AKRON, OH — A statewide smoking ban has cut operator revenues in bars by as much as 30% across the board, according to third-generation operator David George Jr. of Bell Music Co.
But George and his company, strongly endorsed by the Ohio Coin Machine Association, aren’t taking the hit lying down. Bell Music this summer has launched an aggressive two-pronged program, installing outdoor speakers in the route’s existing locations and acting as a distributor of low-cost outdoor heating units to operators statewide.
Operators can in turn sell the heaters, which cost as little as $300 (less in quantity), to locations and realize a 50% to 75% markup.
The goal is to make the outdoor patios of Ohio bars and restaurants more comfortable for smokers longer into the fall season, increasing patronage and thus overall revenue, including that from jukeboxes when equipping patios with outdoor speakers. George says the program is succeeding.
Operators can generate an additional $30,000 to $40,000 yearly by selling heaters to locations, George said.
According to OCMA, “These heaters provide Ohio operators with a means to help keep locations busy during cold months, as well as obtain new location contracts. They are perfect for bars, restaurants, private clubs, country clubs, bowling alleys and bingo halls.”
Ohio voters passed Ohio’s indoor smoking ban under a new chapter of the Ohio Revised Code in November of last year, requiring “public places” and “places of employment” to prohibit smoking as of that date. George says he began investigating the outdoor patio products because “It became a personal issue with me that they were telling businesses how to operate. How can you have a legal product that people are not allowed to use?”
Beginning in January of 2007, George met with several heater manufacturers and several attorneys to ensure that any products he decided to use would be in compliance with liability requirements. Bell Music began selling the heaters in July, and George said operator and location response has been “stronger than expected – and increasing. We expect sales to become very strong as we near colder weather.”
The smoking ban has been devastating for Ohio’s hospitality market, George noted. “The bars draw bodies, but when you walk in, they’re empty,” he said. “Everyone is out on the patio, smoking. Nobody is playing the pool table, the countertop or the dart game. They will play the jukebox if there are outdoor speakers, so we’ve been installing those.”
Bell Music installed 60 patio speakers this summer to help locations prepare for cooler weather. “This tells me all these bars in Ohio are building patios,” he said. “They have to do something to appeal to consumers. They will be year-round patios, which means they need heaters.”
Bell is selling its low-end heaters to operators at a $200 wholesale price; operators can resell to locations at $300 or give away a few heaters as premiums to secure a new location. “The product is of enormous value to these bars,” said George.
Operators can also allow bars and restaurants to finance heater purchases by adjusting cashbox commissions, Bell said. This also allows the operator to charge a financing premium. Operators might sell three heater units for a total of $1,000 through this method, he suggested.
Bell is encouraging operators to band together for group sales in order to enjoy volume discounts. If 20 operators buy 15 units each on a single order, he explained, the margin can reach a 75% return on investment.
“Selling heaters also allows operators to get into other markets beyond those where they provide music and games,” Bell said. “For example, funeral homes need heaters because some entire families are smokers and they visit these facilities for five hours at a time. They can’t smoke indoors, but with our heaters, they can step outside and have a cigarette.”
Auto repair shops and other venues that have places where people wait for services are also potential customers, George said. And, he suggested that operators may be able to place coin-op equipment in new locations by first establishing a relationship through heater sales.
Bell’s heaters are sourced from a company in Barberton, OH, that George describes as a leading manufacturer in the sector and one whose products satisfy all legal liability requirements.
Heaters are seven ft. tall, with 41,000 BTU (both metrics are industry standards) and include wheels so that location staff can easily roll them inside when the establishment closes. A small round tabletop attachment for drinks or ashtrays is also available.
In addition to the low-cost hammered iron heaters, Bell offers a higher-end stainless steel unit. The cheaper heaters should last three or four years, George said, while the better units will last longer. Some locations may elect to buy the cheaper units but replace them annually to ensure attractive appearance, he said.
“It’s not that big an investment, especially since they can resell a year-old heater pretty easily,” he said. “This could be an ongoing revenue stream for the operator.”
George predicted that Ohio and Illinois are “the tip of the iceberg” for statewide smoking bans in the Midwest. He expects Michigan, Indiana and others in the region to pass similar bans in coming years.
“It’s a train you can’t stop, but this is a way for operators to recover a little of the resulting lost revenue,” he said.
Beyond outdoor speakers and heaters, Bell is also planning to add a third component to its patio supply program. George says he is preparing to offer a summer line of outdoor misters for patios to help keep customers cool in warmer weather. It will also be a 50% to 75% markup for operators to sell to locations, he said.
Bell Music can be reached at (800) 648-3774. Its website is bellmusicco.com.