Machine Management

Fruit machines, quiz machines, pool tables and juke boxes provide an invaluable source of income and profit for your business. In some pubs I have run they can contribute as much as 10% of your income, though in the majority it has been nearer 5%. To put this income (and its importance) into perspective this income can mean the difference between showing a profit or running at a loss. Traditionally I viewed machine income as the “icing on the cake” or the way that I paid for things like holidays and other treats; now with ever increasing pressure on pub profits I view them as critically as any other income stream.

Recent changes in the law have increased the opportunity for pubs to host games, such as poker, which involve stakes and prizes. The gaming machine industry is fast moving so you need to keep updated on how you can take advantage of opportunities as they arise.

Paying careful attention to the choice and position of games machines and carefully selecting products for vending machines can boost your profits. An interesting offering can attract new customers and encourage people to stay in your pub for longer.

If you are a tenant, your landlord will employ managers to control all the gaming, amusement and vending machines in your pub, remember you are the customer and they work for you.

If you are a free house or not tied for machines then you will need to organise this yourself and you should contact the Independent Operators Association for advice and details of suppliers in your area. Check with other pubs to see who they use and how they fare with them.

Discuss your requirements and ideas with your landlord or chosen machine operator and explore the options open to you on machine choice and position. Once you’ve decided on your machines ensure they are delivered, installed and maintained according to your wishes.

Landlords will use a limited number of suppliers who should offer the widest choice of machines and the best maintenance service. They will help you benefit from developments within the industry (new machines generally go into the large estates first), and help you to operate your machines within strict industry legislation and licence restrictions.

Automated Teller Machine (ATM) or Cash Machines

More and more pubs are installing cash machines to provide an additional service for their customers and a new income stream for themselves.

You need to find a service that suits you. There are various rental packages to choose from and you should receive training support and additional materials such as till rolls free of charge. A service agreement provides 24 hour support, 365 days a year, and regionally based engineers to keep your cash machine working properly.

Cash machines can help retain existing customers for longer, especially if there are no cash machines in the immediate vicinity of your pub. You receive a proportion of the transaction fee on each withdrawal and the increased footfall can help grow your sales.

An advantage you may enjoy is lower bank charges (as you’ll be filling the machine yourself), making it quicker and safer to bank your cash. The big disadvantage is that cash machines are a prime target for burglars and may incur additional insurance premiums.

These machines are large and often not pleasing to the eye so an option you may wish to consider is offering cash back via your credit / debit card machine. You can set a fee (less that that of ATMs) of even offer it as a free service to your customers. I tend to prefer this to ATMs and would offer it free (as long as the customer is spending at least £5) and for straight cash back transactions charge 50-75p.

Fruit Machines or Amusement With Prize Machines (AWP)

An AWP is a chance game that offers players a prize, such as the traditional fruit machine (one armed bandit). Your AWPs will probably account for the lion’s share of machine income in your pub and changing them regularly and siting them well helps increase the amount of money you can collect.

They can make a great addition to most pubs but you must operate within the codes of practice and the industry legislation that surrounds gambling machines. For instance you must make sure that no one under 18 uses them.

You need to have to the latest models and keep informed about changing legislation relating to stakes and prizes. The maximum prize money paid out rose from £70 to £100 on January 15th 2014 which is more in line with other venues such as social clubs and betting shops, so make sure your operator has switched out your machines for the new prize level.

As a tenant you receive a share of the “profit” of the machine. Until February 1st 2013, the operator will deduct the rent, gaming licence cost and VAT from the total money in the machine when it is emptied. From this you will normally receive 50% from you landlord. If you are free of tie you get it all. From February 1st 2013 new arrangements for Machine Games Duty came into force, for more details see the separate article here

Continue reading … page 2page 3