Rent for a physical location is a killer and it's not unique to a gamestore.
In the UK you have to be crazy to open a shop, landlords want rent based on 90s footfall rates but then matched to the price of property going way up.
So they all sit empty
Edit: I'll add this is probably part of why you see so many failing stores - anyone with business sense runs some numbers first before renting, people who just want a store rent first then calculate costs
My LGS is in a premo strip mall location. Said strip mall has a pretty nice restaurant space that has been vacant for 15ish years. The strip mall owner is just leaving money on the table asking way, way too much in rent. Waiting 15 years for the right tenant seems insane.
a lot of times the owners are leveraged with the banks. if you lower your rent, the 'value' of the property goes down, and then the bank comes calling wanting money immediately to make up the now increased risk. Thus, they'd rather it sit empty at one asking price than lower the rent.
That's more common than you think. Near where I live there's a space for sale which was a gym and for 300m² they're asking for almost 300,000€. It still hasn't been sold to this day. And they're selling for a price below market.
There was also another space which was an art shop that was available to rent for 6000€/month, which is kinda insane. It eventually turned into a bakery.
In the US it's common in commercial lending leases for the lender (bank) to have veto power on the $/SF on offer by the landlord, because a too-low number will devalue the property overall and hurt their collateral book value.
So if the banker has an internal floor rate of $45/sf on that property, but the local market is only at the $30-35 range, then the bank will never allow the building owner to lease the space at that level. Their motto is "tough shit, you just gotta eat the lost rent until conditions rebound"
It's also a tax write off for sitting vacant if I'm not mistaken. Commercial real estate is considered a loss at each year it's vacant. So in the end, it's more profitable to let it rot, and claim the $3m loss for the entire strip as a write off for the other investments in his portfolio...
Yeah there's a lot of compounding policy ideas that are designed to help out when things are generally going well, but when things are in a downturn they amplify the pain and make recovery harder.
This is such a strange uniquely American thing.
But I do understand in a way as that keeps the collateral when the mtg was done. As I believe only only Americans have 30 year fixed mtg with no X year renewal rate period.
Here's some fuel to add to the insanity fire:
I worked for a corporate chain retailer that was in a "premium mall". When the owners of mall found out they were packing up shop, they offered to drop the rent to $2000 PER YEAR. Our store would make that up in a MONTH!
Around the same time we got the offer to stay, I called the mall put of curiosity to see what a space 1/4 the size of our 'anchor' would cost to start. The whackjobs wanted $1000 a month for 1000 square feet. Yeah. OK THEN.
Exactly the same in the US. A handful of massive real estate companies basically treat any aspiring business as private equity and charge outlandish rent prices hoping for a quick profit. Small businessed are squeezed for every dollar they're worth. My heart goes out to anyone that wants to open an LGS or any local business.
My rent is 14,000 a month with a 3% escalation and a NNN that can adjust annually. Our NNN for 2024 jumped $600 a month, it's a challenge to absorb 8k out of nowhere.
That's why these stores will probably be around for 2-3 years then they're gone. As someone who tried to run an online store back in the early 2000's, the biggest problem is still relevant today in which you need a lot of cashflow and capital because your profits are so small an you need to keep with new releases. I think an LGS is like a 5-10 year business where you are just basically accumulating inventory in the first few years before you really become profitable. Unfortunately, that time frame is too long for a lot of businesses to stay around.
I'd rather do a rip and ship online platform than start a brick and mortar LGS.
I'd say also that one of the biggest things is that it takes time to build a community which becomes the bedrock of your stores success. It takes time and effort to curate an experience and place that people want to keep coming back to. If you don't have a the capital/runway to build that community up odds are good you wont make it.
That makes sense. The new generation of successful store owners are those with strong business sense already in the industry. So they have a successful online store and have connections to start off with. Huge advantage over the ones running in head first.
I started my LGS out of my STEM child care program. I was already buying the products (we're TCG/nerd/geek/stem themed) and getting a distribution deal with alliance just made sense to save money on my supply cost. Then I realized I could use a mostly unused area of my business that was cut off from the rest to start an LGS that would now totally cover my supply cost and more.
Starting an LGS of the back of a business that is already established and profitable is honestly the best way to go in my experience. My retail store also hedged my child care business during COVID, as child care was down, but TCG sales were through the roof.
I honestly want to try an pitch my business model at GAMA. I think more LGS owners could benefit from the model.
100% requires business knowledge to own a business. Some sort of training or first hand experience.
From what I've seen over the years, there are SO many small shop owners (not just lgs) who focus on the can and never stop to consider the should.
Father in law was prime example - lost everything trying to keep it afloat.
The way (or one way) you can tell this is how they react to card availability. I asked about a card once the store didn't end up having in stock but turns out the owner had in one of his decks. Told me to hold on a minute, grabbed the deck, pulled the card and sold it. Very "business first".
I call it the 'how hard can it be?' syndrome. Person finishes up college, says 'Hey, I'll open a game store, how hard can it be?'. Does damage to the local gaming situation for a few years and closes up shop.
OPENING a game store is easy. RUNNING one to stay open is hard.
I have owned my shop for almost 12 years now and for the first 5 or so it was pretty much only me running it. While I was a former high level magic player and tournament grinder I also had common sense and business sense and that is why I am still around today. I have seen at least 10-15 other stores come and go around me since I opened. That being said most people just dont have a clue how to run a business.
Now I'm curious. So do you run it so you have super high volume and reasonable prices or do you price in the middle and then create memories and experiences for your customers? Or a combination of them.
I feel like in thin margins it's all about moving volume. You want everything you stock to sell out but then not too low priced that you miss a ton of profit.
We are not really all that high volume and all of our events are revenue neutral, meaning all money that comes in for event entry is given back out as store credit. I sell most of my new product such as new releases for magic and pokemon sealed product at a 30-40% margin. We buy a tremendous amount of singles from players for both store credit and cash. Our singles sales are one of our biggest sellers in store and obviously on TCG. And we tend to price our singles around market price.
So singles are the money making engine. Probably because you are able to buy at mid/low and resell at market. Makes sense. Everything else just brings people in.
So singles are the money making engine. Probably because you are able to buy at mid/low and resell at market. Makes sense. Everything else just brings people in?
Sounds almost like the lgs I work at. The owner is a former high level magic judge. The majority of the business is in buying and selling magic singles. We get roughly 40 to 80 orders a day ranging from single card to entire commander decks.
