Vending Times
Census of the Industry 2011
COPYRIGHT ©2011 by VENDING TIMES Inc.; all rights reserved.
The contents of this publication may not be reproduced either in
whole or in part without consent of the copyright owner.
2 Analysis: Vending
Total Vended $ Volume
3 Vended Product Volume
Vending & Manual Locations
4 Patterns in Operating
Truck and Van Use
5 Packaged Cold Drinks
6 Confections and Snacks
7 Milk
Ice Cream
8 Food
Tobacco
9 Hot Drinks
Cold Cup Drinks
10 Coffee Service
11 Bulk Vending
12 Analysis: Music & Games
Amusement $ Volume
13 Coin Phonographs (Jukeboxes)
14 Videogames
15 Prize Merchandisers
16 Electronic Darts
Pinball Machines
17 Ticket Redemption (Arcade Games)
Kiddie Rides
18 Pool Tables
Shuffle Alleys and Bowlers
Soccer Tables
19 Other Coin-Operated
Equipment
www.ven ding tim es.com
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
2
Analysis
Businesses in the United States did their best to adjust to the new
economic realities of the post-2008 world last year, with some success. Those realities affected workplace service providers and purveyors of away-from-home self-service entertainment differently.
Product sales in workplaces, especially through full-line vending,
are necessarily tied to employment. In 2010, U.S. unemployment
averaged 9.3% throughout the year, a very slight improvement
from the 2009 annual average of 9.6%. It is not surprising that
vending performance in 2010 was substantially unchanged from
the previous year. Much of the change that did occur resulted from
efforts to streamline operations, and to apply technology to optimizing product mix. Therefore, while total dollar sales dipped 1.7%
to $42.2 billion from $42.9 billion in 2009, profitability benefited
from fewer marginal locations and more fast-turning products.
This continues a sometimes painful rethinking of the vending
business model that began early in this century; the new millennium has not been kind to the traditional practice of automating
the sale of high volumes of low-priced items to large numbers
of people with few alternative sources of supply. The collapse
of 2008 caught many businesses by surprise, but vending operators had known they were in trouble for quite a while, and
had begun to take remedial action. They may reap the rewards
by recovering more quickly than most.
In 2010, then, most vendible product categories saw revenues
and unit sales volume erode, although revenues generated by
cold drink and snack machines more or less held the line:
» Packaged cold drinks: revenue up 1.8%, unit volume down 3.8%;
» Snacks and confections: revenue steady, unit volume down 1.6%
» Hot beverages: revenue down 20%, unit volume down 18.5%
» Food: revenue down 6%, unit volume down 11.5%;
» Ice cream: revenue up 4.8%, unit volume down 9%;
» Milk: revenue down 7.5%, unit volume down 10.3%;
» Cup cold drinks: revenue down 27%, unit volume down 28%;
» Cigarettes: revenue down 23%, unit volume down 26%;
» Bulk vending: revenue down 3%
The office refreshment segment has been subjected to different
challenges. From one viewpoint, persistently depressed employ-
2010 Total Vended $ Volume
ment and the increased percentage of smaller workplaces has
widened the market for services that do not require the frequent
attentions of a highly trained field force. The transformation of
American attitudes toward coffee, perhaps initiated by the old
Coffee Development Group’s campus coffeehouse program in the
late ‘80s and certainly catalyzed by Starbucks over the past two
decades, has enabled operators to talk about something other
than price. With smaller sites – often smaller than their managers
had anticipated they would be – requiring refreshments for staffs
often working long, unpredictable hours and generally experiencing persistent anxiety, workplace service providers confronted a
market that presents real opportunity for creative blends of conventional vending, high-quality OCS and pure water service.
If vending operators have had to find new methods of applying
a costly service infrastructure to meeting a more diffuse clientele, many OCS companies have needed to maintain their margins while upgrading a typically barebones physical plant to
address the demands of patrons whose demand for quality has
not been seriously lessened by adversity. While the boundary
between “vending” and “coffee service” has been blurred for
half a century, it now is virtually nonexistent.
Like vending, contract foodservice has had to struggle with a
larger percentage of smaller locations, many retaining the expectations they developed in happier times. Here again, new
methods have been developed, involving greater use of vending
– “combination” machines delivering both fresh food selections
and cold drinks or snacks, and frozen-food venders to supplement service-intensive refrigerated merchandisers. Network
services enabling field sales personnel to accept major credit
cards have extended the scope of mobile catering and modular
speedline operations. New service concepts like self-service,
self-checkout “micromarkets” moved out of the proof-of-concept phase during 2010 and started earning well.
It often has been observed that these industries do not exhibit
sudden changes. The “disruption” so prized by market analysts
takes time to work its way down to third- and fourth-tier locations; universally accepted glassfront snack machines took almost a decade to replace most of their “first-in, first-out” candy
and snack predecessors that appeared at the end of the 1960s.
But the adoption of new methods and new tools always has been
accelerated by economic downturn; when times are good, people have less incentive to find new ways to do things. Operations
that have survived the past three years have an excellent chance
to prosper as economic conditions improve.
SALES (BILLIONS)
50
40
30
20
10
0
Total $ vol. (in billions)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
$38.7
$41.0
$41.1
$42.2
$44.2
$46.0
$46.8
$47.5
$45.6
$42.9
$42.2
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
2010 Vended Product Volume
PRODUCT
% SHARE 2010
$ VOLUME 2010
56.1%
$23,712,000,000
23.0%
$9,711,000,000
Hot Drinks
6.8%
$2,874,000,000
Vended Food3
6.5%
$2,730,000,000
Ice Cream
2.1%
$929,000,000
Milk
1.8%
$756,000,000
Bulk Vending
1.0%
$388,000,000
Cold Drinks (Cup)
0.6%
$243,000,000
Cigarettes & Cigars
0.6%
$229,000,000
1.5%
$650,000,000
100.0%
$42,222,000,000
Packaged Cold Beverages1
Snacks, Confections, Pastry2
All Other
Total
1. Includes nonperishable cold beverages (soft drinks, juice, water, tea, energy, isotonic, etc.) in cans and bottles.
2. Includes shelf-stable packaged single-serve snack and candy items, both “wide” and “narrow,” and pastry sold through nonrefrigerated venders.
3. Includes refrigerated, frozen, can/bowl pack and other shelf-stable main meal items.
Vending and Manual Locations
The market for vending, office refreshments and manual foodservice reflects the overall
economy, and thus between 2009 and 2010 the number of locations served by operators
dropped about 1.5%. Manufacturing (plants and factories) and office location numbers
witnessed moderate declines in 2010. Manual foodservice sales continued to trend
downward, decreasing about from $9.2 billion in 2009 to $9 billion, or 2%, in 2010.
