A Tale of 50 Snack Honor Boxes

[BobTHJ]

Haven't had much time to post (or lurk) of late, but given some past topics in this forum regarding long-term performance of honor boxes I thought it might be interesting to share the following:

In January of this year (2013) I hired Covenant Marketing Solutions (based in the Denver, CO area) to place 50 snack honor boxes for me. Joesph of Covenant Marketing arrived and located these boxes the week of January 7-11, 2013 in the geographical area I am already serving (western Colorado: Garfield, Mesa, Delta, and Montrose counties). The cost for locating was $50 / box (total cost $2650 including a travel charge); A bit higher than I initially thought might be the case - though worth the cost in my opinion. I do recommend Joseph / CMS to anyone else looking for vending locating services, he was professional, friendly, and hard-working. I have already hired Joseph a second time to place a second batch of 50 boxes (and some bulk and full line locations) for me earlier this month. FYI for the curious: Joseph agreed to replace any accounts lost from this first batch and did so when he returned the second time.

My service cycle length varies based on usage (busy accounts get more frequent service), so honor boxes get serviced somewhere between 14 and 60 days, with the average being about 28 days. These are larger boxes holding 70-120 snacks each. For the most part they are the wood grain boxes I purchased from Dennis (also a member of this forum). Snack items in my boxes are priced at $1.00 each, with one row containing smaller items that are 2 for $1.00. I allowed ~3 weeks for the initial service cycle, and began to service these accounts the last few days of January and early February. From there the service cycle lengths diverged for each account based on usage results from the first service. Below are month end reports for February on this batch of 50 new accounts. I will post month-end results for March in a few days.

FEBRUARY

Accounts Retention: 45 / 50 (90%)

Total Services: 69

Expected Revenue: $2161.50 (based on number of items sold)

Gross Sales: $1568.31 (actual amount collected from boxes)

Theft Rate: 27.4%

Net Profit: $602.44 (after COGS and sales taxes)

Profit per Service: $8.73

$$$ per hour: $26.19 (assumes 20 minutes total to pack box, service account, and count money)

Accounts reporting $5.00 or greater monthly profit: 31

Accounts reporting $20.00 or greater monthly profit: 9

Accounts reporting < 20% theft: 26

Accounts reporting < 40% theft: 36

Accounts that have paid for themselves: 1 (net profit > $50.00 locating fee)

Accounts selling $25.00 / month or more worth of product (ignoring theft): 25

Accounts selling $50.00 / month or more worth of product (ignoring theft): 10

Cross-sales resulting from these accounts: 0 (drink honor boxes, bulk vendors, soda machines, 2nd locations, etc.)

NOTE: $5.00 net / month is my minimum cutoff. Accounts which can not generate this level of income (either due to slow sales or theft) during a three month period are pulled. This is NET profit (after theft, COGS, and taxes), not GROSS sales. My average profit per box across all ~200 of my snack box accounts is around $11.00.

For the five accounts lost: 1 was a duplicate (box was located at a business where I already had a snack box), 3 were immediate rejections (I arrived for the first service and they informed me they changed their mind about having a box), and at the last location the box had been stolen during a break in and the owner declined to take a replacement box.

[bulkdude]

Great to hear your story cant wait to hear more. I just bought some honor boxes and will be working on placing my soon.

[sherlock]

Thanks for sharing this info.

I just want to clarify:...

$2650 was your locator cost for these initial 50 boxes and profit since Jan was $602.44.

That means it will take another 4-or-5 cycles similar to your last two-to-three-month cycle (Jan-March) just to recover the cost of your locator.

Is this right? Am I reading your numbers correctly?

If so, your locator fee is costing you roughly a year's worth of profit.

That sounds awfully steep.

[dogcow]

Thanks for sharing this info.

I just want to clarify:...

$2650 was your locator cost for these initial 50 boxes and profit since Jan was $602.44.

That means it will take another 4-or-5 cycles similar to your last two-to-three-month cycle (Jan-March) just to recover the cost of your locator.

Is this right? Am I reading your numbers correctly?

If so, your locator fee is costing you roughly a year's worth of profit.