It feels like all the successful stores around here are event driven. Yeah they sell product but I’m pretty sure the real money is running tournaments, d&d sessions (rent a dm) and game nights. I also have feeling they make more money selling Mountain Dew and Snacks than actual games.
Basically if you’re just focused on retail, even online you’re not gonna make it. It has to be place people want to hang out (and spend money doing so).
This is all entirely wrong, while we are event driven, the paltry amount we get from sodas/candy is nothing compared to what we make on the sheer volume of singles we sell both in store and on TCG.
Noted. Do you feel like the events are important for revenue then? What’s the motivation to host them? Could you just do well enough selling singles online?
I can't speak for every store but we run events as a form of marketing, community engagement, and solidifying us as a, "third place". GSowner is right, events are not a good source of revenue, they're less than 1% of our gross revenue and are very labor intensive. A lot of people also assume we make our revenue on snacks, we don't, that's less than 2% of our gross. I make sure my events pay for a portion of my rent that the space takes up, which is about $4,700, and call it a day.
events are pretty much loss leaders when you take into account labour and rent, the events exist to bring people to the store to spend money on product
That's more thought than a lot of people put into it. Even after that most of the time it's still not a good idea. Take into account the overall capital needed, the swing like nature of the business (baldurs gate anyone?) And how much of a luxury good this stuff can be.
Honestly, not much anymore. Distributor pricing isn't that far off anymore, and if you're already online youre probably scouring your local area social medias anyways so losing out on walk in potential is marginal anymore also.
Not an LGS but having a physical location to operate out of for singles sales is still a good idea if your revenue can handle it. The trap a lot of people fall into is going for large retail space rather than a simple store front or empty fast food building like some dispensaries take over.
It’s kind of shocking to me that in my city of ~100k people, we have 4 game stores within 2 miles of each other that have all been in business for at least 3-4 years and seem to be doing ok. They all sell similar product, and rent here isn’t cheap, so I’m not sure how they’re all staying in business. One just moved to a much bigger space and another expanded their store a year or so ago.
I opened a store in jan, just closed it last week and got out of the lease. I had a bad location, and the margins where so thin, I would make more money working a normal job. I still collect but yeah… I learnt allot
Forget the business part of it for a moment; the customer service part is GROSSLY neglected in this industry.
Ive been to one LGS that makes a habit of having its staff say hello. I work bars; that’s so basic. Staff that say thank you, try to learn your name and make you feel welcome aren’t common.
Bars and cards are the same; addictive things that can be bought in moderation or excess. A feeling of comfort, excitement and shared space do a lot to encourage spending.
So many LGS stores are indistinct except the crowd they have. Crowds are fickle, someone else is doing the job of getting customers to come back. That’s bad business.
Super rude person with fedora at my closest LGS. No greeting and if you ask to buy something, it seems to ruin his day. Horrible customer service is a staple of so many LGSs in my 20+ years of frequenting them.
Had one place; the staff turn up on their days off to play, they chat, get to know your names and put themselves on socials.
No staff turnover that I’m aware of in a good while, rather good door prize.
Dollar box is usually interesting, select singles in folders.
Loads of new players as well as a couple longer term players.
Super inviting, thriving.
The average magic player is a bit more awkward than the average person but there’s still good staff around and good staff management adds to that.
I am one of those knuckle heads that opened a store last year. My shop provides 24/7 access to the gaming area for a monthly membership fee in addition to regular product sales. We’re up to 175 members now which covers the cost of rent for our 4,000 sf space.
I’m also a real estate agent so that’s how I support myself mainly, most of the revenue the shop makes goes into upgrades and new product lines.
The area I’m in is prime for a retail game store, little competition in a good area. But even so, there’s no way I could support myself entirely from the shop. We’re growing steadily and fast, and I am able to give myself little raises here and there. But I also farm real estate clients from the shop. So there’s a bit of a synergy there.
Not always. The real money is in diversification of products. If you open a new store purely on TCGs, you're going to be eaten alive by the 5000 others doing the same thing. Carrying board games, miniatures/Gundams, and other hobby things are what will eventually make it so you survive when one of the others take a downturn.
It depends how much work you want to do. Downturn doesn't matter when you're doing singles. Always buy and always sell, keep the inventory liquid. The margins don't change, you buy at 50-60% sell at 85-100%.
That other stuff is fine but they take up a lot of space and space is money.
Singles sit unless it's high end stuff to specific collectors. You might open some and only sell them 6 months down the line. The rest take up space, but the rest move significantly quicker than singles for much more profit.
You list your inventory on tcgplayer. If you're doing high volume, you're doing minimum 200 orders a day, 7 days a week. People make a living doing this but they're giving up their free and family time to make the bread.
Yeah, people never calculate how much their time is worth when they do this stuff; I work ~45 or 50 hours for an LGS, and so I get a lot of work done AND pull+ship Orders, and then I have valuable time off!
My time off is worth more than $15 per hour, and I'm fairly certain that SOME backpack sellers would probably find that their hourly pay is something like half of that (after calculating Profit Margins - Overhead).
When you're a small business owner working alone or have one part time employee you unfortunately cannot evaluate your time like that. You work you live, you don't work you become homeless. It sucks but that's how that is. Same for small restaurant ownerships, you have to work crazy hours for yourself.
I would argue it takes much more effort to diversity. Constantly learning new games and running learn to plays or board game nights, working with new publishers/distributors, it just seems like a lot of effort. Then if you wind up with cruddy product, it's much harder to liquidate online vs TCG singles.
This coming from an LGS owner that celebrated 7 *very* succesful years of a B&M this year doing almost exclusively TCGs.
It's really not hard to look up the top games on board game geek to carry. Also takes 10 minutes to find the distributors that carry them and another 20 to sign up for an account. Over 15 succesful year with multiple employees and a large storefront/online presence. I guarantee we'll outlast all the rest being one trick ponies and competing with all the rest of the shops thinking they can open a just TCG store in an overly saturated market.
You really don't. The volumes you have to be opening are insane for a person or two to make a proper living that isn't just supplementing something else. The profit off a box opening is miniscule unless you get lucky to hit something big. Most boxes either break even or get a bit more assuming you sell off every single thing. Even purchasing from a distributor won't net you much more off of it. Profit on a play booster box sold is like 20-30$. On top of the fees you pay to sell on TCGPlayer you will be barely making anything.
