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Issue Date: Vol. 43, No. 9, September 2003, Posted On: 9/9/2003


Now For The Good News


Marcus Webb

Sometimes optimism pops up in unexpected places. "I think the industry is doing better," a veteran street operator said this summer'despite the fact that he does business in an economically depressed state. "I'm fairly bullish on the industry," this operator continued: "In fact, we're probably going to have the best year we've ever had this year. We are doing very well."

So says Jerry Johnston of Amusement Unlimited (Eugene, OR). How does he explain his route's record profitability? "Well," he said, "I sure don't attribute it to that old idea that the amusements industry performs better when times are bad. Here in Oregon, we have the highest unemployment in the country. I suspect that people have less money to spend on entertainment today than they did a couple of years ago, especially in working-class bars. And don't forget, we are also competing with the Oregon Lottery."

Instead of attributing his high earnings to some counter-cyclical economic theory, Johnston cheerfully claims the credit for himself'based on good, solid, professional operating. "We are doing a good job and the marketplace is responding to our efforts," he declared. "For one thing, we're really diversified, with pool, music, and pinball, as well as video. In fact, we pride ourselves on offering the full range of today's equipment. Our locations know that whatever comes along, we're ready. We are using all of our products to pick up new business, and to increase business in places where we had machines before. That's why, even though our local economy is weak and entertainment spending is down, I am pleased with our situation."

Johnston is not alone. From coast to coast, many professional operators say they are having an excellent year. G&G Amusement Co. in Los Angeles, celebrating its 51st year in business this month, is another example. And, this happy trend is not confined to street routes. If you have been reading Frank Seninsky's column in this publication, you know that his Alpha-Omega Amusements (E. Brunswick, NJ) is experiencing an extremely strong year with its arcade-based business.

So if "the good news" is not confined to one region of the country or one type of operation, what common factors are found in all of these success stories? Quite simply, the operators of these profitable businesses have a very aggressive policy of (a) updating their routes with good, new equipment; and (b) selling older equipment after three or four years, while it still commands a decent price.

"I have forced competing operators in my area to keep up with me," says Phil McBride of T&G Music (Titusville, FL). "They are having to go with newer equipment, because I am constantly upgrading my own machine inventory. But in regions where nobody is leading the market, operators are bleeding their routes by taking the money out of the cashbox without reinvesting in newer machines. Today you have to invest 25% to 30% of what you take in, to keep your route current. Otherwise, you're just cashing out early. You can't keep up with the industry and you get caught in a downward spiral. As your equipment ages, collections drop and replacing machines becomes even harder."

Of course, all operators (and distributors) would like to see available more of both good and new equipment from which to choose. Who wouldn't? But the winners aren't just passively waiting for "the next 'Pac-Man'" to appear. And they aren't sitting around wishing for legalized gambling, either. They are jumping on the best of whatever is available, operating it as well as they can'and smiling. You'll see these operators at this month's AMOA International Expo. They will be walking the aisles, studying the new products, talking to manufacturers, distributors, and each other. You'll also see them scribbling down notes on which products they plan to buy, and how many.

Operating is hard, hard work; that fact will never change. But the "secret" of success in this industry is really not so secret. It's hiding in plain sight, from Oregon to New Jersey, and from Florida to Los Angeles.


Topic: Editorial: Music and Games

Articles:
  • Luck Is No Longer A Variable For Bulk Operators
  • Churn, Baby, Churn. Declining Dynamism In Larger Economy
  • Lessons Learned From The Life Of The Mad Mogul Felix Dennis
  • Can Operators Cash In On Heavy Summer Traffic?
  • Are Vendors Adapting Too Slowly To Changing Retail Landscape?

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