AngryChris Posted March 22, 2014 Share Posted March 22, 2014 So I have recently done some extra evaluations. I have been surprised by some things and not by others. Here are things that surprise me about the honor box business: The places that tend to steal.... they steal bad. Not only do they steal too much (over 25%) but the shortage rate gets higher and higher. You say something to the manager and the shortage suddenly drops for a few weeks (say from 35% down to 15%) and then QUICKLY rises back up to the point where you had to tell a manager. What happens next? The box disappears! Oh no! As a matter of fact, it disappeared from their break room and reappeared in my vehicle! How did that happen?!?! Places that tend to be honest... they stay honest. That's right. I have some places that are usually right at 0% shortage almost EVERY time I go there. In fact, I had one place that was historically at 0% shortage every time but once in the past 6 months. When it came up $3 short, I was very disappointed. I didn't leave a note because I figured... I lost $3 today but that's not bad considering they almost never come up short. I came in the following rotation and guess what! I was $3 over!!!!! Banks are always short. I probably have 6 banks and they are ALWAYS short. I have to tell people when I am short at all of these banks and... sometimes the money turns up... sometimes it doesn't... but I ALWAYS come up short when i check the box. ALWAYS. Dentists offices usually pay up, and they love chocolate and anything that will stick to your teeth. I don't get why dentist-offices are more honest than banks... but what really gets me is why these same people absolutely love things that are said to be terrible for your teeth. Oh well. Automotive shops are either really good or really bad. In other words, there's no telling how well an automotive shop will do until your first rotation. Upon the first rotation, you will find out whether they are good or bad because the shortage will either be close to 35%+ or nearly 0%. Managers hate it when their employees don't pay up. What's their solution to dealing with people who steal from the box? They tell you to remove the box! After all... once the box is gone.. there's nothing left for the thieves to steal... right?? Employees blame CONTRACTORS for EVERY SHORTAGE. I have probably 3 places where contractors are known to have access to the honor box. EACH location says that the contractors grab the snacks and don't pay for them.. and THAT'S why the box is short. Yeah.. okay... Employees blame CLEANING CREWS for shortages as well. If anyone is going to steal, it's the cleaning crew.. right? If anyone is going to steal, it's the mexican crew that come in at night to clean the store. No 16 year-old would EVER take a snack from an honor box without paying... right? Anyway... now that I have given some funny gripes about that.... here are some general numbers. My average shortage is 20%. Some places are closer to 0% and some are as high as 50%, but the average is 20%. If I were to remove my boxes from the places with high theft rates, that would obviously lower my average shortage rate.... but I have seen a potential use for those high-shortage locations which I will mention later. My average unit cost is roughly 40 cents which is 40% of the unit price. With that said, the unit that was sold cost me 40 cents while the average shortage was 20 cents. That yields me 40 cents on every unit that was sold. I think that's pretty good considering places that sell 6 items per week easily yield $10/month. That may not sound like much, but if you had 50 locations yielding $10/month in profits, that's $500. It would only take you approximately 25 hours each month to service those accounts if they were close together. The point is that you can actually make money doing this! As for the high-shortage locations.. here's the ONLY advantage. I can take my items that are about to expire and put them in these locations. Sure... I may get "ripped off" by 50% of what they are supposed to sell for... but if a bag of chips costs me 42 cents and will expire in a week.... and I only get 50 cents for that item... it's still better than throwing the bag away and losing 42 cents! In fact, I made 8 cents! That's my plan with these locations. I will continue to give them items that don't have much time left before they expire. I also "punish" locations with low-cost items. Some customers gladly pay $1 for crackers because they want them but most locations only have 2 crackers in a box (and the box may have 30+ items). The high-shortage boxes may have 4 crackers and a variety of other items that only cost 25-30 cents. They don't get many chips and, when they do, they are items that are cheaper with larger bags (like pork rinds that cost me 33 cents). This lowers my average cost per unit to about 30 cents at these locations. So even if I only made 20% profit at this location (which may gross 35 sales/week and profit $7), I got rid of my product that was about to expire AND I still made a little profit. It's important to note that the honor box is stressful at first but it takes some human ingenuity to get it down. I had a location today that sold 60 pieces and I only collected $51.95. I probably still profited well over $26 even with the shortage from this location and it took me about 20 minutes to service. Now that's easy money! It's just too bad that not every location is like this. Link to comment Share on other sites More sharing options...
mission vending Posted March 26, 2014 Share Posted March 26, 2014 A great post, thanks for taking the time to keep us updated. How many boxes are you running right now? Link to comment Share on other sites More sharing options...
metrovending Posted March 27, 2014 Share Posted March 27, 2014 That was a great post, very informative. I'm thinking of putting out some boxes, what's the cost for the box? & where can you get them? I'm a little concerned about the hourly rate? 50 boxes at 10.00 profit is 500.00 divided by 25 hours yields 20.00 an hour minus gas & wear and tear on your vehicle. It looks like if you are a small vending operator that is short on capital to grow their business but has plenty of time this makes sense. If you have access to capital & can get a lot of new business operating vending machines will get your hourly rate up to at least 40.00 per hour in my area & that's on the low end. Link to comment Share on other sites More sharing options...
