Ep14: Why Own a Franchise Game Store with Dragons Lair Austin
Join Josh on The Business of Gaming podcast as he visits with Angie from Dragons Liar Comics and Fantasy in Austin, TX. This episode discusses the pros and cons of running a franchise game store, how industry changes are impacting game stores and what you should consider before starting your own game store.
Auto Generated Transcript:
SPEAKER_00: 0:00
Hey y'all. Welcome to the Business of Gaming podcast. I'm Josh with Game Haven Guild, and today we're at Dragon Slayer Comics and Fantasy in Austin, Texas, with its owner, Angie. Tell us about your history with the store.
SPEAKER_01: 0:10
Sure. So I started working in the business in 2004, 2005. And I came on working at Dragon Slayer part-time staff in the evenings just to keep myself busy. I'd just gotten married to my second husband. I was kind of bored. Didn't want to work in a regular office job anymore. I was kind of burned out on that. And very quickly went from being part-time to full-time, full-time to assistant manager, and then assistant manager to manager, and then general manager and like a two to three year time period of both the Austin store and one of the San Antonio stores. Um, at which point the then owner, who is now the franchise or of our franchise, decided he wanted to sell his stores. He didn't want to run them anymore. He still wanted to be involved in the industry, but in a different way. So at that point, I indicated him that I would like to buy the store. And for I think almost seven years, I worked towards the goal of coming up with the money, um, putting in my sweat equity with him, uh, and then partnered with my brother, who were 50-50 business partners, and finally bought the store in 2015. And I have owned it now officially for um 10 years. We just paid off our massive SBA loan finally, uh, which, you know, feels sort of miraculous after COVID and everything. We're like, okay, at least we don't have that to pay off anymore. Um, and we are just, you know, plugging along, doing our thing. So I've technically been in the industry for just a little over 20 years. I worked for a competitor who is gone now for about a year and a half before I came to Dragon Slayer. So I've kind of been through some ups and downs, market up, market down, uh, the height of the popularity of everything geek because of the movies that were out, the games and the the resurgence of it all, and then COVID on. So I I feel like I've seen a pretty broad array of interesting things.
SPEAKER_00: 2:11
Well, let's talk about how that industry in particular, maybe what's gone on with the store has changed over those years. What did the store's assortment mix look like? How much of this was card games versus role-playing games, war games?
SPEAKER_01: 2:24
So Dragon's Lair has always been very much about diversifying product lines, with the goal being that if one product line slags a little bit, the other one should be able to pick it up. So we've always had this mix of products adding in little stuff here and there. But what I've noticed over the time of owning the store in particular is that we're starting to see, I don't know how to, we're starting to see less. Right now it's all about CCGs, collectible card games. It's all about the collectability, the play, the sets. It's just on fire. I can't get it, I can't keep it, it's out of print, it's everything. At the same time that's happening, I'm watching my board game sales go down. Um, and my RPGs, they're kind of consistent, but very release dependent. Um, so when there's a new DD book or a new Pathfinder book or Starfinder or a new indie RPG hits like Daggerheart or something like that, we see that department kind of peak. Um, but over the years, our product mix is is it's still the same lines, but it's different stock levels than it used to be. I don't necessarily carry as much as I used to in certain areas because they're just not my profitable areas. And of course, the challenge is right now, like I said, the CCGs is our number one department. But if I can't get stock, it it it affects us. And it looks like I don't have something, but it's really that I don't have something. I can't get it. I've sold out of it and I can't get it again. So that's kind of how it is. Our, I mean, I do feel like our product lines are pretty much the same. We, of course, do comics as well, manga and graphic novels. That has been very challenging over the last five years, especially the last year with a bankruptcy. So those uh product lines have experienced some fluctuation simply because we've had to relocate all of that business to like five other distributors now. So it's just kind of like moving and stuff, if that answers that question. We're still very diversified. It's just different stock levels.
SPEAKER_00: 4:28
Let's go back to your uh board game comment because we've seen the industry an explosion in board games coming out, particular indies and self-published titles. How do you decide what to carry?