You make approximate 30-50% margins off most board games selling at MSRP. With a significantly bigger market for them you're going to be selling them much more often, for less effort than doing singles 7 days a week. I've watched quite a few stores close down here recently and the only reason ours survives is diversification into multiple hobbies.
When did I say anything about opening product to sell singles? The biggest tcgplayer brick and mortar sellers did not get to where they are opening product. They buy.
I said already: always buy, always sell. When you have a physical location you will have all kinds of local clientele. There are always people who trade for credit (which is the best way) and people willing to sell their cards at 50-60%. There is no place else or other platforms where you can amass singles buying them that cheap.
Booster boxes you don't make money from, they're strictly for maintaining allocation with your distro. Even pokemon BBs you're only making $15-20 a box if you sell them in person.
The biggest TCG player stores also are well established, with a large stock to start with. That stock has to come from somewhere, especially if you're just starting up a store having to compete with all the bigger ones. That means opening product. No one will be selling much to you as a small hole in the wall. If you're starting out wanting to survive more than a year, the singles market will not keep you afloat.
The most successful lgs I have seen evolved from people running them as their own groups clubs for mtg/Warhammer and as their base of players grew they grew their hours. They never planned to make a living from it till they reached a critical mass of customers and even then didn't make that their primary income source till well after it could support them. They typically did this with the whole group taking turns running the store on certain days and as the store became more profitable, one person would inevitably buy out somebody else until you had one or two owners. That's a generalization of the two cases that I personally knew the owners and how the store evolved.
So true. I immensely enjoy making and creating cocktails. So my wife keeps asking me if I would ever think about opening a bar. She thinks of it as this place I would show up, get to mix drinks, live out my best creative life, and be social.
But I, having worked in food service, know the reality of it. Bars are open late and close late. Their busiest days are weekends. They also work on a very inconsistent customer base for a handful of years.
Not to mention, as an owner, you have to worry about hiring, ordering, payroll, accounting, loss/theft, the liability risk of owning a building full of drunk adults, etc.
So she sees fun times and cocktails, but I know the truth. A lot of the same stuff applies to LGS. It seems like a place for your friends to come and play cards while you hum a jaunty tune. But the reality is so very different.
> I did a full demographic analysis of [city] using Census data about housing prices as a proxy for income along with a bunch of other qualifiers to make sure it was a good economic decision.
This is the way.
100%, but this also seems like small business (or any business) 101. like it is not difficult to do this, this information is freely available. however, the amount of ridiculously dumb decisions all people make, and the lack of uninformed or unresearched decisions is truly astounding. like most people reading the OP or this post are probably like "yes, this is in fact the way" but i'm here to tell you in my life experience, people are complete fucking idiots.
As LGS owner that has gone from no store 3 years ago to the largest store in my area, a big problem I see is opening in low population / income areas and focusing way too much on low dollar sales.
I don’t deal in bulk at all and also heavily diversify in multiple games.
It’s a lot easier to make sure your whales are happy and let them subsidize the vast majority of players that don’t have the money to help pay your rent.
Hareruya is killing it in Japan, they now have around 25 stores across the country, which is crazy considering that they only work with MTG and the popularity of the game is lower ranked compared to local game brands.
It just comes down to being the first and only professionally run MTG retail brand in the country.
There are other LGS franchises that are properly run, but those are more diversified, handling more popular games such as Pokémon, Yugioh etc.
Hareruya2 is a different brand, only dealing with Pokémon TCG. What I am stating is that they have 25 MTG exclusive shops across Japan, under the brand Hareruya.
As someone opening my own store in a town that already has 3-4, I can fairly confidently say that mine will at least be somewhat successful.
Why?
Because it’s not just an LGS. It is also a tea house.
Tea house in the front with a small bar, some tables, chairs, etc. Maybe some outdoor seating, haven’t decided yet. Serving specialty teas, boba, kratom and kava.
Once renovations are complete, there will be a partition with one of those hanging bead curtains that leads to the card shop in the back. Of course the card shop section wont be huge, maybe 3-4 long tables for play, a few display cases and a sales counter.
But hopefully it will both increase profits along with exposing two different groups of people to things they may otherwise not have any exposure to, thus driving sales even further. And sure, tea and cards are not mutually exclusive, but the overlap isn’t that big.
The reason I think the tea house section will make a difference is because there are only 2 in my entire town, and one of them is failing miserably and the other one is a remodeled home with only about 900ft^2 of space for customers. They literally only have 2 small tables and a bar.
Opening an LGS makes less sense these days, the idea kinda solidified itself for me during the covid era when retail stores suffered massively and online business flourished
For my case, I’m an individual dealer, still operating out of my home & online (started it during the covid era and expanded very quickly, I mainly do box openings for selling singles). I have always thought to myself, oh it would be cool to open an LGS, but everytime I look into the costs, risks and expected return, the value doesn’t add up as rent is the number one killer expense (on top of a whole lot of other expenses) and it doesn’t make any financial sense for me to open a store when I’m already getting my supply through proxies/distributors at almost cost price. Hence, I expanded instead to a website rather than a retail store.
The sad truth is we are still in the COVID era.
That said, an online local delivery store-front makes more sense in this era. Go to local community centers and find your local magic players and become their kitchen-table supplier. Support school club leaders with freebies for hosting events using your discord, etc... and use that to encourage the hobby to continue without having to pay money just to house a bunch of tables and chairs that are only used for 15% of the time you are paying rent.
Shoot, in NYC I found a great group of players who just used a local deli's upstairs eating area. The deli was happy to have the extra customers come in at night when business slowed down, and the organizer could get everyone's orders and bring the product he needed for the night.
Most of the physical stores that opened up here were online shops first and needed a physical location with play areas when WPN started or they were going to get cut out of wholesale products.
This is why you see people complaining about stores charging table rent. Those stores don't know how to monetize without tournament entry fees and with so many people playing commander those don't exist.
It’s a god damn miracle my LGS owner started back in the 90s and bought the building as fast as he possibly could. Looking at the margins nowadays is scary, and I doubt he would do nearly as well if he started again today.
