Arcade Bars – Getting Into The Game

If you thought Donkey Kong was long gone, think again. Arcade games are still red-hot attractions, only now they appeal to kids and adults alike—especially millennials. And more bars are getting in on the action, building their entire concept around coin-operated video games and pinball machines.

Sure, the constant noise and commotion may annoy the heck out of Grandpa, but your younger customers are eager for some Pacman fever and ready to go ga-ga for Galaga all over again. And there’s nothing like a rousing game of Terminator to work up an appetite.

“The video game arcade—that magical place full of flashing lights, blaring sounds, and sore fingers blasting away at buttons—is in the midst of a veritable renaissance, as everything old is new again,” says Daniel Lee Perea, media producer for PMQ Pizza Magazine and video game world champion. “From the mainstream Dave & Buster’s franchise to the ultra-chic granddaddy of them all, Barcade in New York City, the arcade bar concept has turned the nostalgic appeal of old games into entertainment destinations. Far from being just museums for older customers to relive some quarter-dropping glory days on Frogger or Galaga, these arcade bars attract a wide age range of players, including hip, youthful patrons—some of whom are even younger than the games they enjoy playing.”

Memphis’ Rec Room was founded to fill just such a niche. “We felt like there was an entire culture and segment of the population that our concept would serve well and fill a niche for. So we started Rec Room to service that segment, and have been really successful,” states Miles Kovaric.

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Rec Room in Memphis, Tennessee features 15 foot projection screens, couch seating, console rentals, and table tennis for a more diverse experience.

Partnering for a Win-Win

Some bar owners purchase their own machines, but many opt to work with an outside vendor to provide and service the machines, then split the profits. “The industry standard is 15% to the house, or 20% if it’s a good location,” says Brad Hines, owner/operator of South Shore Vending in New Bedford, Massachusetts. Some bars host their own, which is not unreasonable; they just have to learn to clean it, fill it, repair it and transport it. “I always recommend that people who want to self-manage one should check places like Craigslist and eBay, where secondhand choices have serious discounts.”

Kelly Johnson, owner of Big Daddy’s Pizzeria in Pigeon Forge, Tennessee, doesn’t recommend buying your own machines. She notes that many of them—a skee-ball setup, for example—are very expensive, though costs range greatly. In addition, her customers like to see games swapped out monthly (based on usage) to make room for new additions, which is less feasible if you’ve purchased the machines outright. “All arrangements are possible, but we chose to partner with an amusement company so we could draw on their expertise,” she says. “They bring in the new and take out the old, service them when issues occur, and generally strategize with us, while we staff and stock the redemption counter. The revenue-sharing situation makes it a win-win.”

Ian’s also works with a gaming operator. “We supply the space, and the operator supplies and services the machines,” Andy Johnson says. “We arranged a 50-50 split on the profits; right now, our profits are about $50 to $100 per month, but the games are gaining popularity.”

Luther Moss, operator of Forbidden Planet,  purchased his own machines because he couldn’t find a reputable gaming provider in his area (Iowa City, Iowa to be exact), and no one had the vintage games he sought. He wanted to offer selections that no one else carried, so he purchased a few from companies, private owners and collectors. “The arcade community is tight-knit and really positive—a great resource,” Moss describes. “Those personal relationships help when fixing or moving a machine. We even got a couple for free.” He notes that costs can range from $200 for an arcade game to $8,000 for a rare or brand-new pinball machine, but he handles most of the maintenance himself. “There’s always something to do, and some of the electronic stuff is beyond my means, but very rarely are any of the machines in our pizzeria not working,” he adds.

Other options let you avoid the profit-sharing arrangement. Happy Gaming, based in Antioch, California, restores and rents out classic arcade games to businesses. “Some owners will simply buy their games outright, but then it’s not as easy for them to keep the games fresh by changing them, and they can break down a lot,” says co-founder and CEO Seth Peterson. “But instead of
revenue share, our company leases the games for $75 per month, and they’re free to keep 100% of the revenue.”

Of course, this type of arrangement depends upon traffic. Peterson notes that some locations make about $300 per game a month, while lower-traffic places sometimes don’t break even. “Interestingly, the bulk of our customers put the games on free play and don’t earn anything at all from them,” Peterson says. “They use the games to attract customers and make higher food and drink sales. If a bar is earning $900,000 per year as a local watering hole but can increase their sales by 40% by simply adding 10 games on free play, they stand to make a lot more money from extra beer sales—$360,000 in extra business vs. $18,000 per year in revenue from quarters.”

Space to Play

Operators don’t need a huge space to start testing the waters of coin-operated entertainment. “Start with one game—you’ll need only about five square feet for the first one,” Andy Johnson advises. “We would recommend trying to find an operator that has games ready to go. It costs you nothing, other than the space the machines take up.”

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Generally, Hines advises against adding games if they don’t fit your establishment’s personality; if the machine makes too much noise, generates trash, or detracts from your location, you might reconsider. But even if games fit your joint’s vibe, you will likely want to place them where they don’t wreak havoc on dining  or drinking experiences. “Our arcade is attached but totally separated so that customers in the restaurant can’t hear the machines,” Kelly Johnson points out. “While we have many customers who would love the opportunity to play with their kids while waiting for their pizza, we also have customers who do not want to be involved with the arcade. There is an open door and a lot of glass windows so people can see the arcade, but otherwise they would not know it was there, as the noise does not enter the restaurant itself.”

Moss says his games are key to “shaping the experience,” with their quirky noises, vintage vibe and glowing screens. Forbidden Planet has even named specialty pies after classic games and hosted tournaments in-store. But the machines are kept in the back of the pizzeria, with dining up front. “The biggest problem is waitstaff moving through if it’s really crowded, but overall the games are a benefit,” Moss says. “If there’s a half-hour wait, we can give out free tokens as a bonus for customers to stick around for a table. If they buy too many tokens on one visit, they’ll come back to use them up—an incentive to return. Some people come in just to play, and some don’t play at all, but the games help create an open, friendly, inclusive environment that’s safe for kids and fun for adults.”

 

 

 

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