JLM Vending Posted June 4, 2012 Share Posted June 4, 2012 Seems like inflation makes the products increase overtime. How are vendors going to counteract this issue? The oak lady said that when you make it 50 cents, twice as many will come out. Seems to me like that defeats the whole entire purpose. Gumballs are the best profit maker, but not all spots want them. In the next 4 years, how much would you say PMM are going to cost? If it starts costing more and more, that is going to be a problem. What I don't understand is why they don't have bulky PMM products that are for vendors. They should allow you to buy dozens of pounds at a time to save some money on cost. Link to comment Share on other sites More sharing options...
PerformaVending Posted June 4, 2012 Share Posted June 4, 2012 I suppose you could probably buy cheaper from the Mars, but I don't know how much that would really save you. I'd imagine you'd need to buy a pallet. In the long run, Mars is going to raise prices as high as they can go without slowing the demand. Because there really isn't a good "substitute" for M&M's of any variety, they can charge pretty much whatever they want. While I think Vendelicious would probably have a better idea of the economic angle of things, PMM's and candy in general aren't going to get any cheaper. This is where we have to either get creative or start filling out applications at Wendy's. It's been said time and again that 50 cent candy is coming- but there doesn't seem to be a clear recourse for when that day comes. Entire routes of machines will be obsolete and unsustainable in short order. Right now it's manageable, and we can still make it okay at 25 cents, but what is the next level? How do we keep up with changing times when our equipment can be 40 years old in some cases? To that, I'm not sure. Link to comment Share on other sites More sharing options...
shepherdsflock Posted June 4, 2012 Share Posted June 4, 2012 I think we'll be seeing more electronic based machines, like the All American Chicken and others, that have dollar bill acceptors and eventually credit/debit card readers. I think we'll see machines like this replacing traditional toy machines, and will probably see versions of it made for candy. Everything's becoming high dollar, go-big-or-go-home. Link to comment Share on other sites More sharing options...
JLM Vending Posted June 5, 2012 Author Share Posted June 5, 2012 I think we'll be seeing more electronic based machines, like the All American Chicken and others, that have dollar bill acceptors and eventually credit/debit card readers. I think we'll see machines like this replacing traditional toy machines, and will probably see versions of it made for candy. Everything's becoming high dollar, go-big-or-go-home. yea bout how in the world will you make money then? That itself is going to make the business that much more expensive. Plus what will we do with the machines we have now? And how many more years are we talking before this change occurs? Link to comment Share on other sites More sharing options...
PerformaVending Posted June 5, 2012 Share Posted June 5, 2012 yea bout how in the world will you make money then? That itself is going to make the business that much more expensive. Plus what will we do with the machines we have now? And how many more years are we talking before this change occurs? I believe vending is evolving from the traditional "coin-op" and more into automated retail. What we know as bulk vending today isn't going to be what bulk vending will be 10 years down the road. Between inflation, the influence of plastic and the electronic ways people do business, I can't imagine traditional machines stand much of a chance. The All American Chicken was one of the first, but I figure it's only a matter of time before every machine has a DBA on it. Credit readers are so small these days I figure they'll be everywhere in no time as well. I saw a soda machine on a college campus that has a card reader- so they're already here. I think toy vendors will ride it out- the price-points they're working with can keep them afloat, but I can't see people paying 50 cents for 8-9 PMM's from a machine. The expenses are going to eat a lot of guys alive, and it's going to be a dark day for all of us when that day comes. I expect the big squeeze on candy will begin about two years down the road if price increases remain consistent. (I'm gauging this will the cost of skittles from 2009-now) because that puts your COGS per vend close to 16 cents a vend if you're vending 10-12. I think what we're doing now might not be a viable business in the near future. Between government intervention, price increases, and just the substantial cost of living- I think a day will come when lots of part-time vendors like me will close up shop for good and they won't be replaced. If quarter machines become obsolete, there's an ocean of machines that will go offline forever. It's tragic really. I really hope I'm wrong about this. Link to comment Share on other sites More sharing options...
