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RePlay June 2015

June 2015

Inspired by Excellence

Toy Barn’s Operator Roots Inform Its Unique Approach to Prize Supply

Southern California-based prize supplier Toy Barn traces its roots in the amusement industry to Jack Mann’s days in the 1980s as an operator running game rooms for his family’s bowling center operation and later when he was placing cranes on the street and developing his own diverse line of prizes. Today, Mann oversees a thriving supply business with his wife Gina.

“Do people really need to have a toy, a prize, a sensation of fun?” Mann asks rhetorically. “The answer is absolutely. We entertain people with our products because they need it and are willing to pay for it. That’s what I recall running game rooms from an early age and being involved in the bowling business.”

Mann’s father was an orthodontist by trade, but he and several colleagues formed a partnership that created golf courses and bowling centers in Southern California. “They built what was then the largest bowling center west of the Mississippi, Regal Lanes in Orange, Calif., with 72 lanes,” remembered Mann. “I used to sweep that place after each construction day while it was being built. It was a nightmare. My father also built Fountain Bowl in Fountain Valley and Tustin Lanes in Tustin, and operated Kona Lanes in Costa Mesa. I worked at every one of them both during construction, and then once completed in the back as a pin chaser. I also worked the game rooms, and I loved that work,” Mann added.

During that period working for his father’s business, the impressive revenues being generated by the games captured Mann’s attention. “The quarter hauls were huge from the video games,” he said. “This was pre-Nintendo, of course. I would have to make several trips each collection with special box dollies filled with quarter bags from games like Pole Position and Pac-Man. We would take shopping carts full of quarters to the banks and in some cases crush the wheels because of the weight of quarters. I recall a one-day Pole Position collection of $700 from Regal Lanes.”

Mann’s growing fascination with the game business only increased with his introduction to the skill crane. A third-party operator, part of the Sugarloaf network, placed a Greyhound skill crane in Kona Lanes. He ignored the game for a few days in part because as a manager he was not allowed to play the game. “Then one night in a moment of weakness it came upon me,” he said. “I caught the plush gorilla out of the corner of my eye as I walked by. It was of such nice quality. I had expected them to use junk. Though it was past midnight and all the employees were long gone, the power to the games was still on. I could hear Street Fighter and its iconic voice tags. All of that faded to black as my focus centered on that wonderful plush gorilla. I had to have it…for my wife, of course. I gave up all hope of resistance, and the dollar bills came forth from my pockets even as I looked left and then right one last time to be sure I was alone. I could not be seen playing a silly toy crane machine.”

Mann didn’t win the gorilla, but he was hooked. He ultimately bought 40 Rainbow cranes and started his own route. He built his operation, along the way honing his ability to find just the right quality items to create that same overwhelming desire to win in others. As a result of his success, he also received requests from other operators in southern California, who wanted to buy the special plush mixes he was creating for his own route. At first he refused, choosing to focus on his own operation, but his desire to create a diverse product mix had a downside, a warehouse full of items.

“I found that regardless of what I could buy the products for on my end, the players would get sick of an item and not play as much,” he said. “My solution was to buy more variety from more vendors. Soon I had a large warehouse full of product yet players demanded more variety still. Having so much money tied up in inventory did not make sense either, regardless of what I paid for the goods.”

The answer to this dilemma came to him following a 1988 trip to Fiji to surf and fish. Mann related:

“The sea was a deep green and dead calm as we headed out in our little motorboat from the beautiful white sand beach of Tavarua Island, Fiji. It was high noon and hot. I was feeling the pressure already as more than one of my fellow travelers reminded me that I was to bring home dinner for all. It took all day, but finally my poorly made trolling lure hooked up something on the way in. ‘Fish on!’ shouted the Fijian deckhand. That bugger fought hard, and with the water so clear I occasionally would get silver flashes of it running below. I figured it was a nice 20-pound skipjack meal. Eventually I brought him alongside to gaff him, already preparing him for dinner in my mind. Just as my mate swung the gaff up to bring it down on my catch and guarantee our meal, in a split second I saw large white and sharp teeth in place of what should have been a wonderful catch. A huge shark had been watching and came up directly from under the boat. In less than a second, and in one bite, the shark took everything except the head, as cleanly as the most expert chef. It is not uncommon, yet startling nonetheless, for a shark to steal fish.