That sounds awfully steep.

i agree thats outrageous, anyone can place honor boxes, most locators charge in the 10-30 range. i feel 20 is on the high end of

what its worth.

[BobTHJ]

Thanks for sharing this info.

I just want to clarify:...

$2650 was your locator cost for these initial 50 boxes and profit since Jan was $602.44.

That means it will take another 4-or-5 cycles similar to your last two-to-three-month cycle (Jan-March) just to recover the cost of your locator.

Is this right? Am I reading your numbers correctly?

If so, your locator fee is costing you roughly a year's worth of profit.

That sounds awfully steep.

$602.44 was the profit for February only (discounting the last half of January for the initial service cycle) - one month. So at this rate I'm looking at 4-5 months to recoup my locating fee, which is acceptable to me. I agree that $50 seems steep for an honor box location - I've hired college students to locate for me at $20 a pop in the past. However, I do feel that I got what I paid for. This cost included free replacements for any lost locations in the first 60 days as well as the overall quality of locations were much higher than what I got from college students. Also, his success rate was much higher than my own or others attempts at locating - which is important to me since I live in a largely rural part of the state and don't want to have to expand my geographical area at this time to find new accounts (and there are a limited number of potential accounts in my service area). This was for in person locating, and there is no one offering such service (professionally anyway) on my side of the state so it was somewhat understandable to have to pay a bit higher of a price to get such services here.

[sherlock]

$602.44 was the profit for February only (discounting the last half of January for the initial service cycle) - one month. So at this rate I'm looking at 4-5 months to recoup my locating fee, which is acceptable to me.

I see...sorry for the confusion.

Your original post states the boxes were placed Jan 7-11 and that some cycles are between 14 & 60 days with an average of 28 day cycles.

That lead me to believe some Jan and March collections would have to be mixed into your numbers as per your cycle calendar.

So, how many boxes/collections made up that $602.44?

[BobTHJ]

I see...sorry for the confusion.

Your original post states the boxes were placed Jan 7-11 and that some cycles are between 14 & 60 days with an average of 28 day cycles.

That lead me to believe some Jan and March collections would have to be mixed into your numbers as per your cycle calendar.

So, how many boxes/collections made up that $602.44?

I think this is what you are looking for (extracted from above post):

Total Services: 69

Net Profit: $602.44 (after COGS and sales taxes)

Profit per Service: $8.73

[BobTHJ]

MARCH

Accounts Retention: 41 / 50 (82%)

Total Services: 40

Expected Revenue: $1497.00 (based on number of items sold)

Gross Sales: $1007.91 (actual amount collected from boxes) (Cumulative: $2576.22)

Theft Rate: 32.6%

Net Profit: $350.53 (after COGS and sales taxes) (Cumulative: $952.97)

Profit per Service: $8.76

$$$ per hour: $26.28 (assumes 20 minutes total to pack box, service account, and count money)

Accounts reporting $5.00 or greater monthly profit: 31

Accounts reporting $20.00 or greater monthly profit: 8

Accounts reporting < 20% theft: 17

Accounts reporting < 40% theft: 30

Accounts that have paid for themselves: 3 (net profit > $50.00 locating fee)

Accounts selling $25.00 / month or more worth of product (ignoring theft): 22

Accounts selling $50.00 / month or more worth of product (ignoring theft): 5

Cross-sales resulting from these accounts: 1 (1 Drink Honor Box)

4 more lost accounts: Two changed mind about box, one closed down, one was pulled for slow sales. None were among the greater than $5.00 monthly profit group above (either due to slow sales or theft), so all would likely have been pulled anyway.

Profit and sales are a bit lower, this is due to several reasons:

1. Service cycles on these accounts have been spaced out a bit more and some slower accounts didn't get serviced this month (40 services in March vs. 69 in February)

2. I have been very busy the past two weeks from acquiring two other unrelated routes and thus have been late on servicing some of these boxes. At months end 8 of these accounts are overdue for service (I should have serviced them this week but didn't make it)

3. As account retention decreases (hopefully by weeding out the less successful accounts) sales naturally decrease (though theoretically profit should decrease at a lesser rate).

