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Issue Date: Vol. 42, No. 4 / April 25, 2002 - May 24, 2002, Posted On: 4/25/2002


Merger Trend In The Tavern Sector Expands Coin-Op Market, Says NC&B Show Owner


Marcus Webb

U.S.A. - The number of establishments that are licensed for on-site liquor consumption in America remains fairly stable at around 300,000 locations, but the role of coin-op games and music in those establishments is growing as entertainment of all types becomes an increasingly key component of the location attraction mix.

That's the assessment of a man who ought to know: Kevin Seddon is CEO of Oxford Publishing (Oxford, MS), the company that produces Nightclub & Bar Magazine as well as the gargantuan Nightclub & Bar Show. V/T interviewed Seddon in the wake of the highly successful NC&B 2002 exposition, getting his views on the state of the tavern industry and the prospects for greater cooperation and crossover between his show and the Amusement Showcase International , a cause he favors strongly.

According to Seddon, coin-op amusements, leagues and tournaments, satellite-downloaded music and games, and various forms of online entertainment are all sought today more eagerly than ever by U.S. location owners. This trend is only expected to grow in the coming years, he added. The move toward offering more entertainment , including more coin-op amusements , is part of a larger picture in which locations are diversifying their product mix, he explained. In fact, said Seddon, "There's been a merging of the food and beverage markets. Restaurants have increased their bar business; bars are offering more food."

The Oxford CEO points to high-profile examples that bear out his point, but he also claims that the food-beverage merger trend is happening throughout the tavern and restaurant industries. This includes the single-site, independently owned mom-and-pop locations and neighborhood taverns that have traditionally been the backbone of the street operator's route.

"Look at the chains like Chili's, Applebee's, and T.G.I. Friday's," Seddon suggested. "These are places where middle America goes for lunch or dinner. But the bar is almost half the building, which means they are strongly committed to beverage sales, which becomes about 50% of their net profit. Remember, that's happening at family restaurants!"

"That trend," Seddon continued, "means that food and beverage together are very important to the on-premise market. It's not just one or the other anymore; it's really both. Now as this trend takes place, all these locations are going to incorporate coin-op into their establishments, if they haven't already. It's all about keeping people in the location and keeping them entertained. Today's nightclub and bar owners, restaurant owners, hotel and casino owners, are open to anything that brings in the customers and helps them increase sales."

Contrary to conventional wisdom in the coin-op industry, Seddon said the major regional and national chains are increasingly receptive to coin-operated amusements. "They are always looking for new ways to make money," he declared. "Coin-op will be more visible in the new breed of restaurant-bar-entertainment complexes, and there will be more opportunities to place amusement equipment, including opportunities from a tremendous number of chains. And I believe that when enough of them take advantage of it, even the chains that have not embraced coin-op so far eventually will stand up and take notice."

Seddon also contradicts the coin-op industry's conventional wisdom when it comes to the fate of mom-and-pop taverns. While he agrees that regional and national chains have certainly become the most prominent players in the industry, he also argues that independents remain stronger and healthier than is generally believed. This assertion carries considerable weight, since it comes from a man whose company regularly pays good money to purchase new mailing lists of taverns, restaurants, hotels, and other establishments that offer on-site liquor consumption.

"I don't think the trend toward chains is as big a trend as everybody says," Seddon told V/T. "Certainly the chains and franchises exist, but they are mainly food and beverage establishments. On the whole, classic nightclubs and bars are still independently owned. We draw a tremendous amount of independent restaurant owners at our show, too."

The 2002 winter edition of the NC&B Show took place March 4-6 at the Las Vegas Convention Center, overlapping one day with ASI (March 6-8) which is sponsored by the American Amusement Machine Association. This year's winter edition of the NC&B Show featured perhaps 900 exhibitors in some 1,500 booths. The event drew 32,340 attendees , maintaining the expo's astonishing seven-year record of 30% annual growth. Seddon is notably humble about the success of his expo, but does allow himself to point out: "The dramatic part is that (our growth rate) is always 30% of an ever-larger number."

