Mike32110 Posted October 21, 2012 Share Posted October 21, 2012 Hello everyone, I originally attached this information to my "new member" post, however, I think it is more appropriate to post in this forum. I recently started my vending machine business about two months ago, and just startnig buying several machines on locations. I was looking for a second opinion as to how good/bad of a deal so far, as well as some advice on certain issues that have come up so far. I have 9 locations, with several machines (some combo, some just snack), and one coffee machine. I purchased all of these machines in locations for various prices. I bought 4 machines for $5000 CAD (equal it USD right now) that included Saeco coffee machine (I think it's the 7p plus) - Sales ~$70 a week (Adult learning center) RPD combo - $10/week (DT office, 50-70 employees) Seaga hf2500 combo - $5/week (bank break room, avg. to small sized bank) RPD combo - $40-50/week (truck repair shop) I bought 2 machines for 1700 Older AP medium size snack machine - $20/week (engineering office- 20-30 employees) Older mechanical fridge style vending machine - $5-10/week (industrial shop) I bought a full sized snack machine for $1200 AP snack machine - $60/week (Dept store snack room) I bought a saega combo machine for $1700 Saega 3500 - $40/week (tire repair store) And I bought a single mechanical (9 choices) unit for a small clothing stoer snack room for $350 unknown name - $10/week So I bought these machines off of 3 different people, and was quite dissapointed on certain machines in which I was promised sales much higher than what was observed. The worse example was the 2 units for 1700, as I was told sales were 40-50/week per machine. I found that 2 out of the 3 people generally exagorated their sales (unless the last two months were total anomalies). I also lowered the prices on many of the machines, which should if anything increase sales. Has anyone had similar experiences such as this? I'm starting to realize from a return of investment and time perspective, the coffee machine was my best purchase by far ( he wanted 2500 just for the machine originally) as it makes me about 3500-4000 a year gross, of which at least 80% is likely profit (no commission). My total investment so far is almost exactly 10k for the machines. My plan was to start with these machines, build up the sales (many of the machines were somewhat neglected due to previous owners not being able to service them properly) and get a productive inventory list for each location, and essentially get this route "running smoothly" with minimal amounts of work. My goal is ultimately to expand slowly by finding my own locations, get lockboxes on all of the machines, and eventually buy a van and get an employee to work maybe one day per week. I am currently visiting all my machines weekly, as I am trying to figure out what the top sellers are. My goal is to visit the 3 locations over $40/week biweekly, the other 5 locations monthly, and the coffee machine weekly (as it currently fills from a water cooler tank, which lasts about a week or $70-90 in sales). My plan is to eventually hook up the main line water to the machine (which has already been done) and installing a filter, so that the water tastes good. The previous owner hooked it up without the filter and said the coffee tasted like crap. This would make the coffee machine biweekly afterwards. So far I have found it to be quite a bit of work, just learning the basic functions of the machines, setting up the right products, and getting myself organized with inventory lists, proper rotation of snacks, etc. Most of the machines were somewhat neglected by the previous owners, and have very low sales. I did notice a couple machiens had quite a few expired items. I think I might make a point out of removing ALL of the old stock on these slower machines, replacing it with brand new stock (less full of course) and putting a sticker saying "all new stock!", in case the machine has a reputation for this. My one office with almost 70 employees that makes $10 a week is the best example, as this clearly should have much higher sales than it does. Another plan that I have already started, is for all of the slower monthly visit machines to replace most of their potatoe chip selections with items with a much larger shelf life (e.g bags of cookies, bags of chocolates, mr noodles/popcorn, vegie chips/pop chips, etc.), so I dont' have to go through so much expired product. Several of the these machines had products quite old in the past. I also have some machines that just look very unprofessinoal (have hand written notes saying "PEPSI", etc.), so i am thinking that once I spend the time to clean all the machines up and replace the logos, the sales should improve a bit. Sorry for all these questions! Just thought I'd tell you my story. What do you guys think? Link to comment Share on other sites More sharing options...
