Lease or Purchase
First of all, we don’t lease machines, but we get this request ALL THE TIME. I have some suggestions when thinking about putting in one or more machines in your place of business.
So, should you lease or purchase outright?
The answer really depends on how much emphasis or expectation of income you expect from your machines. If you haven’t noticed, there are not too many small arcades operating anymore, but that doesn’t mean at all that they aren’t valuable to your business.
Here are couple thoughts about arcade games:
- Place machines on free play to keep customers longer – or entertain the kids while the adults watch the game/socialize.
- Place a couple of classic machines that match your business for nostalgic reasons. IE: classic pinball in a soda fountain, Harley Davidson pinball in a biker bar.
- Keep machines pay to play at a $0.25 or $0.50 max. Any more, people get turned off.
- Don’t expect huge incomes from your machines, so don’t pay for top of the line, new machines. New machines can cost over $10,000 – which you’ll never recover and the reason why there aren’t many arcades around anymore. If you can purchase a machine for around $2000, you will recover the capital pretty quickly in both income and increased time spent in your establishment.
- You’re not going to be splitting the profits of any arcade game you lease. Expect more like 30% net.
- Check with your local tax codes if you need to separately register an arcade game as a vending machine. If the costs are prohibitive, set them to free-play. The word will get out quick that you have a free arcade.
If you cannot afford what you want and feel that just having a machine in your business will help overall income, then definitely lease. You can find local arcade route operators by going down the street from your business to another restaurant or bar and looking at the contact information sticker usually placed on each machine. Try to negotiate what machines get placed in your business, and how quick they come out to service them when they break down. The machines you get from a route operator are not going to be in great condition. They will work… and they will break down. Get some kind of penalty clause or machine swap if they cannot be repaired in a timely manner.