Montana Gaming Group

article archives

Quickly search for past articles.

Article Quick Links

Analysis and Report
By Cole Boehler
    And that Oct. 1 smoking ban finally seems to be capturing the attention of operators. The progressive ones are already out front of it, perhaps having gone smoke-free or making accommodations to keep smokers comfortable while they puff away out of doors.
    The emerging strategy seems chiefly and broadly to revolve around the individual operator's attitude and approach to running their businesses.
    The Tavern Times spent all day March 9 in Billings visiting with six business owners and managers representing four locations. All reported excellent growth in 2008 and "gangbusters" months in January and February.
    They were: Owner Jeff Flatness at the Squire Lounge; owners Marlon Engberg and Rick Steinmetz at the Muzzle Loader Cafe and Powder Horn Casino; Craig Severson, owner of Peppers Bar and Grill and the Treasure Creek Casino; and Sean Graves of Hooligan's and the Montana Brewing Co.
    Granted, the Billings economy is better than some, but not as good as a few others. However, these owners seem to have de-coupled their businesses operations from the vagaries of the local economy. Rather, they appear to be operating their businesses in a manner that is despite the economy.
    None of these businesses relies on a price point to beat the competition, though they may run an occasional drink special or even a happy hour. Instead, they report their prices are merely "competitive" with others in the marketplace. Low-margin/high-volume is not what they want.
    Most of them talk of returning to the "roots—"the "fundamentals"—of the "bar business." They are focused on making their establishments fun places to be. While not neglecting their gaming casinos, they have found new revenues and margins on the bar side of the operation.
    They are accomplishing this through extraordinary attention to customer service: friendly, smiling staff who work hard and take special care to assure patrons' wants and needs are filled, and that they are made as comfortable as possible.
    Top-flight customer service doesn't cost a bar anything, unless it means rewarding the good workers who get the concept. Good workers don't cost an operator money, they make you money, is what these Billings owners say.
    And in every case the Times was told this new success requires the business owner to be on premise as much as possible (some put in 14-hour days, seven days a week) not only to supervise staff and business operations, but to damp down problems as soon as they arise.
    Even more importantly, they are present to establish and build meaningful, lasting personal relationships with individual customers. It's called "loyalty."
    It's about being there and managing and working your "joint" hands-on, they agree.
    Absentee ownership is a potentially fatal arrangement in this new, hyper competitive economy, they say. They add that there will be winners and there will be losers, with the implication that the losers will outnumber winners.
    Already the license price bubble has burst, they say, noting a market flooded with businesses and licenses for sale. License prices in Billings have reportedly come down 15 percent and more adjustment may yet be on the way.
    These businesses we visited don't necessarily have fabulous locations or expensive, state-of-the-art facilities, but they have decent locations with a fair amount of natural traffic, and all have comfortable and functional interiors and amenities. One is brand new but a far cry from fancy.
    One other thing all four places are focused on: amusement and entertainment; keeping customers in their seats longer.
    There are inexpensive alternatives to live performances, we learned, that are creating a lot of buzz. Some are more traditional and perhaps require no more than a cribbage board and someone who can organize a tournament. Other entertainment options rely on high-technology that is developing even as this article is written.
    Just as traditional video gaming machines have seen revolutionary improvements in game design, features, audio, visual, animation and ergonomics—in short, "entertainment value"—so have alternative electronic amusement devices. They are all benefitting from exponentially increased computing power, connectivity and high-speed broadband communications.
    Have you played a Wii video gaming console lately? An X-Box? If not, you might want to see what your kids are running on their game terminals, lap tops and other personal electronic devices. The sophistication of the game experience—the presentation and player interaction—is almost out of this world. It is, for sure, worldwide.
    And those same technological video game enhancements are finding their way into traditional bar venues in somewhat more traditional game concepts: Golf, bowling and shooting, for example.
    The latest iterations of these not-so-new game concepts must be seen to be believed. The accuracy with which they play is uncanny and, thus, real skills can be developed to make play highly competitive.
    The display screens are now huge and the resolution extremely high definition. Colors and graphics are brilliant. Animation is smooth and realistic. The audio effects are high fidelity with good stereo separation. The controls do exactly what they should.
    The games play so well they actually come pretty close to simulating the real thing, the owners say.
