Vend Size

[grumpy]

Even I take my own advise sometimes.

I went out last night to the corner store (5 mi) and purchased a small MMP bag 49g or for the US 1.75oz. In the bag there was 23 MMP and it cost $1.19 plus tax so a total of $1.36.

I sell MMP @ $0.25 for 5, which works out to a better deal then buying at the corner store. 5 X .25 = $1.25 for 25 MMP's. In turn this means when people complain about the small handful I now have an answer that my machine gives more for the money then the corner store. (I was already saying it, but here is proof)

[Beer980]

I agree that you do get a better value through our machines with them. They are one of my favorite candies. I don't encourage them unless my location asks for them because of the small vend ammount.

[markvend]

I also only give 5-6 in my candy machines at .25. If Sams goes up much more I will quit selling them or go to .50 and give probably 7-8. I don't like to use MMP but I have some places that eat them like Jethro Bodine eating cornflakes (Beverly Hillbillies). The volume is high enough in these places I do OK with them.

Does anyone know of a cheaper place than Sams to buy MMPs?

I am figuring by giving 5-6 on average that your cost per vend is 6.5 cents by buying the bags from Sams (54 oz I believe). Doesn't leave much room after paying charities, servicing expenses, product spoilage, recouping your initial investment, interest, admin. expenses, etc!

Mark

[Jay-Son Vending]

Mark,

WHat is your local Sam's charging for your Pmm"s

[Jax Snacks]

MMP is a classic vendor's dilemma - high volume but low margin. Seems almost impossible to get the desired margin AND volume in any one product. I too have some locations where it is the only product that sells.  No other M&M product (plain, crispy, dark, etc.) sells like the peanuts do.

Because of it's popularity (and low margin), MMP has become a defensive product for me. The goal of this product is to help get me into locations and to put pressure on competing machines. This area is saturated with gumball vendors and a chocolate product can greatly help open the door (especially with women) in many locations. Because it is the number one (or two) selling bulk candy product, it will usually impact competing machines and take some quarters away from competitors. Even with a 50% overhead, I still make some money and have a defensive weapon (plus annoy some competitors (lol)). I bite the bullet on this product and always hope to sell more profitable products in the other heads.

I get a number of complaints at some locations about getting only 4 or 5 MMP from a competing (usually biz-op) machine. I tell them that the machine is NOT MINE and I always give 8 or 9. I have not yet heard of any vendor having success with 50 cent MMP vending - maybe it's time will come soon. Until then, I will just use it as trump card to get into places.

Jax

[antoniocinisi]

I have seen 50 cent pmm in a mall.in about 6-7 more years all candy will need to be switched to .50 cents imo.

I was curious about how many I would get,but I hate putting money in a potential competitors machine

[desert_gold_hound]

I have seen 50 cent pmm in a mall.in about 6-7 more years all candy will need to be switched to .50 cents imo.

I was curious about how many I would get,but I hate putting money in a potential competitors machine

Potential competitors = What was that artical I saw about cardboard slugs?

J/K don't do this I just started laughing when I read this and thought of that. I would never do this and would not recomend it. This was just a stupid thought.

[markvend]

Jax and Jay,

My Sams charges 7.88 plus tax for MMPs.  I give out 5-6 candies per vend and have not had many complaints from customers.  If I hear a comment I try and explain my product cost went up almost 20% (actually 18% over a year ago) on this candy.  Most people are OK with a sincere explanation. I have found also that having MMPs is a good hedge against losing an account when a business really wants that particular product.  I try to have a gumball with it to increase my bottom line at the business.

Another thing I do is to give free Dixie cup samples to the business if they make a comment.  This "Dixie cup effect" really gives me favor with the employees and seems to make a difference in sales when I begin to do it occasionally.

One thing I'm doing right now is decreasing all my portions on candy as Sams seems to be slowly increasing prices on candy and gum.  I know some of you may not agree with this, but when you can save half to one and a half cents a vend and you extrapolate that cost out over 100s and 1000s of machines, it makes a real difference.  The effect multiplies over a 5-year period.  I'm also looking for a new supplier for gum and am looking to buy from Concord direct.  Would appreciate info from anyone who is using a supplier who can beat Sams (now at 2 cents per gumball here).  I ran some numbers to see what effect changing my Beaver candy wheel settings would have on my gross sales if anyone is interested.

