From left Kari Finn, Dana Gray (on phone), Robin Stange, Brian Riggles, Marty Luepker, and Steve Tini.
It was 1991. The industry was embroiled in the parallel board issue, dubbed "the issue that wouldn't die;" Louisiana finally legalized video poker and would be the last state to do so; and Teenage Mutant Ninja Turtles was the year's hot video game. This was the industry backdrop for the emergence of a company that had nothing to do with any of the year's top stories. In fact, looking back, it's probably a surprise to some that S&B Candy & Toy Co. holds the promise the industry needs. But after you hear the story, you won't be surprised at all. S&B embodies the ideals the coin-op industry seems to have forgotten.
Let's step back to the early years for only a brief moment because, as owner Brian Riggles stresses, the past is past, it's the future that's important. However, the past is where the seeds for S&B's success were planted 10 years ago, and where the company's philosophies and principles took root. Brian and Steve Tini (the "B" and the "S" in the company's name) left Edison Bros., a well-known and respected name in coin-op circles, and began their own operating company called S&B Entertainment, which today services 100 locations and operates hundreds of pieces of equipment.
Brian and Steve formulated a plan, not to compete with their former employer, but to do something different. Brian had first seen a new concept winner-every-time crane in south Florida and was fascinated. Though on test and not actually available yet, that didn't stop Brian from calling the manufacturer to tell them the idea was phenomenal and he wanted to operate them. Brian said S&B literally bought the first machines off the assembly line, placed them in bowling centers, roller skating rinks, and pizza parlors; not one of them did less than $300 per 10-day collection period.
As pleased as he was with the machines, early on it was quite clear to him that there had to be a better way to stock product. Just to fill the first machines, Brian recalls, took several trips to the wholesale clubs in the area, buying whatever candy looked good, breaking it down to put in the machines, and then trying to figure out how much was spent to calculate a return on investment. In an obvious understatement, Brian declared that it was a lot of work. Before long S&B Candy & Toy was inaugurated. Since many of the big candy manufacturers were also in the St. Louis, Mo., area, S&B began to buy candy in huge volumes and prepared their own mixes. S&B then began advertising and doing pre-mixes for other operators. Brian brags that S&B was the first to offer free freight with the purchase of product. For the same reason S&B could offer the free freight-being centrally located in the Midwest--the candy manufacturers did also. This enabled S&B to pass that savings on to its customers.
While other operators opted to sit back and wait to see if the concept of a winner-every-time candy crane would find a following, S&B was so confident that the company added machine sales to its growing concern. S&B sold new cranes from a number of manufacturers, reconditioned machines, and offered parts and repair to keep their customers' machines up and running. Diane, Brian's future wife, and Marty Luepke left Edison Bros. and joined S&B. Just last year Brian bought out his partner and the company moved to a huge 30,000-square-foot facility, its fourth move to bigger facilities in its 10-year history. The success S&B has attained has not been an accident or luck. It's because of hard work and experience. For instance, we talked about those first machines that enlightened the staff to the need for a more convenient, cost-saving means of stocking inventory and supplying machines with quality product. Without the familiarity and know-how gleaned from first hand knowledge, perhaps success would have been elusive. However, it seems that every innovation, all concepts, and service has been developed from personal experiences.
One of the most significant innovations from S&B, once again, was an offshoot of experience with the product. While operating candy cranes it became apparent that after a certain number of plays the candy became a solid mass, making it impossible and frustrating for players to get a prize. As you've heard before, necessity is the mother of invention; S&B could have penned that phrase. S&B saw a need and soon provided the solution--and this is really innovative. S&B developed a custom packaging concept which could be simply described as a little pillow pack to hold the candy. As Brian is quick to point out, "This really sets us apart from everyone else in the world." S&B makes its own package, sends it to the manufacturers, and the brand name candy is inserted into the package.
Why is this so significant? Remember that problem of the candy becoming somewhat like a cement block in the bottom of the crane? It won't happen with this package because they know the exact weight; every machine has its own idiosyncrasies as far as the size and weight of the candy pack and each one has its own. For example, S&B makes a Smart mix designed specifically for the Smart Candy Crane. They know exactly how the Smart claw reacts to candy, they know how many pieces the claw can pick up at a time, and S&B has it down to a science for each crane.
The company has tested and retested every crane model. They know, and operators soon find out, that they can't go to the store, fill their pick-up with bags of candy, dump it in their cranes, and expect to make money. "We learned that lesson the hard way 10 years ago," Brian notes. "If an operator tells me that his crane isn't making money anymore, or that he has a cash box full of money at the end of the week but no candy in the machine, I know he's not watching what he's doing." Brian cited these two questions as those asked the most by operators: Where can I find a locater service? How many pieces of candy will the machine give away?
