You're sizing owner pay before distributions: Year 1 EBITDA is $914,000 and Year 2 EBITDA rises to $1,704,000, showing owner cash potential but distributions will be constrained by a minimum cash reserve of $833,000 and $2,070,000 initital capex. The plan's 43% IRR and rent at $25,000/month limt aggressive payouts.
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Income Driver
Description
Min Impact
Max Impact
1
Annual Revenue Level
Baseline and scaled revenue trajectory from launch through Year 5.
$3,139,000
$7,315,000
2
Net Profit Margin
EBITDA progression and margin drivers after COGS and fees.
$914,000
$2,981,000
3
Growth Stage And Reinvestment Rate
Capex and marketing reinvestment supporting expansion and utilization.
$2,070,000
$3,000,000
4
Taxes And Owner Pay Method
Tax choices, payroll allocation, and compliance costs affect distributions.
$30,000
$833,000
5
Debt, Leases, And Financing Payments
Lease, interest, and financing reduce free cash and owner returns.
$300,000
$833,000
Key Takeaways
Base initial owner distributions on Year 1 EBITDA $914,000
Reduce rent pressure or renegotiate $25,000 monthly lease
Raise off-peak reservation utilization to increase revenue quickly
Add premium F&B and private events to boost margin
How Much Do Arcade Owners Typically Make Per Year?
$914,000-$1,704,000 typical owner income range (this is owner pay potential, not total revenue). How Profitable Are Arcades in Today's Market? The range varies with reservation utilization, F&B margins, owner reinvestment and financing, plus minimum cash needs of $833,000 and a modeled IRR of 43%.
Income Range
Low
$0-$914,000
Early operator taking minimal distributions while covering $2,070,000 capex and $833,000 cash reserve.
Typical
$914,000-$1,704,000
Owner capturing Year 1-Year 2 EBITDA as distributions as utilization and F&B average check improve.
High
$1,704,000-$2,981,000
Scaled owner realizing Year 2-Year 5 EBITDA with high utilization and controlled fixed costs.
What This Looks Like at 3 Business Sizes
Startup
$0-$914,000
Launch phase where Year 1 revenue is $3,139,000 and capex is front-loaded.
Revenue level 🟡 Mid - $3,139,000
Net margin âž– Medium - implied by Year 1 EBITDA
Owner role/time operator - hands-on
Estimated owner pay range $0-$914,000
Steady Operator
$914,000-$1,704,000
Growth phase as revenue rises to $4,748,000 and utilization increases.
Revenue level 🔵 Large - $4,748,000
Net margin âž– Medium - rising with utilization
Owner role/time manager - mixed duties
Estimated owner pay range $914,000-$1,704,000
Scaled Operator
$1,704,000-$2,981,000
Mature stage with revenue up to $7,315,000 and EBITDA up to $2,981,000.
Revenue level 🔵 Large - $7,315,000
Net margin 🔺 High - Year 5 EBITDA strong
Owner role/time executive - strategic
Estimated owner pay range $1,704,000-$2,981,000
Tips & Tricks
Compare salary vs distributions carefully
Prioritize cash over paper profit
Withhold taxes on distributions appropriately
Match debt service to revenue ramp
What Factors Have The Biggest Impact On Arcade Owner'S Income?
Top drivers are reservation fee pricing and utilization, F&B average check (40% per-customer margin lift), and fixed costs like $25,000 monthly rent; see the ranked list below and learn how to plan here: How Write Business Plan Arcade?
Ranked factors list
Reservation fee pricing & utilization - direct top-line driver
F&B average check lift - raises per-customer profitability
Small margin moves cause big swings in owner pay: Year 1 EBITDA margin ≈ 29.1% ($914,000 / $3,139,000), F&B gross cost is fixed at 24%, and reservation fees carry lower COGS-so lift utilization or average check to raise distributable cash; see the margin ladder and How Much Does It Cost to Start an Arcade?
Income Range
Low Margin
Margin range: under 29% (below Year 1)
What it usually looks like: high payment processing and low utilization
Income implication: owner distributions compressed sharply
Typical Margin
Margin range: ~29%-41% (Year 1 to Year 5 implied)
What it usually looks like: stable F&B at 24% and steady reservation fee mix
Income implication: predictable owner cash as EBITDA grows with utilization
High Margin
Margin range: above 41% (closer to Year 5 EBITDA rate)
What it usually looks like: higher average check, more private events, low COGS
Income implication: material increase in owner pay and faster cash runway
What Expenses Most Commonly Reduce Arcade Owner'S Pay?
Top drains are $25,000 monthly rent and CAM, the $2,070,000 leasehold and cabinet capex, plus recurring tech and labor costs like the $5,000 monthly app maintenance and growing payroll; see operating line items in What Operating Costs Arcade Games Incur? for detail - expense buckets below.
Expense Buckets
Direct Costs
Cabinet and leasehold capex ($2,070,000)
F&B cost of goods (24% fixed gross cost)
Technician wages (maintenance and uptime)
Direct costs consume initial cash and reduce per-customer profitability, lowering owner distributions.
Overhead
Rent and CAM ($25,000 monthly)
App maintenance contract ($5,000 monthly)
Marketing spend ($7,500 monthly)
High fixed overhead compresses EBITDA and delays when owner pay can increase.