With product and servicing costs escalating, many vendors will not be in business in three years if current trends continue and business changes are not made.  I firmly plan to upgrade my coin mechs, machines and products to be able to survive and hedge against economic challenges ahead.  I've got too much invested.   I'm not a pessimist, but the handwriting is on the wall.  The cost of doing business is going (and has gone) up.  For me, the best hedge against increased cost is to reasonably make the needed changes now to put you in a better position.  I'm probably more spread out than some and therefore my servicing costs greater, but many of the other variables will be comparable.  I'm going to .75 on most of my 2" toy vends and .50 on some of my 1.1" vends (probably behind the game on this already). Many of the toy costs have already gone up 25% for us.

I am very concerned about inflation and the spike that is happening right now.  If you gross 100,000 a year in sales now, it may feel like only 60,000 or 70000 in 5 years.  If we don't prepare for the future by taking a MACRO view of the vending industry we may be left in the dust.  Sorry for the economic rant, but I'm concerned about people working hard for the next five years and having little to show for it besides a job to just get by on.  I believe it can be much more and still provide a good service to businesses, charities, and a good income stream for your family.  Beyond that, I believe you can work a long-range plan to invest excess profits an multiply your net worth as you keep your money working and moving.

Anyone agree / disagree with me?  I'm still learning too.  As I'm new to the forum here, I want to say your comments have been extremely helpful to me.

Respectfully Submitted,

Mark

 

[grumpy]

Mark, I'm of the same mindset as you. It's not a popular place to be but it is about business and not a hobby, without profit there is no business.

"I ran some numbers to see what effect changing my Beaver candy wheel settings would have on my gross sales if anyone is interested."

I would be interested in your numbers if you want to post them or PM me.

[T BIRD]

Great post Mark. Thank you for that.

[Jay-Son Vending]

Mark,

As you formulate your numbers..I am sure there are many here , like me, who would be interested in your findings.

As I am fairly new to this, coming into the area at a time when there will likely be a change in the cost to us and to the public is going to require some extra cost  for change over as well as a learning curve for me  and the public as we change...

[markvend]

Jay and Grumpy,

As I saw Sams progressively raise prices on their candy (and recently their gum) by roughly 20%, I became concerned about staying ahead of the curve. I went almost a year after the first candy increase before I decided to act. A 20% increase seems pretty big to me, and after talking to AA and LM Becker, it seemed like we would get maybe a 30% increase in the price of toys.

I put one of my Beaver machines in my living room and ran a bag of each of my candies through the machine to see how many vends I got per bag.

* M&M Peanut was my highest concern as they went to 7.88 per bag plus tax for a cost of 8.28 per bag. At a wheel setting of 3 (7-8 pieces) I could get 110 vends for a gross of 27.50. My product cost per vend was 7.52 cents out of a quarter. Then I added my charity commission, and came to a figure of 16.20 adjusted gross per bag. From the 16.20 per bag I still had to deal with spoilage, servicing costs, machine thefts, admin costs, etc. The 16.20 was shrinking quickly.

* One thing I learned as I acquired more and more machines was that my actual costs of doing business were higher than I first thought because of the "little" things that added up over the course of the year. The quarter in sales seems to shrink as you legitimately figure in the entirety of these expenses. I use quickbooks and have expense categories for all these things.

* By increasing the wheel setting from 3 to 3 1/2, it decreased product to 5-6 pieces and gave me 127 vends. This gives about 15% more product vends than the original setting and close to the price of the product increase at sams. To figure, take the 127 vends at the new setting minus the number of vends at the orignal setting = 17 more vends. 17 divided by the original 110 vends = .15 (15%) thereby hedging your company from increased product costs. It brought my gross per bag up to 31.75.

* THe new setting shaved a full penny off my product cost per vend (now at 6.5 cents). I bought over 300 bags of MMPs last year and probably will do 400+ this year so every penny adds up. This is true no matter what size business you have.

I have some other numbers I'll give later. Right now I only have the cost per vends at my old settings and want to give you the comparisons for both old and new settings.

*I can say though to consider Runts as one of your best margin candies. I've been going in with Runts and Gumballs on doubles to increase my profits. The new tropical Runts are selling much better for me than the old even surpassing Skittles in my market area.

Hope this helps someone.

