QUICK LINKS: Vending Videos  | Micromarkets  |

VT Classifieds

|

Buy a Classified Ad

|

Editorial Calendars

|

Circulation Data

|

Downloads

|

Bookstore

|

Operators Date Book

Search:    

Bookmark this site




Issue Date: Vol. 43, No. 5 / May 25, 2003 - June 24, 2003, Posted On: 5/25/2003


Crane Segment Continues Gains As Operators Pursue Proven Profit


Marcus Webb

USA- Where cranes are concerned, America's amusement operating community increasingly seems divided into two camps. On the one side are those who love cranes and say this type of machine represents one of their top-earning equipment categories. On the other side are those operators who still don't operate cranes and insist they are not interested. But experts say two other groups are increasing their levels of participation in the crane business: bulk venders and merchandise suppliers.

Longtime crane operators have "pretty well saturated" their territories, explained Neal Rosenberg of Skee-Ball/Elaut Amusement Games.

"If you have a route of 300 cranes it's pretty hard to expand it to 350 at this point," he noted. "So they are pretty much a replacement market. Their approach now is to expand into bulk vending and take over all the equipment in their current locations."

Yet while crane manufacturers acknowledge they are largely in a replacement market, executives also profess satisfaction with the strength and stability of the niche.

"I've actually been surprised at how strongly the crane market has been holding," admitted Stann Smith of Rainbow Crane. "In some states it may be due to new laws outlawing adult redemption. That prompts many operators to go back to the old reliable , cranes."

There is an eminently logical reason why the nation's bulk vendors, as a class, appear to be the only group that is still steadily joining the ranks of crane operation as newcomers. "A bulk vendor or anybody at all with any vending background is the prime candidate to get involved with instant-win redemption equipment," said Rosenberg. "Cranes and rotaries fall right into that category. These guys know what kind of ice cream or candy bars each location likes. That means they know what kind of plush, prize, and other merchandise each location likes. They know what sells and they know what roads to take in buying and selling it. They're just naturals for cranes."

Smith put it this way: "We are seeing sales strength from a lot of bulk vendors coming into the crane industry; in fact I would say that trend is accelerating. It's happening across the country; I'm getting two or three calls a week from bulk vendors in every state who are interested in buying their first cranes. Many bulk operators are getting into cranes in order to protect their locations from crane operators who are now competing for bulk vending business, so we are seeing a lot of crossover."

VARIETY SPEAKS

As for the growth of merchandise suppliers that cater to crane operators, this trend was very obvious during March's Amusement Showcase International. The show featured perhaps the highest percentage of plush, prize, and merchandise providers among exhibitors that has ever been seen at a coin-op trade show.

"It's out of sight what's available out there," Rosenberg said. "More and more merchandise suppliers who were never crane-related before are now making crane product because they see what's going on with the crane market. That is good for the crane operators because they have a growing universe of merchandise suppliers."

Smith confirmed that the number of merchandise suppliers that cater to cranes continues to climb. "It seems to be a very highly competitive area," he said. Competing for crane operators' orders are dozens of companies large and small, both local and national. Each week, several , or even dozens , of sales phone calls are targeted at every crane operator. New direct mail catalogs and circulars are released in a steady flow.

Operators welcome the new competition, which they say provides better quality and wider choices at lower prices. "We get new catalogs from crane merchandise suppliers all the time, and we love 'em , we're always looking for good new ideas," asserted crane operations veteran Zach Stein of Master Amusements (Dallas, TX).

Rainbow's Smith noted that the last really hot themed products for cranes were SpongeBob SquarePants, based on a TV cartoon character, and Spider-Man , based on the comic book hero and a year-old movie. Looking ahead to this summer's movie lineup, Smith foresaw few obvious licenses that would provide spikes in merchandise sales, but he suggested The Incredible Hulk should be popular. Smith also reported that The Walt Disney Co. is re-releasing many of its properties in digital format for the DVD home market and predicted that this could spark fresh demand for Disney-themed crane merchandise during the rest of 2003.

It is a truism that successful crane operation is a simply coin-operated method of competitive retail merchandising. In other words, the quality of merchandise drives the cashbox, as much or more than the particular brand or features of the crane. Even most manufacturers acknowledge this fact. Some officials go even farther: they report that , precisely as is true in the general retail field , many crane operators generate 60% of their annual income during the last quarter of the year. Retailers (and greeting card publishers) have reported in recent years that Christmas is now followed by , surprisingly , Halloween as the second most popular purchasing holiday. Savvy crane operators have picked up on this trend and responded by placing Halloween-themed merchandise in their cranes up to 45 days before the holiday. (Some crane operators reportedly even earn more money during Halloween than during Christmas.)

If the recent year has not been a stellar one for new technology in cranes, perhaps that fact is not surprising. Cranes are a basic industry staple that date back, in one form or another, to the 1920s. The last 15 year period has seen incremental improvements in claw electromechanics and the addition of computerized components for various functions ranging from percentaging to audio. Yet to some degree, the appeal of the crane concept (both for players and operators) lies in the seeming simplicity and familiarity of its basic mechanism and gameplay characteristics.

Past years have seen major innovations and novel variations such as rotating playfields, refrigerated cranes, jumbo cranes, vacuum cranes, and the like. Since VT last surveyed the crane market, no such landmark upgrades have been introduced into the market. The most prominent new technology, as even competing manufacturers agree, has been the addition of "fluffers" to the basic crane concept. But this innovation has been employed in only one crane so far, "Acme Crane Co." from Benchmark Entertainment.

NEW AND IMPROVED

Other notable new crane manufacturing concepts in recent months have been found more in the realm of packaging and marketing. Examples include round-front cranes from Innovative Concepts in Entertainment, and the room-sized crane called "The Big One" from Skee-Ball/Elaut , an oversized unit of approximately 100 ins. cubed. Designed for speciality locations, it's testing in location-based entertainment chains (and reportedly earning on a scale proportionate to its size).