mission vending Posted June 5, 2012 Share Posted June 5, 2012 IMO your right about quarter machines becoming obsolete, its only a matter of time. We are seeing the same thing in full line, you can get a single price drink machine all day long for 200-250 but the locations where it can be placed profitably are becoming as scarce as hen's teeth. The higher volume accounts will warrant a multi price machine, and if you don't do it someone else will. The remaining accounts are so low volume that you can't put a snack machine in (maybe an honor box, but that's another subject) and make it worth your time. So bottom line, like most any other type of business, you need to look at the future and be prepared to evolve with the changes that are coming. If you can't or won't invest in the necessary upgrades for your business as technology dictates then you better not be planning to make a full time living doing this for any significant length of time. Link to comment Share on other sites More sharing options...
BorderJerry Posted June 5, 2012 Share Posted June 5, 2012 Two little positives that were not mentioned yet....Cuba will soon be post Castro, and will probably open up to capitalism. Then the supply of sugar will increase here in the US. Hopefully will help combat price inflation on the candy front. One of the national associations for the blind is suing the US Treasury because the blind can't tell the difference between a one dollar bill and a hundred dollar bill. Almost all countries but the US have dropped the smaller denomination of paper bills and are using coins (its cheaper in the long run because of coin's durability). With one, two or even five dollar coins replacing those bills, sales in bulk machines will increase at least 50% (according to last years NBVA president, who went through the process in his native Canada a few years back). The NBVA is supporting a lobbying effort towards this bill elimination plan. Link to comment Share on other sites More sharing options...
PerformaVending Posted June 5, 2012 Share Posted June 5, 2012 Two little positives that were not mentioned yet....Cuba will soon be post Castro, and will probably open up to capitalism. Then the supply of sugar will increase here in the US. Hopefully will help combat price inflation on the candy front. One of the national associations for the blind is suing the US Treasury because the blind can't tell the difference between a one dollar bill and a hundred dollar bill. Almost all countries but the US have dropped the smaller denomination of paper bills and are using coins (its cheaper in the long run because of coin's durability). With one, two or even five dollar coins replacing those bills, sales in bulk machines will increase at least 50% (according to last years NBVA president, who went through the process in his native Canada a few years back). The NBVA is supporting a lobbying effort towards this bill elimination plan. That is very good news- I know that the US wants to use dollar coins, but I just can't see that becoming the norm here. But, times are always changing I suppose. Link to comment Share on other sites More sharing options...
JLM Vending Posted June 5, 2012 Author Share Posted June 5, 2012 I believe vending is evolving from the traditional "coin-op" and more into automated retail. What we know as bulk vending today isn't going to be what bulk vending will be 10 years down the road. Between inflation, the influence of plastic and the electronic ways people do business, I can't imagine traditional machines stand much of a chance. The All American Chicken was one of the first, but I figure it's only a matter of time before every machine has a DBA on it. Credit readers are so small these days I figure they'll be everywhere in no time as well. I saw a soda machine on a college campus that has a card reader- so they're already here. I think toy vendors will ride it out- the price-points they're working with can keep them afloat, but I can't see people paying 50 cents for 8-9 PMM's from a machine. The expenses are going to eat a lot of guys alive, and it's going to be a dark day for all of us when that day comes. I expect the big squeeze on candy will begin about two years down the road if price increases remain consistent. (I'm gauging this will the cost of skittles from 2009-now) because that puts your COGS per vend close to 16 cents a vend if you're vending 10-12. I think what we're doing now might not be a viable business in the near future. Between government intervention, price increases, and just the substantial cost of living- I think a day will come when lots of part-time vendors like me will close up shop for good and they won't be replaced. If quarter machines become obsolete, there's an ocean of machines that will go offline forever. It's tragic really. I really hope I'm wrong about this. are we still going to be able to do business? how bout u? Link to comment Share on other sites More sharing options...
mission vending Posted June 5, 2012 Share Posted June 5, 2012 Two little positives that were not mentioned yet....Cuba will soon be post Castro, and will probably open up to capitalism. Then the supply of sugar will increase here in the US. Hopefully will help combat price inflation on the candy front. The price of sugar will not decline until the protective sugar tariff the US gov't has in place is removed. Here is a older story about the impact of the tariff: http://www.mackinac.org/4096 Here is something more recent about its impact on the American Economy: http://www.benzinga.com/105260/sugar-tariffs-cost-americans-2-5-billion-in-2009 Link to comment Share on other sites More sharing options...
