Machines & gaming: ATMs
Cash machines remain an area many licensees could exploit, offering them not only a cut of the transaction charge but opportunities to boost their trade over the bar.
Until recently, the cost of a machine, which can be up to £8,000, has deterred many. But rental schemes and, most recently, a deal in which the supplier takes a share of the fee a customer pays to take money out, are bringing more pubs into the market.
There are already an estimated 6,000 ATMs on licensed premises - but they aren't right for every pub, one supplier warns.
Cashbox is a relative newcomer growing fast in the pub market. It has more than 700 machines in bars following deals with Greene King, West Country brewer Wadworth and leased house group Scottish & Newcastle Pub Enterprises.
The company believes it is the first to offer licensees a "placement model", trialled with Wadworth, by which Cashbox continues to own the machine rather than selling it to the publican and instead takes a cut of the commission. Typically the licensee's share of a £1.50 fee is 40p. And all they have to do is keep the machine stocked with notes.
"When we started, ATMs weren't new to people so we set out to differentiate ourselves by adding more service and support, improving the reliability of the machines," explains chief executive Carl Thomas. "Licensees don't want to spend hours messing about with the ATM."
Cashbox runs a 24-hour helpdesk - which tends to get a lot of calls from pubs late at night - and also distinguishes itself by having machines with larger than usual screens, enabling them to carry advertising, something Greene King is currently experimenting with.
Its research, done by marking bank notes, has shown that around half the cash taken out by customers returns to the licensee across the bar, confirming that an ATM really does help keep money in the pub.
Carl has also noticed that fruit machine take has gone up in outlets that have installed ATMs.
But Cashbox strictly limits supply to houses that can guarantee the level of transactions that means it can pay its way.
Every potential site is surveyed first, not only to determine competition - if there's a free bank machine next door there's not much point - but whether the customer profile is right.
You might imagine that cashback is a major rival to ATMs, for instance, but according to Carl "they are a different customer to people who will use cashback".
Ironically, people who are prepared to pay a fee to take money out of a machine are likely to be less financially secure. Because, Carl explains, they are never quite sure how much they have in the bank, they tend to hit machines little and often.
The average amount taken out of a surcharge machine is just £45 compared to £65 from a free machine, the opposite of what you might think.
- A MACHINES survey across the Scottish & Newcastle Pub Enterprises estate aims to make sure licensees are getting the best out of ATMs.
The company has an agreement with Cashbox which has seen about 40 machines installed, but lessees have also done their own deals with other companies over the years.
National machines manager Mark Papworth said: "We believe an ATM has to generate at least 200 transactions a month or it's not worth it, and that requires a pub with a certain level of footfall and barrelage. There is a lot more potential out there."
If a pub can demonstrate it's the right site for an ATM the rewards are great - the transaction fee is merely "the cherry on the cake" for Mark.
"The important thing is it drives footfall and retains business on the premises," he explains. "Customers will get an extra round in and licensees can also save on bank charges, by recycling cash through the machines. We have found that people, especially women, prefer them to high street machines because they regard the pub as a safe environment," he adds.
