The Best Thing that Ever Happened
(To the Arcade Business)
George McAuliffe
By George McAuliffe, President, Pinnacle Entertainment Group
I am in arcades every week, in both our clients’ arcades and their competitors’ as well. I’m checking for game mix, playability, pricing, cleanliness, redemption store merchandising and a lot of other things. There is no area as poorly operated as that of cranes and merchandisers (C&M).
Before we go any further, let’s set the context. Apologies to regular readers of this column because you’ve read this so many times: There is no higher goal for the arcade operator then to get the guest to return for “one more visit!” If you’ve ever watched Shark Tank on TV you’re familiar with the business principle “cost of customer acquisition” or COCA. It is a key to the success of any sales enterprise.
Once you have a guest in your FEC, you have acquired them. You have incurred that “sunk cost.” But if you get them to come back just once, you cut that COCA in half. If they come back twice cut it in half again, and so on!
I recently interviewed Andy Bartholomy, the owner of Andy B’s and a bowling guy all his life, who saw the promise of combining bowling with arcade and FEC early on. He told me: “Redemption and C&M are more important now. They give us the opportunity to deliver a great experience throughout the visit and then slam-dunk it at the end by letting them walk out with a great prize!”
As people are walking out with a great prize, do you think they are more likely or less likely to be wondering of when they can come back?
Winners Make Players BUT Controlling Costs Counts!
When I was figuring out best practices for our newly arrived cranes way back in 1986, I had a plush salesman pushing the concept of “Winners Make Players.” We found that to be true but not without limit. If too many people win, you can’t sustain the business. To our operation, we added the concept of “Controlling Costs Counts!”
Take an arcade doing $500k per year from 32 games. We’d recommend five cranes and merchandisers in that game mix as shown in Table 1 below.
As the volume and/or number of games grows, we add more cranes to the list. We call our crane and merchandiser list our “Crane Lineup.” Think of a line of retail stores in a shopping center. Many windows showing a variety of merchandise, which together, create a powerful attraction to the widest audience. Your selection of machines should be like that. I’m not saying that they need to be next to each other in a straight line but you do need to focus on the merchandise variety.
Now let’s look at cost control. Our company, Pinnacle, ran a 500-crane route in two states and Puerto Rico for 10 years. Every one of those cranes operated on “constant play,” meaning the game was set up to play the same way – with the same claw strength and the same digging power and swing speed – every single play. No auto-percentaging for us! They were skill games, which allowed players to get better the more they played and to have a fair shot at winning. The key is that once a crane was set up, we used prizes of a consistent size and weight every time we changed the mix. Regular maintenance was performed to ensure the solenoid and other claw control factors worked as designed.
In Table 2 above are some key cost metrics for our mix of cranes.
Cost Factors in the Crane Lineup
You’ll note the major variables: Average Prize Cost, Price Per Play and Win Rate. As the average prize cost rises, your players have to win less or pay more to play in order to maintain the target payout of 22.5% (between 20-25% of sales). We are very careful with licensed plush for this reason. Many licenses just don’t pencil out, so be cautious. We do show one licensed mix in our sample lineup.
Beyond that, we prefer good, themed generic plush. Good, themed generic mixes fit a few criteria:
1. They stand for something! It’s not just a hodgepodge of figures and colors.
2. The mix is tied together by toy type and/or features like eye style, ears or the like.
3. Plush quality
4. Price: A good, themed mix in the 8-10” range with quality plush should run $3.25-$3.75. Our lead supplier for our clients, Redemption Plus, has a great mix that checks all the boxes in the $2.25-$2.75 range (depending on quantity). Note: That price would allow guests to win as often as every 6.1 times they play which allows the owner to enjoy a 25% savings from that crane!
Generic plush toys courtesy of Redemption Plus.
With the right crane lineup featuring merchandise for the claw size, with the strength set properly for consistent win rates, consistent size and weight of prize, and regular change-out of the mix (we like every 6 weeks), your crane sales will get to where they should be. Oh, and don’t forget to keep them clean and full. Merchandising counts!
If you’re attending IAAPA later this month, we suggest that you stop by the Smart Industries booth. They’ll have the whole lineup on display!
George McAuliffe has helped hundreds of businesses large and small develop and execute arcades and FECs. He has personally operated family entertainment centers from 2,000 to 150,000 square feet as a corporate executive, entrepreneur and consultant. He is the owner, with his partner and son Howard, of Pinnacle Entertainment Group.
George lives on the Jersey Shore with his wife, Julie. They have three sons, two daughters-in-law and a grandson.
Readers can learn more about Pinnacle at grouppinnacle.com or contact George at [email protected]; phone: 314-422-7197.
