Bigdweimer Posted March 24, 2012 Share Posted March 24, 2012 Hey I am new to the vending industry and just recently secured a location at one of the top law firms in the area. There are currently 60 employees. It has to 2 kitchens and they want a snack and drink machine in each. The office manager sent an email out to everyone with the inventory and prices and received amazing feedback. The reason they're changing vendors is because their last vendor couldn't provide a healthy option and I can. They said I could put a small drink and snack machine in one kitchen that provided less options but they wanted to be able to provide more options in the others. What machine types should I consider to be cost effective and still meet their needs? Also, what would be the max amount spent on the machines to still make it a feasible location? Thanks. Link to comment Share on other sites More sharing options...
AngryChris Posted March 25, 2012 Share Posted March 25, 2012 Well... being that it's a top law firm, I would not expect too much in terms of sales. This sounds like a heavily white-collar location. On the low end, you could expect $60/week. On the high end, about $120/week. I would be leaning closer to the $60 margin, maybe something like $75. Your prices should be good (for you) to stay profitable because, with 4 machines, it's going to be very difficult to sell enough stuff to avoid stale products. I suggest a couple of things. Firstly, if you haven't already done so, stick with cans. These people don't need bottles unless they absolutely insist on it. With that said, I would stick with any 8 select machine or higher that you can get, on the cheap, and place it in the more used break area. I would also stick with a 4-wide snack machine for the main break area as well. Providing TOO many choices means TOO many stales. As for the second location, a combo machine would do justice here... but it may cost you more to get a decent combo machine than it would to get a snack and a soda machine. You would be far better off, in my opinion, to offer another full-size can machine (or maybe one with 6 selections or so) and a 3-wide snack machine if you can get one.... if not, stick with another 4-wide. If I was in your situation and I had this location because it was part of a package deal or something (as I would not bother with a white-collar location with 60 employees that wants FOUR MACHINES!!!!), I would probably call one of my distributors and buy 2 can machines for $600 each in great condition (with validators) and get either two 4-wide snack machines or a 3-wide and a 4-wide. The reason why a 4-wide is okay instead of a 3-wide is because a 4-wide can be installed almost anywhere.... 3-wides are limited to smaller locations and 5-wides are limited to larger locations... 4-wides just seem to be what I feel comfortable with. With the right distributor, you could get away with installing this place for $2000-$3000... but if you were making lets say... $75/week before COGS, or about $35/week after COGS, it would take you 1-2 years to see a return. Unless you get really lucky and the place kicks butt. Keep in mind that white-collar people love to window shop and know they are being given a better "service" but many of them spend little to nothing on the vending machine because they spend their daily $15 allowance on lunch which is eaten at a restaurant. P.S. Unless you absolutely KNOW they are capable of making really good revenue, I would try to talk them out of 4 machines and either reduce it to 2 soda and 1 snack or just 1 soda and 1 snack in one break area. Link to comment Share on other sites More sharing options...
sbishop Posted March 25, 2012 Share Posted March 25, 2012 I would not put in 4 machines for 60 people! I would find a spot inbetween the 2 kitchens Link to comment Share on other sites More sharing options...
Vendors Tech Posted March 25, 2012 Share Posted March 25, 2012 I agree, two machines max. Unless they are snackaholics, the machines will probably average $25 each per week. That's based on an account that size with two machines doing $50 a week per machine, which is fairly reasonable. Link to comment Share on other sites More sharing options...
AngryChris Posted March 25, 2012 Share Posted March 25, 2012 I have a rule of thumb: The more money people make per hour (relative to their industry), the less they spend on vending machines. Also, if they are white collar, $1/person. If they are blue collar, it's $2-4$/person. I have an account with 11 employees that does $65/week... snack and can machine!!! Link to comment Share on other sites More sharing options...
