Council Moves To Lower Minimum Bid For Beach Scopes

OCEAN CITY – At this week’s Mayor and City Council meeting, it was confirmed what many realize – the beach photography business, also known as scopes, is struggling to stay alive.

Patrick McLaughlin of United Beach Photo, Inc. is the current bid holder for both beach photo franchise licenses in Ocean City. A franchise is held for a term of four years, and upon renewal the franchise fee raises 10 percent greater then the initial fee of the term before. The minimal bid to obtain the franchise is currently $300,000.

With the new term approaching, McLaughlin finds himself in an economic hardship to place a sufficient bid. His current contract was for $710,000 per season. He approached the Mayor and City Council at Tuesday’s work session to present the financial hardships with keeping the company going.

“With a large investment of time, energy and equity in this franchise from building three studios and all that encompass to the vision and revision of our business plan, I would like to continue; however, with change,” he had wrote in a letter to the council.

In the meeting, he presented the history of beach photography to convey how the technology has changed and how the new digital age requires substantial spending.

“The people bidding on this was extremely high at one time…in 1999 there was three operating licenses and many bids,” McLaughlin said.

At that point in time, beach photography was the business to be in. The majority of visitors who came to Ocean City were interested in buying scopes, according to McLaughlin, and it had become a tradition for many.

“I could go out as a photographer on the beach, solicit people and everybody was getting them done and that was based on simplicity of the operation. Everyone knew if you wanted scopes it was very easy to get them and be on your way,” he said.

The process of creating scopes from 1999-2003 was based on traditional film processing, involving chemicals and slide film. The cameras used were the same cameras used in World War II.

According to McLaughlin, they were the ideal cameras to use but now they are impossible to find.

“It is a product of tradition, the quality of the photographer and the quality of the pictures. We’re looking for that wow effect and we always got it from those pictures,” he said.

McLaughlin defined the percentage of customers that came into the store to purchase scopes versus the photos shot on the beach as the company’s “post-rate.” While using the traditional photography, the company’s post-rate was 85-95 percent.

In 2003, the beach photography business was forced into the digital age.

“As 2003 approached, there was a lot of speculation…the operation is going to be more efficient, you will get higher ticket average, your post-rates are going to stay the same, and everything was going to be beautiful and great. That didn’t happen,” McLaughlin said. “It was a tormenting experience going from the traditional process to now digital process.”

According to McLaughlin, the photo equipment found at Wal-Mart and other places replaced traditional quickly, and United Beach Photo had to move fast to keep up with the supply and get that equipment out on the street.

The list of supplies to operate a digital business is extensive. For example, computers have taken the place of the slide film, and in order to show customers what pictures they are choosing required the company to purchase a large amount of computers for the studios.

The jump from traditional to digital sent the company into an experimental stage.

“What happened is the operation got so intense people were waiting an hour and a half to get their pictures as opposed to 10 minutes and what that did was kill our customer base,” he said. “When they were approached the next year on the beach, they were less inclined.”

The new equipment and software also requires a larger work force. The company had started out with the need for about 20 employees and now they have moved up to 150.

Bringing his presentation to a present stance, he explained that his business has become comfortable with the operation and the process of creating the product has become more efficient and faster but the price to keep it running has continually increased.

As technology is becoming so handy, beach photography has become less appealing to Ocean City’s visitors

“The value of a picture is going down,” McLaughlin said. “It is much easier now to share a picture. Everybody now has a camera phone.”

The company finds itself in search of new ways to appeal to its customer base and create new and exciting products to keep beach photography alive.

“Despite the decline in demand for pictures on the beach due to infiltration of digital cameras, we are confident we can fill that void,” McLaughlin said. “We are in the long term process of creating an “amusement park” for pictures to replace the “wow” factor that was dictated by the traditional “telescope”. This is going to require more space and more capital outlay.”

The company’s post-rate today has decreased to 40-60 percent due to the transition into the digital era.

“We’ve been walking a razor thin line the past eight years, season to season, in order to stay afloat,” McLaughlin said. “We grossly underestimated and somewhat ignored the cost, intensity, and maintenance of the transition to digital … we thought it would improve the operational efficiency but it really had the opposite effect.”

McLaughlin’s presentation impressed the council, and Councilman Lloyd Martin made a motion to decrease the minimum bid to $150,000 from $300,000.

“We had three franchises out there on the beach, and we cut down to two … one left abruptly and left you holding all of it. I think that part of the reason was the $300,000 number,” Martin said. “$150,000 a year is a nice price because you still have your overhead and your equipment.”

Council member Jim Hall agreed with the motion, but Councilman Joe Hall did not.

“Maybe we should tier it…personally I would have voted for $200,000,” Joe Hall said. “I think we’re discounting it to low. I believe the $300,000 is too high in this market and you probably wouldn’t make it, but I don’t believe your business is going to be unprofitable over the next eight years. I see the motivation.”

Mayor Rick Meehan supported the motion to reduce the minimum.

“I think that we’re misinterpreting one thing here. Just because we’re lowering the minimum that doesn’t tell us exactly where the bid price is going to go,” Meehan said. “Patrick may be working against himself a little because the lowered minimum might even encourage other people to bid on it as well.”

The motion of reducing the minimum bid for the beach photography franchise to $150,000 passed in a 4-3 vote, with Joe Hall and Council members Brent Ashley, and Margaret Pillas in opposition.

“I support what you’re doing,” Meehan said to McLaughlin. “I think the longevity of this business is important to Ocean City. I think we can continue to have a viable business on the beach and get a good return by making the change to the ordinance.”

McLaughlin isn’t willing to give up now, he has put to much time into his business to let it fall apart.

“I thrive on the risk and our ability to find solutions,” he said. “We take an optimistic view and tenacious outlook knowing that if we don’t give up, we will eventually find solutions because a solution exists for every seemingly problematic event.”