Imagine being locked in a dimly lit room with a Dalek and three friends, for an hour each trying to escape by solving clues and puzzles. It may sound less than attractive, but hundreds of thousands of people do it every week, especially young adults between the ages of 25 and 35.
The locations are known as escape rooms and have earned fans from Bangkok to Birmingham. Participants are shown in rooms themed to look like a movie or TV set, from Alice in Wonderland to Dr.
escape hunt is the leader in the sector and the shares, at 34p, should materially outperform in the coming months and beyond.
Expansion: Escape Hunt’s Doctor Who themed game rooms hit
The company entered the stock market in 2017. At the time it was primarily a franchise business, coming up with ideas for game and room design, but leaving the operational side to franchisees around the world.
The franchise business continues to exist today, but chief executive Richard Harpham has added sites that Escape Hunt owns and manages, 15 in the UK and three more overseas, each with about six different rooms.
Franchising is understandable in far-flung parts of the world, but wholly owned properties are significantly more profitable, earning at least £150,000 a year compared to franchise income of around £40,000.
Last year the continuous lockdown and it knocked the escape hunt back and the stocks fell. But Harpham and her team used the time, launching virtual games that can be played from home and plotting out how they might grow after the pandemic is over.
LOL Enemies: One of the Doctor Who Daleks
His plans are starting to come into effect. With shops and restaurants closed on high streets and shopping centres, landlords have been eager to strike deals with tenants.
Escape Hunt has taken full advantage of this by securing premium sites in cities such as Watford, Norwich and Cheltenham that it could never afford before.
But Harpham was eager to do more, expanding the group beyond Escape Rooms to include similar businesses that offer consumers something different to do in their spare time.
They’ve found the answer at Boom Battle Bars, a small but fast-growing firm that combines cocktails and bar food with competitive sports, from shuffleboard to augmented reality darts.
There is even a chance to try Bavarian ax throwing – a popular pastime, but one that is highly supervised.
Escape Hunt is paying £10 million upfront for Boom Battle, with a further £7 million to be paid in the future, provided the business lives up to its promise. The deal is being financed through the issue of £17million new shares at 30p each. The transaction will close tomorrow, after which Escape Hunt will change its name to XP Factory.
Boom Battles only has seven locations so far, but 20 more sites are expected to open over the next 12 months. Looking ahead, a further 39 sites have been identified, of which 18 have already been agreed to the terms.
More escape hunt sites are also set to open, taking the group total to 80 by the end of 2022.
There are also co-location opportunities, where Escape Hunt and Boom Battle can share sites and punters can easily move from one to the other. A combined site opened this month at the Lakeside Shopping Mall in Thurrock and another one is planned next year in London’s Oxford Street.
Escape Hunt continues to make losses to date but is expected to turn a profit with earnings of £1.2million this year, £5.7million in 2022 and £9.4million penciled in for next year.
Midas Verdict: Escape Hunt has had a lot of volatility in the stock market, but the group is about to get stronger, more established and much bigger. At 33p, the shares are a buy.
traded on: aim Ticker: Changing ESC XPF Contact: escapehunt.com/investors or 020 7846 3322