NUMBER OF LOCATIONS
LOCATION DOLLAR SALES
2008
2009
2010
Vending 2010
Manual 2010
150,000
139,500
139,000
$3,870,000,000
$1,360,000,000
Primary & Secondary Schools
19,000
18,000
17,500
910,000,000
192,000,000
Colleges & Universities
34,000
33,000
33,000
4,070,000,000
1,741,000,000
459,000
456,000
445,000
14,940,000,000
594,000,000
11,000
9,500
9,000
1,399,000,000
231,000,000
Offices, Office Complexes
499,000
462,000
460,000
10,703,000,000
4,150,000,000
Hospitals, Nursing Homes
50,000
48,000
47,500
3,700,000,000
393,000,000
Plants, Factories
Public Locations
Government & Military
Other Locations
Total
170,000
156,000
152,000
2,630,000,000
337,000,000
1,392,000
1,322,000
1,303,000
$42,222,000,000
$8,998,000,000
3
CENSUS OF THE INDUSTRY 2011 | VENDING TIMES |
Patterns in Operating
Industry NAICS Codes
The composition of the vending and amusement industries has changed
little in recent years and in 2010 the total number of operating entities increased slightly. The task of launching startup firms has been made
easier by the unprecedented availability of professional-quality equipment and the increased ease of troubleshooting and maintaining it. This
outpaced the trend of existing midsize operations merging into larger
ones. The fluctuation of emerging new companies and consolidation of
mature operations has persisted for half a century, at least, in the vending
industry. Most vending operations are small, and this always has been
true. Last year, 74% employed three or fewer people full-time.
OPERATING COMPANIES:
(Independent & branch operations)
2000
10,800
4
2007
10,300
2008
10,400
2009
10,450
2010
10,700
OPERATING COMPANY EMPLOYEES:
Owner only
28%
34%
35%
35%
36%
1 employee part-time
19%
17%
18%
18%
19%
1-3 employees full-time
21%
19%
18%
19%
18%
3.5-5 employees
8%
8%
8%
8%
7%
5.5-10.5 employees
6%
2%
2%
3%
3%
11-19.5 employees
6%
3%
3%
3%
3%
20 or more employees
12%
17%
16%
14%
14%
The classifications for coin machine operators by the North American Industry Classification System (NAICS) include, but are
not limited to:
NAICS 454210 (SIC 5962), vending machine operators; NAICS 713120 (SIC 7993), providers of coinoperated services such as music and amusements
(NAICS 713990, pool halls, parlors or rooms); NAICS
454390 (SIC 5963), coffee break service providers.
(These service categories are mutually exclusive.)
The Census of the Industry questionnaire
asks respondents to indicate the kinds of
business they conduct. The industry presents
a diverse picture. 80% of operators were involved in vending more than one product
type in 2010. This group includes “full-line”
operators, a description that may or may not
imply providing food; 42% of them do. And
23% concentrated on specialized vending
segments (candy, cigarette, dairy, bulk, etc.).
Recent data show that 49% of vending
firms market coffee service (a larger percentage would result from including vendors that limit their OCS to existing vending accounts); at least 17% operate music
and games equipment as well as vending
machines; 11% of all vendors are involved
in manual foodservice; 2% combine vending and mobile catering and 20% are engaged in other activities.
NOTE: % totals to more than 100, since many
firms are active in several fields.
Truck and Van Use
Route delivery is a central feature of operators providing merchandise vending, office refreshment, amusement and
music services, so every operation depends on its motor vehicle fleet. In 2010, the number of vehicles run by operating
companies dipped marginally as operators continued to consolidate routes and improved scheduling efficiency to offset
high fuel costs. National average gas prices in 2010 saw one of the smallest ranges in recent history. The price for a gallon
of gas bottomed out at $2.61 and peaked at $2.94, a spread of only 33¢. In general, the composition of operator fleets
remained the same compared with the year prior. Vans represented 54% of vehicles in use by operators, and nonmodified vehicles, principally automobiles used by sales, technical and supervisory personnel, ticked up marginally. Operators continue to become more sophisticated vehicle purchasers, as the pressing need for improved route productivity
puts a premium on vocational vehicles that allow drivers to make the most efficient use of their time. Vending delivery
vehicles must be able to haul ever-larger payloads of packaged cold drinks; coffee service route trucks need different
organization if they are delivering prewritten orders than if they are run as “rolling stores”; and in amusement and music
fleets, the need to carry cigarettes has been supplanted by the need to haul redemption merchandise.
2007
TOTAL VEHICLES
2008
203,600
100%
Vans (route delivery vehicles)
112,500
Maintenance vehicles (specialized)
27,500
Medium-duty trucks
Non-modified vehicles*
2009
2010
198,500 100%
193,000
100%
191,400
100%
55%
108,500
55%
104,000
54%
103,000
54%
14%
26,400
13%
26,000
14%
25,400
13%
14,600
7%
14,500
7%
14,000
7%
13,500
7%
49,000
24%
49,100
25%
49,000
25%
49,500
26%
*Non-vending-modified types of vehicle are acquired and used by all types of operation. They include not only passenger automobiles, but also route delivery vehicles employed
exclusively for amusement and music operations, coffee service and event catering — to mention only the most prevalent. Pickup trucks, for example, are widely (but not universally)
used for moving equipment. Companies active in these service areas, in addition to vending, generally (but not always) maintain separate organizations and vehicle fleets for each.
CENSUS OF
Vended Packaged Cold Drinks
SALES (BILLIONS)
30
20
10
0
2006
2007
2008
2009
2010
Total $ vol. (in billions)
$23.9
Total unit vol. (in billions)
30.6
Weekly unit vol.
175
Machines on site
3,364,000
$24.8
30.2
173
3,360,000
$24.1
28.4
168
3,250,000
$23.3
25.9
162
3,080,000
$23.7
25.0
160
3,000,000
INDUSTRY 2011 | VENDING TIMES |
5
Packaged cold drinks held their prevalence among
vendible product categories last year, generating
56.2% of revenue. Dollar volume nudged upward on
improved pricing, but unit sales declined almost 4% as
the number of machines in the field contracted by
2.6%. While demand for vending services remained
strong, there were fewer customers to enjoy them. The
trend of fewer large locations and smaller client populations was evident in 2010, and was reflected by cold
drink equipment and unit volume shrinkage. Enhanced
cold beverages – energy drinks, fortified waters and
other functional formulations – continued to slow the
decline in dollar volume, since consumers will pay a
premium for these items. While many of today’s popular alternative beverages have been offered for vending in 11.5-fl.oz. or 12-fl.oz. cans, operators increasingly
provide the same packaging that patrons have learned
to expect, including larger glass and PET bottles associated with ready-to-drink teas, juices, water and
sports drinks, along with smaller cans characteristic of
energy and ready-to-drink coffee beverages. However,
soft drinks in 12-fl.oz. cans continued to represent the
lion’s share of unit vending sales by operators, if not by
bottlers who run vending equipment, in 2010.
Cold Drink Categories
Cold beverages have been a part of the historic shift
from mass to niche markets, which also has had a profound effect on the snack, confection, food and hot
beverage categories. In the past two years, the growth
of subcategories was small, but significant to vending
operators. New products designed for very specific
sensibilities appeared over the past two decades and
found a perminent place in vending machines. Carbonated soft drinks (regular and diet) retained their stronghold on first place among vended cold drink categories
last year, at 56% of sales, and water held its secondplace position with a 16% share. Juices, sports drinks,
energy drinks and ready-to-drink teas were grouped in
the 5% to 9% range, the same as the year prior.
THE
SOFT DRINKS (DIET)
24%
WATER
16%
SOFT DRINKS
(REGULAR)
32%
JUICE
DRINKS
5%
SPORTS
DRINKS
9%
RTD TEA
7%
MISC.
1%
ENERGY DRINKS
6%
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
6
Vended Confections and Snacks
VendingTimes
SALES (BILLIONS)
Census of the Industry 2011
12
a supplement
10
the Newsmonthly of Vending, Coffee Service,
Foodservice and Coin-Op Recreational Services
8
President and Publisher
ALICIA LAVAY
[email protected]
6
Vice-President and Executive Editor
NICHOLAS MONTANO
[email protected]
4
2
Editor-in-Chief
TIM SANFORD
[email protected]
0
Total $ vol. (in billions)
Total unit vol. (in billions)
Weekly unit vol.