    These Billings operators are all running the newest versions of Golden Tee Golf, Silver Strike Bowling and Big Buck Hunter Pro consoles. They are organizing player tournaments in their own places for their customers. And since more mature customers are already familiar with golf and bowling and hunting, the basic game concepts are readily accessible,  understood and really work.
    One recently conducted electronic bowling tournament at the Squire lasted seven hours and kept seats full of players and spectators and their spouses and friends the whole time. You can believe some drinks were sold that day.
    Better yet, Squire owner Flatness, relying on the ingenuity of his vendor, Billings' Amusement Services, has rigged his equipment to display the competition on some of the big-screen TVs scattered throughout the venue, allowing excellent spectator attention.
    At the Powderhorn, Engberg and Steinmetz have conducted highly successful on-premise tournaments for their patrons. Then they learned another pub just up the road, the Moosebreath, was doing the same thing. So they organized a league where competition is conducted between teams in both venues.
    Taking that concept even further, Tim Carson, president of Amusement Services, is putting together the software and hardware back at his shop to allow tournament and league play to be conducted at various venues around town simultaneously, all managed by computer at his location.
    The key to making all this work is "connectivity," Carson explains. Some amusement devices are already operating via the internet and high-speed communications networks—digital jukeboxes, for example.
    Customers can access a song play-list that includes tens of thousands of songs. Patrons can even build their own personal "favorites" songlist rather than sort through the huge catalogs. Location operators are editing and customizing their own play-lists continuously. All the music is downloaded to the location via high-speed connection.
    As the technology and communications proliferate and improve, costs are coming down, too.
    Carson shows us a bar-top trivia amusement game, again with astounding graphics, player interaction features and hundreds of available games —all tied into high speed digital communication channels.
    Most establishments already have some kind of high-speed connections whether for the business computer, the ATM machine or the modern jukebox. Carson says it is time to get the best connections and the right connections to tie all of your business and amusement devices together.
    He says your bar can engage another down the street in tournament or league play, be it bowling, golf, hunting games or more. Further, your business can arrange competition with other businesses across the state, nation and around the world.
    Imagine a Golden Tee Golf tournament conducted for the whole city of Billings, all on the same day, run through the same tournament management computer. Now imagine the Billings champions challenging the Great Falls squads. Okay, now conjure a western district versus east, or north versus south; the Montana champs taking on Wyoming, all in virtual real time while spectators in your place cheer and jeer.
    This is not fantasy, Carson insists. There are growing national leagues and tournaments currently being conducted. In fact, one Billings player, Scott Welter, general Manager of the Moosebreath Saloon, has a world ranking for the Golden Tee Golf—38th in the world!.
    Is this to say you abandon pool or darts leagues? Not at all, the owners say, but be aware pool and darts takes up a lot of room and is slow moving; the quarters or dollars fed into a pool table don't measure up to the bills that can accumulate in an electronic amusement game and the footprint is much smaller to boot.
    Carson says across his route the Golden Tee game earns anywhere from $50 to $600 per week, but probably averages $250. Flatness concurs, noting the game itself will bring in several hundred dollars weekly in new revenue, not to mention the additional patron spending in other departments that occurs when the house is packed.
    Severson at Pepper's Bar and Grill agrees, though adds that the profit the device generates is secondary to the sales generated simply by filling the seats and keeping customers in them longer.
    He uses a simple concept to build his business.
    "I build my business one day at a time. Maybe I'll focus on Mondays and try to build Mondays by 10 percent over eight weeks. Then I'll focus on getting Tuesday up 10 percent during the next eight weeks.
    "If I can get a customer to visit just one more time each month, I'm up 10 percent. If I can sell one more beer per customer visit, I'm up 25 percent! I need customers to make one more visit, stay one more hour, buy one more beer and I am succeeding."
    A significant factor in that formula is to offer entertainment and amusement options, Severson says.
    Certainly there is more than one way to skin this sales and profits cat. Hooligan's Graves, while fully committed to participating in the amusement revolution, says he is also changing his business model to focus on reigning in costs while providing more value to customers.
    And the best thing is there is still time to prepare for the potential effects of the smoking ban on customer churn. Your competition will be after your customers. Can you keep them?

    Well, that's the macro picture. Now read the profiles on the individual enterprises to learn more about the owners' strategies and philosophies; how they are showing 30 percent gains in sales while others are seeing erosion.

 Source:  The Montana Tavern Times, April  2009, published monthly by Continental Communications, 125 W Granite, Suite 102, Butte MT. 59701