Mark

[Jax Snacks]

Good points Mark and thanks for all the info!

All I can say it that the “Great MMP Dilemma†has been debated for years on many boards and will continue! The consensus then was that you had to offer at least 7 or 8, otherwise repeat sales would tank. Now that was a few years ago, and I could be swayed to cut back if enough other vendors can vouch that selling 5 or 6 has not hurt their sales. I really don’t care much about the customer complaints, but rather what is in the coin box. Without sales you have NO profit and your business will become a hobby!

As far as cutting back on other products, I agree that the costs are getting out of hand and something has to be done. I also have a Mike and Ike Dilemma! Due to the gum-up problem, I don’t want to make the hole any smaller for fear of having even more gum-ups. My Skittles and Reeses are set to the second lowest setting on my machines. So I can only go to that well one more time and I may just do that, but then what?

This cost problem is affecting all parts of the vending food-chain. From the Chinese manufacturers, to the USA suppliers, to us vendors and finally to our customers. All parties must be happy otherwise the “food chain†will break. As the costs are pushed down from the top, it puts more pressure on down the line. Everyone wants to just pass off their costs to the next level down. At what point will the price increases cause people to just stop buying? I really don’t know, but there has to be a limit. I have told A&A that I will no longer buy many of their products since I can’t sell most of them (1 inch) for 50 cents. If my customers stop buying, then I will stop ordering from A&A. The chain is now broken and they get nothing up the line! The suppliers need to wake up and realize if they keep raising prices, then the vendor will look for cheaper alternatives. Such as buying in bulk from a novelty supplier (such as Rhode Island Novelty) and capping them ourselves. I have cut back greatly on MMP as well.

I guess what I am saying is that we just can’t always pass on the price increases. We may need to look for cheaper alternatives (like runts and gumballs) or cut other overhead to survive.

To use McDonalds as an example, I remember when our office was across the street from the golden arches. I remember back in 1990 that people were complaining that a Big Mac meal was around 6 or 7 dollars! McDonalds knew that they could not charge any more otherwise customers would leave to get some real food at that price. Now 18 years later, the Big Mac meal is still just around $5. Certainly their product costs must have risen since then, so maybe they focused on alternatives and cost cutting to keep the “happy mealâ€, to be happy for the consumer’s wallet.

I certainly don’t have the answers on how to deal with the higher costs, but price increases is just one option. Test your price increases, it may not work in all socio-economic areas. Product alternatives and cost cutting are other weapons to consider. Thanks in advance for the input; I enjoy discussing these “radical†ideas on the forum!

Jax

[Jay-Son Vending]

One option would be to find out what the customer thinks.,..now there are two ways to do this..stand there and ask(in which case they will alway's tell you  they want the lower price and a large handful)

OR..and I think this is where we go..Keep the majority of  your products at the .25 levl. and move the more expensive to the next level..in which case you can give biggr handfuls to the customer...If you think through the process such as Mark has explained here(and I am sure many of us have thought about) there is room to give more product , at least upfront, if the pricve goes up.

This is something that many of us have been bantering about for some time..But the customers are used to seeing the price stay the same and the product shrinking on all products in the store..this we have seen in the M & I's they went to 4.5 lbs and the price stayed relatively the same...

So as a vendor you can recoup some cost/profit by going to the next level and raising the vend to say 10-12(just a number, not science behind it yet)   I would suspect that this would allow us to make a little more profit on the best selling and costly item(s) and slowly raise prices.

I suspect that this will be just the beginning step to the next level on all of our products.  Will it effect the sales and profit..I do not know...maybe at the beginning but at what point do we, as JAX said, make this a business decision or just a hobby...

[grumpy]

A restaurant comparison is a bad example for many reasons, but the best reason is the shrinking margin in the last 30 years that has been absorbed by owners. The next reason is that depending on how large the franchise the more control the can exert on the farmer/rancher/supplier. And make them find cheaper ways to do it and shrink their margins too. As individual vendors we can not exert that kind of pressure.

"at what point do we, as JAX said, make this a business decision or just a hobby..."

The more you absorb, and the less proactive you are the further you are from running a business. If you continue to absorb price increases and just continue on the less likely you will succeed.

The raising of bulk vending prices has been weathered before from .01 > .05 > .10 > .25 now as our product prices and expenses increase it is time to move to the next level .50.