moondog Posted October 22, 2012 Share Posted October 22, 2012 I have taken over accounts like these and once your customers realize that your products are fresh the sales will pick up. It takes about a month for this to happen so be patient. Try things like Famous Amous cookies, Knotts rasberry shortbread cookies and Keebler Sugar Wafers. These all have a good shelf life and sell well so you'll have zero waste. Avoid products that no one's ever heard of just because they have a long shelf life. You'll make more money with Lays even though you will have some waste. Herrs is a brand that's popular on the East Coast and has a better shelf life but we don't see them on the West Coast so I don't know exactly how well they would sell but would try them if I had access. I'm not a big fan of the machines you've got - you need to eliminate the Saega's and the mechanical machines when you get the chance. It's also curious that you don't seem to have any Soda machine - these are usually the best income producers. After you've run these accounts for a few months, don't hesitate to dump your dogs - I'm sure that you got a least three of them from the list you posted. Link to comment Share on other sites More sharing options...
Mike32110 Posted October 22, 2012 Author Share Posted October 22, 2012 I have taken over accounts like these and once your customers realize that your products are fresh the sales will pick up. It takes about a month for this to happen so be patient. Try things like Famous Amous cookies, Knotts rasberry shortbread cookies and Keebler Sugar Wafers. These all have a good shelf life and sell well so you'll have zero waste. Avoid products that no one's ever heard of just because they have a long shelf life. You'll make more money with Lays even though you will have some waste. Herrs is a brand that's popular on the East Coast and has a better shelf life but we don't see them on the West Coast so I don't know exactly how well they would sell but would try them if I had access. I'm not a big fan of the machines you've got - you need to eliminate the Saega's and the mechanical machines when you get the chance. It's also curious that you don't seem to have any Soda machine - these are usually the best income producers. After you've run these accounts for a few months, don't hesitate to dump your dogs - I'm sure that you got a least three of them from the list you posted. Thanks for all the great advice. I think my plan is to dump the "crappy locations", as I'm pretty sure that's what many of them did to me . I am now much more skepitcal about guys that are "pruning" their routes so to speak, then I would be with a guy that is just selling his entire route and looking to get out. Oh well, good to know! I am REALLY thinking of getting into exclusively coffee machines due to my recent success with this one machine. One guy is posting a machine with sales 400-450/month, asking 4900 for the machine. Now say if I bought it for 4500, it should make it's money back in one year with minimal maintenence. My concern is of course that If I bought the machine and found out the sales were 1-200/month, i'd be kinda pissed. Should I avoid buying any set up locations all together? The reason i don't have any pure pop machines is because, just by chance, the locations that were for sale just happened to have these machines. I am trying to ignore all the small accouts and focus on bigger ones now. Link to comment Share on other sites More sharing options...
dogcow Posted October 22, 2012 Share Posted October 22, 2012 junk equipment,, bad locationsand you over paid, sorry not trying to be harsh but that is the truth i made the mistake too in terms of location but i was able to sell some equipment and upgrade locations with other equipment, took about a year and a half to get the biz in the right direction. Link to comment Share on other sites More sharing options...
moondog Posted October 22, 2012 Share Posted October 22, 2012 Mike, you pretty much hit it on the head with your assessment of buying locations from other vendors - usually they're just dumping their dregs and they might throw in a couple of decent accounts just to sweeten the pie. I think you actually got at least three good possible locations here but you really need to upgrade your equipment to max your profits. My best accounts were purchased from other vendors but I had to vet a ton of garbage to find them. Vending would be really easy if great accounts grew on trees. Learn what type of equipment to buy before you purchase any other accounts. Link to comment Share on other sites More sharing options...
