*******
" Supermarkets get a small portion of Coinstar's fees for promoting
the service. But the main draw is attracting more customers and
getting first shot at their newfound money."
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Cashing In on Coins / Change counters finding a niche
Peter Sinton, Chronicle Senior Writer
949 Words
6385 Characters
12/13/97
The San Francisco Chronicle
FINAL
B1
RELATED STORY ATTACHED
(Copyright 1997)
Ben Franklin got it wrong. A penny saved is a penny spurned.
An estimated $7 billion in loose change, mostly pennies, is out
of circulation in this country. That's amounts to $30 for every
person.
Counting and wrapping all this change and lugging it to a bank is
more trouble than it's worth for many consumers. But now there are
other options.
One of the easiest is to haul the forgotten treasure to an
automated coin-counting machine at a supermarket.
Patrick Brown recently lugged a plastic bowl brimming with six
* months worth of saved coins to the Coinstar machine at the Cala store
at Hyde and California streets in San Francisco.
Within minutes, the machine tallied up 89 dimes, 282 nickels and
1,922 pennies and printed out a voucher for $39.05 -- after deducting
$3.17 for a 7.5 percent service fee. The machine also spat out a few
unacceptable items including a British Pound and Austrian shillings.
The service fee didn't bother Brown, a location scout for an
independent film company. "It would have taken me a long time to
count and wrap it all and take it to a bank," he said. "I just get
the money at the checkout counter and go Christmas shopping."
Another content customer, John Jacobs, received $27.69 for a bag
full of small change and planned to spend it on greeting cards.
"This is a lot easier than the $14.99 coin-counting machine that's
sitting at home gathering dust," said Jacobs, a graphic artist.
Self-service coin-counting machines can process 600 to 700 coins
a minute and print the total.
Automated machines are showing up at more and more supermarkets
and other locations around the country. The industry leader is
* Coinstar, a publicly traded Bellevue, Wash. company that has
installed 1,500 machines in the past year and 3,000 since 1992.
Nearly one out of ten supermarkets now have the machines,
* including close to 500 in California. Coinstar has 52 Bay Area
locations, including Bell markets in Novato, Cala Foods in San
Francisco, Raley's in Santa Rosa, Save Mart in San Jose and Safeway
in Hayward.
Los Angeles-based Cash Technologies also makes coin-counting
machines called CoinBank and is planning a public stock offering.
The machines charge users a 7 percent fee and are installed primarily
in Southern California financial institutions. Clients include Home
Savings of America, Union Bank of California, Coast Federal and a few
Shell and Arco gas stations.
Self-service coin machines offer consumers an easier way to
get their coins back to work. They also provide stores a way to
attract more customers and financial institutions a way to shift some
of their coin-processing load.
Most banks loathe loose change. Bank of America, like most of
its financial brethren, will not accept unsorted coins. However, it
provides free wrappers to customers so that they can count and roll
their own coins, and it generally will exchange their wrapped coins
for free. (It charges many business customers a 3 percent fee on
amounts above $200 a month.)
Banks typically receive a half-percentage-point of the 7 percent
that CoinBank gets from user fees.
The latest CoinBank models are linked to automated teller
machines so that bank customers can deposit the counted coins to
their accounts. They also allow customers to donate the coins to a
charity and buy prepaid phone cards.
* Supermarkets get a small portion of Coinstar's fees for promoting
the service. But the main draw is attracting more customers and
getting first shot at their newfound money.
"Users have to go to the cash register with their voucher to
collect the money," said Bruce Cancilla, manager of the Cala store on
Hyde Street. "Our hope is that they'll spend some of it in the
store." Market studies show that three out of four customers do just
that.
* Coinstar's stock is trading $1.50 below its $10.50 offering price
last July, but Hambrecht & Quist analyst Shawn Milne remains a fan.
"More than 13 million consumers have voted with their piggy banks
* that Coinstar provides a value-added service," he said in a recent
report.
Installed machines cost about $12,000 each. They also have
substantial maintenance, armored car pickup and other operating
expenses.
* Coinstar has yet to turn a profit. But Milne figures weekly
volume per machine of about $5,000 by the third year of operation and
estimates annual profit margins could approach 20 percent thereafter.
While most customers bring in just a bag or bowl full, some
* arrive with small fortunes. Coinstar's record was set in Southern
California a few years ago when a man poured several five-gallon
water containers filled with change into a machine and emerged with
$8,105.
He had to pay $608 for the service but it was probably worth it.
* Coinstar figures that doing the job manually eight hours a day would
take more than three weeks.
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COIN FACTS
-- This year the U.S. Mint will produce 10.5 billion cents, or
29,000 tons worth.
-- There are 132.4 billion cents in circulation, or about 600 for
every American.
-- There are 12.2 billion nickels, 18.1 billion dimes, and 16
billion quarters in circulation.
-- Cents are commonly called pennies, though that was originally
slang for the British pence.
-- Cents have little use other than making change and paying sales
taxes nowadays.
-- The last time Congress seriously debated dumping the cent was
in 1989.
-- Cents cost less to make than they are worth -- about 7/10 of a
cent. But that excludes the substantial continuing cost of counting,
packaging and transporting them.
-- Three out of four American males store an average of $30 in
loose change around the house.
* Sources: Chronicle research, Coinstar Inc., U.S. Mint
I0607 * End of document. |