Machines on site
2000
2007
2008
2009
2010
$7.6
11.2
183
1,180,000
$10.6
12.1
178
1,312,000
$10.2
11.7
176
1,280,000
$9.7
11.1
172
1,240,000
$9.7
10.9
172
1,220,000
Always a dynamic category, packaged confections and snacks once
again constituted the second-largest vendible products category.
In 2010, these items usually sold through multiproduct glassfront
machines and produced 23% of vended dollar volume. Dollar sales
were similar to 2009’s as unit volume and number of machines on
location decreased about 1.6%. Contemporary glassfront machines
are offered in designs ranging from simple to sophisticated, and this
helps vending operators address the demands of smaller workplaces. Combination snack/cold drink and snack/fresh food venders
(which also can vend milk) provide tools for meeting the needs of
nontraditional markets while adding to the complexity of defining
which products are being sold through what kinds of vending machine. Vendible snacks and confections continue to give operators
the means to satisfy increasingly diverse clientele.
Senior Editor
EMILY J. JED
[email protected]
Production Manager
MARIA ACKIES
[email protected]
CONTRIBUTORS:
Music & Games and Bulk Vending Editor
HENRY SCHLESINGER
[email protected]
Music & Games Editor
MARCUS WEBB
[email protected]
SALES:
Director of Sales and Marketing:
Vending and OCS
DAVID NATHANSON
[email protected] | (516) 398-9925
Sales Administrator:
Music & Games, Bulk Vending and Classifieds
APRIL JONES
[email protected]
BUSINESS ADMINISTRATION:
Controller
[email protected]
Subscriptions:
CALL: (516) 442-1850
[email protected]
ABOUT THIS STUDY: The VENDING TIMES Census of
the Industry provides performance results for major
product categories in the automatic vending and coinoperated amusement industries. The objectives of this
report have been met through mail survey techniques
using VT’s current circulation as the measured universe.
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CENSUS OF
Vended Milk
SALES (MILLIONS)
10
5
0
Total $ vol. (in millions)
Total unit vol. (in millions)
Weekly unit vol.
Machines on site
2000
2007
2008
2009
2010
$404.0
842.0
195
83,000
$860.0
957.5
198
93,000
$861.0
967.8
198
94,000
$818.0
908.5
192
91,000
$756.0
814.5
178
88,000
THE
INDUSTRY 2011 | VENDING TIMES |
Milk and milk beverage sales through vending machines
declined in 2010, trailing the weak economy. Decreases
in vended volume and number of machines on location
reflected the constricted economy and, to a lesser extent, restrictions on the types and package sizes allowed in school vending by state and local governments. Dollar sales dipped 7.5% from $817.6 million in
2009 to $756 million last year, as unit volume (including
both newer widemouth plastic bottles and traditional
cartons primarily sold through refrigerated food
venders) edged down 10% to 814.5 million containers
from a volume of 908.5 million the year before. The
availability of shelf-stable flavored milk in modern graband-go packaging may have mitigated the falloff in
sales to some extent, but its higher price-point worked
against widespread acceptance in a period of intense
price sensitivity. Machines on location were reduced by
3.3%, from 94,000 to 88,000. That total, however,
should be regarded with some caution, since more milk
was sold through glassfront cold beverage machines
not regarded by their operators as “milk venders.”
Vended Ice Cream
SALES (MILLIONS)
10
5
0
Total $ vol. (in millions)
Total unit vol. (in millions)
Weekly unit vol.
Machines on site
2000
2007
2008
2009
2010
$564.0
641.0
145
85,000
$916.0
957.9
151
122,000
$918.0
928.0
150
119,000
$886.7
886.7
147
116,000
$929.0
808.0
140
111,000
7
The reemergence of ice cream as a popular and profitable vendible product began in the 1990s, when advances in
vending machine design enabled operators to merchandise a wide variety of upmarket frozen snacks. The category
posted a 4.8% dollar volume increase between 2009 and 2010, reflecting higher vend prices, but registered
declines in unit volume and number of machines on location of 9% and 4.3%, respectively. Unit sales and equipment
reductions are in line with workforce shrinkage last year. Machines in the field diminished to 111,000 in 2010 from
116,000 in 2009, and from 119,000 in 2008, almost entirely as a result of the smaller number of viable workplace
locations. However, ice cream’s popularity in public locations and enthusiasm for novel venders cushioned the blow.
CENSUS OF
The number of food machines and sales through them
contracted again in 2010, as workplace populations
shrank. Total dollar volume fell 6% on a unit sales decline
of almost 12%, with item price improvements slowing last
year’s revenue decline. The vending operator’s dilemma
has been that there are more locations that want fresh
food than there are locations which can support food
machines. Food venders must be serviced frequently
because they sell perishable products with short shelflives. Sales through machines realize their maximum potential during a strong 24/7 economy that demands
round-the-clock access, which has not been seen for
quite a while. Improvements in machine technology,
“menuing” and forecasting capabilities are helping operators to reduce waste and rationalize service frequency.
When taking a census of the food category, it’s important
to note that frozen venders are now a part of the mainstream and they make it impossible to differentiate between the “refrigerated” and “frozen” categories; the
same branded sandwiches, shipped and stored frozen,
can be sold through both kinds of machine. And “food”
machines do not sell all the food purchased by vending
patrons. A multiproduct glassfront machine, usually designated for snacks and confections, can sell shelf-stable
entrées in trays, cans and microwaveable bowls, as well
as freeze-dried mainmeal items. This makes it possible to
meet a small location’s food demands by adjusting the
menu in a snack machine.
THE
INDUSTRY 2011 | VENDING TIMES |
Food Vending
SALES (BILLIONS)
4
2
0
Total $ vol. (in billions)
Total unit vol. (in billions)
Weekly unit vol.
Machines on site
2006
2007
2008
2009
2010
$3.3
2.4
189 (85)*
166,750
$3.3
2.3
268
166,000
$3.4
2.0
245
160,000
$2.9
1.7
220
150,000
$2.7
1.5
200
146,000
*(Restated to include canned food.)
2010 PRODUCT SALES SHARE
Sandwiches & other “finger foods”
58%
4%
Dairy snacks/desserts (yogurt, cottage cheese, etc.)
Salads
20%
Fresh fruit & vegetables
5%
Packaged cold beverages (juice, milk, water, etc.)
3%
Platters, entrees, soups (including cans)
6%
Pastries
1%
Packaged fruit, gelatin, puddings
3%
Vended Cigarettes
Smoking bans, restrictions on machine placements
and the unremitting burden of taxes levied by all echelons of government on tobacco products kept cigaSALES (MILLIONS)
rette vending on its decades-long downward trajec15
tory last year. In early 2010, the average retail price of
a pack of cigarettes in the U.S. was approximately
$4.80 (including federal, state, and municipal excise
taxes), but prices varied widely across states. The av10
erage state cigarette excise tax rate was approximately $1.44 a pack, but varied from 17¢ in Missouri
to $4.35 in New York. On June 22, 2010, a new federal
5
law went into effect that gave the U.S. Food and
Drug Administration authority to regulate tobacco
products. The FDA restricted cigarette vending to locations for patrons 18 and over, as part of a broad
0
plan designed to limit tobacco sales to youths. With
2000
public smoking restricted to adult establishments,
Total $ vol. (in millions)
$905.0
the need for controlled delivery of cigarettes in such
Total unit vol. (in millions)
312.0
facilities remained valid. Tavern owners are no more
Weekly unit vol.