Financing & Compliance
Capex financing repayments (for $2,070,000)
Payment processing and merchant fees
Insurance, permits, and accounting/legal ($2,500 monthly listed)
Debt service and compliance reduce free cash flow and the cash available for owner distributions.
What Can Arcade Owner Do To Increase Income Fastest?
You're fastest to higher arcade owner income by boosting reservation utilization in off-peak slots and raising average check with premium cocktail packages and paired experiences; run leagues and beta nights, cut downtime with technician staffing, and expand private events and merchandise - see Top 5 fastest wins below and read What Operating Costs Arcade Games Incur?
Measure weekly: reservations, average check, downtime
Price premium offers to preserve contribution margin
Avoid overstaffing for low-demand slots; defintely track ROI
5 Core Drivers Of Arcade Owner's Income
Annual Revenue Level
Higher annual revenue directly raises owner distributable cash by widening the gap between fixed costs and operating income, increasing what owners can safely pay themselves.
What It Is
Primary driver: total sales across reservations, F&B, events
Launch date for reservation revenue: 01/03/2026
Scale path: $3,139,000 Year 1 → $7,315,000 Year 5
Higher net profit margin raises owner distributable cash by converting more of revenue into owner pay, while lower margins shrink what owners can safely withdraw.
What It Is
Share of revenue left after operating costs
Drives owner cash available for distributions
Tied to EBITDA progression and margins
What to Measure
EBITDA margin (EBITDA ÷ revenue)
F&B gross margin (COGS fixed at 24%)
Net take after processing fees (25%)
Fixed cost ratio (rent ÷ revenue)
How it Changes Owner Income
Higher EBITDA margin → more distributable cash → owner can pay larger draws.
Timing nuance: high profit ≠immediate cash → capex and $833,000 minimum cash hold limits distributions.
Quick win
Create a margin waterfall spreadsheet to show gross→EBITDA, to free ambiguous cash.
Publish a pricing sheet for reservation tiers, to raise average check.
Run a processing-fee audit email to payment vendor, to lower net fees.
Tips and Trics
Do track EBITDA monthly, not just revenue
Avoid mixing capex with operating cash forecasts
Measure rent as percent of revenue each month
Don't ignore payment fees; renegotiate annually
Growth Stage And Reinvestment Rate
Early $2,070,000 capex and scheduled upgrades in Year 2 and Year 4 force reinvestment, lowering short-term owner distributions while enabling higher long-term revenue and EBITDA growth.
What It Is
Initial hardware and leasehold capex spend
Ongoing software and cabinet refresh schedule
Marketing and membership reinvestment to grow utilization
What to Measure
Capex remaining vs $2,070,000 budget
Monthly marketing spend to bookings ratio
Cabinet uptime (%) after tech spend
Membership ARPU (average revenue per user)
How it Changes Owner Income
Higher capex now → better capacity later → owner pay rises over time
More marketing reinvestment → higher utilization → increases EBITDA and distributions
Delayed upgrades → more downtime → reduces revenue and owner cash
Reinvestment tradeoff → boosts profit later but cuts near-term cash
Quick win
Create a 'capex tracker' spreadsheet to control remaining spend
Publish a 'month-to-bookings' dashboard to boost campaign decisions
Run one paid league night; produce an event P&L to price premium
Tips and Trics
Do set a $833,000 minimum cash buffer
Measure ROI monthly on each marketing channel
Avoid funding every upgrade without utilization proof
Don't defintely underfund Year 1 capex reserve
Taxes And Owner Pay Method
Tax choices (salary vs distributions) change cash available to the owner by moving dollars from distributable profits into payroll taxes or retained earnings, so owner pay rises or falls independent of EBITDA.
What It Is
Choice between payroll salary and owner distributions
Monthly $2,500 accounting & legal for tax planning
Year one owner economics are best viewed through EBITDA, not direct salary The plan shows Year 1 EBITDA of $914,000 on revenue of $3,139,000, with a minimum cash level of $833,000 required in Mar-26 these figures set the ceiling for owner distributions after reinvestment and debt service owners should expect conservative payouts initially
A practical measure is owner distributable cash driven by Year 3 EBITDA of $2,356,000 and revenue of $5,997,000 Owners can plan distributions after covering fixed costs, payroll, and reinvestment use the Year 3 EBITDA as a benchmark for scalable owner compensation and reserve policies
The model reaches breakeven in Year 1 according to provided metrics Year 1 revenue is $3,139,000 and Year 1 EBITDA is $914,000, which implies operating breakeven early in the plan breakeven timing still depends on cash flow timing and meeting minimum cash of $833,000 in Mar-26
The largest levers are utilization of reservation slots, F&B average check, and fixed costs like $25,000 monthly rent Also relevant are labor growth, initial capex needs of $2,070,000, and app maintenance at $5,000 monthly, all of which determine net distributable cash available to owners
The financials show a 43% IRR and 264 ROE which indicate modest investor returns Over five years NPV is $13,978,820 and revenue grows to $7,315,000 by Year 5 these numbers suggest limited IRR upside unless operational improvements materially increase margins or accelerate revenue growth