Mike32110 Posted October 22, 2012 Author Share Posted October 22, 2012 Well I certainly agree that I overpaid on several machines (the two for 1700, some of the other machines in the group deal for 5k), but I still think the coffee machine location was a great deal. Even the 4 for 5k deal that I bought seems decent in that if the coffee machine was worth 2500, getting 3 locations with combo machines (one location with decent sales) for 2500 doesn't seem THAT bad in that I have seen many people try to sell these combo machines for 1-3k on kijiji (canadian craigslist). And one other thing: I am in Canada, and althought are dollars equal right now, cost of living in canada is much higher than the US as our dolar has historically been worth 60-70% of yours for the longest time. When I look at used vending machines for sale in the US, they are always much cheaper than what I see in Canad(like 25-50% cheaper, I have considered importing ), so I think that should be considered as well. However, sales are sales. My plan was to try and improve the sales on the slow locations, and if I cannot, then I will find new locations for them. I really want to clarify what you guys mean by upgrading the equipment. My rationale at the start was to buy cheaper locations with cheaper equipment for the time being, until I became more established to move onto better machines. Are all of my machines generally poor quality? So I should also mention that I have a pretty decent paying career where I can save AT LEAST 2k per month from my FT job alone. With this in mind, what do you think should be my next step? I am generally hearing get rid of most of my machines, and sell all but 3 or 4 locations. Maybe with this extra capital, I should invest in just one or two "good" machines. I almost did buy a couple single very busy vending locations, however, the risk for me seemed to great. For example, one guy has been trying to sell a single location for 7900 (expensive large combo machine, sales are 1000-1200 per month). If I bought that machine and discovered sales were 100-120 per month, I would be screwed over BIG time. I guess I figured start small and see how it works, and I now know that you can't fully trust someones sales. Should I just focus on finding my own locations? I am loving all of these feedback so far, thanks! Link to comment Share on other sites More sharing options...
dogcow Posted October 22, 2012 Share Posted October 22, 2012 My plan was to try and improve the sales on the slow locations, and if I cannot, then I will find new locations for them. thats the problem with the combo machines, u cant move them to a better location. combo machines are good for nothing, either low nickel and dime locs OR a satilite machine in a huge location where the main bank pays the freight and the extra machine is just gravy I really want to clarify what you guys mean by upgrading the equipment. My rationale at the start was to buy cheaper locations with cheaper equipment for the time being, until I became more established to move onto better machines. Are all of my machines generally poor quality? yes except the AP which could very well be 20+yrs old, based on the other equipment my guess its a dinosaur. Maybe with this extra capital, I should invest in just one or two "good" machines. forget about the machines, u need to solicit new accounts (good accounts) build up your sales pipeline as vending sales takes a very long time in most cases, its not a slam dunk you have to do many follow ups and cold calls to get the acct. so start now building up your sales pipeline,forget buying any machines until you think an account is likely to close,or has closed. I almost did buy a couple single very busy vending locations, however, the risk for me seemed to great. For example, one guy has been trying to sell a single location for 7900 (expensive large combo machine, sales are 1000-1200 per month). If I bought that machine and discovered sales were 100-120 per month, I would be screwed over BIG time. I guess I figured start small and see how it works, and I now know that you can't fully trust someones sales. Should I just focus on finding my own locations? I am loving all of these feedback so far, thanks! most likely those numbers are bs, thats way too high for a combo machine it would be getting filled every few days which is a waste of money. yes work on finding locations not buying accoutns, its not impossible to find a good deal on buying accts but its very hard to find one where the #s make sense. Link to comment Share on other sites More sharing options...