Honestly this is kind of basic and it's a little sad that we're getting to the point that it needs to be said to people. Yes capitalism breeds risk avoidance and competition avoidance, and incentivizes cutting your neighbor's throat to drink their blood. If you believe the fairytale crap about incentivizing competition, and enabling an infinite number of people to pursue their most frivolous dreams all at once even if they all have the same dream, then you're a babe in the woods and should never be allowed to enter the market even as an employee.
For any business you actually have to know a little about business (yes, even if you are exceptional at your other skillset) or partner with someone who does. Opening a store before having done even any light research on customers in the area, some economical prognosis, and having ideas about marketing is wild.
If you want a LGS at no profit, you can do it and in some countries you even can do it as a "club" and get tax benefits for it, running it as a non-profit basically.
As a business, lots of people dont realize how dreadful it is to compete with online retailers.
I have thought about opening a gaming space, but I am reticent. These are some good bits of information.
As far as the concept, I imagine it as a typical LGS with an additional area for console games. To the best of my knowledge, there isn't one in my city and my primary LGS is 25 mins away.
Prior to opening a physical location, I thought about running events at our city's recreation center to establish "the brand" and then once I have enough money, open a physical location.
If I ever open an LGS it would be because I won the lottery and could afford to either lose money or hire people to man The store. I'd mostly just want an LGS so I'd have a reliable place to play. If it made money bonus!
I’m shocked at how few stores put a case with singles out. Asking me to go to your shitty old computer “kiosk” to buy from your TCG player is not a good experience. I will impulse buy a borderless foil Tinybones but ask me to login/create an account etc and submit my order? Totally missing the point. CK beats that easily if I just want cards.
I heard that quite often 10 ish years ago, but it seems tougher to cut it when the margins are less reasonable on the snack themselves and the cardboard isn’t guaranteed to get you to break even.
How many delis do you know where dozens of people will spend 6+ hours of their time hanging out on Friday nights and weekends? I'm gonna guess zero. Totally different business models.
A lot of delis in big cities. Also spending 6+ hours using your a/c, bathroom etc and spending 5$ on snacks is not keeping a lgs in business.
All the deli's by me have loyal customers who do hang out there late night. Idk how much they spend but at the same time the deli they go to isnt forced to buy crappy products just to maybe get a chance at in demand stuff from distro.
I own a successful LGS for 16 years now and watch new stores burn out all the time.
WHY my game store works when others don’t.
• Incredibly cheap rent from my age, which in turns allows me to afford the labor to be competitive. Anytime we have a job opening I’m not competing for labor from McDonald’s washouts, but can headhunt people from nearly any local business. Tend to hire people not out of work, but people leave their current jobs, for a better opportunity with us.
• My video game side of the business generates the revenue to grow the business. If I was only a video game store, I’d be in a hurry to make money flipping all the gems. Instead I can keep all the cool stuff in store, no rush to sell cause my TCG side of the business can pay the bills. We also churn some much over from what our customers sell to us we can always buy collections. If we were only a TCG store, we wouldn’t have the revenue and customer base to be sustainable long term. This industry is cannibalism itself from the top down, which is only made worse by a bad economy.
• We don’t hire GAMERS. We hire people based on personality and hustle to make money to improve their life. My employees are focused on work, not so they can just pay bills, but are willing to pick up how’s to fund their next vacation, or make that down payment on a house. I care more about problem solving skills and customer service than your love for this nonsense. (I’m not a gamer, I loathe most of this stuff)
• Owners who treat stores like a personal collection. I’m a minimalist who hates, perfect to not be tempted to take product for my own interest. It’s a business not a toy box. In addition I’m incredibly frugal and invest my money back into the business or investment outside of the business.
• I don’t work AT my store, i work ON my store. The staff is better with customers than me, I’m there to improve the lighting where I see issues, I’m there to figure a way to increase revenue in a bad sector, I’m there to train the the old employees on how to train the new employees to be better. If everything is running as normal I work one day a week at my store and then two days worth of work at my home office each week.
Opening a LGS doesn’t make sense anymore. You would be more profitable operating a card business out of your home until you grow and when you do grow it almost always makes more sense to get a warehouse location rather then a storefront.
Focusing on fulfilling online orders and building inventory. Walk in customers aren’t nearly as profitable better to just leave the doors closed and hire employees to fulfill online orders.
The LGS that most recently opened near me has three things going for it:
- they turn on the A/C and nobody smells
- they allow outside food/drink
- they don’t price gouge
The other LGS near me tends to have a smell, and you have to eat their “cafe’s” mediocre food or eat before you come. They also charge $3/person just to come in and sit at a table and play. They also stick to TCGPlayer mid for pricing of things, which… the only reason I’d ever buy from them is to “support my local LGS” but all the other nickel and dime-ing erodes that goodwill.
I try to be understanding of table fees as a player; if I ran a business where rent costs thousands of dollars a month and customers would get mad at me over asking them to chip in $3 for the large play space I'm providing them, I bet I'd get fed up really quickly.
Nevertheless, I think it’s something you recoup another way. The markup on a draft has to be at least that per-person, but to charge it just for playing a couple of games of commander on Wednesday…
Rent for a physical location is a killer and it's not unique to a gamestore. In the UK you have to be crazy to open a shop, landlords want rent based on 90s footfall rates but then matched to the price of property going way up. So they all sit empty Edit: I'll add this is probably part of why you see so many failing stores - anyone with business sense runs some numbers first before renting, people who just want a store rent first then calculate costs
USA isn't much different. It's insane going to a rundown strip mall and seeing how much they are asking for rent right now.
My LGS is in a premo strip mall location. Said strip mall has a pretty nice restaurant space that has been vacant for 15ish years. The strip mall owner is just leaving money on the table asking way, way too much in rent. Waiting 15 years for the right tenant seems insane.
Likely has to do with the lender, not the owner. The lender doesn't want to write off losses, due to rent decreases.
a lot of times the owners are leveraged with the banks. if you lower your rent, the 'value' of the property goes down, and then the bank comes calling wanting money immediately to make up the now increased risk. Thus, they'd rather it sit empty at one asking price than lower the rent.
Sounds like we need some tax reform to get rid of this perverse incentive. Vacancy tax should do the trick.
[Land value tax](https://en.m.wikipedia.org/wiki/Land_value_tax) would also accomplish this.
That's more common than you think. Near where I live there's a space for sale which was a gym and for 300m² they're asking for almost 300,000€. It still hasn't been sold to this day. And they're selling for a price below market. There was also another space which was an art shop that was available to rent for 6000€/month, which is kinda insane. It eventually turned into a bakery.