SPEAKER_01: 4:38
The first thing I consider when I look at a game is I I have a guy that works for me that I call my board game expert. His name is Damon. Uh, he himself owns over 500 board games. He goes to all the conventions, he's like plugged in. The first thing I do is I talk to him about anything that's new and I say, hey, what are you thinking about this game? Um, he'll do research, he'll go to board game geek, he'll look and say, Oh, it's got this weight, this many pieces, this playability. At that point, then I look at the price point of the game. And I I try to decide, is this a game, is this a$39 game? I'll bring in three of them, you know, to give myself, is this an$89 game? I want to try it, but I'm only gonna bring in one because I it's a it's a bigger risk for me. Um, so I look at the what the game's about, the playtime, who I think is gonna play it, the price point, both to my customer and to myself, then I make those decisions on whether or not I'm gonna bring it into the store and at what level. The other thing I always consider is, and I won't mention any names, but there are board game publishers and designers that I never even bat an eye about backing their games, getting their games, because I trust the quality of their product. So I also will consider that when I go through. Um some things are just, like I said, they're no brainers for me. I'm like, and sometimes that that bites you in the butt a little bit because not everyone is gonna have a hundred percent hits, but I'm more likely to take the risk. Uh, as far as Kickstarters and self-publishing, I never back anything that isn't already successfully funded. Um, I also look, you know, it has to have a retailer level so that we're getting wholesale pricing. It has to have the right mix of is it six games that they want me to buy or is it 24 games they want me to buy? Like, am I gonna put in there? It's like Gloomhaven, for instance. I back a Kickstarter. It's gonna be three years before I get that, but I'm still gonna back it because I know it's gonna sell even at a high price point, and it'll be three years before I get it again. So I kind of try to look at all those factors. And when you go into Kickstarters and self-publishing, especially Kickstarters, you have to be able to allow your money to be tied up with no return on your investment for who knows how long. So I'm very careful about those, a lot more so than I used to be. I also try to really watch like how how much over a goal did it succeed? Because that means that many people are already getting the game. Is it gonna be something I can sell? Kind of thing. So I look at all those things, um, fit, company, price, um, what kind of risk I want to take, and then my own health of the business, my my finances. Am I am I in September where I'm in what we call the pinch because everyone goes back to school, everything just kind of slowly drops off, and then we don't really see that pickup again, except for little releases, and then at Black Friday, and then they're the holidays. So I just try to be very careful. Like I might go gangbusters for a game in December that I won't in in August and September because I just don't want to take the risk on it.
SPEAKER_00: 7:50
Let's talk about the store itself because it's a it's a large store. I know you you inherited this space, right? As part of taking it over.
SPEAKER_01: 7:57
So I worked for the previous owner in our previous location, which we outgrew. We were just busting at the seams. Um, and we moved over here. So I was his general manager when we moved over here. I coordinated the move, made sure everything, which was in itself a crazy and interesting experience. I I helped set up the store and then I bought the store where it is right now. Uh, it is enormous. It definitely has its challenges. When you have 10,000 square feet or more, you have so much more to stock and so much more risk with your overhead that you have to make sure that your product mix per square foot is really on point. Um, of my of my store, the the back half of my store is dedicated gaming space. I have this private gaming room, and then up one side I have all my minis tables. Uh on any given weekend, depending on what we're running, it'll be jam-packed. And I still have to make it work so that customers can move around that and shop. So the way I've got it set up right now, most of my gaming space doesn't have product around it, um, or it's got enough aisles for people to be able to move around it. It's a little crazy. Sometimes I call this my um two-year-old toddler. Like, I I feel like, you know, there are moments I'm like, it was so much easier when I had to manage 5,000 square feet, own that, do whatever you want. It's it's not that it doesn't have its challenges, but it's so much less to take care of. When it's something this big, it's some days it feels too big and some days it feels too small. When I'm doing summer camps and I have three tables of kids and they're excited and they've had their afternoon break and they've had a candy and it's really loud, I'm like, oh, this door's so big. Yay! Um, but then uh then there are other times where I'm like, it's if I have three pre-releases going on and a minis tournament and there's comic shopping, it it feels compact. It's a challenge.
SPEAKER_00: 9:57
It really is when it gets this big. And you also have a significant number of employees working here as well. Can you tell us a little bit about your employee mix? Sure.