30
eager to undertake the task of purchasing and conMachines on site
166,000
trolling inventories of extremely valuable items than
they ever were. Nevertheless, sales in bar and tavern
locations have been diminished by comprehensive indoor smoking bans
that are now common nationally. The potential of vending technology for
controlling access to cigarettes has not been widely recognized. Currently,
only 11 states have not enacted indoor smoking bans.
2007
2008
2009
2010
$588.1
90.5
29
60,000
$355.0
53.3
25
41,000
$298.0
44.2
25
34,000
$229.0
32.8
21
30,000
8
CENSUS OF
Hot Beverage Vending
SALES (BILLIONS)
6
4
2
0
Total $ vol. (in billions)
Total unit vol. (in billions)
Weekly unit vol.
Machines on site
2000
2007
2008
2009
2010
$3.6
6.5
384
326,000
$4.3
7.0
384
350,000
$4.1
6.4
374
330,000
$3.6
5.6
359
300,000
$2.9
4.6
325
270,000
Vended Cup Cold Drinks
SALES (MILLIONS)
20
15
10
5
0
2000
2007
2008
2009
2010
Total $ vol. (in millions) $2,006.0
Total unit vol. (in millions) 3,086.0
Weekly unit vol.
345
Machines on site
170,000
$788.1
1,200.0
320
74,000
$500.0
800.0
250
60,000
$333.0
520.0
250
40,000
$243.4
374.4
240
30,000
THE
INDUSTRY 2011 | VENDING TIMES |
9
Vended hot drink sales through equipment identified
as “vending machines” continued to fall considerably
in 2010. Annual dollar volume dropped about 20% on
fewer machines in the field. Unit volume through vending machines declined almost 19%. Once closely tied
to industrial employment, full-line hot drink vending
has been expanding far beyond its old factory base in
the past two decades. But losses of industrial locations
and shrinking workplace populations have been driving the decline in full-line hot beverages. Simultaneously, increased deployment of countertop fresh-brew
equipment, which has given operators additional options for dealing with a larger number of smaller locations, has displaced full-size hot drink venders in many
locations, and this was certainly the case in 2010. Bulkloading c-top fresh-brew machines, fundamentally
miniature venders, are operated more and more on a
full route-service basis in locations that formerly might
have received an older soluble-product vender.
Postmix cold cup equipment remains one of two traditional vending machine types that “finishes” the
product before delivering it to the patron. The other
type is hot beverage vending equipment, discussed
above, and these two working together represented
the high-margin foundation for full-line vending in the
heavy-industrial environment that characterized its
formative years. This “wet mix” is still used, and is
profitable, in locations with enough traffic to justify
the equipment and maintenance cost. Postmix machines offer patrons an attractive value proposition: a
carbonated soft drink with or without ice and a generous serving size at a very competitive price. The few
operators who continue to run cold cup drink venders
have made full use of the larger cup size and pure-water options of the last generation of equipment to optimize pricing, and there seems little opportunity to
improve sales further until workplace staffing increases. But the continued reluctance of employers to return to pre-9/11 staffing levels makes this unlikely anytime soon. In 2010, postmix cold cup sales fell 27%.
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
10
Coffee Service
Modern office refreshment service arose when rising fuel and labor costs made older small-site catering methods uneconomical. That legacy has helped operators address today’s market, characterized by higher expenses, smaller locations
and a downsized workforce. It happened amid a longer-term transformation brought about by the rise in specialty coffee
and the resulting demand for quality, a pleasant change from the earlier insistence on low price. The resulting adoption of
more complex equipment, coinciding with the need to apply vending technology in smaller sites and to maximize sales
from every account, accelerated the already considerable interpenetration of OCS, pure water service and vending. While
total volume dipped in 2010, average location sales increased, auguring well for the future.
PRODUCT PURCHASES
2004
2005
2006
2007
2008
2009
2010
86,500
7,300
345
215
12,200
1,350
26,100
4,475
147
86,650
7,150
350
215
12,000
1,420
26,000
4,525
145
86,650
7,100
350
213
12,000
1,520
26,300
4,600
142
87,000
6,900
345
199
11,600
1,600
25,900
4,500
140
87,000
6,800
345
201
11,500
1,650
26,000
4,450
141
85,000
6,500
343
200
11,200
1,700
25,800
4,350
142
81,000
6,250
340
200
10,800
1,800
26,300
4,325
142
2004
2005
2006
2007
2008
2009
2010
626,000
634,000
626,000
632,000
626,000
631,000
625,000
629,000
624,000
629,000
613,000
620,000
594,700
613,900
(Average purchase, in pounds, by category)
Roast coffee
Creaming agent
Soups
Freeze-dried coffee
Decaffeinated coffee
Tea
Sugar and sugar substitutes
Chocolate
Novelty hot drink flavors
CUP PURCHASES
(Average unit purchase, by company)
Paper cups
Plastic cups
SALES VOLUME
$1,824,500 $1,875,000 $1,890,000 $1,895,000 $1,891,000 $1,839,000 $1,867,000
(Average dollar volume, by company)
DISTRIBUTION of COMPANIES by VOLUME
2004
2005
2006
2007
2008
2009
2010
4%
38%
24%
20%
14%
3%
40%
22%
21%
14%
3%
39%
23%
20%
15%
3%
38%
23%
20%
16%
4%
40%
22%
19%
15%
6%
42%
21%
18%
13%
7%
43%
20%
18%
12%
2004
2005
2006
2007
2008
2009
2010
572
73
35
572
74
34
575
73
34
578
71
34
576
68
31
571
65
30
568
65
31
2004
2005
2006
2007
2008
2009
2010
95%
2%
3%
2%
53%
97%
54%
95%
2%
2%
—
55%
98%
54%
93%
1%
2%
—
58%
99%
55%
91%
—
2%
—
61%
99%
57%
92%
—
3%
—
65%
99%
56%
90%
—
2%
—
67%
99%
55%
85%
1%
2%
—
75%
98%
54%
2004
2005
2006
2007
2008
2009
2010
47%
75%
76%
12%
2%
1%
62%
84%
90%
10%
47%
74%
74%
10%
1%
1%
60%
84%
92%
10%
46%
75%
75%
6%
2%
1%
58%
85%
93%
12%
44%
75%
74%
4%
3%
2%
55%
86%
93%
11%
42%
75%
73%
2%
5%
2%
53%
87%
95%
12%
40%
72%
72%
1%
6%
3%
53%
85%
95%
12%
32%
75%
74%
1%
8%
2%
50%
88%
97%
13%
(Annual dollar volume)
$1,000-$100,000
$101,000-$500,000
$501,000-$1,000,000
$1,001,000-$2,000,000 (“Over $1 million” before 1995)
Over $2,000,000
COFFEE SERVICE EQUIPMENT
Average number of accounts
Average brewing equipment purchases
Average non-brewer equipment purchases
BREWING EQUIPMENT USAGE
(Percentage of firms using each type of equipment)
Pour-through
Noncoin freeze dried
Coin-op freeze dried
Coin-op batch brew
Single-cup fresh brew
Plumbed-in
Special gourmet equipment
NON-OCS BREWING EQUIPMENT
(Percentage of firms using each type)
Full-size coffee vender
Candy/snack vender
Microwave oven
Postmix soft drink unit
Ice-maker
Noncoin snack box
Refrigerator or freezer
Canned cold drink vender
Water purifier/dispenser
Other
CENSUS OF THE INDUSTRY 2011 | VENDING TIMES |
11
Bulk Vending
The number of bulk and flat vending machines in the field declined between 2009 and 2010. Total
dollar sales decreased from $398.4 in 2009 to $387.6 million last year, or 2.7%. Ongoing price improvements helped slow revenue losses, especially in the capsuled novelty category, which is supported by a supply chain that is skilled at developing products that speak to the aesthetic enthusiasms of the youth market. Bulk machine crediting (in the United States) is almost always handled
in 25¢ increments, which limits the vending operator’s ability to accurately match cost of goods
to retail pricing trends. However, today’s bulk and flat merchandise patrons are willing to insert
multiple coins to make a purchase, and this trend has helped the industry compensate for higher
product costs triggered by increased prices for such commodities as petroleum (for plastic toys
and capsules) to sugar. In 2010, sales at 50¢ and above rose to 73% of total dollar volume.
