You're launching an arcade; major operating costs are rent & CAM at $25,000/month (the largest fixed outflow), payroll (hospitality 6→12 FTEs, technicians 2→5), and app/software at $5,000/month + $3,000/month. Other recurring costs: marketing $7,500/month, utilities $4,500, insurance $2,000, security $1,800, F&B COGS 24%, initial inventory $40,000, and gaming cabinet capex $1,200,000.
#
Operating Expense
Description
Min Amount
Max Amount
1
Rent & CAM
Contractual monthly rent dominating fixed costs and shaping break-even.
$25,000
$25,000
2
Wages and Payroll
Staffing costs for management, hospitality, and technicians, scaling over time.
$40,000
$80,000
3
App Maintenance & Software
Recurring tech subscriptions and maintenance, plus periodic major upgrades.
$8,000
$88,000
4
F&B Costs
Food and beverage COGS and initial inventory supporting margin targets.
$40,000
$150,000
5
Marketing & Advertising
Fixed monthly spend and GTM events driving initial demand and awareness.
$7,500
$15,000
6
Gaming Cabinets & Maintenance
Initial capital for cabinets plus planned replacement capex and upkeep.
$1,200,000
$1,350,000
7
Utilities, Insurance, and Security
Predictable monthly utilities, insurance premiums, and security service costs.
$8,300
$10,000
Total
$1,328,800
$1,718,000
Key Takeaways
Cover $25,000 monthly rent before any variable profit
Budget $1,200,000 cabinet capex plus $750,000 TI
Plan $5,000 monthly app maintenance and $3,000 subscriptions
Use staffing optimization to avoid overtime and cut payroll
What Does It Cost To Run Arcade Each Month?
Rent & CAM is the single largest fixed cash outflow each month, and monthly cash also flows to payroll, tech contracts, marketing, and predictable facility overhead-read on for the core line items and quick levers. See How Much Does It Cost to Start an Arcade? for capex context. Here's the short list you need to track.
Where Does Most Of Your Monthly Cash Go In Arcade?
Rent & CAM eats the biggest share of recurring monthly cash, followed by payroll for managers, hospitality staff, and technicians - read on to see the other top drains and how they affect cash runway. App maintenance and software subscriptions are steady technology costs, while marketing and F&B consumables are the main variable cash drains. For planning details and to build this into a financial plan see How Write Business Plan Arcade?.
Monthly cash map
Rent & CAM: largest recurring fixed cost
Payroll: managers + hospitality + technicians
Tech: app maintenance and software subscriptions
Marketing & F&B: discretionary ad spend and consumables
How Can Arcade Founder Reduce Operating Expenses?
You're cutting arcade operating costs to protect cash runway and hit break-even; start by negotiating rent and matching staff to bookings, and keep reading for quick wins that defintely move the needle. Prioritize app features to shrink the $5,000/month app maintenance scope, tighten F&B inventory to lower the 24% F&B cost of goods, and shift marketing to targeted digital spend. Learn revenue context How Much Does an Arcade Business Owner Earn?.
Five focused levers to cut monthly cash burn
Negotiate rent & CAM: ask for phased rent-free months or revenue share
Optimize payroll: align hourly shifts with reservations to cut overtime
Trim app maintenance: drop nonessential features to reduce the $5,000/mo contract
Tighten inventory: enforce portion control to lower F&B spoilage
Target marketing: move budget to high-converting digital channels
What Costs Are Fixed, And What Costs Scale With Sales?
You're deciding which arcade operating costs are fixed and which rise with sales-start with the obvious fixed items so cash planning is simple. Fixed costs include rent, insurance, app maintenance, and software subscriptions. Semi-fixed payroll for managers stays stable while hourly staff scales with demand; F&B costs, payment processing fees, and consumables scale directly with revenue. Marketing has a fixed base and variable commissions that scale with channel performance-see owner pay context How Much Does an Arcade Business Owner Earn?.
Fixed vs variable quick checklist
Rent & CAM for arcade - fixed
Managers - semi-fixed; hourly staff scales
F&B costs, processing fees - scale with sales
App maintenance and software costs - fixed
What Are The Most Common Operating Costs Founders Underestimate?