SPEAKER_01: 10:05
I have currently, um, including my brother and I, we have 15 employees. Um, I have no part-time employees. Everybody is full-time. I've I've always had a challenge with part-time employees because I've always felt like they're your most flexible, except I don't have that experience in a college town. Most of the part-time employees are students who have, you know, a set schedule, a structure, or they're people trying to pick up a second job so they can only work at this time. So right now I have full-time employees from all walks of life, all different generations, um, which I'm very proud of, um, all different representations. Um, and they they help make it what it is. I I know there are a lot of people that say you should never call your staff family, that it sends the wrong message. But we are very much uh a family. We can be dysfunctional sometimes because we're with each other, you know, 40 plus hours a week. But it without them, there would be no me doing this. And I know that. And it's been every iteration of my staff. You know, I I I try to see the best in people. I try to uh make their time with me as positive as possible. You can't hit that with everybody. Um, but my goal is that they can look back on this job, whether it was their college job, um, whether they want to make a career out of this on their own someday, that they can look back on this time and go, I learned something. Whatever it was, I learned something. And I got to work with product that's really fun. I didn't have to do something that made me feel my like my brain was numb. I could stand there and talk to somebody about, you know, Magic the Gathering or Pathfinder or how do you start with Catan and go from there? That kind of stuff. So I have a great mix of staff. I I'm I'm very happy that I have this is the first time that I've had like boomers, Gen X, millennials, and Gen Z. So I have all of it's an interesting challenge sometimes because everybody's at different places in their lives, but it keeps you on your toes.
SPEAKER_00: 12:10
What have you seen in terms of changes in how you market the business andor run advertising?
SPEAKER_01: 12:15
So when I started, Facebook was just really beginning to be a thing. And we had a Facebook account and we'd put stuff out about our events and everything, but we did traditional radio advertising signage, a newsletter that we send out every week. Um, that was pretty much the the extent billboards. We did billboards a couple times at the holidays. It is so different now because there's so many different social media platforms and avenues to advertise. We do Instagram, Facebook. Um, we put stuff on our YouTube channel very rarely. Uh we still do our weekly newsletter, we do our in-store signage, we advertise in local publications, the Austin Chronicle, the Austin Kids Directory. Um we haven't done billboards in a while. I'll, I'll, I'll put that out there. But most of what we do in our traction is social media. We're we're exploring the TikTok channel. We're trying to figure out what we want to do there. We've got a little character we're working on that's gonna talk. We haven't quite got gotten there yet. Um, but it's very, it's very, there is a lot more advertising opportunity. And in some ways, it's less expensive to do it and more we're more likely to get results because everybody is so plugged into social media for the most part that we just that's where we hit that's where we hit. And anytime we throw a picture of one of the cats up there, it explodes because everybody loves cats on the internet, right? So, and I have two cats in the store, but uh, you know, it's it's a different, it's a different approach. We still do some of our traditional advertising, but most of it, I would say, has leaned into social media, and that continues to be where we see the most results.
SPEAKER_00: 14:10
Can you tell us about your store's philosophy on events?
SPEAKER_01: 14:13
So I look at events as my community outreach, as my marketing. Um, I don't look at my events, I don't want them to lose me money. Uh to be blunt, to put it in a business perspective, I I can't have events that lose me money. But I also don't expect my events to be my bread-winning part of my business. Because what I want that to do is advertise the product, make people feel plugged into their community so that when they come in here, it feels like a community to them and not like a business, if that makes sense. I know it's a business. I know what numbers I need to hit, but I really treat that as if it is, if it is marketing, I spend money on it. I bring in and try almost anything that hits will be like, should we try cookie run? Let's try cookie run. Let's see what happens, you know. Uh, do we want to try uh this October? We're gonna have some little concerts in the store, which we haven't done in a long time. Let's see how that works, you know? But to me, that's not my goal of where I'm turning my money, if that makes sense. That's my goal to get my customers in the store and want to be here. I want them to come in and sit down and play and have a soda and go, oh, while I'm here, I should pick up some cool dice. Oh, I saw this, I better pick it up. Like I want it to be a comfort for them to be able to come in and play. And my philosophy also with my events is, you know, there are a lot of stores that are very competitive. They have very competitive crowds, and we have some of that here. But for us, it's always been about the joy of gaming. So I don't, my hope is everybody that comes in enjoys the event and takes away from it. Wow, that was my really that's really my jam. I want to come back there. And someday they bring their kids back here because that happens and that's a great thing to see. But I never look at it as the main way to turn my profit.
