resulted in fewer and fewer people looking to buy
routes.
BERESTH: There are virtuaJly no buyers. A large
route will always sell because there's enough in
terms of volume and income for it to sustain its own
overhead, but the only one who would buy a
mediocre ize operation is one who can incorporate
it into his present operation, assuming he has a
fairly substantial operation to begin with.
PLAY METER: Let's talk a minute about the
methods of operating over the last fiftee n to twenty
years. Have t hey changed all that much?
BERESTH: No.
PLA Y METER: Certainly they've gotten more
sophisticated in some areas.
BERESTH: Yes . Being a cigarette operator first
was an advantage for me I think, because it's a heck
of a lot easier to operate music and games. The
cigarette operator always works in small figures
because it's basically a penny business. So as a
cigarette operator you develop a pretty good
insight into profitability; you are always very
conscious of prices and you don't let things get away
from you .
I've talked to music and games operators who
have gone into the cigarette business and in turn I
have known cigarette operators who have gone into
the music and games business. To this day, being
basically a cigarette operator, when I go into a
location --even if I have a very substantial revenue
coming from t hat location --I'll still fight to keep that
cigarette commission down. Because I am a
cigarette operator, I know that the key in the
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cigarette business is to have a low commission even
if the account could be generating a couple hundred
dollar a week and I'll fight them to save a half cent
or a penny a pack . But when the music operator
turns to the cigarette business, he may well say to
himself, 'I'm taking out $200 a week in my music
and games 0 I'll give the guy an extra cent and a
half on cigarettes.' He's not as picky about it. But
I've learned: in the cigarette business you have to
keep the commission down because over the years,
it's creeping up and up and up and up. And you have
to be on top of it all the time. Also the cigarette
operator has always worked with figures whereas
in the music and games business you don't work
with figures . Today you have to, but years ago you
didn't.
PLA Y METER: What figures in particular?
BERESTH: You know, you're watching pennies
and pennies add up to dollars.Y ou're very conscious
of prices, you're very conscious of the small
expenses which you may not have the ability to
control in many cases.
PLAY METER: Okay. We've established then that
operating methods are pretty much the same as
years ago but more sophisticated.
BERESTH: They are especiaJly more sophisticated
from the standpoint of accounting and accounting
procedures. Profitability, depreciation --these are
things that everybody takes into consideration --but
now you've got things like estate planning; you've
got just so many problems. If you don't recognize
potential problems, for example, your assets can be
very much dissipated. This business just doesn't
stop with a quarter dropping into a juke box; it goes
all the way right to death. Let's face it: we all have
to die, and we have to plan for it.
This is where the changes are: the operator is no
longer simply running a route--it's a very sophisti-
cated business, and he'd better start acting like a
businessman. We have to know everything from
soup to nuts. And if you don't know, you just have
to pay for the brains--it's as simple as all that. And
that's where we should invest.
PLAY METER: Could we talk about some of the
financial aspects of the business?
BERESTH: Like most operators, when we first
started we financed a good portion of our
equipment but we haven't financed a piece of
equipment in probably the last four years .
PLAY METER: You've bought on an open account?
BERESTH: Right. I don't mean to say that we
haven't gone into a bank, but we have not financed
a piece of equipment. We've had the ability,
because of the way we operate, to grow and to start
amortizing our routes--we're still paying for routes
we bought a couple of summers ago . I don't know if
it's our overhead or the way we operate, we still
have the ability to grow without going into financing.
This takes us into the philosophy of operating
with regard to where you allocate your dollars to be
spent. You can talk about video games, you can talk
about jukes, you can talk about shuffles, you can
talk about pins . We have our own philosophy of
operating and it's worked for us. We're satisfied.
I've no incentive at this point to change the way we
operate unless the picture changes; then we'll be