CAPSULE VENDERS
Total machines
Annual average volume per machine
TOTAL DOLLAR VOLUME
2006
2007
2008
2009
2010
692,000
691,000
664,000
648,000
630,000
$258
$263
$265
$265
$270
$178,536,000
$181,733,000
$175,960,000
$171,720,000
$170,100,000
13,000
10,500
10,300
9,100
8,500
NOVELTY CAPSULE VENDERS
(Animated high-capacity units)
Total machines
Annual average volume per machine
TOTAL DOLLAR VOLUME
$395
$380
$370
$365
$330
$5,135,000
$3,990,000
$3,811,000
$3,321,500
$2,805,000
413,000
400,000
370,000
355,000
325,000
NUT/PAN CANDY VENDERS
Total machines
Annual average volume per machine
TOTAL DOLLAR VOLUME
$206
$200
$220
$220
$220
$85,078,000
$80,000,000
$81,400,000
$78,100,000
$71,500,000
911,000
913,000
890,000
864,000
850,000
$121
$124
$125
$125
$125
$110,231,000
$113,212,000
$111,250,000
$108,000,000
$106,250,000
210,000
215,000
213,000
213,000
211,000
BALL GUM VENDERS
(Includes “chicle” and wrapped tab gum)
Total machines*
Annual average volume per machine
TOTAL DOLLAR VOLUME
(*Includes charitable/civic organization placements)
FLAT VENDING
(Primarily stickers and temporary tattoos)
Total machines
Annual average volume per machine
TOTAL DOLLAR VOLUME
$176
$176
$175
$175
$175
$36,960,000
$37,840,000
$37,275,000
$37,275,000
$36,925,000
2006
2007
2008
2009
2010
$415,940,000
$416,775,000
$409,696,000
$398,417,000
387,580,000
VENDED PRICES/SHARE OF SALES (DOLLARS) 2006
2007
2008
2009
2010
–
–
–
–
–
25¢
38%
36%
32%
30%
26%
50¢
40%
41%
44%
45%
47%
75¢ and $1
22%
23%
24%
25%
27%
TOTAL DOLLAR VOLUME – ALL TYPES
Less than 25¢
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
12
Music and Games Analysis
The amusement and music industry in 2010 continued to undergo
a transformation dictated by a nearly “perfect storm” of competition from other types of entertainment and the persistent national
economic weakness. Its difficulties had some similarity to those of
merchandise vending, but there were real differences in detail.
Like vending, the on-street music and games business depends
on the strength of its locations for its own prosperity; sitebased operations like family entertainment centers are affected
by difficulties besetting the hospitality industry in general. Both
types of operation thus confronted a hostile environment last
year. The street business also dealt with the ongoing proliferation of rival entertainment modes, primarily mobile devices,
and with the continuing decline of its core market, the once-robust tavern segment.
This erosion of an institution celebrated in American lore has
been under way for more than four decades, but it has been accelerated by the widespread adoption of bans on smoking in
places of public accommodation. Bars and taverns were the only
major category of food and beverage establishment to decline in
2010, falling by 282 last year, after a loss of 628 in 2009. On the
other hand, the number of restaurants not classified as “drinking
establishments” increased by 7,687 in 2010.
For these reasons, the decline in the nine broad types tracked by
the VT Census of the Industry is not surprising. These types are:
» Pool tables (down 12%); 31% of total dollar volume;
» Prize venders (down 3.5%); 19.5% of total dollar volume
» Videogames (down 9%); 16.5% of total dollar volume
» Ticket redemption (down 9%); 16% of total dollar volume
» Electronic dartboards (down 7%); 11% of total dollar volume
» Pin games (down 15%); 4% of total dollar volume
» Soccer tables (down 28%); about 1% of total dollar volume
» Kiddie rides (down 17%); less than 1% of total dollar volume
» Shuffle alleys (down 4%); less than 0.5% of total dollar volume
Public locations other than bars and taverns, in which a majority
of cranes and amusement vending machines are placed, have
been affected by the depressed economy, too. To make matters
worse, the U.S. Bureau of Labor reported that spending on entertainment fell 7% in 2010, compared with a 5% decline in
2010 Total Amusement $ Volume
2009. VT’s Census of the Industry shows spending on coin-op
amusements down almost 9% in 2010 (but better than the
nearly 10% decline in 2009). The economic difficulties consequent to the 2008 crash also had impact on family entertainment centers (FECs). The prolonged recession, reduction in entertainment expenditures, and competing home console and
handheld games reduced traffic and spending at FECs last year.
In some respects, the postwar years – roughly 1947 through 1960
– represented a great turning point in the evolution of technology
in entertainment (and in much else besides). The street operating
business emerged to give average people affordable access to
pleasures that were, at best, very costly to reproduce at home –
a wide selection of high-fidelity music, for example, and a variety
of expensive games. In a sense, street operators created the demand that improvements in design and manufacturing then
filled by making possible affordable home equivalents. The great
shift from band concerts in the park to jogging with an MP3 player took place over more than half a century, but the trendlines
became evident in the 1950s and ‘60s.
At the same time, technology also has given the out-of-home entertainment business new pleasures to purvey that, again, cannot
be enjoyed at home. Real competitive play – the chance to pwn
the man standing next to you, to the cheers and catcalls of the
onlookers – casts a strong social aura over the best modern coinop amusements that’s missing from online games played at home
(even at a LAN party), however engrossing they may be. Operators long have striven to benefit from this crowd effect and to
combat location ownership of equipment by organizing leagues
and staging tournaments for their members. Bolstered by modern
software and wide-area networks, these have become important
tools for maintaining player interest.
Two other trends should be kept in mind when considering the
prospects for the coin-operated amusements. The first is the
willingness of operators to abandon – at last – low-volume locations that had stayed on routes only because the equipment
was fully paid for. Many of these now are seen as costing more
than they’re worth.
Second, the demand created by the classic street operation at
length has crystallized into a relatively new market: the home itself.
Operators have found their inventory of older games and their skill
at repairing them to be very marketable properties, This, in turn,
has created a new market for manufacturers who can recreate
classic games and piqued the interest of the rising generation.