SPEAKER_00: 16:00
If Vince read the goal is just not to lose money, which is a great way to do it. What KPIs or metrics are you looking at to know if the store is healthy?
SPEAKER_01: 16:07
So I look at, of course, my profit loss statements. I look at my overhead versus my um my growth and what I have let. I look at my net at the end to see are my sales up, are my sales down. I also watch the metrics. We have a door counter. So we watch every week and get a report on what our foot traffic look like looks like. And if I'm like, wow, our sales were really low this week and I look at my foot traffic and my foot traffic was down 20%. I'm like, okay, that tracks. I watch that. If I see my foot traffic go up, but my sales are stagnant. That's a question for me to go. Am I not stocking the right stuff in the store? Are we not hitting the right product? Are we close to a new release? So everybody's holding their money back until the new hot thing comes out. Did school start? And so we're gonna wait. Is it payday or is it right before payday? Is everybody about to pay rent? I watch all these things. I watch my foot traffic, I watch that go up and down, I watch my bottom line. Um, and then some of it is gut feel, but you can't really. My business partner, who's my brother, is very much a numbers guy, and I'm very much a, ooh, I I I ooh, shiny, a new game, you know. So we kind of balance each other out. He doesn't go by gut feels, he goes by numbers. I go by numbers based off my gut feeling on something, if that makes sense. But what I do to track is I watch my profit and loss statements. I have to. Um, I watch my I I I bet you I check my bank account 10 to 15 times a day to see, am I good? Is everything fine? Do I need to worry about this? Do I have the money for this? Because you can't, I guess if you're gonna go into the gaming business, you have to go into it knowing you're doing it because you love gaming or you love comics. If you think you're gonna go into it to be a millionaire, it's gonna be a long wait. Um, the profit margins aren't such that that that is a a thing. And depending on the community you're in, which Austin is a very expensive city to live in. And because of that, you have to treat your staff right, or you're not gonna get them and keep them. So you have to watch all of you have to watch all that. It's it's the part of being a business owner I hate. It's what keeps me up at night. It's like, am I am I financially solvent? Am I okay? Do I have the money to invest in this? Uh oh, I've got this rent due. Oh, the property taxes went up, my rent went up, you know. So you're constantly juggling, if you will, to try to get to a point where you've got some reserves so you can survive the hard times. And for a while, we were great with that. The the market right now is very different for us. Very different.
SPEAKER_00: 18:58
Can you tell us more about the market and how it's changed? Sure.
SPEAKER_01: 19:01
Um, the last, especially the last three months, we've finally seen the tariffs start to hit our product. So I think if I had to venture a guest, and I know this is true for some of them, I think many distributors and publishers had stock in, and they were waiting on their next shipments to come in from wherever they got them. And then the tariffs went into place and they're constantly up and down, up and down, up and down. So we didn't see the first shipments come in of product with those tariffs until mid-July, into August. And now we're releasing it. I think the tariffs are hurting a little, a little bit. For the most part, most product has been adjusted very little. Um, but there are bigger products that we're definitely seeing that increase. Um, for us, as a you know, a small business owner, where it's hitting us is our shipping fees, and it's hitting us on our bottom line on our invoice a little bit. And then it's caught, I think it's causing the the public, our customers, maybe other places. I don't know if everyone has this experience. I think people are being much more cautious with their dollars right now. Um, I understand it. I have to be that on my own as an individual. Like I'm like, I I see what's happening, I see the increases to everything. It it hurts when it's like it feels like it's everything at once. It's your property taxes go up, so your house payment goes up. Maybe rents are down right now, but as taxes go up, that'll get passed on to people, their rents will go up. If the rents go up and the credit card fees stay high, people are less likely to spend money, then that hurts the bottom line of them, and it hurts us. So, how do you stay strong in a market like this? I'm trying to figure that out. It it's it's a challenge. Like it is a real challenge because it's also affecting shipping and it's affecting people doing one print run and they're done where you used to always have stock to go back and hit, you don't anymore. So you could have the hottest game in the world and suddenly they're not gonna do another print run because it's gonna cost X amount of dollars to do that print run, to pay a tariff, to do this, to do that, to get in. It's a it's a challenge. And I don't want, I'm not gonna say I don't understand the idea of the tariff, but I do think saying it doesn't affect the consumer is false because it is affecting the consumer. I'm seeing it affect the consumer. You know, I have moments where I sit there and I look out my window from my desk and my store is quiet and empty, and I'm like, uh I can't force people to spend money and I can market and I can do this. But if it's a choice between are you gonna buy your kid clothes for school or are you gonna put gas in your car versus are you gonna buy a board game that went up$5? I can't say I don't understand that. So then I have to figure out what do I do to minimize the pain for everybody? And I that is an ongoing um challenge.