AngryChris Posted March 27, 2014 Author Share Posted March 27, 2014 Metrovending, you are spot on with the time issue. I can afford the time so it makes sense right now. I will worry about the time issue when I gross well over 3500/week from vending machines. I'm not concerned about the 20/hour potential because it's good money. If I had enough honor boxes to do on a full time basis at $20/hour, I would take it. There's no expense other than COGS, mileage, and the initial box cost. To gross $40,000/year doing that would be quite reasonable. As for the cost of the boxes, you can google sheridan honor boxes and find the website. Other members kknow more than I do. Mission, I have about 65 boxes in the field. I have a few accounts out there where I will collect well over $20 in profits in 15 minutes. If I only had 20 just like that... It is generally true that you make a lot more profit per hour with vending machines. I just collected $125 from a snack/drink account that I do every week. I can expect about $50 to go into my pocket on that one and it took about 40 minutes and that was fooling around and talking too much. Link to comment Share on other sites More sharing options...
metrovending Posted March 27, 2014 Share Posted March 27, 2014 Cracks me up very time I see "AngryChris", I Keep picturing someone getting ready to take a machine gun in somewhere and just start mowing people down. And thanks for the info about where to get some honor boxes Link to comment Share on other sites More sharing options...
AngryChris Posted March 28, 2014 Author Share Posted March 28, 2014 Cracks me up very time I see "AngryChris", I Keep picturing someone getting ready to take a machine gun in somewhere and just start mowing people down. And thanks for the info about where to get some honor boxes I turn into Angry Chris when my honor box has 7 pieces missing, 1 dollar in the box, and the manager asks me to remove the box . Link to comment Share on other sites More sharing options...
metrovending Posted March 28, 2014 Share Posted March 28, 2014 That's damn funny Link to comment Share on other sites More sharing options...
AngryChris Posted March 28, 2014 Author Share Posted March 28, 2014 The worst thing about this business is collecting shortages. I'm not a debt collector. Link to comment Share on other sites More sharing options...
AngryChris Posted April 2, 2014 Author Share Posted April 2, 2014 Here is another quick update. In the past 2 months or so, I have lost about 5 accounts. The funny thing is that one account that I "lost" was because they moved to another building and they don't want a box. That's fine because historically they have about a 25% shortage rate. An account that I lost yesterday was a bank that historically had about a 35% shortage rate. An account I removed the box from 2 months ago was a realtor place that historically had about a 35% shortage rate. An account that I lost about 6 weeks ago was a FedEx location. The manager claimed that "over half" of my products were expired, even though I let her look at the dates of everything to prove her far wrong. Instead of looking at the dates, she told her boss (over the phone) that I agreed with her. Then, she proceeded to tell me that I had to talk to her before I removed the box. I simply picked up the box and walked out of the store. I don't have to talk to you, lady. Unfortunately that box was close to 0% shortage historically, but I clearly lost that account because this woman had personal issues. Also, the box was about 65% short when I removed the box. I think she just didn't want to pay for the snacks she took. I don't remember what other accounts I lost but I do remember that they all had high shortage rates. It's funny that the thieving locations want their box taken about because I guess I am "tempting the thieves" which is a crime I guess. They do realize that the thieves are going to steal from their business, right? The point of this post is that I kind of expect my overall shortage to go down soon, even if my revenue also goes down. Once I get a little more organized and I have more time, I am going to try to place some boxes. My goal: place 40 boxes into good locations that generate at least $10 in profits per month. That would be HUGE! Link to comment Share on other sites More sharing options...
metrovending Posted April 2, 2014 Share Posted April 2, 2014 Keep these posts coming, I've always been interested in honor boxes but I have a guy who rides with me all day. He handles all the bottles, cans and product ordering & I do the snacks, coffee & the 5 food machines I have out. This puts my labor costs too high for honor boxes unless I split the route up. Link to comment Share on other sites More sharing options...
AngryChris Posted April 2, 2014 Author Share Posted April 2, 2014 Keep these posts coming, I've always been interested in honor boxes but I have a guy who rides with me all day. He handles all the bottles, cans and product ordering & I do the snacks, coffee & the 5 food machines I have out. This puts my labor costs too high for honor boxes unless I split the route up. If you don't mind me asking, why do you have someone with you all day? By the way, paying someone to service your honor boxes is not something I would recommend. Link to comment Share on other sites More sharing options...
metrovending Posted April 3, 2014 Share Posted April 3, 2014 pure laziness, actually my goal is to have him run the route full time & I will make sales calls, fix machines, make product runs. I'm about 1000.00 a week in sales from accomplishing this. Link to comment Share on other sites More sharing options...