SALES (BILLIONS)
8
6
4
2
0
Total $ vol. (in billions)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
$5.8
$6.0
$6.1
$6.1
$6.1
$6.2
$6.2
$6.1
$5.8
$5.3
$4.8
CENSUS OF THE INDUSTRY 2011 | VENDING TIMES |
13
Coin Phonographs (Jukeboxes)
Digital downloading jukeboxes have kept street operators competitive in a shrinking market over the past decade
and so the number of new units connected to the Internet grew moderately last year. In 2010, there were an estimated 66,000 boxes online, up about 5% from the previous year. The number of compact disc and legacy vinyl jukeboxes continued to decline. In 2010, there were approximately 22,200 CD and vinyl boxes documented, compared
with 26,100 the year prior.
Introduced in 1999, the server-controlled jukebox with a touchscreen user interface has reshaped the industry, allowing coin machine operators to provide scalable multimedia products to their clientele. However, the economic
difficulties of the post-2008 world curtailed the industry’s ability to position the jukebox and allied products in the
emerging place-based advertising market.
The average weekly income generated by a digital phonograph, according to survey respondents, was $160, compared with $205 in 2008. Last year, CD boxes generated $65 a week, whereas legacy vinyl boxes yielded $25 or
less. The diffusion of digital jukebox connections into “C,” “D” and “E” locations, a sluggish economy and slower
traffic in tavern locations explains the decline in weekly earnings experienced by digital systems.
The strategic challenge for today’s music and amusement businesses is that street locations are evolving away from
the neighborhood tavern, whose decline already was being lamented by 1970. Moreover, today’s consumer has access to recorded music and high-tech entertainment that would have been unimaginable in 1950, or even 1970.
While moving the jukebox to an interactive format may increase its social appeal, the industry continued to face
new challenges presented by the same music technology it has employed. IPod play in locations that began to take
hold six years ago continued to reduce jukebox play last year. The number of unlicensed digital jukeboxes playing
unauthorized music reportedly grew last year. These and other factors are making it difficult for the legitimate jukebox industry to expand beyond the approximately 90,000 venues it serves in the U.S.
The modern jukebox surfaced in the late 1940s and enjoyed explosive growth in the following decade, as the highfidelity vinyl microgroove 45-RPM record became the dominant recorded-music format. Valued by artists and
music producers as an effective medium for catching the ears of the music-buying public, jukeboxes were rivaled
only by radio during the 1950s and ‘60s. All this began to change when a new generation, experiencing unprecedented prosperity and falling prices of high-end electronics, turned to the LP album as its music format of choice.
Using the power of its networks, today’s jukebox industry – primarily comprised of three music providers (AMI Entertainment Network Inc., Ecast Inc. and TouchTunes Interactive Networks) and some 2,000 vendors – is trying to
reposition the jukebox as a promotional vehicle for the recording industry. As in previous years, dozens of new albums were released first on digital jukeboxes, which played more than a billion songs in 2010.
JUKEBOX EQUIPMENT in USE
Compact disc
45-RPM
Digital downloading
2003
2004
2005
2006
2007
2008
2009
2010
78%
75%
70%
58%
45%
33%
28%
24%
8%
7%
6%
4%
3%
3%
3%
2%
14%
18%
24%
38%
52%
64%
69%
74%
JUKEBOX REVENUE
Average weekly income
$113
$116
$148
$144
$145
$140
$138
$113
Average commission rate
46%
44%
45%
43%
43%
45%
45%
40%
JUKEBOX PRICING
5/$1 or 25¢
9%
9%
6%
4%
3%
3%
3%
3%
3/$1 or 50¢
41%
40%
38%
39%
40%
41%
42%
41%
5/$2
7%
9%
13%
13%
13%
14%
14%
14%
18/$5
21%
21%
22%
22%
22%
21%
21%
21%
15/$5
11%
12%
12%
13%
13%
12%
11%
11%
Other
11%
9%
7%
7%
7%
9%
9%
10%
20%
21%
22%
23%
38%
28%
18%
21%
AVG. GROSS REVENUE VOL. CHANGE
Increase
Decrease
2%
5%
8%
9%
12%
32%
52%
44%
78%
74%
70%
68%
50%
40%
30%
35%
Karaoke
4%
4%
3%
3%
2%
3%
3%
4%
Background music systems
5%
3%
2%
3%
3%
5%
6%
7%
No change
ALLIED MUSIC SERVICES (offered by operators)
CENSUS OF THE INDUSTRY 2011 | VENDING TIMES |
Videogames
The number of coin-operated videogames in the field
declined almost 4% in 2010, as the base “street” locations, which include bars and taverns, continued a
decades-long tightening. An estimated 296,000 units
on location, compared with 308,000 in 2009, posted
$769.6 million in dollar volume, compared with
$800.8 million in the year prior, a 4% drop.
14
SALES (MILLIONS)
15
10
5
0
Not unlike touchscreen jukeboxes, but perhaps to a
2000
2007
2008
2009
lesser extent, videogames can be regarded as part of
Total $ vol. (in millions) $1,170.0
$904.0
$881.9
$800.8
the greater digital entertainment and advertising secWeekly average
$50
$53
$53
$50
tor, which saw media spending in 2010 increase to
Machines on site
450,000
328,000
320,000
308,000
$433 billion, up 3% from 2009. While overall entertainment expenditures were reportedly down last
year, several market researchers claim spending on
digital entertainment was slightly up. Spending on satellite radio, TV subscriptions, books and filmed entertainment offset declines in recorded music, newspapers, consumer magazines and videogames. Consumer
videogame software sales in the United States fell to $13.6 billion in 2010 from $13.7 billion the year prior.
Arcade videogames were modern marvels when they first appeared on the scene in the early 1970s. They
dominated the amusement trade and surpassed box office sales by the end of that decade and peaked in
1982, representing 60% of total amusement revenue, or $4.4 billion, before crashing in 1983. Last year,
videogames represented about 28% of total amusement machines on location and 16% of total dollar volume.
After the Great Videogame Crash, the category underwent several periods of remission, but ultimately lost
its technological advantage to home systems by 1996. Today, the coin-op video sector mainly consists of
large simulators, ranging from driving to dancing, for arcade placement, conventional upright formats for
installation in bars and other public locations, and touchscreen-enabled games for positioning on bar tops.
Despite the category’s contraction, the videogame is supported by a manufacturing and development sector that continues to innovate, invests in research and penetrates emerging trends. But the number of developers for the street market is few. Games in taverns are dominated by two brands: Incredible Technologies’ Golden Tee Golf and AMI Entertainment Network’s Megatouch, a countertop system. Both manufacturers are striving to increase the number of online games. Big Buck Hunter, from the studios of Raw Thrills
and Play Mechanix, is a third company that has made progress in connecting games to the Internet and
creating player programs for them.
The Golden Tee family of golf videogames proved that a coin-op videogame could appeal to a more mature
audience. Online sports-themed games pointed to a change in the demographic profile of people who play
videogames in public sites, which has altered the economics of the business. Like the activities they
recreate, these games reward experience, but some cannot quite be learned. Their interactivity enables
tournament play, encourages the formation of leagues, publicizes high scorers, opens the door to ongoing
promotions and establishes citizenship in a now global community. Golden Tee first went online in 1995.
Although a significant number of coin-op videogames supports online play and administration, a majority
is operated offline. Last year, there were 12,229 Golden Tee and 6,121 Silver Strike bowling games online.
The 18,350 units connected to Incredible Technologies’ gaming network likely represented over 70% of all
connected coin-op videogames in the field.