He has answers that may seem a little too straightforward, but there's wisdom in the words. To the first question, operators are told that they will never be successful if they can't find their own locations. "They have to work at this, and I'm convinced that they won't make it if they can't even find their own locations," Brian said.
Similar advice is given as the answer to the second question: Find out for yourself. "It will take an operator about 20 minutes to find out how his machine works, and it will be the most valuable information he'll need to run a successful operation. An operator has to understand how his machines work, he must be able to fill them properly, and he has to know the payoff. I can tell him all day long what he should do, but the advice is not going to do him much good unless he understands it and experiences it."
This brings us to another bit of experience and understanding vital to operators. "Operators are accustomed to 50/50 commission splits with most types of equipment. If a full-line operator has a location that requests a crane, he often will simply use the same commission structure. I can understand that an operator may feel that he's bound to offer the same split with that location, but he doesn't have to and he shouldn't have to. Since these machines are vending product every time, you should split the profit, not the gross," Brian explained, obviously speaking again from experience.
S&B is a firm believer in service after the sale, observing that with many vending distributors, once the machine is sold the salesman never talks to the customer again. If parts are needed, call parts. However, that's not the scenario at S&B. In fact, Marty tells us that when he sells a machine, he's often on the phone with the customer every two weeks. "I want to make sure that the customer is happy with the machine and with the product. He'll ask what's hot and tell me what is doing well in his location. The communication with my customers is so important."
A wall-size chart with future movies penciled in is an indication of the amount of thought, planning, and work goes into being able to offer just the right mixes for their customers. Whether it's "102 Dalmatians" or "Jurassic Park 3," it's clear that you have to be on top of future movie releases. "We are working a year ahead," Marty said, "and we know there's no time to sit back and relax." At any given time S&B has over 50 different package designs designed for use with brand name candy, much of it licensed brands. While it's not a candy manufacturer, S&B is a candy package manufacturer, which in this case is substantial to crane operators. In addition, S&B has about 20 different candy mixes for exclusive accounts like Wal-Mart and Kids R Us, for example, which have exacting, demanding requirements. We couldn't help but ask about recent super hot items. "Pokemon was phenomenal," Marty began. "We had an exclusive license on the package size that fit into cranes. It seems like we couldn't make enough of them. While Pokemon is still the number one cartoon on television, fads seem to filter down through the age groups. It will start with the 10- and 11-year-olds and work its way down to three- and four-year-olds. Once a three-year-old is interested, the 11-year-old is ready to move onto something else. However, this is one of the most appealing aspects of the candy crane: a three-year-old can play and win every time. How many machines or games in a location can capture the attention of children that young, give them a fulfilling experience, and not be objectionable to parents?"
Other hot items include baseball, football, Valentine' Day, Hot Music Mixes (think Brittney Spears!), and more. While it's been a point of contention in the industry that there is just not enough promotion, that's definitely not the case at S&B. Promotion is it's middle name! As everyone in the company knows, a crane only does as well as the mix in it. Marty added, "You are literally setting up a mini retail store, which requires signs, posters, and promotion.
We have everything our customers need to merchandise their cranes like you would a store. Believe me, our customers are very receptive to the idea of promotions." One idea that we have to share is the company's Winnie the Pooh and Happy New Year Too! In the mix you see the Pooh characters wearing party hats. Everyone loves Pooh bear, and who could resist him and his friends for a New Year celebration. So what does Winnie the Pooh have to do with New Year's Eve? That's exactly the point! It's a hook everyone can relate to.
If that idea doesn't set S&B apart, how about this idea? In its baseball mix, Mark McGwire was used as the hook-in a very unique way. Posters enticed players to find the winning capsule to win an official St. Louis Dispatch newspaper on the batting champion that was circulated originally only at the stadium. The exclusive issue would cost over $25 on eBay.
Why would S&B go to such extremes? "If someone isn't making money with their cranes, it's not good for the industry. We know that if our customers make money, we do too when they buy more product. If they aren't doing well, then there's a reason, and we are confident enough to think we have the answers," Marty put in plain words we can all understand.