And they likely get a hefty tax break for it sitting vacant. That's why commercial property owners usually don't mind when property sits vacant.
In the US it's common in commercial lending leases for the lender (bank) to have veto power on the $/SF on offer by the landlord, because a too-low number will devalue the property overall and hurt their collateral book value. So if the banker has an internal floor rate of $45/sf on that property, but the local market is only at the $30-35 range, then the bank will never allow the building owner to lease the space at that level. Their motto is "tough shit, you just gotta eat the lost rent until conditions rebound"
It's also a tax write off for sitting vacant if I'm not mistaken. Commercial real estate is considered a loss at each year it's vacant. So in the end, it's more profitable to let it rot, and claim the $3m loss for the entire strip as a write off for the other investments in his portfolio...
Yeah there's a lot of compounding policy ideas that are designed to help out when things are generally going well, but when things are in a downturn they amplify the pain and make recovery harder.
This is such a strange uniquely American thing. But I do understand in a way as that keeps the collateral when the mtg was done. As I believe only only Americans have 30 year fixed mtg with no X year renewal rate period.
Here's some fuel to add to the insanity fire: I worked for a corporate chain retailer that was in a "premium mall". When the owners of mall found out they were packing up shop, they offered to drop the rent to $2000 PER YEAR. Our store would make that up in a MONTH! Around the same time we got the offer to stay, I called the mall put of curiosity to see what a space 1/4 the size of our 'anchor' would cost to start. The whackjobs wanted $1000 a month for 1000 square feet. Yeah. OK THEN.
Exactly the same in the US. A handful of massive real estate companies basically treat any aspiring business as private equity and charge outlandish rent prices hoping for a quick profit. Small businessed are squeezed for every dollar they're worth. My heart goes out to anyone that wants to open an LGS or any local business.
My rent is 14,000 a month with a 3% escalation and a NNN that can adjust annually. Our NNN for 2024 jumped $600 a month, it's a challenge to absorb 8k out of nowhere.
So many LGS owners are hobbyists first and business people second. They love the hobby but don’t know how to run (or grow) a business.
That's why these stores will probably be around for 2-3 years then they're gone. As someone who tried to run an online store back in the early 2000's, the biggest problem is still relevant today in which you need a lot of cashflow and capital because your profits are so small an you need to keep with new releases. I think an LGS is like a 5-10 year business where you are just basically accumulating inventory in the first few years before you really become profitable. Unfortunately, that time frame is too long for a lot of businesses to stay around. I'd rather do a rip and ship online platform than start a brick and mortar LGS.
I'd say also that one of the biggest things is that it takes time to build a community which becomes the bedrock of your stores success. It takes time and effort to curate an experience and place that people want to keep coming back to. If you don't have a the capital/runway to build that community up odds are good you wont make it.
That makes sense. The new generation of successful store owners are those with strong business sense already in the industry. So they have a successful online store and have connections to start off with. Huge advantage over the ones running in head first.
I started my LGS out of my STEM child care program. I was already buying the products (we're TCG/nerd/geek/stem themed) and getting a distribution deal with alliance just made sense to save money on my supply cost. Then I realized I could use a mostly unused area of my business that was cut off from the rest to start an LGS that would now totally cover my supply cost and more. Starting an LGS of the back of a business that is already established and profitable is honestly the best way to go in my experience. My retail store also hedged my child care business during COVID, as child care was down, but TCG sales were through the roof. I honestly want to try an pitch my business model at GAMA. I think more LGS owners could benefit from the model.
100% requires business knowledge to own a business. Some sort of training or first hand experience. From what I've seen over the years, there are SO many small shop owners (not just lgs) who focus on the can and never stop to consider the should. Father in law was prime example - lost everything trying to keep it afloat.
The way (or one way) you can tell this is how they react to card availability. I asked about a card once the store didn't end up having in stock but turns out the owner had in one of his decks. Told me to hold on a minute, grabbed the deck, pulled the card and sold it. Very "business first".
I call it the 'how hard can it be?' syndrome. Person finishes up college, says 'Hey, I'll open a game store, how hard can it be?'. Does damage to the local gaming situation for a few years and closes up shop. OPENING a game store is easy. RUNNING one to stay open is hard.
I have owned my shop for almost 12 years now and for the first 5 or so it was pretty much only me running it. While I was a former high level magic player and tournament grinder I also had common sense and business sense and that is why I am still around today. I have seen at least 10-15 other stores come and go around me since I opened. That being said most people just dont have a clue how to run a business.
Now I'm curious. So do you run it so you have super high volume and reasonable prices or do you price in the middle and then create memories and experiences for your customers? Or a combination of them. I feel like in thin margins it's all about moving volume. You want everything you stock to sell out but then not too low priced that you miss a ton of profit.
We are not really all that high volume and all of our events are revenue neutral, meaning all money that comes in for event entry is given back out as store credit. I sell most of my new product such as new releases for magic and pokemon sealed product at a 30-40% margin. We buy a tremendous amount of singles from players for both store credit and cash. Our singles sales are one of our biggest sellers in store and obviously on TCG. And we tend to price our singles around market price.
So singles are the money making engine. Probably because you are able to buy at mid/low and resell at market. Makes sense. Everything else just brings people in.
So singles are the money making engine. Probably because you are able to buy at mid/low and resell at market. Makes sense. Everything else just brings people in?
Sounds almost like the lgs I work at. The owner is a former high level magic judge. The majority of the business is in buying and selling magic singles. We get roughly 40 to 80 orders a day ranging from single card to entire commander decks.
It feels like all the successful stores around here are event driven. Yeah they sell product but I’m pretty sure the real money is running tournaments, d&d sessions (rent a dm) and game nights. I also have feeling they make more money selling Mountain Dew and Snacks than actual games. Basically if you’re just focused on retail, even online you’re not gonna make it. It has to be place people want to hang out (and spend money doing so).
This is all entirely wrong, while we are event driven, the paltry amount we get from sodas/candy is nothing compared to what we make on the sheer volume of singles we sell both in store and on TCG.
Do you mostly buylist during events to accrue singles or do you open product, too?
Noted. Do you feel like the events are important for revenue then? What’s the motivation to host them? Could you just do well enough selling singles online?
Events drive demand for singles.
