Installing an ATM means convenience for customers as well as profit for you. Phil Mellows reports.
A year or two ago, about the same time that public uproar caused the banks to do a u-turn on charging them for using ATMs, that same fickle public were getting used to the idea of paying to take cash out of similar machines in shops and pubs.
And as demand for convenient cash has grown, so scepticism among pub operators has evaporated and licensees have come to appreciate the benefits of putting an ATM in the bar.
Cash machine suppliers have now identified pubs as the market with perhaps the greatest potential of all, and expect the 5,000 ATMs already out there to climb to between 15,000 and 30,000 - or every other pub in the country.
The biggest player in the surcharged ATM market, as it's called, is Hanco, which has deals with Spirit, the biggest managed house chain, and Punch, the biggest tenanted and leased group among others. It has just begun its largest installation roll-out yet, putting machines into 850 more managed pubs before May.
Other suppliers agree that pub operators have grown far less cautious about installing ATMs as the benefits to the business have started to come through thanks to people being willing to pay money for cash.
The advantage for customers is convenience - especially as banks close branches and communities lose free machines - and the extra security of taking cash out inside a pub.
"While there are some who will never pay to take cash out, people in general are getting used to the idea, it's becoming accepted," said Helen Bradley, business development manager at InfoCash, which has a mix of fully-managed and self-fill machines and whose customers include SFI Group and independent licensees.
"People pay for convenience, and from a female point of view it means you can take out cash in a well-lit secure environment. When you go to a hole in the wall at a bank it's obvious what you're doing and that can be disconcerting."
The advantage for licensees is measured in hard commercial terms. Not only can they expect a cut of the commission, it is now proven than a large chunk of the cash taken out finds its way back across the bar. And there are less obvious gains. The vast majority of ATMs in pubs are self-fill, which means you take the notes out of the till and put them straight back into the machine, reducing bank charges.
Then there are the "softer" benefits. An ATM, especially in rural areas, gives people an extra reason to go to the pub. And once they are there, they are likely to stay longer if they don't have to go out for more money.
"People can come to adopt a cash machine as if it's their bank," said Hanco managing director Rob Grouse. "Licensees are in a great position to mine that. Pubs with ATMs see a sales uplift across the board. It supports the whole business. It even drives take for other machines, AWPs, the pool table.
"If it takes off people can be withdrawing from £500 to £1,500 a day. Some of our machines see 1,000 transactions a month.
"But it takes a lot of time and effort to achieve that," he added. "We like to work with licensees with the right mentality to push the business."
Not every pub will be able to make an ATM work. A pub which is literally next door to a bank machine might find it difficult, for instance, but a more common problem is that there isn't enough cash in the tills at the end of trading to fill the machine.
"Your machine has to be reliable," said Rob. "It has got to have cash in it all the time. If someone goes to your ATM and finds you're out of cash three times you'll probably lose that customer.
"So you need the cash flow in the first place. We reckon you need to take at least £6,000 a week or you will struggle to keep the machine filled."
Six good reasons for installing an ATM
- The pub operator gets a cut of the commission paid on each transaction, typically 90p out of each £1.50
- Cash is recycled within the business reducing bank charges and improving security
- ATMs keep money in the pub. People spend more over the bar and put more into machines
- The pub can become a destination for people to get cash and attract new customers
- It enhances customer loyalty. Some people "adopt" a cash machine as if it's their bank
- Customers pay less by credit card reducing charges to the pub operator.
Case Study: The Hare & Hounds, Leyton, East London
Lessees Malcolm Durrant and Rita Acharya (pictured) installed an ATM at their pub, the Hare & Hounds in Leyton, East London, a few months ago - and it has had a much bigger impact on their business than they expected.
"We've seen our profits and customer base increase considerably," said Malcolm.
"At the Hare & Hounds we serve food, have a games area and large television screen, so by adding the cash machine we've just about got everything to be a one-stop evening out.
"We're on a main road opposite a retail park, which is helping as customers are dropping in to take out cash and then having a quick drink before going shopping.
"Also, before getting the cash machine we offered a cashback facility at the bar, but that was time consuming and hit our service levels.
"Now we don't have that problem. Service is quicker and more efficient because people get their money from the machine."
The Hare & Hounds is one of the first pubs to benefit from an exclusive deal between Hanco and pubco Unique that has seen ATMs installed in 200 of its sites.
What is Link?
Link is the organisation that makes it all possible, linking nearly every ATM in the country to the banks.
It extended its network to non-bank machines less than four years ago and effectively acts as a regulatory body, setting standards and managing disputes between machine owners and customers.
Its website includes an ATM locater through which, by keying in your postcode, you can find the nearest cash machines to your pub. This could help you decide whether it's worth having a machine and at what price you might set a competitive surcharge.
Go to www.link.co.uk
- Bank Machine: 01707 632800
- Cashbox: 0870 1266664
- Hanco: 0800 1958501
- InfoCash: 0800 7812453
- Money Box: 0800 0920845
- Omnicash: 0800 032 13 14
- TRM: 0800 898774
ATM advice: Once you've decided to have an ATM on site there are a few points you should be aware of.
Supplying ATMs is a booming market, and as such it has inevitably attracted its fair share of cowboys. A number of firms are reported to have been cold-calling pubs, offering what appear to be good deals - but licensees should beware.
"There are a lot of companies selling machines out of the back of a van and they seem cheap - but the catch is they offer no support at all," says Cashbox's Carl Thomas.
That's in contrast to the reputable Link-registered suppliers which tend to compete on the level of service they can offer.
When the charge-for-cash ATM market got off the ground in 2000 Hanco invested no less than £1m into service and support, including a helpdesk and 30 field engineers in vans. "Two-thirds of our resources are in service," says Hanco's Rob Grouse (pictured).
"Our helpdesk is staffed 365 days a year, 24 hours a day