The staff at S&B is so optimistic and enthusiastic, it's contagious. How do they feel about the industry in general? Not mincing his words, Brian described an industry in trouble with overpriced machines with questionable quality, lots of problems, and no service. Yes, S&B operates other types of equipment so experience speaks once again. "I have dealt with the big name manufacturers, and I can't even get parts. In fact, I recently had a machine in a location that broke and the only advice I got was to bring it in to have it fixed." However, as with other issues, this experience has only enhanced S&B's commitment to addressing quality and service.
Street operators may be surprised to hear that S&B is touting street locations as ideal for its cranes, as Marty observed, "Candy cranes are consistent and they will net $100 a month. If that doesn't sound like what street operators are used to with their video games, consider the return on investment. A crane costs about $2,000 and it will be viable forever. It's more like a pool table: consistent. If an operator hasn't tried a candy crane in a street location, maybe it's time. But I have to caution those operators trying one for the first time to be prepared for the reaction because they'll probably be calling in their order for even more!
What's the big news in candy cranes? Chocolate! And squeezies! Let's take one at a time. First, both Smart and ICE developed the idea for a Chocolate crane. Both companies approached S&B for the product. It wasn't a snap decision for S&B since it wasn't sure it wanted to deal in chocolate. However, the more the staff looked into it, the more they decided it was something they could excel at and did just that. With same day shipping, special shipping containers to ensure freshness that the candy won't melt, and confidence from customers, S&B took up the challenge. In fact, Namco Cybertainment, which has been ecstatic about the chocolate crane, didn't buy the machines until S&B agreed to provide the product. Now that's customer loyalty and confidence! Brian added that with the exceptionally high temperatures during the summer months, there was not one complaint about chocolate melting.
How about those squeezies? On June 6, 2000, the Canadian courts declared all cranes illegal except the winner-every-time variety. One of S&B's Canadian customers called, saying he needed a mix right away that he could use in his plush cranes that had a $1 vend price. Viola! S&B came up with a great assortment of larger toys that included the irresistible squeezies that were lightweight and much more inexpensive than the perceived value. Of course, S&B was not afraid to make a commitment to buying over a million of them to get the price break they needed for their customers. Another customer, Tim Greeno of Game for You Entertainment couldn't say enough about how satisfied he is. Marty told us that Tim suggested that all of the slow beanie baby cranes be converted to the big squeezies and big value candy.
Throughout the interview Brian constantly praised the staff for the super job and we figured we'd better introduce them to our readers. Robin Stange has been with S&B for about four years. She brought a wealth of experience she earned at Ace/Acme and has been invaluable in building S&B's redemption business. She deals with key buyers, and as Brian said, she really knows her stuff!
Of course, Marty is a key player having been with S&B eight years. His experience at Edison Bros. has been priceless in his position as product manager/sales. He noted, "We all know our product."
Kari Finn has an extensive background in marketing and sales and Brian credits her with developing the chocolate product line. She's been with S&B for five years and is looking forward to many more productive years working on future projects. Brian calls Kari "our key person. She is responsible for all mixes being made for the day and making sure all orders get shipped the same day. She also keeps track of all inventory that has been received in or shipped out."
Ron Blue has been with S&B for four years as the route manager supervisor. His experience is impressive: he was in the Air Force where he worked on F15 fighter planes. Like we said, imposing and certainly a remarkable foundation for working on cranes.
Diane Riggles is the woman behind the numbers, doing payroll and payables. Brian said she's been a huge force in the company and at trade shows. She brought experience capital also from Edison Bros. Although Brian and Diane have only been married six years, the two have worked together since their days at Edison Bros. Diane is on a leave of absence to care for their newborn daughter Brooke. She'll have lots of help from four-year-old Brandon. But, as Brian offered, she'll be back!
Mike Shupe has five years with S&B. As warehouse manager he is responsible for shipping every order the same day it's received.. "This is quite a task due to the large number of custom mixes," Brian noted. "However, that's what our customers require and expect."
Rubin Buchanan, the warehouse shipping/receiving manager has been with S&B nearly two years. "He's great at quality control!" said Brian.
Kim Hathway and Dana Gary work on a part-time basis to help build the new redemption line. In addition, S&B recently hired Diann Blue, Ron's wife, to assist with retail, parts, and the redemption business.
Brian and the rest of the staff are looking forward to the future four-color flyers, which will be a marketing tool as customers are able to see how superior S&B's mixes look even before they get them. In addition, Brian explained that S&B is planning a redemption catalog, which will be a great one-stop shopping for the company's crane customers who have arcades and will help build S&B's customer base with new arcade locations. He added that the company recently set up a 30,000-square-foot FEC, designing the layout of the redemption counter and stocking it. We're sure the company will be doing many more projects as well as it has done everything else.