Here in Ontario large bulk vendors who run racks only offer cheap pan candy, gumballs and toys. Why, because the operating costs do not allow anything else. As small vendors who focus on special locations we offer a choice of higher cost items to get those smaller locations. Is it not time to make those smaller locations pay a premium for the products and service we provide?

[grumpy]

Mark,

You have more patience then me. To fill and empty a globe to count how many vends.

http://www.vendiscuss.com/forums/view_topic.php?id=298&forum_id=13

Is a excel spreadsheet that works off weight and product count per pound, a lot easier and faster. Yes I know it is not actual as it works off averages on the odd shaped products but it sure is close.

Whoops! Just noticed you need a few more posts for the plus section.. I'm sure you will get there quickly.

[grumpy]

This article kind of goes with this post, controlling portion size to help with costs/profits.

The incredible shrinking Doritos bag

Big companies are protecting profits with subtle repackaging, putting a little less into boxes of cereal, containers of ice cream, rolls of paper towels and other products. Guess who's paying for it?

By Michael Brush

Full article

http://finance.sympatico.msn.ca/Investing/MichaelBrush/Article.aspx?cp-documentid=9017832

[Jay-Son Vending]

Grumpy,

This is true,  As I had mentined earlier..We have seen it with the Mike & Ikes..they have recently gone to a 4.5 lb bag instead of the 5 lb bag...same price..

Prompted by this thread, I have begun to reset my machines with the PMM's and other items to slowly bring the vends on my route to 5-6 intead of 7-8..

I suspect that sometime in the Spring I may be asking the accounts if staying with the smaller vend at .25  or going to .50 mechs for certain items and a larger vend...whicjh one would they prefer..

I wonder..what could we set the vend at for .50

This could also open the door for higher valued items..jelly belly..etc..

[AmuseStar Vending Co]

With PMM, Jay is right on. 5-6 is a good amount.

[Jay-Son Vending]

OK..But lets think ahead...What happens at the next price increase....What ARE YOU going to do???

[desert_gold_hound]

We need to find a generic brand try it out. I know name brand sells faster but if your giving samples out. Ask them if they would rather have less name brand or more off brand. I would rather have more but I cant speek for the others out there.

[Bravo Duck]

We need to find a generic brand try it out.

 

OhNutz from Ford is a generic. Fastcat8 tried them and was not too impressed.

[Jax Snacks]

I know another vendor who tried the OhNutz AND he also used the MMP label.  Someone wrote "FAKE M&Ms!" on his machine in magic marker!  The other problem is the shipping cost - there is not much cost savings once you pay the shipping.  You also need to be careful shipping chocolate in the warm weather - which fortunately is most of the year here .

Jax

[alyssamma]

Hello, brand new to vending here, so I apologize if this is something obvious

Has anyone done an analysis on vend size vs. volume of sales? It seems like many are focusing on profit per bag (or vend), but if you do less sales, you make less overall profit.

In other words, say you make (round numbers for example's sake) $0.10 per vend handing out a large amount of candy, but $0.12 per vend handing out a small amount of candy.

Now, if you do 200 vends per month handing out a large amount of candy, that would be a profit of $20. If you do 160 vends per month handing out a small amount of candy, that would be a profit of $19.20.

So, more profit per vend, but less profit per month. 40 less vends would be 10 less per week, or 2.5 less per day (assuming the machine is in a 5 day location).

So, as someone who is about to place their very first machines and is trying to determine vend sizes, has anyone does this level of analysis?

Thanks,

Kevin

[bacho]

Welcome to vendiscuss, Kevin.

My thinking is on the same line as yours. The volume of sales makes up for the profit loss. My route consists mainly of repeat customers. If I decrease the vend size, I'm shooting myself in the foot to save a buck. I haven't tried it to see what happens and I'm not willing to take the risk at this time. There hasn't been a price increase around here in over 9 months. If there is one in the near future, I'm still going to make a decent profit because of the volume of sales. If it increases significantly, then I'll be forced to cut back on the size.

These are only my opinions and this is the way I choose to run my business. Some will agree and some will disagree. You run your business the way you see fit for you and only you. You'll get advice here but that doesn't mean it will fit into your business scheme.

Good luck with your future business venture, Kevin. Don't hesitate to ask questions.