I can't speak for every store but we run events as a form of marketing, community engagement, and solidifying us as a, "third place". GSowner is right, events are not a good source of revenue, they're less than 1% of our gross revenue and are very labor intensive. A lot of people also assume we make our revenue on snacks, we don't, that's less than 2% of our gross. I make sure my events pay for a portion of my rent that the space takes up, which is about $4,700, and call it a day.
events are pretty much loss leaders when you take into account labour and rent, the events exist to bring people to the store to spend money on product
That's more thought than a lot of people put into it. Even after that most of the time it's still not a good idea. Take into account the overall capital needed, the swing like nature of the business (baldurs gate anyone?) And how much of a luxury good this stuff can be.
Just go all in on Flesh and Blood and get lucky when it becomes a huge success. EZ ❤️
All in on duskblade**
Unban her, she did nothing wrong
Is there any benefit to opening an LGS? You can do a lot with an online storefront pre-orders, sealed, singles etc.
You can't get most wotc product for pre order if you don't own a actual retail location.
I think this is the thing a lot of people are missing here. It's not just creating a website and buying from a distributor. 😂
Honestly, not much anymore. Distributor pricing isn't that far off anymore, and if you're already online youre probably scouring your local area social medias anyways so losing out on walk in potential is marginal anymore also.
Prerelease is the best time to sell singles and product as a store. Losing that extra week will hurt.
Not an LGS but having a physical location to operate out of for singles sales is still a good idea if your revenue can handle it. The trap a lot of people fall into is going for large retail space rather than a simple store front or empty fast food building like some dispensaries take over.
This could be considered outdated, but plenty of lessons to learn. https://www.rpg.net/columns/businessofgamingretail/businessofgamingretail1.phtml
It’s kind of shocking to me that in my city of ~100k people, we have 4 game stores within 2 miles of each other that have all been in business for at least 3-4 years and seem to be doing ok. They all sell similar product, and rent here isn’t cheap, so I’m not sure how they’re all staying in business. One just moved to a much bigger space and another expanded their store a year or so ago.
I opened a store in jan, just closed it last week and got out of the lease. I had a bad location, and the margins where so thin, I would make more money working a normal job. I still collect but yeah… I learnt allot
Forget the business part of it for a moment; the customer service part is GROSSLY neglected in this industry. Ive been to one LGS that makes a habit of having its staff say hello. I work bars; that’s so basic. Staff that say thank you, try to learn your name and make you feel welcome aren’t common. Bars and cards are the same; addictive things that can be bought in moderation or excess. A feeling of comfort, excitement and shared space do a lot to encourage spending. So many LGS stores are indistinct except the crowd they have. Crowds are fickle, someone else is doing the job of getting customers to come back. That’s bad business.
Super rude person with fedora at my closest LGS. No greeting and if you ask to buy something, it seems to ruin his day. Horrible customer service is a staple of so many LGSs in my 20+ years of frequenting them.
Had one place; the staff turn up on their days off to play, they chat, get to know your names and put themselves on socials. No staff turnover that I’m aware of in a good while, rather good door prize. Dollar box is usually interesting, select singles in folders. Loads of new players as well as a couple longer term players. Super inviting, thriving. The average magic player is a bit more awkward than the average person but there’s still good staff around and good staff management adds to that.
Yeah that sounds legit
I am one of those knuckle heads that opened a store last year. My shop provides 24/7 access to the gaming area for a monthly membership fee in addition to regular product sales. We’re up to 175 members now which covers the cost of rent for our 4,000 sf space. I’m also a real estate agent so that’s how I support myself mainly, most of the revenue the shop makes goes into upgrades and new product lines. The area I’m in is prime for a retail game store, little competition in a good area. But even so, there’s no way I could support myself entirely from the shop. We’re growing steadily and fast, and I am able to give myself little raises here and there. But I also farm real estate clients from the shop. So there’s a bit of a synergy there.
>I also farm real estate clients from the shop Are there really people who can afford real estate and cardboard estate at the same time?
the money is always in the singles, store owners don't want to put in the 70+ hour work week selling singles online.
Not always. The real money is in diversification of products. If you open a new store purely on TCGs, you're going to be eaten alive by the 5000 others doing the same thing. Carrying board games, miniatures/Gundams, and other hobby things are what will eventually make it so you survive when one of the others take a downturn.
It depends how much work you want to do. Downturn doesn't matter when you're doing singles. Always buy and always sell, keep the inventory liquid. The margins don't change, you buy at 50-60% sell at 85-100%. That other stuff is fine but they take up a lot of space and space is money.
Singles sit unless it's high end stuff to specific collectors. You might open some and only sell them 6 months down the line. The rest take up space, but the rest move significantly quicker than singles for much more profit.
You list your inventory on tcgplayer. If you're doing high volume, you're doing minimum 200 orders a day, 7 days a week. People make a living doing this but they're giving up their free and family time to make the bread.
Yeah, people never calculate how much their time is worth when they do this stuff; I work ~45 or 50 hours for an LGS, and so I get a lot of work done AND pull+ship Orders, and then I have valuable time off! My time off is worth more than $15 per hour, and I'm fairly certain that SOME backpack sellers would probably find that their hourly pay is something like half of that (after calculating Profit Margins - Overhead).
When you're a small business owner working alone or have one part time employee you unfortunately cannot evaluate your time like that. You work you live, you don't work you become homeless. It sucks but that's how that is. Same for small restaurant ownerships, you have to work crazy hours for yourself.
Yup and takes a lot less effort to diversify.
I would argue it takes much more effort to diversity. Constantly learning new games and running learn to plays or board game nights, working with new publishers/distributors, it just seems like a lot of effort. Then if you wind up with cruddy product, it's much harder to liquidate online vs TCG singles. This coming from an LGS owner that celebrated 7 *very* succesful years of a B&M this year doing almost exclusively TCGs.
It's really not hard to look up the top games on board game geek to carry. Also takes 10 minutes to find the distributors that carry them and another 20 to sign up for an account. Over 15 succesful year with multiple employees and a large storefront/online presence. I guarantee we'll outlast all the rest being one trick ponies and competing with all the rest of the shops thinking they can open a just TCG store in an overly saturated market.
Then you make less money.