“On the slow ride back to the island, empty-handed, I became philosophical and metaphorical,” Mann continued. “There are small fish and big fish in this world all living in the same pond. The size of the pond, the food sources available and size of the fellow predators were important to consider, especially if you are trying to survive. I thought about my little operation and how small time my thinking had been to that point. I was just a minnow, and my pond was familiar, yet not fully explored. I decided right then that I needed to look within and expand my operation. I guess to be cliché, I wanted to swim with the sharks without being eaten. That’s how I came to decide to expand my plush toy operation. Before I landed at LAX on that trip, I had my rough business plan penned.”

Much has changed in the industry since Mann and his wife Gina founded Toy Barn in the late 1980s. Today, the firm employs a dozen staffers working from a 20,000-sq.-ft. facility in Oxnard, Calif. Toy Barn also ships goods from warehouse facilities in several other U.S. states.

Toy Barn purchases from every major plush toy supplier to the amusement industry to help customers maintain product variety, which in turn drives game plays. In addition to his work in his father’s businesses, Mann also spent some time in the apparel industry, designing and manufacturing women’s clothes. He relies on that experience to design and make his own Toy Barn brand of plush toys. “I am very comfortable with pattern making and cut and sew production so plush toys were a natural fit for me,” said Mann.

In addition to working with main suppliers, Toy Barn execs attend a wide variety of trade shows and have an active closeout merchandise network. They are always looking for unique items that can bolster customer mixes.

Toy Barn sells mainly to operators of toy skill cranes. “I have been operating toy cranes so long that my loyalty is to my fellow operator,” said Mann. “Our next largest customer group is the promotions industry followed by increasing Internet sales. We have continued to invest in our Internet channels of distribution going forward and expect to see continued growth in that area. The costs can be quite high building, promoting and maintaining web sales, especially in this competitive and changing digital marketplace. The price to enter into a web-based sales platform that can generate meaningful returns are high and frankly the odds poor regardless of industry. We have learned many hard lessons at big costs to get us to where we are today.”

Mann says the market has changed in the last few years, in large part because of the prize industry’s reliance on sourcing goods from China and most recently the West Coast port strikes.

“The volatility of raw materials in China to make our goods, increasing worker wages and fewer factories willing to make plush at low costs are a continual problem,” he furthered. “The currency of China (the Yuan) has increased in value over the U.S. dollar over the past decade. In 2005, you could get more than 8 Yuan per U.S. dollar. In May 2015, our U.S. dollar brings 6.21 Yuan. I don’t know of many businesses that can increase their prices to existing customers by 4-6% each year every year for 10 years in a row and stay in business,” said Mann. “Margins and profits are thinner, the advantage producing in China smaller and you have to work harder now than ever to be competitive.”

According to Mann, Toy Barn has been working hard to keep price targets and price points low and still provide excellent value. “We have adjusted by bringing in lower cost prizes for cranes; vinyl balls for instance,” he explained. “In plush we have been buying closeout retail merchandise to help fuel value and variety and give operators a better chance to make money. I view plush as a commodity much like corn or copper, and I don’t really care who makes it as long as it is cool and people will play and or pay for it. We are buying and selling plush toys from many manufacturers all day long here. Sometimes I feel like a brokerage house of plush toys.”

Toy Barn’s product line-up also includes its own line of toys as well as licensed plush products in all sizes. Balls have also been a great way to keep costs down while giving the customers a prize, and Mann said he expects to see continued increases in ball sales, especially 5” knobby balls and 6” colored decal balls in sports themes. “Our 6” soccer, basketball and colored and striped balls have been moving very fast,” said Mann. “We are also working on an .85 cent mix as well as a value $3.95 mix for monster-sized plush closeouts. Nobody can beat our volume and variety.”

Going forward, Toy Barn will also focus on developing new lower cost options for skill crane customers while at the same time offering higher quality products for those whose customer base demand it. “Choosing the right product ultimately depends on your locations and customer base,” concluded Mann. “We suggest operators try everything they can and experiment with different averages until they find the right products that their customers will play for and win. Skill crane operators must dispense product to generate revenue. If nobody wins, nobody plays.”

To learn more about Toy Barn’s prize supply business, log on to the firm’s website at http://toybarn.com.

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