You're likely to underbudget several predictable arcade operating costs, so check these now and adjust cash runway. Ongoing app maintenance and feature upgrades and higher-than-expected marketing spend are common misses; game technician salaries, F&B inventory turnover and spoilage, plus insurance and unexpected repairs also bite cash. Track these alongside your core arcade monthly expenses and use the metrics in 5 KPI & Metrics for an Arcade Business: What Should You Track for Success? to spot overruns early. Here's the short list to act on immediately.
Underestimated arcade business expenses
Ongoing app maintenance and feature upgrades often exceed initial development estimates
Game technician salaries and overtime for equipment maintenance are frequently underbudgeted
F&B initial inventory turnover and spoilage create higher working capital needs
Operating Cost: First Operating Expense Rent & Cam
Rent & CAM for arcade is the contracted facility lease payment and common-area maintenance charges and it matters because the $25,000 per month obligation must be covered before variable margins contribute to profit.
What This Expense Includes
Base monthly lease payment (contractual rent)
Common-area maintenance (CAM) charges and pass-through taxes
Lease escalations and annual CPI adjustments
Parking fees or additional facility charges where applicable
Tenant improvement amortization if landlord funds TI
Biggest Cost Drivers
Location and square footage (higher rent per sqft raises monthly cash)
Lease structure: escalations, CPI, and CAM pass-throughs
Occupancy and operating hours (foot traffic required to cover fixed rent)
Typical Monthly Cost Range
$25,000 per month contractual rent & CAM (specified amount)
Actual cost varies by market rents and square footage
How to Reduce This Expense
Negotiate phased rent or rent-free months up front-use the first 6-12 months to ramp bookings
Secure tenant improvements (TI) or landlord-funded buildout to avoid upfront capex
Propose a revenue-share or performance clause to align landlord incentives and lower fixed rent
Common Budget Mistake
Underestimating CAM and escalations → unexpected monthly cash shortfall
Signing fixed high rent without revenue clauses → pressure on break-even and cash runway
Operating Cost: Second Operating Expense Wages And Payroll
Wages and payroll for arcade cover core management salaries, hospitality hourly staff, and game technicians and matter because they are the largest controllable recurring cash outflow that directly affects uptime, service quality, and monthly break-even.
Not tracking hourly shift patterns → persistent overtime and inflated payroll run-rate (defintely hurts runway)
Operating Cost: Third Operating Expense App Maintenance & Software
App maintenance and software for arcade are the ongoing contracts and subscriptions that run reservations, payment flows, analytics, and membership data, and they matter because they consume recurring cash and protect reservation revenue and uptime.
What This Expense Includes
App maintenance contract - $5,000 per month
Software and subscription stack - $3,000 per month
Reservation system hosting, uptime SLAs, and backups
Analytics and membership data tools for revenue tracking
Periodic feature upgrades (example: $80,000 upgrade in 2029)
Biggest Cost Drivers
Service tier and vendor rates (support SLA level)
Number of integrations and API calls (usage/volume)
Timing and scope of periodic feature upgrades
Typical Monthly Cost Range
Recurring tech cost approximately $8,000 per month ($5,000 maintenance + $3,000 subscriptions)
Plan for periodic upgrades (example: $80,000 one-time in 2029)
How to Reduce This Expense
Reduce SLA tier or cap support hours with vendor to lower monthly fee
Prioritize and delay noncritical features to shrink maintenance scope
Consolidate subscriptions and negotiate bundle pricing with vendors
Common Budget Mistake
Underestimating ongoing maintenance and upgrades - leads to surprise one-time spend and potential downtime that reduces reservation revenue
Not tracking subscriptions - causes duplicate services and wasted monthly cash
F&B costs for arcade are the variable cost of food and drink sold (assumed at 24% of F&B sales) and they matter because they directly drive gross margin, working capital needs, and cash burn through initial inventory of $40,000.
What This Expense Includes
Food cost of goods sold (COGS) at assumed 24% of F&B sales
Beverage and bar supplies (alcohol, mixers, nonalcoholic drinks)
Initial F&B inventory startup working capital of $40,000
Kitchen disposables, packaging, and smallwares
Vendor delivery fees and perishable spoilage/waste
Biggest Cost Drivers
Monthly F&B sales volume and average check size
Portion control and kitchen yield (recipe execution)
Vendor pricing and contract terms for ingredients
Typical Monthly Cost Range
Cost varies by monthly F&B sales volume, menu mix, and spoilage rates
One-time initial inventory outlay: $40,000 (startup working capital)
You're opening arcade; Marketing & Advertising covers the ongoing spend to drive reservations, F&B attach, and membership growth and is critical to monthly cash flow because it converts awareness into revenue.