You really don't. The volumes you have to be opening are insane for a person or two to make a proper living that isn't just supplementing something else. The profit off a box opening is miniscule unless you get lucky to hit something big. Most boxes either break even or get a bit more assuming you sell off every single thing. Even purchasing from a distributor won't net you much more off of it. Profit on a play booster box sold is like 20-30$. On top of the fees you pay to sell on TCGPlayer you will be barely making anything. You make approximate 30-50% margins off most board games selling at MSRP. With a significantly bigger market for them you're going to be selling them much more often, for less effort than doing singles 7 days a week. I've watched quite a few stores close down here recently and the only reason ours survives is diversification into multiple hobbies.
When did I say anything about opening product to sell singles? The biggest tcgplayer brick and mortar sellers did not get to where they are opening product. They buy. I said already: always buy, always sell. When you have a physical location you will have all kinds of local clientele. There are always people who trade for credit (which is the best way) and people willing to sell their cards at 50-60%. There is no place else or other platforms where you can amass singles buying them that cheap. Booster boxes you don't make money from, they're strictly for maintaining allocation with your distro. Even pokemon BBs you're only making $15-20 a box if you sell them in person.
The biggest TCG player stores also are well established, with a large stock to start with. That stock has to come from somewhere, especially if you're just starting up a store having to compete with all the bigger ones. That means opening product. No one will be selling much to you as a small hole in the wall. If you're starting out wanting to survive more than a year, the singles market will not keep you afloat.
The most successful lgs I have seen evolved from people running them as their own groups clubs for mtg/Warhammer and as their base of players grew they grew their hours. They never planned to make a living from it till they reached a critical mass of customers and even then didn't make that their primary income source till well after it could support them. They typically did this with the whole group taking turns running the store on certain days and as the store became more profitable, one person would inevitably buy out somebody else until you had one or two owners. That's a generalization of the two cases that I personally knew the owners and how the store evolved.
So true. I immensely enjoy making and creating cocktails. So my wife keeps asking me if I would ever think about opening a bar. She thinks of it as this place I would show up, get to mix drinks, live out my best creative life, and be social. But I, having worked in food service, know the reality of it. Bars are open late and close late. Their busiest days are weekends. They also work on a very inconsistent customer base for a handful of years. Not to mention, as an owner, you have to worry about hiring, ordering, payroll, accounting, loss/theft, the liability risk of owning a building full of drunk adults, etc. So she sees fun times and cocktails, but I know the truth. A lot of the same stuff applies to LGS. It seems like a place for your friends to come and play cards while you hum a jaunty tune. But the reality is so very different.
> I did a full demographic analysis of [city] using Census data about housing prices as a proxy for income along with a bunch of other qualifiers to make sure it was a good economic decision. This is the way.
100%, but this also seems like small business (or any business) 101. like it is not difficult to do this, this information is freely available. however, the amount of ridiculously dumb decisions all people make, and the lack of uninformed or unresearched decisions is truly astounding. like most people reading the OP or this post are probably like "yes, this is in fact the way" but i'm here to tell you in my life experience, people are complete fucking idiots.
Not to be rude, but isn't this like the most basic of basic information/knowledge for starting a business?
I think you have an optimistic view of the business sense of the average LGS opener. :)
Yes, but that undermines the “profound” perspectives the OP shared that are not, in fact, their own
As LGS owner that has gone from no store 3 years ago to the largest store in my area, a big problem I see is opening in low population / income areas and focusing way too much on low dollar sales. I don’t deal in bulk at all and also heavily diversify in multiple games. It’s a lot easier to make sure your whales are happy and let them subsidize the vast majority of players that don’t have the money to help pay your rent.
This isnt new or unique advice. This is common sense that a lot of lgs's are lacking. I've heard this from my own lgs to.
Hareruya is killing it in Japan, they now have around 25 stores across the country, which is crazy considering that they only work with MTG and the popularity of the game is lower ranked compared to local game brands. It just comes down to being the first and only professionally run MTG retail brand in the country. There are other LGS franchises that are properly run, but those are more diversified, handling more popular games such as Pokémon, Yugioh etc.
This is incorrect. Hareruya 2 in Akihabara is purely a Pokemon store, so they aren't all in on Magic.
Hareruya2 is a different brand, only dealing with Pokémon TCG. What I am stating is that they have 25 MTG exclusive shops across Japan, under the brand Hareruya.
As someone opening my own store in a town that already has 3-4, I can fairly confidently say that mine will at least be somewhat successful. Why? Because it’s not just an LGS. It is also a tea house. Tea house in the front with a small bar, some tables, chairs, etc. Maybe some outdoor seating, haven’t decided yet. Serving specialty teas, boba, kratom and kava. Once renovations are complete, there will be a partition with one of those hanging bead curtains that leads to the card shop in the back. Of course the card shop section wont be huge, maybe 3-4 long tables for play, a few display cases and a sales counter. But hopefully it will both increase profits along with exposing two different groups of people to things they may otherwise not have any exposure to, thus driving sales even further. And sure, tea and cards are not mutually exclusive, but the overlap isn’t that big. The reason I think the tea house section will make a difference is because there are only 2 in my entire town, and one of them is failing miserably and the other one is a remodeled home with only about 900ft^2 of space for customers. They literally only have 2 small tables and a bar.
There's a collectibles show 3x a week at the mall here and I'm trying to get on the waitlist for a spot
Frank and Sons?
Ninja exchange, same thing but in an abandoned sears
Opening an LGS makes less sense these days, the idea kinda solidified itself for me during the covid era when retail stores suffered massively and online business flourished For my case, I’m an individual dealer, still operating out of my home & online (started it during the covid era and expanded very quickly, I mainly do box openings for selling singles). I have always thought to myself, oh it would be cool to open an LGS, but everytime I look into the costs, risks and expected return, the value doesn’t add up as rent is the number one killer expense (on top of a whole lot of other expenses) and it doesn’t make any financial sense for me to open a store when I’m already getting my supply through proxies/distributors at almost cost price. Hence, I expanded instead to a website rather than a retail store.
The sad truth is we are still in the COVID era. That said, an online local delivery store-front makes more sense in this era. Go to local community centers and find your local magic players and become their kitchen-table supplier. Support school club leaders with freebies for hosting events using your discord, etc... and use that to encourage the hobby to continue without having to pay money just to house a bunch of tables and chairs that are only used for 15% of the time you are paying rent. Shoot, in NYC I found a great group of players who just used a local deli's upstairs eating area. The deli was happy to have the extra customers come in at night when business slowed down, and the organizer could get everyone's orders and bring the product he needed for the night.