Yet the exploding NC&B Show is not simply riding the coattails of an exploding liquor industry. At least, the beverage industry is not seeing a marked increase in the number of on-premise consumption sites. Some beverage industry observers point to a recent increase in the number of 21-year-olds, amounting to perhaps 5% annual growth in recent years; but Seddon does not appear to believe that demographic trend is driving his show's growth, either.

What, then, accounts for NC&B's remarkable track record?

Seddon points to a number of factors, but the chief one is diversification. "Our show is more 'horizontal' than it used to be," he said. "In addition to nightclubs, we also have more restaurants, marketing experts, hotels and casinos, gaming and coin-op companies who attend. We have more coin-op manufacturers who exhibit every year as well. AAMA's presence will be larger next year than last year. A lot of our show's growth, then, has to do with changes within the industry itself. We are reflecting the industry's trend toward offering more types of products and experiences in locations, by becoming more of a food, beverage, and on-premise entertainment show."

Extremely aggressive marketing is also a key factor in NC&B's growth, Seddon explained. "We changed our marketing approach in recent times," he said. Changes were accomplished by relying more on outsourced telemarketing; by creating customized direct-mail campaigns that are individually tailored for different demographic niches; and by expanding the targeted customer base to include more and different types of potential attendees beyond simply the traditional base of nightclub and bar owners. (This latter point is one key reason why Oxford continually buys new mailing lists.)

Coin-op's conventional wisdom holds that bars do better in a recession, but here again Seddon takes a somewhat different view, at least in terms of how the economy impacts the NC&B Show. He's well aware that his show's years of sustained dramatic growth coincided with the longest and largest free market expansion in history. And, Seddon reports that the recent soft economy , and particularly the post-Sept. 11 retraction , were challenges, not benefits, to the NC&B Show.

"Our October 2001 show was up, too, but not what it should have been," he commented. "We made the decision at that time that we would not back off from our marketing and promotional efforts; otherwise we'd be contributing to the decline."

The U.S. economy's nascent recovery in early 2002 helped boost the March edition of NC&B, he added. "What I'm hearing in the industry is that things are starting to pick up again," Seddon said. "It's not booming necessarily, but things are getting better. I don't know why but one reason may be that the economy is leveling off and people are not as concerned about their future as six months ago. But I think the industry as a whole is very strong, beverages more so than food."

The onsite beverage industry's trend toward diversification holds clear lessons , and major opportunities , for the coin-op industry, Seddon believes. He confirmed that new technology, such as online liquor orders and online entertainment, has penetrated the tavern industry quickly and deeply. "It's definitely there from a music and video standpoint, although at this point more for nightclubs than bars," he said. "They embrace emerging technology quickly because you have to change the focus of a nightclub every two or three years to remain effective."

Yet even while new technology is becoming popular with nightclubs and, increasingly, taverns, the basic role of coin-op in the tavern market has not changed, Seddon asserted , except, perhaps, to grow even more important now than in the past. And that growing importance motivates Seddon's desire to see the NC&B Show cooperate more closely with ASI in the years to come.

Ideally, Seddon would like to see the two shows cooperate in several dimensions, including bringing more coin-op manufacturers into NC&B as exhibitors, and also by permitting attendees of both shows to visit the other event. Seddon believes that closer cooperation between NC&B and ASI would be a positive development for everyone, including amusements operators.

His reasoning: "Coin-op remains incredibly important as a source of revenue and entertainment for nightclubs and bars, with leagues, competitions, and interactive online games now becoming important, too. What I wish I could see would be that more amusement operators would attend our show. We are working with AAMA on possible collaboration next year. I know operators worry that manufacturers would bypass them but that's not the case."

In sum, this notable expert on the nightclub and bar market is quite confident in forecasting a strong future for coin-operated amusements in the taverns. "The people who attend our show simply love coin-op," he said, "and they are definitely interested in seeing the new coin-op equipment. The more exposure they have to operators and coin-op equipment, the more opportunities amusement operators will have."

