The claw machine, the blinking arcade fixture known for swallowing quarters and seldom surrendering a prize, is making a comeback — and in a surprisingly big way.
Claw-machine arcades are grabbing up U.S. retail space, expanding from niche storefronts in Asian shopping districts into malls and shopping centers. Chains are franchising, signing leases with big landlords and opening locations coast to coast, including recent debuts at Simon Property Group and Unibail-Rodamco-Westfield properties and at the Mall of America in Minnesota.
Landlords are responding to the "clawcade" craze, fueled by America's embrace of both Asian culture and experiential entertainment, operators and real estate analysts say. And there's another appeal: Cash-strapped Americans are looking for reasonably priced family outings in lieu of expensive vacations to places like Disney World, a recent JLL report found.
In fact, location-based entertainment has now become a primary retail tenant category, JLL said. It drives traffic at shopping centers and malls, endearing it to landlords. The category includes trampoline parks, escape rooms, kid zones and family entertainment centers, a subcategory that encompasses claw arcades, James Cook, director of research for JLL retail, told CoStar News.
In a claw arcade game, players maneuver a mechanical claw with a joystick or buttons to try to snatch up prizes. Those items can range from toys to Labubu dolls to pricier goods, depending on what kind of customers the operator is targeting.
Patrons purchase tokens to play the machines. Arcade operators said claw machines offer a fun group experience that simply can't be duplicated on the internet.
"People can buy a plush toy online with one click, but they can't buy the thrill of the win," said Kevin Soulivong, director of operations at Kako Claw. "They can't buy the cheering of their friends or the atmosphere of our stores. So we consider ourselves an Amazon-proof concept. We drive foot traffic because we provide a destination for social entertainment, a place where people can put their phones down and engage with each other."
Rise of the clawcade
Long-term success for claw-machine arcades is no guarantee. The retail landscape is littered with concepts that expanded quickly only to fade as consumer tastes shifted. From frozen yogurt chains to novelty entertainment concepts, landlords have seen once-buzzy tenants struggle after rapid expansion.
Even so, claw machines are getting a boost in popularity from social media such as TikTok and Instagram. Operators argue that it's not a fad. At this point in the U.S., the sector is still very fragmented with no national leader.
A number of mom-and-pop operators are found in Asian neighborhoods scattered across the country. The list of bigger players, with many looking to scale up, includes not only Kako Claw but also Kawaii Klaws, Fantasy Claw Arcade, Duck!, Claw World and Clawzania.
Real estate brokerage Colliers piggy-backed on the popularity of claw machines at the retail industry's ICSC conference in Las Vegas in May. It had one of the machines — loaded with plushie toys and trinkets — in its booth on the convention floor as well as at the party it hosted at the confab.
"It was a nice way for us to just kind of give our clients something to bring back home to their kids," said Nicole Larson, national manager of U.S. retail research at Colliers. "But it was very engaging. It was really fun."
Operators race to expand
Duck! recently opened at Mall of America, according to Larson. That retail property, owned by Triple Five Group, is the biggest mall in the United States and is a trendsetter for some landlords.
Duck! bills itself as "Minnesota's largest modern Asian themed claw machine arcade" on Mall of America's website. It features over 100 claw machines, offers Korean shaved ice and "brings the energy and excitement of Asia's arcades right to the heart of Minnesota," according to the website.
California-based Kawaii Klaws has 22 locations, with one also slated to open in St. Cloud, Minnesota, according to the chain's website. At least seven of them are in Simon malls.
Fairfax, Virginia-based Kako Claw launched in December 2023 and now has 14 locations, most recently rolling out in Sugarloaf Mills in Lawrenceville, Georgia. That city is in Gwinnett County, sometimes called the "Seoul of the South" and the hub for the Korean population in the American South.
Kako Claw is also opening a site in Grand Rapids, Michigan, this fall. The chain doesn't necessarily target locations in Asian neighborhoods but rather looks to find space in top-tier malls, according to Soulivong.
"We don't focus primarily on Asian markets per se, but we would be remiss to not recognize that Asian pop culture and its booming influence in America definitely plays a role in our success for sure," he said.
Fantasy Claw is headquartered in Las Vegas, where it rolled out its third location in the city at Area15, an interactive entertainment and events district, in May. It also has an arcade in Hawaii and recently opened one at Easton Town Center in Columbus, Ohio. Another location is slated to open in Hawaii this year.
The chain is looking to accelerate its expansion by franchising, according to Elliot Cole, Fantasy Claw's franchise development director.
"We want to be the dominant name in claw arcade spaces," he said. "We want to ramp up. Our big, hairy audacious goal is to be 100 units by the end of the decade."
Claw machines were a fixture in traditional U.S. amusement arcades years ago but have resurged in popularity and become more mainstream. They now have arcades totally dedicated to them and are open in Class A malls. Still, their popularity doesn't approach that in Asia, where claw arcades are prevalent across Japan, China, South Korea, Vietnam and Taiwan.
"If you go to Tokyo, there's one on every other corner," Cook of JLL said. "They first started expanding in the U.S. in neighborhoods with high Asian demographics, but I feel like they've broken through."
Why landlords are buying in
In part in the U.S., claw arcades are feeding on Generation X's love of nostalgia and the fascination and adoption of Asian music, entertainment, toys such as Labubu — the collectible, sharp-toothed plush character that has become a global craze — and Korean beauty goods, according to Cook and Larson.
"We have seen it the past two years, this sort of Asian-brand takeover," Larson said. "Think back to 2020. As Americans were not very open to any Asian brands. ... Three to four years later, the country has just open-arms embraced the Asian culture and all of the brands and the food and the products that go along with it."
Americans "are really on board with Asian culture right now," according to Cook, "not just K-pop, but Japanese culture, anime, all of that."
Right now, "there is active demand where landlords are seeking out this concept," Fantasy Claw's Cole said.
A claw arcade is a quick fit for retail properties and their landlords, points out Larson.
"It's honestly a really easy way to fill maybe a 1,000 square foot, maybe even 500-square-foot vacant space that maybe these landlords have had a problem filling," she said. "There's no real build-out cost. There's not any high operational cost. So, it's really attractive to both the landlord and the retailer to work together."
Claw game arcades can tailor their selection of prizes to whatever customers they seek to attract, offering flexibility, according to Cole.
"Think of a claw machine like a vending machine," he said. "You can put whatever you want in the machine."
At Mall of America, one claw machine has rolls of toilet paper as prizes. Nowadays some even offer luxury goods such as designer accessories or electronics to appeal to older players, not just kids.
"People ask, 'Who's your target demographic?' and my answer is always, 'Yes,'" Cole said. "Because if you're targeting an age group, a sports-fan group, a foodie group, you can just change whatever you put in the machine to target them and boom: You have a new target audience."
For example, Fantasy Claw has a location at the Miracle Mile Shops at the Planet Hollywood Resort & Casino on the Strip in Las Vegas.
"It's very touristy," Cole said. "So, something we did last summer — that we're doing again this summer — is in the machines we'll put Vegas souvenirs and shot glasses and pool floaties just because tourists are coming to town. They want to have fun. They want to get drunk and float at the pool. So, we'll gamify the retail experience."