SPEAKER_00: 22:15
You did purchase this store as a franchisee. Yes, I did. What have been the pros and cons of going with that model versus starting an independent store?
SPEAKER_01: 22:23
So the pros, of course, for me in particular, because I already worked here and this store was already well established. I had a brand name that was recognized and that the community loves and comes to and considers their theirs their safe place, their haven, their whatever it is. So buying into the franchise gave me that brand recognition. It gave me a set stable store with a customer base that was already built by the previous owner, previous managers, me, and all my employees thereafter. Um the other nice thing about being a franchise is if you have multiple stores in the franchise in different locations, you can share and pull information from each other where you might not be able to do that with another store down the street because they're your competitor. And while Austin is pretty friendly, game stores with each other and like trying to work with each other and make sure we're not scheduling on top of each other, they're still your competitor. So you're not going to go down the street to, you know, John Smith's store and say, wow, my profit margin is really bad right now on my sales around. How are you doing? You know, you get that with a franchise. You can speak to your other uh store owners. For us, there are currently six Dragon Slayers, and you can say, Are you experiencing this? Oh, you're not. So what are you doing that I'm not? You know, or oh, I did this, I can help. I want to tell you, bring in this line, try this blind box mini, do this because it went gangbusters for us. And then you have the strength of being able to negotiate with distribution and publishers to say, hey, can you work with us as a franchise instead of individual stores because we can bring you this much more buying as six stores versus one store. So that's also really nice. It's the sharing information, it's the ability to negotiate, it's the having a um a franchisor who owned at one time uh David owned four stores. So he knows what it's like to be a multiple store owner. He now knows what it's like to be a franchisor. Um he's still plugged into the industry. He still attends Gamma Comics Pro, constantly talking to people, you know. So I think there's your strength is you have a pool of people you can pull from that have experience at different levels. So, you know, us being here at Dragon Slayer next year will be 40 years in the business, is a is a resource for the brand new store that opened this year in San Marcos to say, hey, we're a lot smaller, but how did you get through this? But it's also really cool for me because those new people that come in have ideas I maybe I didn't think about. You know what I mean? They're like, oh, hey, we tried this. I'm like, wow, I never I never thought about that. Let me give it a go. So I think that's the strength. Um when it comes to the cons, I think it's less about cons and more about you have to decide if it's right for you. Because you do have someone that you have to answer to. All of us as business owners answer to our customers, right? That's the ultimate boss. But when you're a a small business owner, most people go into small business because they want to be their own boss. And you are your own boss, but you also have a franchise that you have to strict stick to the guidelines. You have to make sure you have this product mix, this signage. This is registered. You have permission to do this. You want a new shirt, make sure it's approved. Um, I mean, so there is a structure. It's not as free as if you just went on your own. And then you have to go into it with open eyes, knowing that you're gonna have fees that you have to pay. Um, you're gonna have to pay royalty and marketing. The marketing fees, you know, in theory, should be a boon for you because that means the franchiser is taking these marketing fees and marketing your business and his brand everywhere. And that should be a positive. So you just have to know going in that you're going to be sharing some of your profit and that you get what you put in. So you've got to do your research. You got to make sure, because there are a number of gaming franchises. There's not a lot of them, but there are a number that you can pick up. So do your research. Make sure that you're willing to work with that person that you align with their philosophies, that um that they run or have stores that are solid stores. They're not the Simpsons comic book guy. You know, you come into the store and it's well lit and it's clean and it's it's stocked and the staff greets you at the door, or, you know, you just want to make sure you in investigate all that because it's not for everybody.