U.S.A. , The number of establishments that are licensed for on-site liquor consumption in America remains fairly stable at around 300,000 locations, but the role of coin-op games and music in those establishments is growing as entertainment of all types becomes an increasingly key component of the location attraction mix.

That's the assessment of a man who ought to know: Kevin Seddon is CEO of Oxford Publishing (Oxford, MS), the company that produces Nightclub & Bar Magazine as well as the gargantuan Nightclub & Bar Show. V/T interviewed Seddon in the wake of the highly successful NC&B 2002 exposition, getting his views on the state of the tavern industry and the prospects for greater cooperation and crossover between his show and the Amusement Showcase International , a cause he favors strongly.

According to Seddon, coin-op amusements, leagues and tournaments, satellite-downloaded music and games, and various forms of online entertainment are all sought today more eagerly than ever by U.S. location owners. This trend is only expected to grow in the coming years, he added. The move toward offering more entertainment , including more coin-op amusements , is part of a larger picture in which locations are diversifying their product mix, he explained. In fact, said Seddon, "There's been a merging of the food and beverage markets. Restaurants have increased their bar business; bars are offering more food."

The Oxford CEO points to high-profile examples that bear out his point, but he also claims that the food-beverage merger trend is happening throughout the tavern and restaurant industries. This includes the single-site, independently owned mom-and-pop locations and neighborhood taverns that have traditionally been the backbone of the street operator's route.

"Look at the chains like Chili's, Applebee's, and T.G.I. Friday's," Seddon suggested. "These are places where middle America goes for lunch or dinner. But the bar is almost half the building, which means they are strongly committed to beverage sales, which becomes about 50% of their net profit. Remember, that's happening at family restaurants!"

"That trend," Seddon continued, "means that food and beverage together are very important to the on-premise market. It's not just one or the other anymore; it's really both. Now as this trend takes place, all these locations are going to incorporate coin-op into their establishments, if they haven't already. It's all about keeping people in the location and keeping them entertained. Today's nightclub and bar owners, restaurant owners, hotel and casino owners, are open to anything that brings in the customers and helps them increase sales."

Contrary to conventional wisdom in the coin-op industry, Seddon said the major regional and national chains are increasingly receptive to coin-operated amusements. "They are always looking for new ways to make money," he declared. "Coin-op will be more visible in the new breed of restaurant-bar-entertainment complexes, and there will be more opportunities to place amusement equipment, including opportunities from a tremendous number of chains. And I believe that when enough of them take advantage of it, even the chains that have not embraced coin-op so far eventually will stand up and take notice."

Seddon also contradicts the coin-op industry's conventional wisdom when it comes to the fate of mom-and-pop taverns. While he agrees that regional and national chains have certainly become the most prominent players in the industry, he also argues that independents remain stronger and healthier than is generally believed. This assertion carries considerable weight, since it comes from a man whose company regularly pays good money to purchase new mailing lists of taverns, restaurants, hotels, and other establishments that offer on-site liquor consumption.

"I don't think the trend toward chains is as big a trend as everybody says," Seddon told V/T. "Certainly the chains and franchises exist, but they are mainly food and beverage establishments. On the whole, classic nightclubs and bars are still independently owned. We draw a tremendous amount of independent restaurant owners at our show, too."

The 2002 winter edition of the NC&B Show took place March 4-6 at the Las Vegas Convention Center, overlapping one day with ASI (March 6-8) which is sponsored by the American Amusement Machine Association. This year's winter edition of the NC&B Show featured perhaps 900 exhibitors in some 1,500 booths. The event drew 32,340 attendees , maintaining the expo's astonishing seven-year record of 30% annual growth. Seddon is notably humble about the success of his expo, but does allow himself to point out: "The dramatic part is that (our growth rate) is always 30% of an ever-larger number."

