Within the hospitality space, many franchises struggle to maintain profitability, largely due to the cost of goods sold. Escapology, the premium escape room franchise, leverages the hospitality model but focuses on high-margin entertainment, providing gameplay rather than goods. This, combined with robust corporate support, creates a sustainable, scalable pathway for franchisees. By eliminating the food from the hospitality equation and providing a turnkey system that solves complex game design, the brand is seeing rapid growth, expanding its footprint with both new and established franchisees.

“When I first learned of Escapology, my first comment was, ‘This looks just like the restaurant business without food costs,’” CEO Burton Heiss said in a recent interview with 1851 Franchise publisher Nick Powills. “If we think about food costs, best-in-class might be low 20s; in the old days, there was a lot of 30%. You add that amount of profitability to the bottom line. My honest thought was that I have so much more margin for error that we can really go out and explore how to grow.”

As a veteran in the hospitality space, Heiss knows the model well. He made the leap to Escapology when a private equity group acquired a majority stake, and he decided to get his “hands dirty.” Bringing a sophisticated lens to the escape room world, and with the cushion of wider margins, Heiss has led the growth of Escapology, including the expansion of the brand’s corporate footprint to 20 locations. These serve as “sandboxes” for testing new initiatives and have been crucial in the transformation of the brand from a boutique concept to a high-performance franchise system that rivals the operational discipline of top brands.

Below is a transcript of Heiss’s conversation with Powills. It has been edited for clarity, brevity and style.

Nick Powills: All right, Burton, one scripted question, then everything else is off the cuff. Almost everyone has an accidental franchise story. How did you accidentally fall into franchising?

Burton Heiss: I was in the restaurant business my entire life. I had done a little bit of franchising by accident but really had never been involved at an executive level for a franchisor. The good news is there aren't a lot of CEO-ready escape room people out there with that kind of experience. When our private equity group bought a majority stake in Escapology, they didn't have experience in that either. They reached out to someone they knew that had consumer-facing experience. I was so taken with the product, the business, the white space, and the opportunity that I said I didn't want to consult — I wanted to get my hands dirty and jump in.

Powills: I want to set this next one up. There are times I do assessments where I look at a brand — like a taco brand I saw earlier this week. Their AUVs were about a million-five, but net profitability was about 8%. For a restaurant, that’s not awful. But at those numbers, once you pay 8% in fees, the franchisees make $0. You jump into this business, and the profitability is much different. Did that surprise you? Because it is still hospitality. What were your initial thoughts looking at a P&L here?

Heiss: Nick, you're spot on. My first comment was, "This looks just like the restaurant business without food costs." If we think about food costs, best-in-class might be low 20s; in the old days, there was a lot of 30%. You add that amount of profitability to the bottom line. My honest thought was that I have so much more margin for error that we can really go out and explore how to grow. In the restaurant business, you spend so much time trying to squeeze a little more juice out of the fruit. With this, we realized we had the opportunity to build a model that is sustainable and franchisable because of that margin.

Powills: One counterpoint we've talked about is the perception of whether this is a fad. When you see independents close, it’s usually not because the category is bad, but because they were too bootstrapped. They made mistakes in real estate or leases and couldn't build a moat. The reality is that if this were a fad, the units wouldn't perform like they do. How did you look at overcoming that fad element?

Heiss: Fads are defined by boom and bust, and escape rooms have already had that. The number of venues across the country and the world has actually been very stable for many years now. For me, the white space defined the opportunity. Regarding the independents that haven't made it — those numbers actually match the percentage of small businesses that fail across all industries. What is different in the escape room space is how fast the evolution has been. It’s almost like if the restaurant business started cooking over a campfire and, within 10 years, you had a modern kitchen. Keeping up with that — the real estate model, the technology, the marketing — is where the challenge lies. That rapid change is why some people think it's a fad, but the location count is stable.

Powills: Think about a pizza brand. I could name 50 independent pizza businesses in Chicago because pizza doesn’t need a franchise to be a business. But with escape rooms, an independent often fails because they don't have the systems.

Heiss: It would be like if, to open a pizza restaurant, you had to first build your own oven. Suddenly, that gets rid of a lot of those favorite local places. I don't know how to build a double-deck oven! That’s what is different about our industry. To design a game, build it, figure out the theming, the storylines, the props, and the puzzles — it’s complicated. If you had to build the oven yourself, you wouldn't see many non-franchised pizza places around.

Powills: That’s why it is a business model meant for franchising. It’s like what Orangetheory did to the gym. They took a component, built a moat around it, and made it so that a franchisee needs that support to have a shot. You built the oven.

Heiss: To use that Orangetheory example, we know there’s a cyclical fad element in fitness with direct competition. We have adjacent competition, but it’s typically very complementary. If people play an escape room, they usually play that room once. We like to say our only competition is a bad escape room — an experience that turns people off to the concept. There is an insulation there because you aren't going to have someone come in and directly take out the brand just by offering a slightly different version of the same thing.

Powills: You have 20 corporate units. Most franchisors don't take that route. You’re testing the trials and the swings and misses yourselves.

Heiss: When I first got here, we only had a few corporate locations. When we started to invest in that program, I was asked if we were going to be distracted. I said that being a bigger operator makes us a better franchisor. Your problems are now my problems times 20. I have to solve how we become more profitable. Now we have a sandbox. We don’t roll out something that hasn't been tested. I can bring data to show people the benefit of a new theme or a new licensing arrangement because we've proven the value.

Powills: If there is a franchise buyer watching right now, what is the one thing you want them to know that they can't see on a website?

Heiss: Come in and have the conversation. I was talking to some prospective franchisees recently who had just gotten a list of current owners to call. You could see a wholesale change in their approach afterward because they realized how helpful the network is. We are an open book. We have a relationship-driven process. So many people just don't know this is an opportunity yet; we just need them to have a listen.

The other thing to understand is how the model de-risks the investment. In any business, a long payback horizon leaves you vulnerable to changes in the world. But if you can double your money in four years, the long-term risk of whether something is a "fad" essentially disappears. I don’t believe that’s the case here, but the math protects you regardless. Right now, our franchisees aren’t dropping out. They’re renewing. We are even making the proactive decision not to renew some older models that don't fit our current standards unless they "reload" with more games. The fact that the network is staying and reinvesting speaks volumes about the longevity of this brand.

Watch the full interview above or on YouTube.

To find out more information on costs to buy this franchise, please visit https://1851franchise.com/escapology.