SPEAKER_00: 27:13
Given your experience in the industry and with the store, what advice would you have for someone looking to potentially get into the industry, whether it's opening a game store, whether it's coming out with their own game?
SPEAKER_01: 27:24
Sometimes I think if if I could go back 10 years, would I still be a small business owner because there's so much stress with it sometimes? But the answer is yes, I always would be. Because even as a franchise, I am still my own boss. I set my own schedule. I still take immense pride and joy and seeing people's faces light up when they come in the store for the first time. I think if you're gonna do that, you have to have the feeling that you really want to do this, but you have to be realistic. You have to know you're not gonna be a millionaire in 10 years. You must have a solid business plan. You must do your research on where you open your store. Don't put it on top of three existing stores because and there's like a whole principle for why people do that. Um, but make sure that you do your homework, that you know where you're going, you have the you have the foot traffic, you have neighboring businesses that'll pull people in, that you understand your profit margins, what it's gonna take to set up accounts, that you have enough money when you start, that you have a cushion, make sure you have a line of credit. Don't do it without having a line of credit when you first start because you just don't know what's gonna happen. I think the first year that I was the owner, we had two AC units go down on top of the store. And in the state of Texas, the AC units are the responsibility of the renter and not necessarily, so you're talking, you know,$13,000,$14,000 units. I've replaced six of them now. Um it's you have to know going in that you should have that line of credit, that you should do your homework, you have enough money to open. You you gotta make sure you're not just, oh, I have just enough to buy. You're not, you want to make sure that when you stock your store, you pay attention to what your customers want, that you hear feedback for when you're missing stuff. I mean, you can go out on my floor right now and I'm missing product either because I can't get it or I don't know about it. So listening to your customers, you need to make sure that you do that. And above all else, if you're gonna be a gaming or comic store owner, you have to love people. Because if you don't love people, you are not gonna enjoy your life. I mean, the the whole thing works around people. Gamers are opinionated, they they are serious about when they win and lose. There are good winners and there are bad winners and good losers and bad losers. And there are people that come in here that maybe just had the worst day of. Their whole life and that you you get that brunt for a little bit, you got to be able to diffuse that and understand and and hope that you're dealing with people that you can say, it's okay to come here. So you have to love people to do this. If you don't, run an online business. Then you never see people, although you will still deal with them if their product doesn't arrive on time and it's damaged. So I think you have to just make sure that you go in with open eyes with a clear understanding that this will not turn you into a millionaire in 10 years. Wouldn't that be great? Um, but that's the most important thing is don't just go into it because you're like, oh, I like game, I like games. You can like games and play them. If you like games and you're a business owner that sells games, understand that your hobby just became your livelihood. And so you probably won't have time to play those games anymore so that other people can. I always say I'm gonna have a fabulous retirement one day because I have stuff that's still in wrappers at home that I haven't played. I'm like, oh, that's a really cool game. Okay, I don't know what time you to play it. I'm running a business, you know. So just make sure you know all those things that you go in understanding that's where you're at. It's not to discourage people, it's just to say realistically, you have to know what you're stepping into. And you'll still be surprised. Trust me, Josh, I'm surprised. Every week by something that happens, I'm like, I had no idea that could happen. I had no idea this would be the thing. It could, could it possibly be even more expensive? Yes. And then every once in a while, there's something you're like, that was amazing. I didn't think that was going to sell that way. Let's get more of it. You know, be open, be active, be engaged, um, get the right mix of staff, know how to get the right mix of staff. Um, and be able to divorce yourself from product that doesn't work even if you love it. That's one of the hardest parts. Oh, but I really love this. It was so good 10 years ago. Okay, but no one's buying it anymore. And so either don't carry it and put something out that is buying, people are buying, or just keep that one copy for that one person that hasn't the style or to come in and get that game.
SPEAKER_00: 32:11
Angie, thanks for sharing your story today.
SPEAKER_01: 32:13
100%. Thank you.