Play Meter

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we have a merit system whereby, if an exceptional
employee warrants it, he will be eligible for a raise
during a six-month period. However, all employees
will receive something at the end of the year. So we
try to give raises on an annual basis, with the
possibility that we will do it sooner for an
exceptional employee.
PLAY METER: Do you pay standard union wages?
LONDON: No. The ·union has been reasonable- in
that respect. My employees belong to the machinist
union, but the union understands our industry.
They are attempting to monitor our ~dustry, and
they are aware of what the pay is in our industry.
PLAY METER: Have you had any success in
upping the amount of bucks in your coin boxes?
LoNDoN: Yes, we've done that- by establishing
minimums. The sales department is aware that we
will not put out equipment below certain numbers.
This does not eliminate the possibility of making a
mistake-you can misread a location and give it to
them for 50/ 50, and they don't produce. If so, we
find that out in our productivity reports, and we go
back and resell the location. But generally
speaking, our sales department knows we have to
make so much. Every new piece that comes out,
they know what category it falls into, and there has
to be a certain amount attached to it. For example,
I try to get a minimum of $45 per week at my end
for a new jukebox with the full stereo installation.
For a solid state pin, I'm looking for about $35, and
a new pool table is around $25.
PLAY METER: How about better commission
arrangements, any luck there?
LONDON: If anything, the sixty-forty can go the
other way, that is, with an exceptional location.
With the pressures of location selling, ~e have had
to be very soft in our commission structure.
However, we have succeeded for the first time in a
provision for ASCAP off the top. We double what
we take off the top so that, in effect. it is the
location which is paying for ASCAP. The locations
were told that they were going to pay it all, right
from the beginning. That is another thing which we
feel we cannot absorb. We call it a service charge,
and it was accepted by the locations without any
problems.
PLAY METER: Are you buying less equipment
now to compensate for cost increases?
LONDON: We try to run a balance. It was very
easy a few years ago to fall into a trap of buying
what was hot, a la video games. Buying equipment
that would be very flashy, very fast, and give you a
big return on your investment. Therefore, since we
only apportion so many dollars to our purchases, we
neglected some other areas, namely phonographs.
And we found through a lot of conversation, a lot of
investigation that we should not do this. You must
maintain all departments. You cannot neglect them.
And that has led within the last one-and-one-half
66
years to redistributing our purchases back to
emphasizing phonographs because I consider that
to be the backbone of our business. At times we
tend to neglect it because the games are so strong,
but the phonograph requires more service in a
location than any other piece of equipment. There is
a special skill in programming records. It's giving
the location the kind of music it must have for its
customers. That is the piece that requires the most
skill and knowledge for the operator. That puts the
operator's best foot forward in the location. By
neglecting that, by saying that the same
phonograph will last for an extra year, you're doing
the location a disservice, and you're taking away
the impact that music does in that location. It's been
glossed over. Everybody fell in love with video
games and the fast returns. Then we found that we
were starting to get some calls from locations
asking why didn't they get a phonograph this year.
It woke us up to the fact that we had a little unrest
out there . As a result, we have slowed up on video
games, and we're going back to phonographs.
PLAY METER: Have you also slowed up in your
purchase of pingames?
LONDON: We have had such an influx of pingames
and, commensurate with that, an increase in
earnings; so we are continuing to buy pingames and
put them out. Also, we're using the solid state
pinball to get the twenty-five -cent play, with
absolutely no complaints whatsoever. So our
purchase of pingames have not been curtailed.
Sure, I'm investing more dollars, but how else can I
make a better investment. For just a few extra
hundred dollars , I can double my sales price on
pingames. I'm getting a terrific return on those
pieces, and we're doubling our collections. It hasn't
hurt our play at all.
PLA Y METER: Do you occasionally have to borrow
capital to keep the business running smoothly?
LONDON: Yes. As a businessman grows, he must
learn to develop the best lines of credit that he
possibly can. It means getting to know your banker
and getting him to know you and your problems,
which are in many cases very different from any
other business. You must establish a viable credit
line and an understanding of how bankers work.
You may want a revolving line of credit or just flat
loans against specific purchases of equipment.
Banks are prepared to do this, but not with
somebody they don't know. So operators today are
est ablishing these relationships. I have established
a rapport with my bank, and when I need funds,
say, for when another route becomes available-
and I can't generate the money out of current
earnings-then I will go to the bank and borrow the
funds. You have got to take advantage of an
opportunity when it comes up. You can't hoard up
all your pennies and wait for the day when you've
got enough of them to spend; so financing is a
crucial part of operating. But how you do it is
sometimes going to show if you're going to make a
profit in the future. After all, a guy could borrow at
high int erest rates, make a mistake in buying, and
kill his profits for a couple of years.
PLAY METER , June, 1978