There is “buzz” in the bowling industry that game revenue can be doubled or tripled by adding redemption (ticket dispensing) machines. In my previous article, we started off with adding 6-8 redemption games and an automated self-contained redemption prize center as a first step (Redemption 101) for those centers that only had about 500 sq. ft. of space available for games. This issue, I will address the majority of the centers: Those that only have 1,000-1,500 sq. ft. available (including a staffed Redemption Prize Center (RPC)). Welcome to Redemption 102.
Westgate Lanes, now called Westgate Entertainment Center, is an ideal case study. Located in Lima, Ohio, this 36-lane center has been family owned and operated since 1958. Andy and Wes Johnston, the third generation owners, are currently celebrating the center’s 50th anniversary. Westgate was voted Best Interior Renovation in 2002 by Bowlers Journal International and Best in Region by Lima News. So their tag line, “We’re not your Grandpa’s bowling alley” is accurate and well-earned. The Johnstons also own Northland Lanes, a 24-lane center in Lima as well.
Andy recalls: “Westgate always had a game vendor who supplied video games, cranes and air hockey (all operated on quarters). For the past several years our gross game revenues were averaging $1,000 per week or $50,000 annually. My brother Wes and I thought this was a good source of revenue for the 1,200 sq. ft. arcade room that housed 21 games.”
This is an average gross of $50/week/game (about the national average for video games). Soon thereafter, the Johnston brothers decided to purchase the games from their vendor (approximately $40,000 for games and buy-out of contract) and learn first hand what is would be like to maintain the service for their own games. They discovered that they (along with their lane mechanic) could handle the situation but they were not able to increase the game revenues much above that $1,000-per-week level. So they made a change.
Step 1. The game room had only one entrance and could not be seen well from the concourse. For redemption games to generate maximum revenues, the game space must be inviting and as accessible as possible. They removed one section (non-bearing) of the front wall and removing the entire L-shaped bar seating area so there would be four open spaces for customers to enter/exit instead of one.
Step 2: Several scale drawings were made to see if the redemption prize center (RPC) could be included in the existing bowling desk or to see if expanding the bowling desk would work. Neither of these two options looked good. The existing mini-bar (hardly ever used) was converted into the RPC without changing the configuration at all. The RPC takes up 200 sq. ft., plus open space of five feet width along two sides, totaling 22 feet or an additional 110 sq. ft.
Step 3: A review of the current center revenues and expenses showed that game revenues could be $400,000 (133,000 visits @ $3 per capita) but if, and only if, the game space was doubled, or 21 redemption games were
purchased, and almost all of the old video games were removed. Since this was not possible at the time, and only 1,200 sq. ft. was available, a conservative game revenue potential of $200,000 ($4000 per week average) annually was projected by assuming that the Johnstons were willing to purchase at least a dozen “workhorse” redemption games.
Step 4: A game layout was done choosing the highest earning games of the currently existing games that Westgate owned and adding in the best earning and highest ROI (return on investment) redemption games into the mix. Andy says he saved money because, “Amusement Entertainment Management was able to use our existing floor outlets and wall outlets so all we needed to was add one floor outlet and balanced out the electrical circuits.”
Step 5: Budget. The total budget could not exceed $90,000 and that included everything—and Andy seriously meant “everything.” To get the most bang for the buck, Westgate saved $10,000 by mixing new and reconditioned games and being able to purchase 11 workhorse redemption games.
The following expenses were put to paper:
- 11 Redemption games—$58,139 (including shipping)
- Redemption prizes—$2,150
- 25,00 logo tokens—$2,500
- Redemption Tickets ($1,000 for 1 million)
- 20 .984” token mechs—$215
- Token push slide—$30
- Consulting fee—$12,000 (flat-rated for eight months)
Step 6: Andy and Wes took out a loan for $90,000. “We have had an excellent relationship with our bank,” says a smiling Andy, “and were able to get 15-year terms with SBA backing. Our payments are just over $600 per month.”
Step 7: Take a Look at the Results. Andy reports, “The first week (last week of April) the 11 redemption games grossed $1,900 (an average of $173 per game) and the remaining videos/cranes/air hockey grossed $400 for a total of $2,300. Typically this time of year our weekly game gross was $500 so this is a substantial increase or more than four times. We are now in May, which is our slowest month of the year and there is little doubt that our game revenues will be at least $3,500 per week during the summer. And as AEM said, we should easily hit $4,000 per week or more during our busy weeks. I can conservatively say that our game revenues are more than triple what they were! Wes and I are looking forward to purchasing some more redemption workhorses in the fall and removing more of the non-earning video games that are just taking up our valuable space.”
Step 8: Andy points out that, “If you do birthday parties and kids programs like we do, the redemption games and the prizes are a great addition for the amount of square foot utilized and money invested.”