moondog Posted October 22, 2012 Share Posted October 22, 2012 Look on the bright side - a lot of new vendors get sucked by the biz ops. I think you've done much better than that. If you're only in for 10 grand it's not so bad. The AP machines are an industry standard - I have 8 of them (7600's and a 6600) that are admitedly a bit older but all look and work great. I refurbish them myself which takes about a day per machine and saves me about $400 over what the local machine refurbishers charge. I am not a great account finder. If nobody is vending there, there's probably a good reason. If there is a vendor onsite be real careful about trying to take that account. Around here "poachers" tend to disappear or land in a world of hurt. I like to keep a good multiprice soda and 5 wide snack machine in reserve in case I do land a new account. There's nothing worse than making a new customer wait while you flop around for a week or so trying to locate equiptment. The guy who told you that combo machine did $1200 a month is completely full of it. If you do the math, a combo machine can't hold enough product to possibly do that. Don't buy anymore combo machines. You see a lot of them for sale because nobody wants them. If you ever get a large acount that needs one as a satellite they're definitely available. Link to comment Share on other sites More sharing options...
dogcow Posted October 22, 2012 Share Posted October 22, 2012 If there is a vendor onsite be real careful about trying to take that account. Around here "poachers" tend to disappear or land in a world of hurt. where do u live?! Link to comment Share on other sites More sharing options...
sbishop Posted October 22, 2012 Share Posted October 22, 2012 I skipped some post, so maybe this has been mentioned. I would move all machines to 2 week service schedules. One of you biggest expences is the trip to them machines. You have to pay for gas and your time. I personally try to schedule machines so that I will pull at least $100 per machine. One way to look at it is to ask yourself if you would be willing to pay someone(at least min wage) to service the locs weekly. Also, with each of the non-mechanical machines, I would take a min of 2 route trips and take the vend readings to verify the sales before I would buy them. Link to comment Share on other sites More sharing options...
moondog Posted October 22, 2012 Share Posted October 22, 2012 Dogcow, So. cal. Between the Armenian mafia and the Russian mafia (which are both into vending/money laudering) it pays to be cautious about stepping on somebody's account. One guy was offering a $500 bounty to any employee of a company who could kick out the existing vendor so he could take over. This usually involves sabotaging somebody's equiptment. Well, according to the grapevine, that guy is out of business now. It's more common around here to find abandoned accounts which are sometimes pretty good. Anybody who tries to sell me an account now should be ready for a real hammering. I buy the machines up front off him for a reasonable price, switch the locks and stock them up. After that we meet each time I service the machines for three months, count the money together and I pay him the gross amount. This amounts to six months earnings. If he lied upfront (they usually do) about the actual gross it's going to be obvious pretty quick. Of course I hope the gross will be everything he said it was but if it's not, I don't get too stuck. Link to comment Share on other sites More sharing options...
mission vending Posted October 22, 2012 Share Posted October 22, 2012 If there is a vendor onsite be real careful about trying to take that account. Around here "poachers" tend to disappear or land in a world of hurt. Its called Competition, not "poaching" and is what makes this country great. Noone should fear soliciting business from a company that has a existing vending company onsite. They don't own the place and should have no expectation that they get to keep the account for life. If they don't provide the right combination of price, equipment and service then it will be ripe for the taking. I will also add that the solicitation should be on a honest and ethical basis, don't go into a location and tell them something like their current vendor is a crook, is ripping them off and stuff like that. You go in and present your self as being able to offer better equipment, better service, etc. In my nearly 20 years of vending I have had only 1 confrontation with another vendor. The guy cussed me out because I moved his machines because he did not pick them up when he was supposed to. So don't be afraid to solicit other locations, if you wait until they find you then you will NEVER grow your business. If there is something going on in your area where people "disappear or wind up in a world of hurt" then somebody needs to man up, get a set of balls and get the authorities involved. Link to comment Share on other sites More sharing options...
dogcow Posted October 22, 2012 Share Posted October 22, 2012 Dogcow, So. cal. Between the Armenian mafia and the Russian mafia (which are both into vending/money laudering) it pays to be cautious about stepping on somebody's account. i dont know i believe poplady1 is located in so. cal i know she has a management operation i would imagine if she hasnt been whacked it may be a myth lol i have always heard hte mafia was involved in vending but the only place i have seen it is in the 8-liner business which is illegal gambling and it brings in BIG money , (800+ profit per week per location) yeah i would not pay someone to sabotage the equipment, i thought it was impossible to "take" an account, but actually it CAN be very easy, so many vendors drop the ball OR they rest on their laurels and dont keep good communication with the account/stakeholders to know what thye need , or in some cases they simply change management and decide to boot the current vendor, timing is everything. as one of our other members RJT told me once, any good account there is most likely already a vending machine there. Link to comment Share on other sites More sharing options...