What This Expense Includes
Fixed monthly ad budget of $7,500
Content production (photo/video) for Instagram and socials
Exclusive beta and launch event costs to create scarcity
Paid search/social spend by reservation channel
Partnership activation fees with local groups and promos
Biggest Cost Drivers
Channel CAC (customer acquisition cost) by reservation source
Frequency of paid campaigns and creative production needs
Scope and scale of partnership activations and events
Typical Monthly Cost Range
Fixed monthly marketing budget: $7,500
Variable paid media above base depends on CAC and booking targets
How to Reduce This Expense
Track CAC by channel weekly and reallocate spend to top 20% performers
Use local tech/community partnerships for event co-marketing to cut paid spend
Shift to in-house content production after 3-4 launches to lower creative costs
Common Budget Mistake
Undertracking CAC by reservation source → wasted spend on low-conversion channels
Overinvesting in broad awareness instead of targeted beta events → slow reservation lift and higher burn
The gaming cabinets & maintenance category covers the capital and ongoing service costs of your machines and matters because uptime and content costs directly protect reservation revenue and customer lifetime engagement.
What This Expense Includes
Initial cabinet capital of $1,200,000 for 15-20 high-fidelity units
Ongoing technician wages and replacement parts for uptime
License/content fees at 1% of revenue as recurring cost
Planned replacement capex: $150,000 purchase in 2028
Spare-parts inventory and emergency repair budget
Biggest Cost Drivers
Cabinet count and fidelity level (15-20 units)
Technician headcount, hours, and overtime
Vendor parts prices and license fee changes
Typical Monthly Cost Range
Cost varies by cabinet count, technician hours, and parts usage
License fees scale with revenue at 1% of revenue
Replacement capex timing (next material purchase: $150,000 in 2028)
How to Reduce This Expense
Negotiate multi-year service contracts with caps on parts to cut variable repair costs
Implement a preventive maintenance schedule to reduce emergency repairs and downtime
Consider staged cabinet purchases or short-term leases to spread the $1,200,000 capex
Common Budget Mistake
Underestimating technician hours and parts leads to recurring downtime and lost reservations
Ignoring scheduled replacement capex causes cash shocks when the $150,000 purchase arrives
Operating Cost: Seventh Operating Expense Utilities, Insurance, And Security
Utilities, insurance, and security cover the predictable facility costs for an arcade-starting at $4,500 per month for utilities, $2,000 for property/liability insurance, and $1,800 for security-so they must be baked into monthly burn and minimum cash needs.
What This Expense Includes
Electricity for cabinets, lighting, HVAC (starts at $4,500/mo)
Property and general liability insurance premiums (budgeted $2,000/mo)
On-site security staff or contracted patrols ($1,800/mo)
Emergency repairs, alarm monitoring, and fire-safety inspections
Waste removal and utility meter fees tied to operating hours
Biggest Cost Drivers
Operating hours and cabinet power draw (longer hours = higher utilities)
Location and local insurance rates (urban sites pay more)
Service tier for security (armed vs unarmed, 24/7 monitoring)
The direct answer is monthly rent & CAM is $25,000 per month This is the single largest fixed cost and must be covered before variable margins contribute to profit Use the minimum cash cushion of $833,000 to absorb early months with lower utilization and protect against leasing hiccups
The direct answer is breakeven is reached in Year 1 Revenue Year 1 is $3,139,000 and EBITDA Year 1 is $914,000 which supports the claim Monitor monthly booking velocity and F&B attachment to ensure year one assumptions hold
The direct answer is yes substantial capex is required upfront Total key capex items include $1,200,000 for gaming cabinets and $750,000 for leasehold improvements Plan working capital including initial inventory of $40,000 to cover opening operations
The direct answer is budget $5,000 per month for app maintenance plus $3,000 per month for software subscriptions Also plan for a $250,000 initial software development capex and future feature upgrades of $80,000 in 2029 to remain competitive
The direct answer is hospitality staff grows from 6 to 12 FTEs and technicians from 2 to 5 FTEs by 2030 Management roles remain constant and payroll must scale with reservations to protect service quality and equipment uptime