Vendelicious Posted June 5, 2012 Share Posted June 5, 2012 This is an interesting topic, to say the least. Early in the previous century, children would eagerly rummage through their pockets, looking frantically for one special coin. Dropping the useless quarters and dimes back into the seams of their cotton jeans, they would excitedly lift their favorite coin, the nickel, up into the air and jump with joy. You see, no other coin except the nickel could bring about this level of joy in the children. All it took was just one nickel for the children to operate their favorite mechanical device, the candy machine. With a turn of the knob, candy poured in all directions. As the years passed, the nickel, for one reason or another, lost its shine with the children and a new star emerged in its place, the dime. Soon too however, the glory of the dime faded and the herculean quarter, the last of the coins, emerged victorious. The quarter, with all its might, pushed its way into the twenty-first century and remains today, the envy of all children. Link to comment Share on other sites More sharing options...
shepherdsflock Posted June 5, 2012 Share Posted June 5, 2012 yea bout how in the world will you make money then? That itself is going to make the business that much more expensive. Plus what will we do with the machines we have now? And how many more years are we talking before this change occurs? That is my concern as well. I think the future of bulk vending is big companies with the deep pockets to buy electronic machines and have huge routes to get a decent ROI in a reasonable amount of time. HOWEVER, I don't think that will last forever. I think there will be a span of about 5 years where its going to suck for the little guy, but then the electronic machines will start to show up very cheap on the used market. And, if there are some innovative folks out there that know how to integrate electronics with mechanics, somebody could make a small fortune if they could come up with a compact dollar bill acceptor and/or card reader that can operate the old mechanical machines. Link to comment Share on other sites More sharing options...
shepherdsflock Posted June 5, 2012 Share Posted June 5, 2012 By the way, my next plans for my business include machines with DBAs, like the All American Chicken and some of OK's machines. I don't think I'll be doing much more of the triple and double head coin operated machines. I'm already seeing that the industry is quickly moving away from machines like these. They're great machines, and if I would have gotten into vending about ten years ago, I would have had a lot more motivation to invest in machines like them. But, times are changing, and I see the need to move to electronics based machines. My goal right now is to save enough from my triples to buy an electronic machine. I think I should be able to do that in a year or less, then it's time to start building the business in the direction of electronic bulk vending. Link to comment Share on other sites More sharing options...
BorderJerry Posted June 5, 2012 Share Posted June 5, 2012 The price of sugar will not decline until the protective sugar tariff the US gov't has in place is removed. Here is a older story about the impact of the tariff: http://www.mackinac.org/4096 Here is something more recent about its impact on the American Economy: http://www.benzinga....billion-in-2009 Good post, I am of the generation who grew up in the cold war and to us this tariff is common knowledge...but it is probably not known to most in the younger generations. I should have pointed out there will be two reasons for the supply increase; the dropping of the import tariff into the US and the increase in production via the profit motive of capitalism. Link to comment Share on other sites More sharing options...
dperry Posted June 5, 2012 Share Posted June 5, 2012 Seems like inflation makes the products increase overtime. How are vendors going to counteract this issue? The oak lady said that when you make it 50 cents, twice as many will come out. Seems to me like that defeats the whole entire purpose. Huh? This isn't right. Even if you make it 50c, then amount vended won't change unless you change the setting in the wheel to allow for more. If you only change to a 50c from a 25c mech, then you will doubling the cost for the same amount of product. Gumballs are the best profit maker, but not all spots want them. In the next 4 years, how much would you say PMM are going to cost? If it starts costing more and more, that is going to be a problem. What I don't understand is why they don't have bulky PMM products that are for vendors. They should allow you to buy dozens of pounds at a time to save some money on cost. This may be why many of us here have forgone candy in favor of toys. Not that toys aren't affected by inflation themselves. Link to comment Share on other sites More sharing options...
