SOFT PLAY, FAQ,

SOFT PLAY – BUSINESS OR CAFE? WHERE’S THE OPPORTUNITY?

If you’re interested in setting up a soft play business, there are multiple different routes you can explore but the primary decision to make is whether or not you want to open up a traditional play centre or a café with play. Which one is right for you?

There are a lot of differences between a soft play centre and a soft play café, from how they make money to ideal location. However, the fundamental difference is that you would charge for entry into a play centre but not for entry into a café which would generally be open to all members of the public. This includes those with and without children whereas it is generally a condition of play centres that adults are only allowed access if accompanied by a child.

This key difference affects the classification of planning you would need. If you want to restrict access to adults with children and charge an entry fee then it is likely to fall into the category of ‘play centre’ and would be planning class ‘D2’ (Class 11 in Scotland). If you want the venue to be accessible by all and would not charge an entry fee then it likely to fall into the category of a ‘café’ and would be planning class ‘A3’ (Class 3 in Scotland). This may affect how quickly a business can be up and running as there are fewer properties on the market with existing ‘leisure calls use than ‘café’ use.

This planning class issue leads onto differences in where a business can be located and the space breakdown for different areas. Play centres tend to be large venues in an edge of town location, established in a warehouse type property with a rent/rates payable overhead of up to £15 per square foot per annum. This is usually spatially split one third for play equipment, one third for seating and one third for ancillaries (kitchen, servery, toilets, party areas etc.) and attracts children up to junior age.

In comparison, cafes tend to be small venues in town centre locations, established in retail type properties with a rent/rates payable overhead significantly greater than £15 per square foot per annum. A town centre located café in a retail environment does not usually have the necessary height to provide equipment suitable for such an extended age range so usually opts for the pre-school market. A large play centre that catered only for pre-school children would be unlikely to be viable because it needs to attract a wider age range to get the necessary foot fall to make the business work. A smaller venue can legitimately target a restricted age range because it needs less foot fall to be viable but the spatial allocation has to be right.

The seating would have to be significantly more than one third because it does not have the pay and play income stream and so will rely more heavily on the food and beverages income so needs more ‘covers’ to help protect the business. Also, the spatial allocation for the ancillaries should be as space efficient as possible for the same reason. The play equipment spatial allocation is likely to be less than one third again to maximise covers but also because younger children to not need the large scale play equipment that is required to keep, say, 10 year olds happy. A traditional play centre usually has three income streams, pay and play (take at the door), children’s parties and the food and beverage. Whilst percentages will vary from centre to centre, broadly, 40-50% of revenue comes from the refreshments, 25-30% comes from each of pay and play and parties. Also, because they are usually located in industrial premises their rent/rates payable overhead is around £10 per square foot per annum, perhaps a little less or more in certain areas. A café with play is an entirely different business than a traditional play centre. The income streams are different. There is income from refreshments and parties but there is no pay and play income. This is replaced by a fee levied for those children that do want to play.

However, both business types are driven by foot fall. The revenue for a play centre is the foot fall multiplied by the entry fee and secondary spend. For example, at our play centre ‘Astrabound’ located in Doncaster, South Yorkshire, if we take all visitors including pay and play and parties, children and adults included, the average spend per head is around £5.50 – £6.00* (gross of VAT) although it should be noted that many parts of the UK (perhaps most parts) could expect to command a higher spend per head than our example.

You will need to then estimate the key inputs for your own business plan and then understand the likely gross profit, that is, the total profit before overheads. It would then be sensible to do some sensitivity analysis to understand what a change in the key inputs does to the gross profit, the key inputs being foot fall and average spend per head. Then, when you look at the overheads you will be able to see if the business is viable in terms of your income expectations or whether the overheads (particularly the rental/rates payable) take all the profit. We have a business plan template that you can use if you wish free of charge which our team would be happy to share upon request.

Finally, in terms of capital budgets, you would expect a traditional play centre (assuming that the building is not a shell and has, at least, existing usable heating and lighting) to have a split on capital of 50% for play equipment and 50% for leasehold improvements. For a café with play this budget is likely to be completely different. The budget for play equipment is likely to be significantly less as a percentage of the total capital required perhaps even half as much of it is ground floor activity with partial first level activity. The key, really, is working out how many pairs of feet at what average spend per head are required for the business to be viable and understanding what impact reductions and increases in the key inputs have on profit.

We know there is a lot of information here but it is important that you get your head around the key drivers in order to decide which is the best option for you. For an out of town play centre, scale and building characteristics are key. For an in-town café with play, location and rent/rates overhead are paramount. To discuss how we can help you develop your project please contact the House of Play team on 01302 846876.

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