Hawai‘i’s Pawn Stars: Pawnshops Are a Nearly Recession-Proof Businesses

We decided to find out more about the way pawnshops work, and what’s behind the counter in Honolulu’s best-known outlets.

Richard Cornell, of Bag’s End, says a key to success for a pawn shop is return customers. He and his mother, Thuan Brechler, have customers they’ve been dealing with for the past 10 years. Photo: Olivier Koning


As I carried my mini electric guitar through the Taco Bell parking lot toward a little hole-in-the-wall pawnshop in Kailua, I wasn’t as depressed as I thought I might be. I always pictured people who used the services of pawnshops as sad, pathetic creatures deep-sixing the family silver in order to buy another fifth of “Old Overcoat” or to pay off a bookie.


But I had done a little research on the history of pawn broking after deciding to sell my mini electric guitar—no doubt a treasured gift from a loved one but one whose identity time and tide had washed away—and I felt I was engaging in a noble tradition whose roots reached to the medieval days of Europe. The House of Lombard in England set up the first pawnshops after realizing that, even in the Middle Ages, financially challenged townsfolk needed places where they could trade their electric guitars for ale money. Some think pawning goes further back, that it’s the world’s oldest financial institution, likely originating—purely coincidentally, you understand—just days after the establishment of the world’s oldest profession.


Banking systems, such as those set up by the Knights Templar and Bernie Madoff, come and go, but pawning endures, especially during financial hard times. There are about 50 licensed pawnshops in Hawai‘i, mainly buying and pawning gold, which is valued at more than $1,200 per ounce. That’s probably why, when I walked into Kailua Pawn & Gold with my little mini-electric guitar, the pawnbroker behind the dusty counter, Fran Peoples, wasn’t exactly ecstatic to see me. The truth is that, while pawning is considered a recession-proof industry, everybody’s trying to sell to pawnshops these days and not buy. Electric guitars may be a staple of pawnshops, but they don’t fly off the racks and they aren’t worth $1,200 an ounce even if you melt them down.


I explained to Peoples that I really just wanted to go through a pawnshop transaction so I could experience what it was like. Kailua Pawn & Gold is typical of the smaller pawnshops on Oahu, small, cramped and decorated with old computers, TVs, bad paintings, DVDs and a beat-up surfboard. I was disappointed to see there were no samurai swords on display. Based on my knowledge of the famous pawnshop scene in the movie Pulp Fiction, I thought it was mandatory that all pawnshops have at least one samurai sword. But Peoples and other pawnshop owners and managers told me there have been few samurai swords on the market in recent years. Kailua Pawn & Gold did have one electric guitar hanging on the wall and it looked like it had been there since Eric Clapton was just a little chap.


Peoples began our transaction by going to her computer and punching up eBay, Craig’s List and other “buy-and-sell” websites.


The computer has become an indispensible part of a pawnshop, taking the place of the stacks of Blue Books, which list the value of items ranging from cars to power tools. The books are still there but they are as dusty as the TV with the built-in VCR player. Craig’s List and eBay are sites where you can find out the real-time retail value of an item.


Peoples quickly found an exact match to my mini electric guitar, selling new for only $100. Ouch. Then she found some used ones in better condition than mine for $50. Since the usual formula is that pawnshops pay half or less to pawn or buy an item in order to make money on it themselves, I’d be lucky if my guitar was worth a mediocre bottle of chardonnay.


“Twenty dollars,” she said. “That’s all I can give you. Do you want to pawn it or sell it?”


Unless you are talking about a gold Hawaiian bracelet or other gold jewelry, pawnshop owners really don’t want you to pawn your item. Pawning is one of the most heavily regulated industries in the state; there are more regulations related to pawning an item to a pawnshop than to selling it outright to a store.