2010
$769.6
$50
296,000
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
Prize Merchandisers
SALES (MILLIONS)
12
10
8
6
4
2
0
Total $ vol. (in millions)
Weekly average
Machines on site
2000
2007
2008
2009
2010
$605.5
$142
82,000
$1,005.9
$156
124,000
$1,001.0
$154
125,000
$980.1
$152
124,000
$943.8
$150
121,000
Prize merchandisers continued to generate a significant share of dollar volume for operators
in 2010, about 19%, similar to the percentage share in 2009. Declines in this category last
year were not as large as in others. Total dollar volume dropped from $980 million in 2009
to $944 million last year, or 4%, on fewer machines in the field. The number of machines on
location declined from 124,000 in 2009 to 121,000 last year, or 2.5%. Merchandisers experienced consistent annual growth between 1996 and 2007. In 2008, the growth trend leveled
off, and in 2009 revenue declined 2%. Coin-operated amusement devices that award prizes
robotically benefit from the availability of affordable equipment that provides stronger merchandising appeal. For more than a decade, prize dispensers were put into service as “other”
income sources for the nation’s retail space, occupied by national and regional mass merchandise chains, restaurants, movie theaters and grocery stores. This, in part, is due to restrictions on the placement of videogames, which oftentimes are not considered “family
friendly” enough. Over the past three years, slower foot traffic and coin drop at retail locations contributed to revenue declines.
Kinetic art aspects of merchandisers and cranes provide “retro” appeal. The skill crane or
“digger,” which makes use of a claw with adjustable tension strength to retrieve prizes, is the
most common type of amusement merchandiser. The origin of the skill crane is traced back
to traveling carnivals of the early 20th century; early arcade versions, known as “claw”
games, first appeared in penny arcades in the 1920s. Their universal application in typical
street and location-based sites began around 1980 when they were added to the mix of
equipment found in videogame arcades. The second machine type in this category, also
known as “self-contained redemption,” is commonly called an amusement vender, and usually combines a skill game and wider range of vendible selections that are awarded through
a separate dispensing mechanism. The ability to instantly offer a patron a prize after playing
a game of skill plays a central role in today’s amusement industry.
15
CENSUS OF
Electronic Dart Games
SALES (MILLIONS)
10
5
0
Total $ vol. (in millions)
Weekly average
Machines on site
2000
2007
2008
2009
2010
$669.2
$66
195,000
$695.6
$76
176,000
$632.3
$76
160,000
$561.8
$73
148,000
$520.5
$70
143,000
THE
INDUSTRY 2011 | VENDING TIMES |
16
Electronic dartboards, usually played with soft-tip darts,
are almost always placed in bars and taverns where professional vending companies administer dart leagues and
tournaments. A decline in location numbers and traffic
has kept pressure on the dart category’s downward trend.
In 2010, electronic dartboards registered a revenue loss of
7% on a decline in machine placements and weekly earnings of 3.5% and 4%, respectively. While electronic dartboards are staple coin-op machines throughout the country, they are most prevalent in the Midwest, where the faltering economy has hit hard. Some 90% of operators involved in darts identify local and statewide smoking bans
as key reasons for diminishing league membership and location traffic in the blue-collar taverns they serve. This has
also impacted other barroom pieces like jukeboxes,
videogames, pool and foosball. Leagues and tournaments
have always been the foundation of electronic darts and
remained strong in 2010 despite the economic hardships.
Last year, the National Dart Association sanctioned about
56,000 players who were sponsored by vending companies that installed boards in more than 10,000 locations
worldwide. In addition to organized promotion, electronic
dart machines have been the beneficiaries of technology.
They were among the first coin-op games to go online, as
far back as 1991. They offer versatile payment systems, remote monitoring and software to run paperless leagues.
Pinball Machines
The popularity of pinball machines among a devoted
constituency and casual players of all ages has kept
this classic coin-op game in commercial operation.
SALES (MILLIONS)
Total dollar volume generated by pinball machines
was $233.4 million in 2010 compared with $275.2 mil10
lion in 2009. Pinball machines, or flipper games, were
among the first coin-operated amusement devices to
be widely deployed by professional operating companies. They were originally associated with “street”
5
locations, from neighborhood taverns and restaurants
to candy stores and mom-and-pop groceries, and often complemented jukebox and cigarette vending
operations. Today, coin-operated pinball is regarded
0
as a niche product, offered by fewer and fewer vend2000
ing companies capable of handling rigid maintenance
Total $ vol. (in millions)
$936.0
procedures, equipment rotations and electromechanWeekly average
$60
ical repairs. But for these operators, the game remains
Machines on site
300,000
a critical part of the equipment mix and helps define
their businesses as full-service coin-op amusement
providers. Interest in the art of playing pinball still remains high for many in the 40-and-older crowd, as well as for the generations
born after pinball’s heyday. Outside the commercial sphere, pinball’s status as
a collectible or home accessory continues to climb. Sales to homeowners, collectors and hobbyists have contributed to the game’s endurance.
2007
2008
2009
2010
$381.9
$72
102,000
$323.0
$69
90,000
$275.2
$67
79,000
$233.4
$66
68,000
CENSUS OF
Ticket Redemption (Arcade Games)
SALES (MILLIONS)
10
5
0
Total $ vol. (in millions)
Weekly average
Machines on site
2000
2007
2008
2009
2010
$572.0
$100
110,000
$895.9
$118
146,000
$891.1
$119
144,000
$844.5
$116
140,000
$760.8
$110
133,000
2000
2007
2008
2009
2010
$25.1
$69
7,000
$40.6
$65
12,000
$38.9
$65
11,500
$32.8
$60
10,500
$27.2
$55
9,500
THE
INDUSTRY 2011 | VENDING TIMES |
After a marked growth period of two years, the ticket
redemption category experienced its first decline two
years ago and continued to fall back in 2010. Total revenue dropped from $844.5 in 2009 to $760.8 million
last year, or 10%. Weekly per-machine earnings and
number of machines on location both dropped about
5%. Ticket redemption devices are “specialized” arcade
games that test a player’s skill and award achievement
by dispensing tickets. They are prevalent in site-based
entertainment markets, particularly FECs (family entertainment centers). Unlike prize dispensers that
award merchandise at points of sale, which can be
classified as “automated redemption,” ticket redemption games are usually operated alongside attended
product centers that showcase a wide selection of
prize merchandise. Redemption centers also act as exchange points for accumulated tickets. Redemption
centers are sometimes sited in high-traffic locations,
known as anchors in industry parlance, whose primary
business is something other than coin-op amusements;
redemption offerings in the gamerooms of bowling
centers illustrate this application. The coin-op amusement industry borrowed the redemption concept from
traveling carnivals, which had always offered table
games and other challenges for prizes. Automated
ticket-dispensing technology was first added to coinoperated redemption in the late 1960s.
Kiddie Rides
Total $ vol. (in millions)
Weekly average
Machines on site
17
Kiddie ride revenue declined approximately 17% in 2010. The number of machines on location dropped almost 10% while weekly average earnings decreased 8%. Restricted to a narrow audience of children between ages three and seven, kiddie rides never held a formal
presence in music and games route operations. However, they have been longstanding fixtures placed on the sidewalks in front of, or inside, grocery and retail stores since the mid20th century – and nowadays they are common adjuncts to bulk venders and cranes
serving the same retail spaces. Most kiddie rides are placed by specialized operations that
can maintain equipment for service periods as long as 30 years, during which they are put
back into circulation many times over. In 2010, losses in dollar and unit volume could be attributed to depressed traffic in the kiddie category’s core public retail locations.
