Coin Machine Review (& Pacific ...)

Why Operators {;o 13roke
By Robert Latimer
The often repeated question-why do
operators go broke?-came up for dis-
cussion recently at a meeting of coin
machine men in St. Louis . With opera-
tors and di stributors both present and
taking part in the discussion , the an-
swers were many and varied.
Carl Trippe, president of the Ideal
Novelty Company, spoke from the stand-
point of the jobber and distributor;
while Michael Ogilvy, who for many
years has owned all types of coin ma-
chines, discussed the question from the
viewpoint of the operator.
An important point on which both
Trippe and Ogilvy agreed, was that "an
operator does not actually go broke. "
He may close his route for a number of
reasons, including restrictions and bad
seasons, but few are ever in deep
enough to lose their investment.
If, however, the route is entirely inac-
tive for a year or more , the operator
may be forced to look elsewhere for
locations. Ogilvy maintains, "the opera-
tor simply loses the depreciation on his
route, potential profits, and possibly
goodwill, but he does not suffer the
same kind of loss the average retail
store would under similar circum-
stances. His overhead can be curtailed
along with profits, and the operator lit-
erally hibernates until more favorable
conditions allow him to start out again."
Looking over records of associations
in this territory for several years , it was
shown that most of the original member-
ship is still active, and except for a
minor percentage of operators who en-
tered other businesses, or quit because
of ill health, the coin machine industry
is as solid as it was seven years ago.
What few examples of "going broke"
were to be found can be explained with
a set of eight reasons, each of which
Ogilvy and Trippe discussed. The rea-
sons, none of which can be overlooked
with safety, are:
I. Bad choice of location-The coin-
man must select his locations from two
standpoints. He must have favorable
conditions, plus a good customer-accept-
ance at the location itself. Whenever an
operator distributes his machines indis-
criminately, in the hope of catching
nickels everywhere, he is bound to run
into trouble . Every location should be
carefully checked for potential grief, as
well as profits, before installation.
2. Operating obsolete, old equipment
-The operator who .continually tries _to
capitalize on good locations with ma-
chines which have lost their up-to-the-
minute appeal cannot hope to pull busi-
ness. His main appeal is the novelty
and fresh interest of his machines, and
few customers play machines which are
old and unattractive . A constant injec-
tion of "new blood" on a route will
bring excellent returns and pull other-
wise dead locations into the profit
category.
3. Too slow depreciation on initial
cost-Some operators go after deprecia-
tion in a useless manner, spotting in
their new machines in low-pay loca-
tions , with the hope that they can im-
prove these spots. In almost every case
this does not pay, and the machine can-
not be written into the profit ledger until
it is depreciated completely. It is sug-
gested that new machines be placed in
the best paying locations, thus depre-
ciating them as rapidly as possible.
4. Lack of leadership and cooperation
- The operator who does not join and
assist an association, watch trends
closely, and keep himself constantly in-
formed of the business situation is al-
most certain to find himself on the
downgrade. Reading his trade journal
is another important point. It takes a
solid, we ll-united front to keep the in-
dustry firm enough to offset derogatory
influences.
5. "Chiseling" and competition-This
is one of the worst and has happily
been cul to a minimum. Some operators
are in the habit of offering better com-
missions to locations in order to get
their machines in use . Outright "chisel-
ing" of rates and locations is the surest
way to an early failure.
6. Not enough fields of operation-
Specialization has its advantages in
many businesses, but the coinman who
pulls good collections the year around
must spread his machines and routes
simultaneously - operating every kind
of machine which has a conceivable
market. If one slacks off one of the
others will usually make up the dif-
ference .
7. Failure to keep income check on
each type. Operators who breeze afong,
without keeping a down-to-the-penny
check on every machine of each type ,
do not last long. Remembering that the
operator is a "merchandise manager" of
"salesmen," it is necessary for him to
watch each location, and to match them
against the others. Only in that way
can he spot the right machin e in the
right location to insure the maximum
profits. Keeping separate books on each
'type of machine is practical insurance
against loss .
8. Two machines in one location- A
fruitless act, in the majority of cases, is
the placing of more than one machine
of the same type on the same location.
Most locations with two machines will
show profits on one, with a loss on the
other. One good machine is plenty of
each type for a sin g le spot.
In summing up the discussion Carl
Trippe remarked, "To prevent any of
these reasons from cutting down on
route income there is one rule that must
always be followed, that is-strict ad-
herence to better merchandising by coin
machine operators."
e
"Glad to see you getting in on time
these mornings, Mr. Howard," said the
man ager.
"Yes, sir. I've got a parrot."
"A parrot? What for? I advised you to
get an a larm clock."
"I did, sir. But after a few mornings
I got used to it and failed to wake to its
ringing. So I got a parrot and now upon
retiring I hang the alarm clock over his
cage. It wakes the parrot. And what
the bird says would arouse anybody.
9
COIN
MACHINE
REVIEW
PENNY OR NICKEL PLAY
Console model above.
Also counter model.
Legal anywhere-a new idea
in novelty games, that will
make a good profit in terri-
tory, where payout equipment
is not permitted.
Write to-day for prices.
GROETCHEN TOOL CO.
122 N. Union
Chicago, Ill.
https://elibrary.arcade-museum.com