In most things in life, purchasing an item almost always makes sense over leasing it. Whether it is a car or a house, furniture or electronics, generally the return is in the consumer’s favor if they have the means to buy. Yet there is one arena where it might put business owners at a disadvantage to own, and that is the coin-operated machine industry.
Avoid the Jukebox Graveyard
The number one benefit that business owners receive from operators is service to the coin-operated equipment. By hiring a nearby coin-op operator, the savvy owner can ensure that the machines are well serviced and up to date.
Rick Caviglia, owner of California Amusement Group, serves the San Francisco Bay area. He explained that even though owners may receive 100 percent profits from a machine that they own, it is 100 percent of a smaller number. Because operators’ sole focus is the success of the coin-operated machines, their efforts go toward making sure everything is running smoothly with the machines, in turn producing a greater return for the business owner.
“We are the guys that are running out at 11 o’ clock at night on the Fourth of July and Christmas to service broken machines,” Caviglia explained.
Thomas Cobb, with Acme Music and Vending in St. Joseph, Mo., agreed: “The location that thinks that way, all they can see is, ‘I want 100 percent of what money goes in my location.’ What they fail to realize is that they will get 100 per of a smaller number—that an operator can bring them 50 percent of a bigger number.” His company reaches northwestern Missouri, parts of Kansas and up to the Iowa state line.
On the flip side, those who own their machines often do not have the expertise to keep them maintained, sometimes resulting in owners who turn around and buy another machine because they are not capable of fixing what is broken or having machines sit in disrepair.
“I can almost spot that the owners buy their own equipment. There just seems to be this drop-the-ball mentality,” Caviglia said. “Parts that are worn out, lights that are worn out, a ratty pool table that should have been recovered eons ago—I’ve seen that time and again, they will let them fall apart.”
Conversely, working with a coin-op operator can help keep those machines in top shape so that business owners never miss a sale.
Beyond fixing machines when they break down, routine maintenance can go a long way in making sure sales continue over the long term. Robert Herman of Ace Amusements Inc. in Brooklyn, N.Y., explained how even minor upkeep can make a big difference in the user experience of a game and keep customers coming back.
“If they are putting in a mix of games, games require changing them on a regular basis to keep them appealing, or even just a chip change to keep the abilities in that game, so again they need an outside source to keep them with fresh presentations,” Herman said.
A Shoulder to Lean On
Coin-op operators can be of assistance in many ways. Sometimes it is by giving someone a loan or helping them get certain equipment, explained Herman, whose company services the Brooklyn, Queens, Nassau and Manhattan areas of New York City. “We have more resources,” he continued. “We give them the opportunity of all the products that are available. It’s the sense of support that owners get from coin-op operators.”
Caviglia expanded upon this, saying, “We will go to the trouble of checking what’s popular in music so we can make good decisions on upgrades. We supply them with spare pool balls, chalk and spare parts.”
Max Wurzer with Action Enterprises in Cameron Park, Calif., said, “a good dart operator will promote the location via tournaments and leagues, pretty much for free. It is like having a partner you don’t have to split the bar sales with. Dart operators will normally promote traveling leagues as well. This brings new faces into the location.”
Grow Your Business Model
Cobb with Acme Music and Vending said that these days, coin-op operators must be pioneering and promotions oriented. “That’s why we have been in business since 1938. You don’t stay in business that long and not be progressive,” he explained.
When Cobb’s father started the business, the plan was simple: provide customers with the best equipment and services in the business. Cobb himself has been working with the business since 1970, and now the business model has evolved to include pool and dart league promotions for his clients.
“We can put people in your seats six nights a week,” Cobb said of the promotion options they offer. “We have ceased to be a company that just comes by and drops equipment off in your location.”
These days, Acme Music and Vending and companies like it are purveyors of a good time. “We are up against fighting for all the discretionary dollars that folks have to spend,” said Cobb. “We have to figure out ways to get them interested in a reasonably priced night out so it is a way to get people out of their homes into a tavern or bar atmosphere and have fun with their friends.”
Recently, Cobb and his team, which includes a full-time promotions coordinator, promote leagues for Megatouch video games, Incredible Technologies Golden Tee golf and Silver Strike bowling games as well. This is in conjunction with developing promotions with the Club Lucky Group.
“Club Lucky is a group of likeminded individuals that realize it is our job to not only provide fun equipment, but it’s our job to get them in the bar on specific nights and to drive sales for the bar,” explained Cobb of the invite-only, 35-member organization that links players’ scores from around the country in a tournament where people can rank nationally and earn great prizes.
“Everyone has a central focus in mind to be the best promotion company that they can be in a given market,” he said of the Club Lucky member coin-op operators.
Added Value Without the Purchase Price
Even for environments where serious gamers may not be seeking the latest thrill, hiring a coin-op operator to bring in a few classics can be a boon to business.
“Something as simple as a crane in a restaurant can keep kids occupied while their parents are relaxing for a few extra minutes,” said James Young of Action Amusement in Corpus Christi, Texas. Young has clients from the Gulf of Mexico to the Brownsville, Texas, area to Victorian Kennedy, Texas, for a total area of about 300 miles.
“Parents might say, ‘Let’s have a cup of coffee after supper. Let’s sit here and relax while they are running around,’ ” he explained. “It is definitely an added attraction for businesses.”
Another avenue to increase revenue through coin-op operators is by adding an ATM. “If they have an ATM machine, they reduce their credit card fees,” said Young. “It puts cash in their pocket.”
As for owners buying equipment direct and maintaining it themselves, the consensus is that it’s simply better not to in most cases.
“Myself, I normally don’t recommend it,” said Young. “If a bar owner wanted to buy two pool tables and juke, let’s say it would be around $15,000 plus having to get licensed and tax permits. It’s a little bit of legwork and it costs cash. If a guy only has $30,000, he doesn’t want to spend $15,000 of it to buy a pool table.
“[Going through an operator] frees up the location’s cash and gets them into opening up a bar or restaurant for less.” –