Bigdweimer Posted March 25, 2012 Author Share Posted March 25, 2012 Hey thanks for all the input. I do realize this location is probably not going to be the most profitable location there is but the main thing I'm looking at is the potential opportunity from this account. It is in a 17 story building and the office manager is gonna help me get more machines placed in some of the buildings public areas as well as recommend my services to all the tenants in the building. There's also a new business about to move in that will take up 3 floors and she is going to reference me to them. Along with this opportunity her husband is the maintenance supervisor for 5 other buildings and she said he could get me into several other locations throughout downtown. Do you think future opportunity out ways actually turning a huge profit from this location based on they're vending needs?(They specifically want 2 snack and 2 drink) I'm thinking a USI 3039 and 3038 combo for the small kitchen and a AP 7600 snack and a DN 2145 drink for the bigger kitchen. I do realize it might be somewhat overkill but it's really the best prices I could find on the web coming out to a total of $4000. My average profit margins are between 55- 60%. I'm kind of in a time crunch and don't have much more time to shop for machines considering they need them in 2-3 week and I haven't made a purchase yet. I am a quick learner but have little experience except for web knowledge about this industry. Are these good choices for machines considering they want a mixed variety of healthy and non-healthy snacks as well as an assortment of different size healthy and non-healthy drinks? Sorry for the rambling. haha Link to comment Share on other sites More sharing options...
RJT Posted March 25, 2012 Share Posted March 25, 2012 Two machines only, if they dont agree to that, find another account. It does not make "business sense" so no need in trying it at all..... Link to comment Share on other sites More sharing options...
AngryChris Posted March 25, 2012 Share Posted March 25, 2012 Hey thanks for all the input. I do realize this location is probably not going to be the most profitable location there is but the main thing I'm looking at is the potential opportunity from this account. It is in a 17 story building and the office manager is gonna help me get more machines placed in some of the buildings public areas as well as recommend my services to all the tenants in the building. There's also a new business about to move in that will take up 3 floors and she is going to reference me to them. Along with this opportunity her husband is the maintenance supervisor for 5 other buildings and she said he could get me into several other locations throughout downtown. Do you think future opportunity out ways actually turning a huge profit from this location based on they're vending needs?(They specifically want 2 snack and 2 drink) I'm thinking a USI 3039 and 3038 combo for the small kitchen and a AP 7600 snack and a DN 2145 drink for the bigger kitchen. I do realize it might be somewhat overkill but it's really the best prices I could find on the web coming out to a total of $4000. My average profit margins are between 55- 60%. I'm kind of in a time crunch and don't have much more time to shop for machines considering they need them in 2-3 week and I haven't made a purchase yet. I am a quick learner but have little experience except for web knowledge about this industry. Are these good choices for machines considering they want a mixed variety of healthy and non-healthy snacks as well as an assortment of different size healthy and non-healthy drinks? Sorry for the rambling. haha $4,000!!!!?! Listen... I don't know how you are going to make a 55-60% margin. That may be your margin after the product cost but have you considered fuel at least? Repairs to the equipment? Stale products? Realistically, I make an average of about 33% margins overall within my business and I am capable of getting closer to 40% if things were a little more efficient. 55-60% just sounds unreasonably high. Your prices must be all around 75 cents to $1.00 for most items to make that kind of a margin and your canned soda must be at least $0.75. Regardless, assuming you DID make 55% (I am not even going to bother with 60%), and your total purchase price was $4,000, you would have to generate $7,300 over 2 years... or $70/week. While $70/week is not unreasonable for this account, this is assuming NO repairs, NO gas expense, NO commission, NO replacement parts. But I have to say... the AP 7600, in great condition, is worth about $1200. The USI Combo is probably worth $1000.... $1200 MAX. And the DN glassfront... that thing is probably worth $1,200 in GREAT condition. Overall, I wouldn't give more than $3,000 for the SET. These things would have to be upgraded, everything working, 6 month warranty, delivered and set up, etc... for me to purchase them for $4,000. Also, a 7600 is a HUGE snack machine.... the DN glassfront