Redemption Plus recently launched Rtown Academy, its new educational resource, and kicked it off on Jan. 15 with the first in a series of four Webinars. The Webinar was titled, “Three Wise Men Discuss Hot Topics in Family Entertainment Center (FEC) Operations”.
The moderator was George McAuliffe of Pinnacle Entertainment Advisors; presenters included Rick Iceberg of CJ Barrymore’s in Michigan; Ben Jones, Senior Lender and FEC Domain Expert for Live Oak Bank; and George Smith, President of Family Entertainment Group.
Play Meter attended the Webinar; below is a sampling of the sage advice from this trio of experts.
Iceberg said CJ Barrymore’s has undergone tremendous expansion since it opened in 1974 to now offer more than 15 different attractions. He has followed a path of continued improvements, most recently adding full-scale bowling, which he said “turned out to be dynamite,” also mini bowling, with the combination being “a home run for us.”
He said, “When we committed to bowling we flew all over the country to research bowling. We spent a considerable amount of money in this effort but it was the best money we ever spent to get our own design down pat. If you are going to spend big, invest in research.”
Along with the investment in bowling came massive remodeling to accommodate bowling and upgrade other areas including the party rooms and the arcade, which was also outfitted with more new equipment. All this happened when the recession hit. Iceberg said, “Growing creates excitement. If we had stopped growing when the recession hit we would have been in trouble.”
Jones said that Live Oak Bank, the second largest originator of Small Business Administration (SBA) loans, is making a big push into the FEC market. He said the FEC industry has often been “overlooked and misunderstood” by lenders. He provided guidelines for dealing with a lender when you want to develop, refinance, or expand an FEC.
Jones said that Live Oak Bank is “streamlined and transparent” and brings a business advisory team to each project. Eligibility for loan consideration requires that the applicant be in the FEC business for three to five years and have FEC or related experience. Jones said the first step when dealing with a lender is to discuss your dreams and goals and what you want to accomplish.
Live Oak will do loans for expansions, remodeling, acquisitions, equipment, succession financing, and refinancing. Jones said, “A full-blown expansion is right in our wheelhouse.”
Smith said, “The overwhelming evidence I have seen in the last 15 years, and especially the last five years, is that quality is the hallmark for equipment. “In the last few years it has been hard enough to sell a good game but you can’t sell a mediocre game. This applies to capital decisions for new and used equipment. Games that look good and operate simply are usually the best.”
Regarding equipment legality questions, he said, “We want skill-only pieces instead of programmable, percent aging pieces. We want something that will be around for the next five or 10 years and not challenged by local government.”
Smith said it used to be that video games and novelty games represented nearly 90 percent of equipment in a game room. Now, on average, the mix is 65 to 70 percent redemption, 15 to 20 percent instant win cranes that give a prize directly, and the other 10 percent video and novelty (and declining). In conclusion, he said, “I have never seen a better lineup of equipment than we have today. The proof is in the cash box.”
Two Webinars were conducted in February, one on profitable parties and one on top toy trends. The last of the series is set for March 20, noon (CST), on technical issues in the redemption game room (gotomeeting.com/register/144789954). For more information, visit (www.rtownacademy.com)