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CoinopTODAY.com
For the country’s 70 million Baby Boomers, it wasn’t so long ago that neighborhood bars, restaurants and arcades were the place to go to relax with friends. Perhaps more than at any time in recent memory, the Coin-Op industry faces a variety of complex challenges. For the country’s 70 million Baby Boomers, it wasn’t so long ago that neighborhood bars, restaurants and arcades were the place to go to relax with friends. But things are changing.Firestone Financial Vice President-Sales Jim Hines notes challenges facing today’s route operator:
• More family entertainment centers and chain restaurants • Increased smoking bans, especially in the Northeast n Drinking laws are more strict and more strongly enforced Hines, a 12-year Firestone veteran, says to survive and grow, “Street operators are starting to introduce non-traditional revenues sources in traditional places like bars.” These ‘non-traditional’ units include merchandisers, redemption equipment and cranes. Operators should be creative, securing non-traditional locations such as bowling alleys, family entertainment centers, mini-arcades and pizza shops catering to families and younger crowds. He sees a resurgence in family-oriented activities and skill-based games. “Growing in popularity are high-ticket redemption units. They can be great revenue generators with prizes like CDs, ipods, plush animals, movie tickets, Game Boys, cell phones, etc.” Dave Myers, founder and President of Lake Champlain Entertainment of Vermont, operates equipment across New England. He says, “Many restaurants are doing better as bars limit drinks and/or smoking. “Now parents take the family for dinner and a drink at a family entertainment center.” His formula for success: A mix of redemption and arcade units, video games, merchandisers, and digital download juke boxes. High-end redemption prizes bring people back.” Myers says, “95% of bowling centers will be here in 10 years, but I can’t say that about bars.” He adds, “I’m enthusiastic about the industry. Payback may take a bit longer, but the earnings life is much greater than withvideo games. You need to build long-term relationships with owners. We target the type of locations and businesses we want rather than waiting for site owners to come to us.” Christian Vara, who runs Melo-Tone of Somerville, Mass., one of New England’s oldest and largest vending companies, says operators must be more innovative as many locations generate less income and there are fewer locations. “Identify who your customers are, where they go to relax, and what machines are hot,” he says. “Yesterday’s bars are being replaced by family entertainment centers and chain restaurants where video games and jukeboxes may not be part of their footprint. The formula for success is to learn what works in each location.” One ‘secret’ he shares: Have a relationship with a lender like Firestone. “They’re a financial partner who enables the operator to purchase or lease the latest equipment and technology at affordable prices. It’s great when your lender gives you flexibility to help grow your business.” Jack Kelleher, Executive Director of the Association of Music Operators of America (AMOA), says a lot depends on one’s perspective: “Manufacturers think operators hold on to their equipment too long and could increase revenues if they invested in new machines. Operators say there aren’t a lot of great new pieces to buy.” Jim Pietrangelo, President of the (AMOA), is one of few in the industry who has worked in manufacturing (co-founder of SMS), distribution (AMA of New Orleans) and route operation (rural Virginia). He first financed through Firestone when he was in New Orleans. Pietrangelo offers good old-fashioned advice: “Maintain your machines.” As for new equipment, “Certain upgrades can have an immediate, dramatic effect on the bottom line,” he says. “Add bill acceptors and run thelatest software. Introduce new equipment in your best locations to free up machines for your ‘B’ and ‘C’ locations. With a little help, these can become ‘A’ locations. Managed upgrades and rotation help earnings.” Asked about non-traditional locations route operators often overlook, Pietrangelo says, “Sometimes you need to shake things up. Habits are hard to break, but taking risks can open up new opportunities.” What about new innovations? He says, “Digital technology in jukeboxes and photo booths can give new life to traditional equipment. Also use data collection devices and software. Anything that makes it easier for an operator to control the cash box and analyze game play patterns will benefit the industry.” Pietrangelo says, “To compete with home games, operators should invest in equipment that can’t be easily duplicated at home. Pool, foosball, darts, tournament-based videos, photo booths, redemption games, and merchandisers can help progressive operators maintain profit margins.” And where does a forward-thinking operator go for equipment financing? Pietrangelo doesn’t promote any one company, but says his experience with Firestone has always been positive. “Many of our operator clients use Firestone to finance their purchases.” One last tip from Pietrangelo: “All operators should join AMOA.:” (visit www.amoa.com). David Cohen, President and CEO of Firestone Financial, says controlling the financial part of any business can be challenging, especially now for route operators and distributors. He notes, “Having a good understanding of what you control and can affect is very important. My philosophy is to under-project and over deliver. That way you are providing positive results all the time. We all must take risk in our business, but that risk must be measured and understood. Stay focused on the all-important details. And if you aren’t going to do it, make sure you have someone you trust to be the careful, watchful eye on your finances.” About Firestone Financial Corp. Firestone Financial Corp. has been the leading independent provider of financing to the coin-op amusement and vending industries since 1965. Being in the business for over 40 years has allowed Firestone to gain a specialized knowledge and understanding of the amusement and vending trades, as well as equipment financing for small businesses. Firestone prides itself on building long-term relationships with its customers. The proof of their commitment is that over 75% of its customers are repeat customers. Firestone provides financing for a wide range of equipment. Their services enable you to boost your business and they're affordable and convenient. Delayed and seasonal payment plans, as well as route acquisition financing options are available through Firestone. For more details on all promotions, please call Firestone at 1.800.851.1001. Contact: Larry Yaffe, Senior VP - Sales & Marketing, lyaffe@firestonefinancial.com - 1.800.851.1001 x213 or Melissa Siegal, Marketing Assistant, msiegal@firestonefinancial.com - 1.800.851.1001 x273 From: Firestone Coin-Op News TRENDS & TIPS |
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First Look
Jim Hines