As is true of many pawnshops, Kailua Pawn is a family-run enterprise. Javen Robinson (above) is the nephew of the owner, Joe Robinson. Photo: Olivier Koning


If you pawn a relatively worthless item, like, say, a beat-up mini electric guitar, the store clerk has to do a ton of paperwork, including setting aside a yellow sheet of paper documenting the transaction that the Honolulu Police Department will pick up to make sure the item pawned is not stolen. Then the pawnshop has to hang on to the item for 60 days before selling it. After 60 days the item is put on display and, in a bad economy, it sits there. And continues to sit there.


If the pawnshop buys an item outright, it still has to file all the paperwork but only has to hang on to the item for 30 days, the direction in which Peoples was gently nudging me. It’s almost like a straightforward sale at Longs Drugs, except Peoples has to type up all the forms, I have to show a government ID (driver’s license, military card, etc.), promise I own the item and then put my thumbprint on one of the official documents. If the item turns out to be stolen, HPD will have the thumbprint of the cunning criminal who got $20 for a beat up mini electric guitar. You have run through quite a bureaucratic gauntlet to deep-six something at a pawnshop.


But Peoples is good-natured about the transaction and explains that a lot of the myths about pawnshops taking advantage of people who are down on their luck are wrong.


“We try to give them as much as we can,” she said. “We don’t want to rip them off, we want them to come back.”


Pawnshops depend on return customers. She said some people pawn the same gold bracelets and jewelry again and again.

Kamaka ‘ukulele at Liliha Pawn. Photo: Olivier Koning

“It helps them through that bad stretch between paydays,” she said.


That sentiment was echoed by others I talked to, including Richard Cornell, whose family has been running Bag’s End Pawn II on Kalakaua Avenue for more than 20 years.


“We have customers we’ve been dealing with for over 10 years, every other month,” he says. “We don’t ask them too many questions about why they are pawning something. Some people have extra expenses that they need money for and when they get their paycheck, they come in and pick [the pawned item] back up.”


Customer loyalty is also rewarded when the collateral item isn’t as good as gold, but rather iffy, such as a year-old laptop computer.


“If we like the person, we’ll let them do a loan a few times even if it’s for electronics, like laptop computers,” he says. “We’ll give them the same price we’ve given them over the past several months even though the value of the laptop isn’t as high. Because we know they will pick it up.”


Bag’s End Pawn II is one of the larger pawnshops in town  and mainly deals with gold, platinum and diamonds.


“We want things we know we can sell or melt down,” Cornell says. The meltdown rate for gold is publicly available online daily, making gold easy to sell on the open market.


What he and his mother, Thuan Brechler, don’t want in the pawnshop are things that are going to sit around, taking up space on the shelves, like construction tools. In a bad economy, everybody wants to sell power tools, not buy them.


He also sees a lot of iPods, DVDs and cameras. For the most part they don’t sell, and,  once pawned, don’t get picked up.


I asked Cornell how he’ll know when the economy is picking up.


“Once we start getting some space to walk around in here,” he says.


Ironically, Cornell said he would like to buy a real samurai sword, but they just aren’t available. If he bought one, he’d keep it on display in the store for tourists, much like his prized Russian, triangular-shaped guitar, called a balalaika.


Cornell said quite a few tourists visit Bag’s End, but the store is nothing like what has become the most famous pawnshop in the world, Gold and Silver Pawn in Las Vegas, home of the hit History Channel TV show Pawn Stars.


Pawn Stars features store owner Rick Harrison, and his father, who is simply called “the Old Man,” his son, Corey “Big Hoss” Harrison, and a goofy shelf-stocker named Austin “Chumlee” Russell.


Pawn Stars has attracted an audience mainly because of the exotic items people bring in to sell and pawn, from race cars to Civil War rifles to treasure maps.


John Spiker, owner of the store All Hawai‘i Gold and Silver on Waialae Avenue, and president of the Hawai‘i Pawn Brokers Association, is happy that Pawn Stars shows his industry in a good light, but points out that a certain amount of artistic license is taken in producing it.


“Pawnshops in Hawai‘i don’t have people walking in trying to sell hot-air balloons and boats like they do,” he said.


