ATM = automatic troublefree moneymaker: moving a bank machine into your restaurant can end your check-cashing and credit card woes and help grow business

Nation's Restaurant News, Nov 3, 1997

Moving a bank machine into your restaurant can end your check-cahsing and credit card woes and help grow business.

Automatic teller machines, or ATMs, have long dotted the banking, mall and supermarket landscapes, but a growing I number of hospitality industry operators I say the evolving technology benefits their guests and businesses as well.

"Wow, an ATM, let's use it!"

These are words heard over and over again by Kelly Bailey, general manager of the Brickyard Crossing Golf Resort and Inn in Indianapolis, ever since installing an ATM machine six months ago.

"I wish I'd had it eight years ago," he says. "Our business is up, and I'm convinced the ATM has contributed. Not only that, but we're counting up more cash than credit card receipts and checks these days."

Actually, it was the increasing number of check-cashing requests that motivated Bailey to begin investigating ATM programs two years before he made the final decision.

"I wasn't interested in incremental profits, just providing that extra service for our guests. I wanted some equipment that would be a no-brainer-something that looked sophisticated, but was easy to use. We certainly got it. The service provided us by the ATM distributor is phenomenal. If there are any drawbacks, I haven't noticed them yet.

"You simply put the ATM where people will see it, and you've got a real winner," Bailey says.

Bailey's experience was similar to those of several other "early adopters" of ATM technology we spoke with. ATMs are convenience tools, their boosters say.

Sign of the Times

"They're everywhere. It's a sign of the times, and now it's one more reason to come to McDonald's," says Scott Frisbie, who manages 12 of the more than 120 McDonald's locations in Southern California where ATMs were installed this July. "You've heard of fast food. How about fast money?" began a September newspaper article about the McDonald's pilot program. Reportedly, this is the first time that a network of freestanding cash dispensing ATMs has appeared in a fast-food outlet. "We've thought about this for years," Frisbie says. "We had recognized the value of ATMs, primarily as an additional service to our customers. It wasn't looked at as a moneymaker, but we do believe the service will turn out to be profitable."

The McDonald's machines can do everything a bank ATM does but accept deposits and in addition can issue promotional coupons. The machines are made by NCR and cost $20,000 each.

"As the ATM market widens, companies with marketing savvy, such as McDonald's, understand how ATMs serve as a value-added marketing tool," says Kurt Schusterman, senior vice president of sales and marketing for XtraCash ATM, a provider of ATM machines to non-bank locations. "ATMs are not just cash dispensing machines, but electronic marketing systems that can be used for a variety of customer loyalty and advertising programs."

A portion of the surcharges collected at McDonald's machines will go to support the Make-A-Wish foundation, the nonprofit organization that grants wishes to children suffering from life-threatening illnesses.

Legislation Opened Way

It was the legalization of surcharges in many states that paved the way for non-bankers to place ATMs in their businesses. The new laws allowed merchants a way to cover expenses and make a profit on the machines. Until the hold-out states act on authorizing surcharges or simplifying regulations, the location of ATMs outside banks remains illegal or impractical in some states.

Today's streamlined ATMs (also called CDs, or cash dispensers) cost tens of thousands of dollars less than feature-laden bank models--$8,500 to $20,000 compared with $30,000 to $60,000. And that relatively low cost means base model ATMs can pay for themselves with as few as five to 10 transactions a day, Florida Restaurant Association officials and some vendor representatives report. Before surcharging was an option, common banking industry wisdom held that a minimum of 3,000 transactions a month was needed to justify an ATM installation.

Since the inception of ATMs, the market had been dominated by banks offering customers a lot of features and capabilities.

"While interesting to the customers, (they) have not been as widely used as typical cash access," says Ernest Burdette, president of Triton Systems Inc., the third-largest manufacturer of ATMs and the first to provide a low-cost ATM offering the single function of cash withdrawal. "We saw a niche of non-bank or off-premises markets that needed affordable ATMs," he says. In 1994, Triton shipped 200 mini-ATMs. In 1995, the company moved almost 3,000.

What is behind the technology that has reduced the cost of ATMs to affordable levels for restaurant owners and other retail merchants?

Cheap Phone Access

Dave Grano is vice president of marketing and distribution for Card Capture Services, an industry pioneer that believes it is the nation's largest ATM distributor. "The key to the reduction in expense is the dial-up technology we helped develop early in the decade," he says. "This is the ability for an ATM to operate over conventional phone lines versus what banks required-which was a leased-line connection."