will.vend Posted June 5, 2012 Share Posted June 5, 2012 That is my concern as well. I think the future of bulk vending is big companies with the deep pockets to buy electronic machines and have huge routes to get a decent ROI in a reasonable amount of time. HOWEVER, I don't think that will last forever. I think there will be a span of about 5 years where its going to suck for the little guy, but then the electronic machines will start to show up very cheap on the used market. And, if there are some innovative folks out there that know how to integrate electronics with mechanics, somebody could make a small fortune if they could come up with a compact dollar bill acceptor and/or card reader that can operate the old mechanical machines. actually its the big guys that are keeping most of there 2 inch at 50 cents and their 1 inch at 25 cents. it most likely is because of them that product cost has been kept down, now Im talking primarily toy cost here but you mentioned the "big companies"On the other hand 99% of candy vendors are part time charity vendors and they do not rely on vending as their main source of income. while candy keeps increasing in cost and profit margins get slimmer it's not a deal breaker for them. IMO the solution for candy vendors is to eliminate candy and only vend gum and toys. You can always provide candy for those "special" accounts. As far as them offering pmm's in bulk for vendors they could care less that people are vending their product in machines. they are making way more money in their current packaging. packaging is key in their business, people dont think twice about paying around a dollar for a package of 8 or 9 pmm's but will complain at only getting that many out of a vending machine for a quarter. I also think the long term fix for bulk vending is the dollar coin, that would jump us to a max of 4 dollars right off the bat. Link to comment Share on other sites More sharing options...
PerformaVending Posted June 5, 2012 Share Posted June 5, 2012 are we still going to be able to do business? how bout u? That depends on what we do now. The future of our industry relies on whether we innovate and grow, or sit around and get swept away in the "reaping of the Vendstars". Under my current configuration- if prices skyrocketed tomorrow, I would be forced to shut down. My route is predominantly candy right now, and my toy line doesn't make anywhere near the national average. But, there will always be innovators, and there will always be locations, and there will always be customers- we just have to think outside the box to stay in business. The question now is what do we have to do to make it work? I think we've got some good places to start already listed here in this thread. Link to comment Share on other sites More sharing options...
JLM Vending Posted June 5, 2012 Author Share Posted June 5, 2012 but do you guys think things will stay around the same the next 5 years? Link to comment Share on other sites More sharing options...
musser Posted June 6, 2012 Share Posted June 6, 2012 Two little positives that were not mentioned yet....Cuba will soon be post Castro, and will probably open up to capitalism. Then the supply of sugar will increase here in the US. Hopefully will help combat price inflation on the candy front. One of the national associations for the blind is suing the US Treasury because the blind can't tell the difference between a one dollar bill and a hundred dollar bill. Almost all countries but the US have dropped the smaller denomination of paper bills and are using coins (its cheaper in the long run because of coin's durability). With one, two or even five dollar coins replacing those bills, sales in bulk machines will increase at least 50% (according to last years NBVA president, who went through the process in his native Canada a few years back). The NBVA is supporting a lobbying effort towards this bill elimination plan. Sorry, the price of sugar is controlled by the Fed, import quota and domestic price support. You want cheap food? Kill the USDA. Link to comment Share on other sites More sharing options...
Vendelicious Posted June 6, 2012 Share Posted June 6, 2012 I think it is very important to understand that the principal cause of price inflation is inflation. I define inflation in the classical sense as an increase in the supply of currency or bank credit. Defined in this manner, the principle effect of inflation is a general increase in the price of goods and services or price inflation. Below is a M1 chart for the US dollar: What is M1? According to Investopedia.com, M1 is, "A category of the money supply that includes all physical money such as coins and currency; it also includes demand deposits, which are checking accounts, and Negotiable Order of Withdrawal (NOW) Accounts." In 1971, President Nixon suspended the convertibility of US dollars into gold, thus rendering the US dollar a fiat currency. As one can see from the chart, after 1971, the physical money supply has increased exponentially. This is the first time in the history of the world that every currency in use around the world is a fiat currency. Personally, I don't think this experiment is going to end well. Although individuals in Washington are always promising to fight price inflation, price inflation is an unfortunate and predictable consequence of US monetary policy. Henry Hazlitt, author of one of the most popular economic books of all time, nailed it on the head when he stated in 1964 that our political leaders, "are promising to fight with their right hand the conditions brought on with their left." Books I recommend on the subject of money and inflation : http://www.amazon.co...38959702&sr=8-1 http://www.amazon.co...86&sr=1-3-spell http://www.amazon.co...38959914&sr=1-2 Link to comment Share on other sites More sharing options...