Yet the exploding NC&B Show is not simply riding the coattails of an exploding liquor industry. At least, the beverage industry is not seeing a marked increase in the number of on-premise consumption sites. Some beverage industry observers point to a recent increase in the number of 21-year-olds, amounting to perhaps 5% annual growth in recent years; but Seddon does not appear to believe that demographic trend is driving his show's growth, either.

What, then, accounts for NC&B's remarkable track record?

Seddon points to a number of factors, but the chief one is diversification. "Our show is more 'horizontal' than it used to be," he said. "In addition to nightclubs, we also have more restaurants, marketing experts, hotels and casinos, gaming and coin-op companies who attend. We have more coin-op manufacturers who exhibit every year as well. AAMA's presence will be larger next year than last year. A lot of our show's growth, then, has to do with changes within the industry itself. We are reflecting the industry's trend toward offering more types of products and experiences in locations, by becoming more of a food, beverage, and on-premise entertainment show."

Extremely aggressive marketing is also a key factor in NC&B's growth, Seddon explained. "We changed our marketing approach in recent times," he said. Changes were accomplished by relying more on outsourced telemarketing; by creating customized direct-mail campaigns that are individually tailored for different demographic niches; and by expanding the targeted customer base to include more and different types of potential attendees beyond simply the traditional base of nightclub and bar owners. (This latter point is one key reason why Oxford continually buys new mailing lists.)

Coin-op's conventional wisdom holds that bars do better in a recession, but here again Seddon takes a somewhat different view, at least in terms of how the economy impacts the NC&B Show. He's well aware that his show's years of sustained dramatic growth coincided with the longest and largest free market expansion in history. And, Seddon reports that the recent soft economy , and particularly the post-Sept. 11 retraction , were challenges, not benefits, to the NC&B Show.

"Our October 2001 show was up, too, but not what it should have been," he commented. "We made the decision at that time that we would not back off from our marketing and promotional efforts; otherwise we'd be contributing to the decline."

The U.S. economy's nascent recovery in early 2002 helped boost the March edition of NC&B, he added. "What I'm hearing in the industry is that things are starting to pick up again," Seddon said. "It's not booming necessarily, but things are getting better. I don't know why but one reason may be that the economy is leveling off and people are not as concerned about their future as six months ago. But I think the industry as a whole is very strong, beverages more so than food."

The onsite beverage industry's trend toward diversification holds clear lessons , and major opportunities , for the coin-op industry, Seddon believes. He confirmed that new technology, such as online liquor orders and online entertainment, has penetrated the tavern industry quickly and deeply. "It's definitely there from a music and video standpoint, although at this point more for nightclubs than bars," he said. "They embrace emerging technology quickly because you have to change the focus of a nightclub every two or three years to remain effective."

Yet even while new technology is becoming popular with nightclubs and, increasingly, taverns, the basic role of coin-op in the tavern market has not changed, Seddon asserted , except, perhaps, to grow even more important now than in the past. And that growing importance motivates Seddon's desire to see the NC&B Show cooperate more closely with ASI in the years to come.

Ideally, Seddon would like to see the two shows cooperate in several dimensions, including bringing more coin-op manufacturers into NC&B as exhibitors, and also by permitting attendees of both shows to visit the other event. Seddon believes that closer cooperation between NC&B and ASI would be a positive development for everyone, including amusements operators.

His reasoning: "Coin-op remains incredibly important as a source of revenue and entertainment for nightclubs and bars, with leagues, competitions, and interactive online games now becoming important, too. What I wish I could see would be that more amusement operators would attend our show. We are working with AAMA on possible collaboration next year. I know operators worry that manufacturers would bypass them but that's not the case."

In sum, this notable expert on the nightclub and bar market is quite confident in forecasting a strong future for coin-operated amusements in the taverns. "The people who attend our show simply love coin-op," he said, "and they are definitely interested in seeing the new coin-op equipment. The more exposure they have to operators and coin-op equipment, the more opportunities amusement operators will have."


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