mission vending Posted October 23, 2012 Share Posted October 23, 2012 Dogcow, So. cal. Between the Armenian mafia and the Russian mafia (which are both into vending/money laudering) it pays to be cautious about stepping on somebody's account. One guy was offering a $500 bounty to any employee of a company who could kick out the existing vendor so he could take over. This usually involves sabotaging somebody's equiptment. Well, according to the grapevine, that guy is out of business now. The guy is out of business because he is obviously a golpher bag. No question there is a lot of shenanigians that go on in a mostly all cash business but to have the mafia involved.... I call B.S. until I see some evidence. News story of a bust would be perfect. Maybe in 8 liners like dogcow mentioned or amusements, reason being there is no perishable inventory. There are so many way to launder cash that it is inconceivable that a criminal element would settle on something as difficult as full line vending to do it with. You might have a couple of turds locally that play rough but I seriously doubt the mafia connection Link to comment Share on other sites More sharing options...
dogcow Posted October 23, 2012 Share Posted October 23, 2012 The guy is out of business because he is obviously a golpher bag. No question there is a lot of shenanigians that go on in a mostly all cash business but to have the mafia involved.... I call B.S. until I see some evidence. News story of a bust would be perfect. Maybe in 8 liners like dogcow mentioned or amusements, reason being there is no perishable inventory. There are so many way to launder cash that it is inconceivable that a criminal element would settle on something as difficult as full line vending to do it with. You might have a couple of turds locally that play rough but I seriously doubt the mafia connection the guy i know who does 8 liners basically said, if u want a location and u muscle someone out of it they cant go to the cops because its illegal, thats why the mafia is involved with it (he was a gangster telling me this) any other business u go to the cops if someone says they will break your legs, etc... Link to comment Share on other sites More sharing options...
moondog Posted October 23, 2012 Share Posted October 23, 2012 Re: the mafia and money laundering and vending, all they have to is inflate their reported earnings - they don't care if the machine actually sells anything. For them its the easiest way to launder funds. They are not prevalent in Popladys area which is the inland empire. Her company has been in business here for many years and I believe that they deal mostly with the mega vendors now. I do know a guy that has a vending company in their territory which is basically Glendale to West Hollywood. He's very careful about which accounts he solicits. To put this back in perspective, the comment I made to Mike, the new vendor was related to his current situation. He's just like me a couple of years ago. He's picked up several accounts to get his feet wet, he's not currently hurting for the money and he's trying to learn the ropes. We know (Dogcow and I) that he's got several dog accounts he should dump. On the other hand I think he may have at least three good accounts he should develop but he needs to upgrade his equiptment first. Mike needs to work his existing accounts and get his system down before trying to go out and solicit other peoples accounts. RJT told me awhile back that it's not so important how many accounts you have but how profitable they are. He also said that you'll probably lose every account you ever have sooner or later. I'm not adverse to competition and I have moved out other vendors who were not performing but I draw the line at busily soliciting somebody's account who is stocking their machines properly and servicing their locations diligently. That said, I know there are some much larger vendors than I responding to this thread. I currently have 10 accounts that gross 6 grand a month in total. I had as many as twenty but dumped my dogs. If I could add 10 more accounts like I have I wouldn't want anymore. I doubt that I'll ever have the 2k and 3k a month accounts you guys compete over. I've found my niche and I suspect that a lot other members of this forum are in that same niche. At 55, I've already built my empires. Link to comment Share on other sites More sharing options...
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