AZVendor Posted April 3, 2014 Share Posted April 3, 2014 Hey Metro, I'm glad to hear that you're so close to your threshold goal. Before you put someone out on your route by themselves, make sure you have accountability procedures in place. The last thing you want to deal with is someone stealing from you but you need to be able to find this out quickly if it were to ever happen. The only way to detect theft (and prove it) is to use route accountability procedures. This will, at the very least, include tracking products into and out of the machines, tracking change added to coin mechs and reading meters on every collection. If you don't have meters on some machines, whether can counters or internal cash meters in logic boards, then those are the machines that are likely to be stolen from. You then have to perform calculations with each collection bag as you count them in order to determine if there is an over or short situation with any machine. This can get tedious but using a computer that you can input the numbers into will be very helpful. Good luck getting to your goal. Link to comment Share on other sites More sharing options...
AngryChris Posted April 4, 2014 Author Share Posted April 4, 2014 pure laziness, actually my goal is to have him run the route full time & I will make sales calls, fix machines, make product runs. I'm about 1000.00 a week in sales from accomplishing this. That's been one of my alternate goals as well. I either want to settle down at 4,000/week and run a full-time route and manage the business all by myself while living off of the profits OR I want to get up to 7,000-12,000/week in revenue and hire about 3 people to run the entire business for me while I oversee everything (ride-along with employees, help with repairs, etc...) but put less than 20 hours in every week. Either way, I would like to get a salary around 50,000/year. The question is, do I want to work harder and make sure it gets done (by myself) or work less and risk having the business get run into the ground. Link to comment Share on other sites More sharing options...
mission vending Posted April 4, 2014 Share Posted April 4, 2014 That's been one of my alternate goals as well. I either want to settle down at 4,000/week and run a full-time route and manage the business all by myself while living off of the profits OR I want to get up to 7,000-12,000/week in revenue and hire about 3 people to run the entire business for me while I oversee everything (ride-along with employees, help with repairs, etc...) but put less than 20 hours in every week. Either way, I would like to get a salary around 50,000/year. The question is, do I want to work harder and make sure it gets done (by myself) or work less and risk having the business get run into the ground. You only need 2 employees to run 12-15K, any route guy worth more than minimum wage should be able to do 7-8K a week and not go over 40 hours. Provided you have one place for them to load and you don't make them drive to hell and back between stops. That leaves you free to do sales, bookeeping, ordering, service calls and checking up on them. Just leave room in your schedule to jump in the drivers seat for the occasional sick day and vacation. Link to comment Share on other sites More sharing options...
AngryChris Posted April 4, 2014 Author Share Posted April 4, 2014 You only need 2 employees to run 12-15K, any route guy worth more than minimum wage should be able to do 7-8K a week and not go over 40 hours. Provided you have one place for them to load and you don't make them drive to hell and back between stops. That leaves you free to do sales, bookeeping, ordering, service calls and checking up on them. Just leave room in your schedule to jump in the drivers seat for the occasional sick day and vacation. I was wanting 2 part-time and 1 full-time . Link to comment Share on other sites More sharing options...
wildmanne39 Posted April 7, 2014 Share Posted April 7, 2014 I was wondering have you had any trouble with sheridan systems? I ordered last week, but I have not received a tracking number and I have not been able to reach them by phone or email since they took the money out of my account. I figure they just do not send tracking numbers but it makes me uneasy. Thanks Link to comment Share on other sites More sharing options...
Grazing Hippo Vending Posted April 8, 2014 Share Posted April 8, 2014 I have ordered most of my boxes from Sheridan. Margaret has always been very easy for me to reach. I have always found them to be a stand up operation. I have always picked my stuff up from their warehouse though - never had anything shipped from them. Link to comment Share on other sites More sharing options...
wildmanne39 Posted April 8, 2014 Share Posted April 8, 2014 Thank you that makes me feel better! Just the lack of communication had me worried. Link to comment Share on other sites More sharing options...
Spragues Vending Posted April 10, 2014 Share Posted April 10, 2014 I was wondering have you had any trouble with sheridan systems? I ordered last week, but I have not received a tracking number and I have not been able to reach them by phone or email since they took the money out of my account. I figure they just do not send tracking numbers but it makes me uneasy. Thanks I have ordered from Sheridan Systems before and they are great. They won't send you tracking info (at least they didn't with my orders) but you can definitely expect you items to arrive soon. Link to comment Share on other sites More sharing options...
wildmanne39 Posted April 10, 2014 Share Posted April 10, 2014 Thank you, you are correct the honor boxes arrived without any issues, they just do not give tracking numbers. Link to comment Share on other sites More sharing options...
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