is a HUGE pop machine. The snack machine alone has about 40+ selections while the glassfront soda has about 45 selections... that's about a selection for every person! I'm just telling you that it's not just overkill... it's like driving a tank from your house to the local convenient store a block away.... for a candy bar. It's beyond overkill. You might not think it's such a bad idea... but you will have SO MANY STALE PRODUCTS!!! If this is the only account that you have/will have, you are simply offering too many options. People may like 20 different types of snacks out of a vending machine, but they generally only buy the same 1 or 2 items all the time because that is their favorite. I strongly recommend you to call up a different distributor if you can find one and find something along the lines of a 4-wide snack and a can machine. Just so you know, there's virtually no way you will make a 55-60% margin on bottled soda unless you are selling the 16.9 ounce stuff or cans. You really need to provide us with some pricing on various items because I think you are just asking for trouble. You would be better off spending $1,500 on a tool shop with 20 people than this thing. You may be thinking "Man, they are going to hook me up with so many locations, this is awesome!" but in reality, office buildings are generally junk. There are plenty of kitchens and break areas with refrigerators where people bring in their own stuff. I STRONGLY recommend you look for different equipment. Those are TOO big. Also, just imagine how much it would cost you to purchase all of the product to go into the machines! You can't buy partial cases, you can only buy full cases. Imagine buying a full case of diet pepsi and finding out that no one drinks it! There goes a $18~ loss. That $4000 is better suited elsewhere. I recently invested $4,500 in a location that only does $150/week and I wish it had done near $200/week like I had expected it to. At LEAST haggle that price down closer to $3,000. $4,000 is absurd for all of those unless they are upgraded like I mentioned. They better all take 5s and be all MDB. The USI combo may be a decent setup for the smaller break area but that's about all I can support you with for now. Link to comment Share on other sites More sharing options...
Bigdweimer Posted March 26, 2012 Author Share Posted March 26, 2012 I do have the cans at $0.75, 16.9 oz bottles $1.00, and also healthier drinks that range up to $2.50. Snacks range from $0.75-$2.00. I had an email sent out with the inventory available and prices listed and still got an amazing response. I have made a spreadsheet and sorted by most requested product and plan on narrowing it down based on the highest profit margin products requested. I have a family member that works there and that will handle restocking for no charge so I will have no gas or labor fees. I'm now currently trying to convince them that I would like to try just one snack and drink machine in the one kitchen and if it calls for more in the future I will consider making those arrangements at that time. If they can't work with that then I'll continue pursuing other locations. Thanks for the feedback! It's good to hear from knowledgeable people in the industry. Link to comment Share on other sites More sharing options...
AngryChris Posted March 26, 2012 Share Posted March 26, 2012 I do have the cans at $0.75, 16.9 oz bottles $1.00, and also healthier drinks that range up to $2.50. Snacks range from $0.75-$2.00. I had an email sent out with the inventory available and prices listed and still got an amazing response. I have made a spreadsheet and sorted by most requested product and plan on narrowing it down based on the highest profit margin products requested. I have a family member that works there and that will handle restocking for no charge so I will have no gas or labor fees. I'm now currently trying to convince them that I would like to try just one snack and drink machine in the one kitchen and if it calls for more in the future I will consider making those arrangements at that time. If they can't work with that then I'll continue pursuing other locations. Thanks for the feedback! It's good to hear from knowledgeable people in the industry. No problem! I just don't want to see you really regret this and then have to find locations for those machines or sell them at a loss because you get sick of the high expense and little profit. Link to comment Share on other sites More sharing options...
cashman Posted March 27, 2012 Share Posted March 27, 2012 white collar =slow sales try for maybe two combo units Link to comment Share on other sites More sharing options...
AngryChris Posted March 29, 2012 Share Posted March 29, 2012 white collar =slow sales try for maybe two combo units Two combo machines might cost as much as 4 full-size machines. I wouldn't bother unless he found a good deal. Link to comment Share on other sites More sharing options...
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