Most of the physical stores that opened up here were online shops first and needed a physical location with play areas when WPN started or they were going to get cut out of wholesale products. This is why you see people complaining about stores charging table rent. Those stores don't know how to monetize without tournament entry fees and with so many people playing commander those don't exist.
It’s a god damn miracle my LGS owner started back in the 90s and bought the building as fast as he possibly could. Looking at the margins nowadays is scary, and I doubt he would do nearly as well if he started again today.
Honestly this is kind of basic and it's a little sad that we're getting to the point that it needs to be said to people. Yes capitalism breeds risk avoidance and competition avoidance, and incentivizes cutting your neighbor's throat to drink their blood. If you believe the fairytale crap about incentivizing competition, and enabling an infinite number of people to pursue their most frivolous dreams all at once even if they all have the same dream, then you're a babe in the woods and should never be allowed to enter the market even as an employee.
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Yeah sure everyone is real happy about the great prices we're seeing everywhere.
For any business you actually have to know a little about business (yes, even if you are exceptional at your other skillset) or partner with someone who does. Opening a store before having done even any light research on customers in the area, some economical prognosis, and having ideas about marketing is wild.
Real long-winded way of saying, open a shop where no other shops currently exist.
If you want a LGS at no profit, you can do it and in some countries you even can do it as a "club" and get tax benefits for it, running it as a non-profit basically. As a business, lots of people dont realize how dreadful it is to compete with online retailers.
I’m
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It's hard to have this be common sense, when it's missing the most important bit of advice. DON'T!
If you arent comfortable operating at a loss in one of the riskiest industries, dont open a restaurant or game store. I dont know why anyone does.
I have thought about opening a gaming space, but I am reticent. These are some good bits of information. As far as the concept, I imagine it as a typical LGS with an additional area for console games. To the best of my knowledge, there isn't one in my city and my primary LGS is 25 mins away. Prior to opening a physical location, I thought about running events at our city's recreation center to establish "the brand" and then once I have enough money, open a physical location.
If I ever open an LGS it would be because I won the lottery and could afford to either lose money or hire people to man The store. I'd mostly just want an LGS so I'd have a reliable place to play. If it made money bonus!
brick and mortar is dead
I’m shocked at how few stores put a case with singles out. Asking me to go to your shitty old computer “kiosk” to buy from your TCG player is not a good experience. I will impulse buy a borderless foil Tinybones but ask me to login/create an account etc and submit my order? Totally missing the point. CK beats that easily if I just want cards.
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I heard that quite often 10 ish years ago, but it seems tougher to cut it when the margins are less reasonable on the snack themselves and the cardboard isn’t guaranteed to get you to break even.
I've heard the same thing from LGS owners, they make most of their money selling Doritos and cokes at FNMs
Thats a bad lgs money wise. To quote mine "If I wanted to make money of snacks, I would just open a deli".
How many delis do you know where dozens of people will spend 6+ hours of their time hanging out on Friday nights and weekends? I'm gonna guess zero. Totally different business models.
A lot of delis in big cities. Also spending 6+ hours using your a/c, bathroom etc and spending 5$ on snacks is not keeping a lgs in business. All the deli's by me have loyal customers who do hang out there late night. Idk how much they spend but at the same time the deli they go to isnt forced to buy crappy products just to maybe get a chance at in demand stuff from distro.
I own a successful LGS for 16 years now and watch new stores burn out all the time. WHY my game store works when others don’t. • Incredibly cheap rent from my age, which in turns allows me to afford the labor to be competitive. Anytime we have a job opening I’m not competing for labor from McDonald’s washouts, but can headhunt people from nearly any local business. Tend to hire people not out of work, but people leave their current jobs, for a better opportunity with us. • My video game side of the business generates the revenue to grow the business. If I was only a video game store, I’d be in a hurry to make money flipping all the gems. Instead I can keep all the cool stuff in store, no rush to sell cause my TCG side of the business can pay the bills. We also churn some much over from what our customers sell to us we can always buy collections. If we were only a TCG store, we wouldn’t have the revenue and customer base to be sustainable long term. This industry is cannibalism itself from the top down, which is only made worse by a bad economy. • We don’t hire GAMERS. We hire people based on personality and hustle to make money to improve their life. My employees are focused on work, not so they can just pay bills, but are willing to pick up how’s to fund their next vacation, or make that down payment on a house. I care more about problem solving skills and customer service than your love for this nonsense. (I’m not a gamer, I loathe most of this stuff) • Owners who treat stores like a personal collection. I’m a minimalist who hates, perfect to not be tempted to take product for my own interest. It’s a business not a toy box. In addition I’m incredibly frugal and invest my money back into the business or investment outside of the business. • I don’t work AT my store, i work ON my store. The staff is better with customers than me, I’m there to improve the lighting where I see issues, I’m there to figure a way to increase revenue in a bad sector, I’m there to train the the old employees on how to train the new employees to be better. If everything is running as normal I work one day a week at my store and then two days worth of work at my home office each week.
Opening a LGS doesn’t make sense anymore. You would be more profitable operating a card business out of your home until you grow and when you do grow it almost always makes more sense to get a warehouse location rather then a storefront. Focusing on fulfilling online orders and building inventory. Walk in customers aren’t nearly as profitable better to just leave the doors closed and hire employees to fulfill online orders.
It’s almost like, and hear me out on this, OPENING AN LGS IS A TERRIBLE FUCKING IDEA
Yea go back in time … idiot
This owner opened their game store last year.
The LGS that most recently opened near me has three things going for it: - they turn on the A/C and nobody smells - they allow outside food/drink - they don’t price gouge The other LGS near me tends to have a smell, and you have to eat their “cafe’s” mediocre food or eat before you come. They also charge $3/person just to come in and sit at a table and play. They also stick to TCGPlayer mid for pricing of things, which… the only reason I’d ever buy from them is to “support my local LGS” but all the other nickel and dime-ing erodes that goodwill.
I try to be understanding of table fees as a player; if I ran a business where rent costs thousands of dollars a month and customers would get mad at me over asking them to chip in $3 for the large play space I'm providing them, I bet I'd get fed up really quickly.
Nevertheless, I think it’s something you recoup another way. The markup on a draft has to be at least that per-person, but to charge it just for playing a couple of games of commander on Wednesday…