NYvending Posted May 5, 2015 Share Posted May 5, 2015 Coming from the ATM side of things I'm used to working with 3 and 5 year contracts on locations. I'm new to food and beverage vending but I've noticed that most people selling located equipment rarely have more than a month to month agreement. Thus far I've only looked at locations with a single machine but I've seen grosses from $200-$600 many times operating for years in the same account. Is this more common when looking at small accounts? Link to comment Share on other sites More sharing options...
AZVendor Posted May 6, 2015 Share Posted May 6, 2015 Contracts are a pain and usually aren't bothered with. They are also only as good as the money you're willing to spend to defend them. Vending is quite often just a handshake agreement and if you provide good service and maintain your machines most locations aren't interested in looking for another vendor. When you need to invest a lot of money in equipment for a location is when you want to get a contract to protect your investment and make your money back. Link to comment Share on other sites More sharing options...
NYvending Posted May 6, 2015 Author Share Posted May 6, 2015 That's actually great to know, coming from ATM's where everything is intensively contract driven it was confusing me to find machines in locations with no real agreement or paperwork. When it comes to adding equipment or multiple machines to a location if the volume ends up being more than anticipated or say you have a further location you wish to go to less. Is it usually just a phone call to the owner saying you want to increase the equipment there? Link to comment Share on other sites More sharing options...
AZVendor Posted May 6, 2015 Share Posted May 6, 2015 Yes. Vending is a pretty carefree business where you are meeting a need and most locations are very happy to have machines. Locations always like upgrades. You should always be evaluating your bottom 10% of accounts and moving those machines to better locations. You also want your best machines in your best locations. Link to comment Share on other sites More sharing options...
AngryChris Posted May 6, 2015 Share Posted May 6, 2015 90% of my accounts have no contracts. To date, I have only lost about three accounts to competitors. Two of those accounts were lost because a municipality decided to consolidate all of their locations into one contract. Link to comment Share on other sites More sharing options...
NYvending Posted May 6, 2015 Author Share Posted May 6, 2015 Thanks guys that's great to know. So bringing in more machines is generally looked at favorably as an upgrade? What guidelines do you use on a bottom level account. Are there certain numbers you would remove a quality machine but bring in a cheap one because it does certain numbers and you don't want to get rid of it entirely? Also how do you guys feel on commissions? I'm in NY so a lot of businesses have vending already but larger foot traffic locations have expressed willingness to switch to me but they all keep asking for 20% of sales to switch. No joke 5th customer this week that met with me and said they get 10-15% from there current vendor so 20% would make them jump. I know this seems high but the foot traffic is very high volume so I was thinking of trying it. I can always pull the machine and I suppose the only upside to going in at 20% is I doubt anyone is going to come in and outbid me. The latest one is a gym with 3000 members. Is something like this worth trying? Link to comment Share on other sites More sharing options...
Walta Posted May 6, 2015 Share Posted May 6, 2015 Any location that does not gross 100 dollars is not worth stopping your truck = 0 % commission pull your equipment as soon as you find it a new home. Any location that grosses 100 – 150 is marginal = 0 % commission. Any location that grosses 150 - 200 is good = 10 % commission with high vend prices or 0% and low prices. There are very few locations that can generate high volume sales at a price point that will allow you to pay 20% commission. I think you will find that high commission will drive up the vend price to the point where sales drop to almost nothing. Plan your stops when the machine needs restocking not because it is Wednesday. Walta Link to comment Share on other sites More sharing options...
NYvending Posted May 6, 2015 Author Share Posted May 6, 2015 Walta Is that weekly or monthly gross? Link to comment Share on other sites More sharing options...
Walta Posted May 7, 2015 Share Posted May 7, 2015 To me it is not about the calendar. It is about how many labor hours you invest in a cash box compared to how much is in the box. If the machine sells $50 a week and you can find products with a 4 week shelf life, service it every 3 weeks and turn a profit 1.25 hr/$150. Service it every week and go broke 1hr/$50. Walta Link to comment Share on other sites More sharing options...
vendman0729 Posted May 8, 2015 Share Posted May 8, 2015 I have never been kicked out of a location. Then again I am also trying to turn this into a career. If your very serious about vending, contracts shouldn't even come to your mind. Unless as mentioned before, your investing in a lot of money into a location. Commission's are not only something that you have to pay extra, but its also an extra inconvenience. I would never give a location more then 10%. In the future when its time to pay, that thought will always be buzzing in your head, "man why do I have to give them this much money". Just my 2 cents. Link to comment Share on other sites More sharing options...
