, and sometimes even faster than that.
What habits or mindsets helped you become successful in the escape room business?
I think one of the major keys to our success was that we did not have a business plan.
In fact, we did not plan much at all. We worked on our first escape rooms as a side project, just for fun.
We just took the risks. This allowed us to make quick decisions and stay flexible, change and adapt according to the situation. I would not say that this approach will work for everyone, but it did certainly work for us.
Another thing we got right – we quickly realized that if we really wanted to grow our business fast, we wouldn’t be able to do it alone.
We needed some help.
We decided to focus on expanding our franchise business, rather than thinking about how to open our own next escape room.
This decision helped us to become the leaders in the industry.
How long does it take to build an escape room business to the break-even point?
So it really depends on your marketing strategy.
We were lucky to be the first ones [in Moscow], so in the beginning marketing was relatively easy.
However, things have changed since, and now you have to invest into marketing.
Marketing will become one of your major costs.
What we are interested in right now is slightly more expensive escape rooms.
They are more expensive to build, they are more expensive to maintain, but also the entry ticket is more expensive.
Our experience shows that these rooms reach break-even faster – so we insist on quality.
Since only small percentage of people have even heard of escape rooms, how do we reach the vast majority?
Identify your market and find the way to approach it. These are the people who are easiest to convert.
We’ve been targeting youth – those who are looking for activities and fun. These are the people who go bowling, carting, to the gym. In fact, if you look broadly, everyone who goes to the cinema is your potential customer.
By the way, cinemas are good places to advertise.
What type of advertising is the most effective?
For the audience which does not know about escape rooms, it is a storytelling. Videos, blogs, articles in magazines, etc.
For the audience that has already been to an escape room before, it would be the usual channels used across retail sales.
How do you come up with new puzzles? Can you describe the process?
We don’t have any specific approach.
We did some brainstorming, and we just listed all the puzzles we would come across and combined them whenever needed.
Right now we have full-time employees who are responsible for scenarios, designs, and puzzles.
What are the newest technological inventions used by escape rooms?
Everything we come across. As soon as the time machine is invented, we are going to use it.
For example, we are experimenting with magnetic levitation.
The “magic” (this is when the client has no idea how this works) is extremely important.
We are also developing a new concept with augmented reality, and we believe that it will have great success when we introduce it to the escape rooms.
How much do you see virtual reality making an impact?
I see virtual reality as a completely different segment. What we are focused on is real emotions and use of all senses.
So one of our next bets is augmented reality, where we can combine the “real” reality with “virtual” reality.
However I don’t think this is going to have a huge impact on the industry – this is just broadening of the format.
What is the difference between choosing to go with a franchise and the do-it-yourself approach?
Franchise a lot easier and often cheaper.
Here is my advice for the ones who are planning to establish escape room businesses.
If you are opening in a small city where there is no competition, you can go on with a relatively small budget and simple escape room scenario.
Your risk is that you might not have a big enough client base, but lack of competition allows you to save costs on escape room design.
If you are opening in a big city, by default there will be competition.
In order to be successful, you need to be on top of your competition, so saving costs on room design is not an option.
You will need to build a better (and probably more expensive) escape room than your competitors have. You will need to spend more on advertising, etc.
The best you can do is this:
- Come to Moscow and play our best-selling rooms.
- Choose the ones you like.
- Pay us the royalty fee of $10k USD per room.
- Pay the cost of the props, materials, puzzles, and design. Rooms cost anywhere between $30k and $150k USD.
- We will put an exact copy of the room in a container and ship it to you anywhere in the world.
- Open up under the Claustrophobia brand.
Believe me, copying is going to turn out to be much cheaper than building from the scratch.
What is the minimum budget to open an escape room with and without a franchise in a metropolis?
It really depends on where you are, competition, etc.
Our best escape rooms cost about $150k USD in terms of design, props and materials.
One room in one location is not going to work; you need two or three.
Therefore, it is $450k USD per location just for the room designs. In addition to this, you need a budget for marketing, running costs, etc.
Franchise costs are about $10k USD and not really relevant, considering your overall budget.
Of course you can go much cheaper than that, but in competitive markets, it might not work at all.
What is the most expensive escape room you are aware of? What’s so special about it?
What is an approximate price to buy an escape room franchise and what does it include?
We have different prices/deals for different markets.
I have given you some examples above. I can give you one more example.
If you want to open a Claustrophobia escape room in Moscow, we are going to ask $45k USD just for the right to use the brand.
In addition to this, the rooms in Russia have to be unique, so the design costs will be higher than if you just copy it. We do, however, set up copies of our rooms outside of Russia.
What are the competitive advantages of franchising with Claustrophobia over other franchises?
We are the biggest escape room operator worldwide.
We have the most experience. Our focus is quality over anything.
In many areas of the world, Claustrophobia is a recognized brand, and people know they can trust it. Claustrophobia = quality.
Is there any notable difference between your first and last sold franchises? If yes, why?
If you look back now to the first escape rooms we did, they were simple and cheap. Our main target was quantity of escape rooms. We believe now that quality is more important.
With the industry development, our conditions became much stricter. Our budget requirements are also higher.
Have you shut down any of the franchised escape rooms?
Yes we have shut down some of our escape rooms – some due to the low quality, some due to the small market.
Several rooms were rebuilt.
As a brand do you feel pressure from smaller brands?
We try to distance ourselves from those who do cheap rooms and those who have short-term strategies. Therefore, we don’t really feel the pressure, but the problem is that they do harm the market.
It is not unusual that a customer goes to one of the cheap escape rooms with the endless chain of padlock-code-padlock puzzles, does not like it, and never comes back.
Do you think that small franchise partners are going to be able to compete with the bigger establishments?
It is not about the size, it is about the uniqueness and the experience the customer gets. Generally speaking, the higher the budget, the more chance to survive.
Is there anything else your potential buyers should know?
- Be [aware] that you will have difficulties in advertising.
- You are too optimistic about the time it takes to open your escape room.
- Do spend money for small things; details matter.
What aspects of the current growth in the industry are negative and/or damaging? How do you counter that?
The industry is expanding. We work hard on new different formats that involve a bigger audience.
We are pushing forward by creating new formats. We now have escape rooms for kids, where parents can play alongside their children.
We have athletic escape rooms, where you are required to use the power and strength of your body.
We have performances, where players become a part of a show with actors.
And we have now started to use augmented reality.
How long will the escape room industry last? What is the “next thing”?
There is no end. It is like the movie industry, where first there was a movie about a train approaching the station, and people were super excited about it.
Now there are tons of different genres that target different audiences.
The same is happening with the escape room industry right now. The formats of escape rooms are expanding, and escape rooms that use basic padlocks are not interesting anymore in competitive markets.
What do you think is going to happen with the industry in the next three to five years?
I don’t want to forecast so far. I have done too many wrong forecasts in the past.
What I can see now is that the industry continues to develop very quickly. There is a crisis in Russia. During crises, people usually limit their spending for entertainment; however, our business is still expanding rapidly, so the impact is limited.
I think this is due to the fact that there is huge potential [in escape rooms] – 90 percent of people don’t know what an escape room is.
Escape rooms are low-investment businesses that almost anyone can set up.
They are also one of the fastest-growing entertainment businesses worldwide.
For a first-hand account of a 23-year-old entrepreneur who started his own escape room without a franchise, check out How I Built a Successful Escape Room Business in Less Than a Year.
If you’re considering opening your own escape game business, the best place to get started is right here.