lurtsman Posted June 6, 2012 Share Posted June 6, 2012 Vend, you do a great job of breaking down economics for people who aren't trained in it. Or so it seems to me. When I try to break down the concepts I never break them down far enough and people just stare and wonder. Clearly inflation is coming, clearly the increase in the money supply--though to be fair, it is an increase in M2 that is leading us towards inflation. Currently the inflation is not in effect because GDP has been suppressed by high unemployment rates. According to Okun's law we will see an explosion in GDP when we reach a reasonable employment rate. However, the inflation will not be tracked because the CPI will track electronic goods that decrease in price over time because of constant innovation. The goal of the Fed is to create this inflation because our debt levels have become unsustainable. It isn't simply that the government owes too much right now, but that their future obligations in the form of medicare, medicaid, and social security can not be paid with current income. Either we will turn our children into slaves and whip them to obedience, or we will accept that there is not enough wealth to support the bloated system currently in place. People will fall on either side of the isle as they evaluate their options. Since no politician can touch these programs that largely benefit people with enough time on their hands to be very involved in politics, the only way to scale them back is by indexing them to inflation and using a fake CPI (consumer price index) to record that inflation. That way the payments go down in real value, and most of the people will be too stupid to realize how much their hand out has decreased. This is also the first generation of Americans to grow up knowing that they are being robbed. Social security taxes are levied on us for a program that will not repay us. People retiring now shouldn't be blamed, it is the fault of crooked politicians who gave our money away to retirees decades ago. The system was designed as "pay as you go" in which each generation was born into bondage to repay the desires of the previous generation. Link to comment Share on other sites More sharing options...
JLM Vending Posted June 6, 2012 Author Share Posted June 6, 2012 How many more years do you guys think it will take before the majority of bulk vending is electronic? Link to comment Share on other sites More sharing options...
PerformaVending Posted June 6, 2012 Share Posted June 6, 2012 How many more years do you guys think it will take before the majority of bulk vending is electronic? My bet is it's starting now, and will command a market segment within 5 years. I believe that in 10 years the electronic machines will be the weapons of choice for professional vendors. Sometime after that, either mechanical machines will fall out as being unfashionable, or economic factors will push many them out of operation for good. This is only my guess, but within 10 years you will want to have a plan to move up to the next level. Presently we're in the first generations of electronic machines, and they will become more common as time goes by. Again, I'm no expert like Vendelicious, but I will say that times are changing. Link to comment Share on other sites More sharing options...
mission vending Posted June 6, 2012 Share Posted June 6, 2012 How many more years do you guys think it will take before the majority of bulk vending is electronic? It seems the trend has already begun, the Chicken Machine that is being raffled off is a excellent example of the new technology coming down the line. I don't think coin op will ever go away totally. Rather, like in full line, there is a relationship to the age of the equipment and the revenue of the location. By that I mean that at some point you won't be able to get gravy locations unless you have electronic stuff and the coin op stuff will be relegated to low performing break rooms. Link to comment Share on other sites More sharing options...
lurtsman Posted June 6, 2012 Share Posted June 6, 2012 It will certainly be mostly relegated to smaller locations. However due to the volume of high quality equipment I expect that even most large commission locations will simply want a change machine with a credit card reader. Effectively an ATM, possibly with a much smaller cap on withdrawals. Full line has started to go that route, and I think it will speed up there. In full line the majority of purchases are large enough to justify dealing with a credit card charge. As those prices inflate (Price of can of coke doubles in 10-12 years--my guess) we'll expect that most things are done on credit. It's simply easier. The top tier of locations will shift from full line machines to miniature electronic stores. The machines will be bigger, the amount of product stocked will be higher, and the system will spit out a report online that says how much of each product will be needed. Link to comment Share on other sites More sharing options...
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