Daniel Batista·August 28, 2025

$2 Million of Fun: Big Margins in Play Centers | Daniel Batista Interview

Daniel Batista is a former entertainment industry executive (Universal Pictures, Paramount, Warner Bros., COO of digital media startups) who acquired Candyland Kids — a single-location, 10,000 sq ft indoor playground in Downey, California — for $3.45 million (3.7x SDE) in 2025. The business had generated approximately $900k SDE on $1.9m revenue for two consecutive years, producing a remarkable ~50% EBITDA margin driven by its predominantly fixed cost structure. Daniel financed the deal with 80% SBA 7(a), a 5% seller note, and 15% equity raised primarily from friends and family. He was attracted to the business partly for its alignment with his decade-long background targeting Hispanic consumers in media and entertainment, as the founder had strategically sited locations in predominantly Hispanic SoCal neighborhoods with strong demographic tailwinds. Key near-term growth levers include introducing owned arcade machines to eliminate revenue sharing, raising party room and membership prices (unchanged for three years), influencer marketing, and character event activations. Longer-term, Daniel plans to open or acquire additional locations de novo, leveraging remaining SBA capacity and tenant improvement allowances from mall landlords, while operating the existing location on a semi-passive basis with two managers and an assistant manager handling day-to-day operations.

Deal facts

purchase price: $3.45m
multiple: 3.7x SDE
sde ebitda: SDE ~$900k
revenue: $1.9m
financing structure: 80% SBA 7(a) + 5% seller note + 15% equity (equity raised from friends/family, ~$500k+, giving up ~20% equity stake)
notes: Single-location asset sale. ~50% EBITDA margin. Candyland Kids brand; one-time licensing fee included in acquisition. Business only 3 years old at time of purchase but had two consecutive years at ~$900k SDE.

Why this business

After nine months of searching across many industries (HVAC, plumbing, metal anodization), Daniel couldn't get excited about boring businesses. Inspired by a prior podcast guest who bought something fun, he narrowed his search to family entertainment centers. He liked the strong demographic tailwinds — high Hispanic birth rates and spending power in SoCal — and as a new father and former entertainment executive, he wanted a business he could get out of bed excited about. He also had deep background targeting Latino consumers through his prior media career, making the specific market positioning of Candyland Kids feel like a natural fit.

What's working

Exceptional unit economics: ~50% EBITDA margin on $1.9m revenue from a single 10,000 sq ft location inside a traditional shopping mall in Downey, CA.
Predominantly fixed cost structure (lease, payroll, insurance) means incremental admissions are nearly 100% profit above the fixed cost threshold.
Strong existing brand reputation: 4.7 Google rating with thousands of reviews provides a meaningful moat.
Strategic demographic placement in a predominantly Hispanic neighborhood — a consumer segment with a 2.1 birth rate (vs. national average of 1.62) and $2.7 trillion in spending power growing ~9% annually.
Mall location provides built-in foot traffic and near-unlimited parking, and malls are highly motivated to host experiential concepts as 'mall savers.'
Low maintenance capex: modular playground design means individual worn pieces (often a few hundred dollars each) can be replaced without full overhauls.
Low-cost staff replacement: minimum-wage roles are easy to fill quickly.
Wife's digital marketing agency background creates an immediate opportunity, as prior owners spent near zero on marketing.
New owned-arcade installation (15 machines sourced directly from Chinese manufacturer at ~$1k each) will eliminate the existing revenue split with a third-party arcade vendor.
Included in the acquisition: rights to the Candyland Kids brand (normally a $100k one-time licensing fee), plus access to the founder's collaborative network of licensee operators.
Raised more capital than needed, creating a runway for working capital reserves and future de novo expansion.

What's hard

Single-location revenue has a natural ceiling; growth requires opening or acquiring additional locations.
Insurance costs increased upon forming a new entity for the asset purchase, and California insurance rates have been rising 20%+ annually.
Minimum wage increases in California are the second-largest ongoing risk to the cost structure.
Black swan events (e.g., a pandemic) could reduce revenue to zero since the business is entirely location-dependent and experiential.
De novo expansion takes 12 to 18 months from site identification to opening.
SBA aggregate loan capacity will eventually cap the pace of expansion beyond 3-4 locations before needing conventional refinancing.
Potential for territorial overlap with the founder, who is also actively opening new locations in SoCal (though LA's scale mitigates this somewhat).
As the first month of ownership required near full-time presence, the semi-passive model requires successfully delegating to two managers and an assistant manager.

Notable quotes

I gave it a shot. You know, I tried it in like nine months. I tried. I was keeping a very open mind and then ultimately I just came to this conclusion that, you know what, I'm just going to focus on things I think are interesting and fun that I can get excited about, get out of bed every morning and want to go work on that business.

It was making 900k SDE in a single location. Which was really impressive because the others I had seen, they weren't making half that much, and in a single location.

The cost structure of a business like this is largely fixed. It's your consistent employee salaries, you have your lease payment, and once you've covered those two key things, there's very little variable. Every incremental admission you get coming in is nearly 100% profit.

By placing these in predominantly Hispanic neighborhoods, he's guaranteeing — he's like future-proofing this business. Their average birth rate is 2.1, meeting the replacement rate. And the spending power of this segment is $2.7 trillion in the United States, growing annually nearly 9% versus the average of 5 and a half percent.