NOTE: This survey represents kiddie rides operated by music and games companies and does not include operations
that specialize in coin-operated kiddie rides or location-owned equipment. However, the Census does reveal developments and emerging trends. The number of kiddie rides placed by specialized operations, music and games businesses
and location owners is estimated to be 64,000 (similar to 2009 and down from 100,000, or 36%, in 2000).
CENSUS OF
Pool Tables
THE
INDUSTRY 2011 | VENDING TIMES |
18
SALES (BILLIONS)
3
The pool table retained its No. 1 earning position among
coin-operated game categories in 2010, accounting for
2
31% of total amusement revenue. The category held
the No. 2 spot for units on location, representing 24%
of placement share, behind videogames, which held
1
28%. Following the crash of 2008, pool was among the
hardest hit coin-op games. Last year, revenue generated by them dropped 12% as units in the field declined
10%. Pool table income is linked to traffic in taverns and
0
bars, and the category’s descent in earnings, which be2000
2007
2008
2009
2010
gan in 2007, is primarily the result of fewer customer
Total $ vol. (in billions)
$1.7
$2.1
$2.0
$1.7
$1.5
visits to those locations nationwide. Coin-op pool taWeekly average
$104
$123
$120
$115
$112
bles, which arrived on the scene in the 1950s, after the
Machines on site
320,000
332,000
320,000
290,000
260,000
invention of cueball separation, are built to last a long
time and engineered for easy maintenance. The success story for pool operators in recent years is the electronically controlled table, sometimes powered by a battery.
Operators report an average 20% increase in earnings when replacing, or upgrading, conventional tables with electronic models. Until recently, pool, also known as “pocket billiards,” was widely regarded as a corruptive influence,
often targeted as an immoral disruptor by politicians and severely regulated by local legislators. Today, pool is
highly respected and enjoys a broad player base, consisting of men, women, teenagers and even children. In 2010,
about 25% of amusement vending companies offering pool also conducted pool leagues, similar to last year.
Soccer Tables
Total $ vol. (in millions)
Weekly average
Machines on site
Shuffle Alleys and Bowlers
2000
2007
2008
2009
2010
$77.0
$37
40,000
$72.8
$35
40,000
$57.3
$29
38,000
$52.4
$28
36,000
$37.7
$25
29,000
Total revenue generated by coin-operated soccer tables dropped about 28% as fewer street operators included them in their equipment mixes. Regarded as
niche products by many full-service amusement vending companies, soccer tables produced less than 1% of
total machine revenue in 2010. Not represented in this
survey are tables run by specialized operations catering
to professional players; equipment in this market outperforms tables on the street. Also known as foosball,
table football or baby foot, this coin-op sports game
has been a part of the American coin-op landscape
since the mid-1970s, and has a history that spans more
than a century. Its fame began to grow after World War
II in Europe and slowly in the U.S., where it became extremely popular during the ‘70s on and near college
campuses and in recreation centers. The first tables
were imported into the U.S. around 1955, experienced
a slow start and earned marginally. The game became
very popular during the ‘50s and ‘60s with U.S. military
personnel stationed in Europe. Returning servicemen,
it is alleged, created a large player base for foosball’s
resurgence in 1969, but only for a short period.
Total $ vol. (in millions)
Weekly average
Machines on site
2000
2007
2008
2009
2010
$19.2
$45
8,200
$17.8
$44
7,800
$17.6
$44
7,700
$17.4
$44
7,600
$16.7
$44
7,300
Classic shuffleboard tables and puck bowlers have
carved out a small niche in the modern coin-op amusement industry dominated by touchscreen devices,
prize-based amusements and pool tables. Both types
of game were route staples during the 1950s and early
‘60s, when they enjoyed immense popularity in neighborhood taverns. Shuffleboard is regarded as an early
contributor to the success of the coin-operated
amusement business nearly half a century ago. As
with other traditional coin-op games, the emergence
in the mid-’70s of the videogame, which generated
greater returns from less location floor space, and
changes in leisure preferences have led to the category’s gradual decline during the past three decades. But
the shuffleboard has survived, offering nostalgic appeal to older players and new challenges to a younger
generation playing for the first time. In 2010, shuffle
game earnings and units on location dipped slightly.
CENSUS OF
THE
INDUSTRY 2011 | VENDING TIMES |
Other Coin-Operated Equipment
The restriction of “vending machine” to a device that delivers merchandise is useful, but is
somewhat artificial. If one defines “vending” as customer operation of a coin, currency or cardactuated appliance, then services are vendible, too. Coin lockers, coin copiers, pay telephones
and coin washers and dryers — and the coin-operated shoeshine machines and hair dryers of
happy memory — are service vending machines. So are jukeboxes and coin amusements.
In some countries with advanced vending industries, vending is defined differently. The Japanese
Vending Machine Manufacturers Association aggregates such things as self-service railroad ticket
dispensing machines with merchandise venders, for statistical purposes. The French regard
newspaper and magazine vending machines as “vending machines.” Both of these examples, and
others, are entirely reasonable. Late-20th-century U.S. definitions are different because of the
way in which our vending, music and games, coin laundry, gasoline station and public transportation industries have developed.
Even ruling out coin-operated television sets, pay telephones and toilet locks — and these would
not have been ruled out 47 years ago — we are left with a large number of self-service devices
that, for the most part, are run by operators, but that defy precise classification. An ancient example is the penny scale, the last mechanical versions of which not only told you your weight, but
also issued a ticket with your fortune printed on it. This is a service vending concept, but it also
is fun. Modern implementations can analyze your weight and height, and issue rather detailed dietary recommendations. That coin scales are no longer a dominant part of the coin machine industry is a reflection of the development of many other types of equipment, and the evolution of
public taste. So, too, is the decline of the venerable pickled-egg vender (shaped like a chicken).
Other hard-to-define equipment types that operators run profitably include medical monitoring
devices, such as pulse and blood-pressure testing machines, and breath alcohol testing equipment. All perform a useful service, and all perform very well in certain kinds of location. All are
technically quite sophisticated, but simple to maintain in the field. And all provide, if not fun, at
least reassurance that patrons consider worth the price.
Collectors of vending machines recognize a turn-of-the-century type usually called a “sales stimulator.” This was a simple brand-identified mechanical vender, usually cast in the shape of a human
or animal, supplied by a candy or gum company to select retailers. The idea was that the novelty,
the fun of the thing, would attract patrons to the store and impel them to use the machine. If they
liked the gum, they would buy it over the counter, too. There are indications that this concept is
coming back, but in the form of extremely sophisticated brand-identified machines connected to
a wide-area network and designed to work with cards, providing detailed demographic information
to the brand owner in return for the fun of using the machine — and, perhaps, a discounted price
on an attractive product. In general, the fun aspect of using a vending machine is receiving more
attention than it has for half a century or so, with very positive results for the industry.
Other types of vending machine are run by specialist operators within rather narrowly defined location types. Such are refrigerated flower vending machines, live-bait venders, bulk water dispensers, DVD rental devices, compact audio disc venders, a variety of card-printing devices, and
so on and on. The appeal of this equipment is very real and widespread, but is exerted locally and
in response to an occasion.
The vending, music and amusements industry that we track in the annual VENDING TIMES
Census of the Industry thus resembles the earth as photographed from a high altitude. The prominent terrain features stand out clearly, but they emerge from a great landscape, the fine details
of which inevitably are lost in the haze. It is important to remember that the landscape affords a
good living to its inhabitants, and offers many attractive and intriguing prospects to those who
are prepared to explore it close up.
19