4. Theft is creeping up a bit. This is not unexpected - my experience with new honor box accounts is that theft gradually climbs over the first 5-10 service cycles and then levels out. With my current COGS, I can profit on accounts with a theft rate under 40% so long as they have a reasonable level of sales.

[bulkdude]

Some good numbers. Just got my boxes now got and try to find some locations for them. Hope mine do good.

[BobTHJ]

APRIL
Accounts Retention: 37 / 50 (74%)
Total Services: 44
Expected Revenue: $1427.00 (based on number of items sold)
Gross Sales: $911.39 (actual amount collected from boxes) (Cumulative: $3487.61)
Theft Rate: 36.1%
Net Profit: $331.17 (after COGS and sales taxes) (Cumulative: $1284.14)
Profit per Service: $7.53
$$$ per hour: $22.59 (assumes 20 minutes total to pack box, service account, and count money)
Accounts reporting $5.00 or greater monthly profit: 28
Accounts reporting $20.00 or greater monthly profit: 5
Accounts reporting < 20% theft: 9
Accounts reporting < 40% theft: 25
Accounts that have paid for themselves: 12 (net profit > $50.00 locating fee)
Accounts selling $25.00 / month or more worth of product (ignoring theft): 22
Accounts selling $50.00 / month or more worth of product (ignoring theft): 6
Cross-sales resulting from these accounts: 2 (1 Drink Honor Box, 1 secondary snack box)

 

Of the four accounts lost in April: one I pulled due to slow sales, one I pulled due to high theft, the other two were pulled when the owners changed their minds.

 

Theft continues to creep upward - though a few accounts with particularly high theft rates are skewing the results a bit for everyone else. I intend to pull several accounts within the next few weeks which should help.

[Joester]

600 bucks a month. For 50 locations?? Seems like a lot of trouble and A LOT of driving for an extra 150 bucks per week. Im new to this vending thing. Thought about getting into it and now Im not so sure. This is a great forum but it seems like nobody is making any real money with any vending. I mean yea, its cool to have your own little business with very little start up cost, but is it really worth it? And is it even possible to make a real income without having 1000 honor boxes and bulk vending machines? I cant even imagine the amount driving to service that many locations.

[sherlock]

600 bucks a month. For 50 locations?? Seems like a lot of trouble and A LOT of driving for an extra 150 bucks per week. Im new to this vending thing. Thought about getting into it and now Im not so sure. This is a great forum but it seems like nobody is making any real money with any vending. I mean yea, its cool to have your own little business with very little start up cost, but is it really worth it? And is it even possible to make a real income without having 1000 honor boxes and bulk vending machines? I cant even imagine the amount driving to service that many locations.

 

Joester...where are you getting your numbers from?

First you claim on another thread bulk vending at approx $1.25 per head monthly.

And now these $600 earnings with 50 boxes.

Please give us your sources.

[Joester]

Sherlock, it says right at the top in the original post that the month of feb he made $602 net. With 50 + boxes. Another guy on this forum somewhere said he was making like $500-600 a month with like 300 something gumball machines

[sherlock]

Sherlock, it says right at the top in the original post that the month of feb he made $602 net. With 50 + boxes. Another guy on this forum somewhere said he was making like $500-600 a month with like 300 something gumball machines

 

What's the original poster earning now?

His original numbers were low...I even pointed that out myself.

But he was starting with those boxes at that point.

Review his more recent numbers. I think they are better.

 

As far as $500-$600 with 300 gumball machines, I don't know who posted that.

But, two points about those figures:

 

1. You claimed 400 heads earning $500 on that other thread...still don't know where you got those figures from.

2. Many gumball machines are not on 30 day service cycles. Therefore, the $500-$600 in monthly earnings MAY not reflect collections on all 300 heads.

[treadmill]

What are your expectations? Vending no matter what type it is is a work in progress, you are always moving things around to make your route more profitable. This business is not a get quick rich scheme. It is hard work and to me sounds like it is probably not for you.

When I had my 400 location gumball route it was doing $8000 gross every 3 months. Not to bad in my book.