8 liners/Cherry Masters route questions...

[dpalmi]

Hello all!

I need your opinions and advice...

Ok - so if you saw one of my last posts, I recently purchased a Cherry Master/8 Liner machine and it got me thinking.  I would like to start-up some kind of business where I place these kind of machines in local bars/restaurants/etc...I believe it's called a route in the business...and share the profits with the owners.  I would provide and maintain the machines and obtain any licenses that are required.  At some point, I could also expand this into Jukeboxes, Golden Tees, Pinball machines, pool tables, etc...but I think the 8 liners are where the real money is.  I looked into the license and it seems like it would be $600 per year plus $25 per machine from the city.  Of course I would need to setup the whole business end of it to make it legal/legit.  I would start with just the one machine I already have - but then as I am able to pull in some cash from it - purchase more machines and get more locations, etc...etc.  Seems like it would have a low start-up cost to test the waters and see what happens...

They are all over around our area here including bars and restaurants and people are always playing them...anyone have any experience with this kind of operation? 

So - am I nuts?  I am going to be contacting a local company here that does this same thing and see if I can get any info from them....

Opinions, advice?

Dan #2

[jay]

I am not sure you have done the math on this or not but here is what I came up with on the back of a (cocktail) napkin.

$625 (your annual licensing fee) = 2500 Plays at 0.25c each assuming 0 payback and nothing to the bar.

Not being totally familar with 8 liners but I would suspect they have a hold %like a slot does.... so I will throw out a figure of 85%
Meaning that 15% is profit.

So you actually need to take in $4167 in gross revenue of which 15% is  $625 which covers your licensing fees (and still nothing to the bar).
This actually translates into 16,668 plays .... dividing this by 360 days (closed Thanks Giving, Christmas, Good Friday, etc) you need 47 plays per day.

Mointhly your cash box revenue is $348... so how much is the bar going to want out of that ??? My guess it would be like 10% or $35/mth. Possibly more as these guys are going to have to deal with the dude that loses his quarter etc, handle pay outs.

So figure on $4585 a your break even (4167 + 10%).... this so far has not added in anything for your time, maintaince, gas money. So figure in another $100 in "expenses" monthly associated with the machine to cover this off.
We are not even talking money in the bank towards purchasing the next machine in your empire......

This means you need to make $5785 to make this truly viable..... or 23140 plays ..... 65 per day on the 360day year. Thats about 8 per hour.... or 2 every 15min......

Of course if I am wrong on my hold percentages..... or bar take .....you might have better cost coefficents on this.

Overall it Seems the math would work out much better if you had 10 machines so your license fees drop to about $88/machine....subsequently thiis would strike me as a volume business...... More machines = better revenue.

                                                                   

[dpalmi]

Hello!

Thanks for some of the math - I hadn't gone that far yet and it helps to really put some numbers to it.

Again, I am really just thinking out loud here...so don't worry about bashing my dreams or anything

Not being totally familiar with 8 liners but I would suspect they have a hold %like a slot does.... so I will throw out a figure of 85%

The machine I bought goes as low as 60% and up to 95%...although I can't imagine anyone would play it more than once at 60%...lol!  When I got it - it was set for 70%.  I would imagine setting it somewhere around 80%....

I took pictures of all the stats screens when I got it - they are still on my camera - I will post those so we can use some real world #'s when I get home.  It was in a private home for awhile, but the guy told me he bought it from a bar owner and I don't think the guy I bought it from would have had any idea how to screw with the settings - so I think the #'s will be good to use as an example.  When I took the coin-in - the coin-out - it was something around $56,000 that this machine pulled in as profit!

... so how much is the bar going to want out of that ???

From people I've heard from already and what I could find on the net - it sounds like standard deal is somewhere around 50% split.  Seems kinda crazy in my opinion....but what can you do....

Overall it Seems the math would work out much better if you had 10 machines so your license fees drop to about $88/machine....subsequently this would strike me as a volume business...... More machines = better revenue.

Yes...at first it would be more of an experiment to see if it's something that makes sense money wise.  The long term goal would be more machines to help cover costs.  I already have one machine - so if I could find a bar/restaurant to install it in - my start-up costs would be pretty minimal.  And if it does succeeded...it allows me to take all my profits to reinvest into the business (new machines, etc).  I have a day job and don't plan on giving that up anytime soon...

Dan #2

[jay]

Giving David the day off here is my second post on this in tabular format ...... 

50% of whats in the machine less float is actually not too bad as that reduces the bar "take" to 1/2 of the hold %.... 1/2 of nothing is still nothing so you can't lose in this model.

Lets assume $100 in.... 400 plays (.25 x 400 = $100).

Payback     Hold   Bar  You   Your Earnings   Plays needed  Per Day   Plays needed  Per Day
                                        Per Play           for 625          360d/yr     for 1825       360d/yr
60             40     20    20    0.05                12500            35              36500         101
70             30     15    15    0.0375             16667            47             48667          136
80             20     10    10    0.025               25000            70             73000          203
85             15     7.5   7.5   0.01875           33334             93            97334          271
90             10     5      5      0.0125            50000           138             146000        406


The table shows 625 in fixed costs for your licenses (break even), the second column at 1825 = 625 + 1200 (100/mth) to cover "route costs".

My conjecture would be to set your machine at 90% to gain loyalty - then measure the coin in to determine number of plays it is getting.
You can then scale back the percentage to match the coin-in-age you are getting.
 Ie If you are getting 50 plays per day the optimuim percentage would be 70% to break even and 60% if you want to make a little.

[midas]

Through my experience ( I used to repair the CM machines for dozens of customers before the State Police confiscated them ALL), the % out was usually set to the lowest 55%.  Some locations before the crackdown were pulling in over $5000 per week.  Yet they would argue about a $100 repair bill LOL.
You have a good idea, but you might get resistance from current route operators.  I wish you luck in your endeavor.

[dpalmi]

Hello all!

Ok - here are the pictures of the bookeeping info for the machine I just bought.  The machine is currently set to one coin = 0.05 (nickel).  So, Credit in shows 1,162,230 or $58,111.50.  Credit out shows 700,745 or $35,037.25.  So difference would be $23.074.25.  Now I have no idea when this machine was last cleared...so no idea if these numbers are for 1 year or 5 years.  I did find a copyright in a manual for the game of 2001 - so I wouldn't imagine it's any older than that.  On the one screen, when you clear the numbers (which I did) - the old data moves into the "Last Data" column...in the pics, that column is all zero's - so it may never have been cleared.

Dan #2

[dpalmi]

One more pic - this is the W-Up game...where you get a chance to double any win you just had....

Dan #2