Liliha Pawn is one of the largest pawn shops in Honolulu. Part-owner Dale Ichishita says gold—which was worth $380 an ounce in 1996, but now commands more than $1,200 an ounce—is king for pawnshops. Photo: Olivier Koning

I love the TV show and doing this piece for HONOLULU gave me the questionable justification for getting hold of the guys from Pawn Stars. I was hoping to hear some bawdy stories from the bald-headed, bouncer-looking Rick, or the curmudgeonly Old Man, but the PR person for the show hooked me up with the sea manatee-like Chumlee. Chumlee’s job on the show is to appear witless, and he does it well.


Chumlee says Hawai‘i tourists and Island transplants to Vegas are frequent visitors to the shop. Before Pawn Stars became a hit, the Vegas pawnshop got about  70 visitors daily. Today, it gets 700 people a day, mostly tourists just wanting to see the inside of the place. They start lining up outside the store at 8:30 a.m., a half hour before it opens.


“We probably see 40 to 50 people from the Islands here every day,” he says. “They come in and some buy stuff. Some bring us gifts like Maui onion potato chips, mac nuts and chocolate-covered macadamia nuts, which is always great.”


Some Hawai‘i visitors who have bad luck in the casinos do pawn things, like Hawaiian bracelets and jewelry. Other Hawai‘i items that have been pawned or sold at the shop over the years include vintage Hawaiian shirts and Kamaka ‘ukulele. The items pawned by Hawaii visitors often have sentimental value and usually are reclaimed, Chumlee says, but not always. Sometimes, what’s pawned in Las Vegas stays in Las Vegas.


The question that comes up watching Pawn Stars or talking to Hawai‘i pawnshop owners is, “Why sell your personal possessions to a pawnshop for half of what they are worth when you can sell them on eBay or Craig’s List for their actual value?”

Author Charles Memminger’s red-hot mini electric guitar prepares to gather dust in a pawn shop. Photo: Olivier Koning

The simple answer, according to Liliha Pawn owner Dale Ichishita is: “They need the money. Immediately.” And, other than the “We Buy Gold” kiosks popping up all over Honolulu these days, pawnshops are the only places you can walk into with just about anything of value and walk out with cold, hard cash. Try getting $20 for a mini electric guitar at American Savings Bank and see what happens.


I wanted to find some big-shot, million-dollar portfolio financial adviser to explain where pawnshops fit into the overall national economy but I think I can field this myself: They fit in at  the bottom. Pawnshops generally cater to people on the lower rungs of the economy, people without steady jobs, credit cards, checking accounts or million-dollar portfolios. They don’t use Craig’s List to sell their stuff at a better price because many of them don’t know what Craig’s List is. Or they don’t have a computer. Or they just don’t have the time. I use Craig’s List all the time and it usually takes at least a week for something to sell, if it sells at all. My mini electric guitar ad didn’t get one response. Selling things on eBay is even more complicated, because you get into setting up Pay Pal or credit card accounts, uploading photos, writing copy and dealing with the post office.


John Spiker noted that pawnshops offer another financial advantage. Pawning something is nothing more than getting what he calls a “non-recourse loan.” In other words, the transaction is what it is and there is no recourse as a result of not reclaiming your pawned merchandise. If you don’t reclaim it, it’s simply gone. Unlike when you default on a traditional loan, you don’t get a bad credit report, your credit card fees don’t go up and you don’t pay any late fees.


Another traditional rap against pawnbrokers is that they charge an interest rate that is too high for people who can’t secure a traditional loan. The rate is about 20 percent, according to Fran Peoples, which means if I had pawned my guitar for $20, I would have had to pay $24 to get it back. That doesn’t sound like such a bad deal to me. Especially when I think that by the time I pay off my $435,000 home loan (and home equity line of credit) in 30 years I’ll have actually paid $1.45 million. I’m not sure where that money’s going to come from, but I noticed a couple of nice Hawaiian gold bracelets in my wife’s jewelry box. Hmmm.


Charley Memminger is thinking of creating a virtual pawn shop online that will buy and sell only virtual items. But for real money.