Notable marketing trends in crane operation are also found on the operating level. Manufacturers report that many U.S. crane operators are switching from traditional "dump load" or bulk load practices to so-called "European style" crane loading. This means that all merchandise units in a single crane are of equal size and value, or very nearly so. Such uniformity makes for greater ease of percentaging (controlling the ratio of prizes dispensed to dollars taken in). In standard loading, with its variation in prize size and weight, the lighter merchandise frequently stays on top and is won first, while the heavier goods settle to the bottom and are won only last.

European-style loading of more uniform goods may sound like it promotes monotony, but in truth the effect can be a positive marketing ploy. For example, banks of Euro-loaded cranes in arcades on the New Jersey Shore , where the modern crane revival began , frequently have different types of merchandise in each crane. "It's like window shopping to walk past those cranes," said one seasoned observer. "Every window, or crane, offers something different and unique."

VT spoke with two longtime crane operators in two different parts of the country, to obtain a current view of the state of the crane market. Both operators , Del Guerrini of Frank Guerrini Vending Machines Inc. (Louistown, PA) and the above-quoted Stein of Dallas , agreed that cranes are a leading earner on their routes; that cranes succeed in almost all street locations; and that crane players include men and women of all ages (most emphatically including the elderly) and from all classes.

"Cranes are very important for us, an integral part of our business," said Guerrini. "We operate them in street locations of all kinds, from taverns and skating rinks, to chain stores like Wal-Mart." His route has been operating cranes since the early 1980s, he said, and today utilizes several different brands of cranes. Guerrini added: "Our crane business is growing in terms of per-machine income and in terms of the fact that we're operating more cranes: plush, jumbo, Beanie Baby cranes, basketball cranes with 6-in. balls, jewelry cranes, and even high-end 25 cranes again."

Crane earnings are very consistent, he said. "It's all about product: the key to operating cranes is getting your customer excited," Guerrini noted. "We work hard to buy retail quality items. When somebody looks in that crane you want them to see an item they saw in a gift shop for $15.95, something unusual. The days of just putting teddy bears in cranes are over; they won't do well. We have players in our stores every day looking to see what we put in. Many of our players are older folks, such as grandmothers trying to win prizes for the grandkids or civic organizations. We like to offer collectible items where you collect a series of six or 10."

Most of Guerrini's cranes are set on 50 per play. His company accounts for the cost of prizes in different ways, depending on what each location prefers. In some cases, that means taking the cost of prizes off the top, then splitting the cashbox 50-50. In other cases, it means a cashbox split that favors the operator.

Percentaging , the ratio of prizes dispensed to dollars taken in , typically sees most crane operators trying for a roughly one-third value, and Guerrini is no exception. "One in 10 is a good ratio for a jumbo crane, but we want to be giving 35% or better with most cranes, so customers come back," he explained. "Our collectors calculate the ratio when they service the machines. We have great repeat play, so that means our route guys are doing a good job. We try to make sure the customer is getting value for money. My philosophy is, if customers aren't winning, then we are doing them a disservice."

ON THE JOB

Professional crane operators are happy to perform the frequent maintenance that successful crane operation demands, said Guerrini. "We're in each crane location three times every week, making sure all the screws are tightened and so on," he said. "The main technical problem you see with cranes is occasional broken nylon strings in the claw mechanism. Other than that, making sure the machines are clean and the bill units work is the main focus."

Guerrini's company is careful to match crane merchandise with the targeted customer base in each type of location. The route's average prize unit cost  in a standard crane is often $2.30 to $2.50 or even more. In some cases, such as with jumbo cranes, merchandise costs can range up to $5 or even $7, he said. "We buy in big enough volume that we can afford better product at attractive prices," he added.

"I think crane operation will continue to be a very valuable part of our industry," Guerrini predicted. "The operators who are willing to go the extra mile and do the extra work, will continue to be successful , no doubt about it."

Texas operator Stein reported that cranes are "real important" to his business. "They're one of our top three money-makers, easily," he said. "It's all a matter of finding the right location. Our routes are mainly focused on grocery stores and Laundromats. Cranes in these sites are very steady."

Stein's cranes typically offer either plush, with a heavy emphasis on licensed goods , or in some cases, jewelry. Merchandise unit costs range from $1 to $4 per item in all locations, he said. He targets a 30% prize dispensing ratio, but this can vary with the cost of merchandise, he added.

A straight percentage split with no money taken off the top for prize costs is Stein's favored method for dividing crane income with locations. "The location owners don't know what we pay for prize merchandise, so they're more comfortable with a fixed percentage of the entire cashbox," he explained.

VT's latest Census of the Industry issue shows that average earnings for prize-dispensing equipment of all kinds (including cranes) rose 13% from 2000 to 2001, the most recent full year for which figures are available. Most cranes (75%) continue to operate at 50 vend prices, but $1 play prices are steadily becoming more common.

 


Topic: Music and Games Features

Articles:
  • Game Exchange Of Colorado Becomes Official MEI-CPI Service Center
  • Live Oak Bank Arranges Funding For GameTime's Flagship Entertainment Center
  • Golden Tee Prize Play Payout Passes $50 Million Mark
  • Shaffer Distributing Kicks Off TouchTunes Service Schools
  • NDA Implements Prepaid Electronic Dart Tournament Fees To Meet Player Demand

Copyright © 2014 Vending Times Inc. All rights reserved. 
P: (516) 442-1850 | F: (516) 442-1849 | subscriptions@vendingtimes.net
55 Maple Ave. - Ste. 304, Rockville Centre, NY 11570