NYvending Posted May 8, 2015 Author Share Posted May 8, 2015 Vendman, good advise but in my area of many good spots already have vending machines. So I've met quite a few business owners who are getting 15% already from there current guy. 4 of the 5 said they would have him remove his machines and switch to me for 20% the fifth guy wanted 25% to switch. I passed on him but when it comes to getting locations away from another vendor if a spot you want will only switch for 20% do you take the account or do you pass? Link to comment Share on other sites More sharing options...
AngryChris Posted May 8, 2015 Share Posted May 8, 2015 Those vendors might be skewing how those commissions are paid out and telling the location that they are getting 15-20% commission when they might be getting far less. And no, I wouldn't pay 20% gross at all. Only monster accounts get that. Link to comment Share on other sites More sharing options...
NYvending Posted May 8, 2015 Author Share Posted May 8, 2015 Appreciate the reply Chris, any suggestions on when speaking to potential accounts how to determine if they are really getting the percent they claim? I asked one potential account to show me a check or statement from his vendor and he said its 20% or we can't make a deal. Then shortly after I had an LA Fitness wanted a machine. Seemed promising, 3000 members and the owner owned 3 other gym. So he was going to put me in 2 of his location. He wanted 25% gross I told him best I could do was 15% and he said I was wasting his time he would call a real vending company. Wouldn't even take my card. Do you think I did the right thing walking away from these? Link to comment Share on other sites More sharing options...
orsd Posted May 8, 2015 Share Posted May 8, 2015 Yep If they can throw you under the bus now they will have no trouble doing it later And 25% is golpher absurd Link to comment Share on other sites More sharing options...
moondog Posted May 8, 2015 Share Posted May 8, 2015 Appreciate the reply Chris, any suggestions on when speaking to potential accounts how to determine if they are really getting the percent they claim? I asked one potential account to show me a check or statement from his vendor and he said its 20% or we can't make a deal. Then shortly after I had an LA Fitness wanted a machine. Seemed promising, 3000 members and the owner owned 3 other gym. So he was going to put me in 2 of his location. He wanted 25% gross I told him best I could do was 15% and he said I was wasting his time he would call a real vending company. Wouldn't even take my card. Do you think I did the right thing walking away from these? Don't feel too bad about losing this one. That prick was asking for half your profits which might be slim if any in a location like this. Remember that those 300 members are never there at the same time. I'd be surprised if this place ever had more than twenty five people there at any given time. It's not like they live or work there. Link to comment Share on other sites More sharing options...
NYvending Posted May 8, 2015 Author Share Posted May 8, 2015 Thanks guys you've all been extremely helpful! Definitely saved me from working for nothing! Link to comment Share on other sites More sharing options...
EatMoreJunk Posted May 10, 2015 Share Posted May 10, 2015 Speaking of written contracts, I'll can attest to the fact that they can sometimes save a very good account. I have contracts with 14 of my 30 accounts, most of which were reassigned to me after I bought out an existing route. The largest of these locations ($8k/year) is in a medicaid type senior nursing and rehab center. They changed management mid 2014 and within a few months decided they wanted to "go a new direction" with the vending operation (they notified me of this in a cowardly way, having an assistant shift manager mention it to me while walking by the machines as I was stocking, haha). I alerted the new Director of the existing contract (it had automatically renewed for the year a month prior to this conversation) ... she then came back and claimed that the contract didn't apply since the management/name of the business had changed. WRONG .. the contract clearly states that it's transferable to new ownership, etc - so she backed off. Within 2 weeks one of the emps tells me that the business office (opposite side of the building from my machines) is selling drinks and snacks at prices lower than mine and "encouraging" the emps/residents to buy from them as they are putting the profits toward the big Christmas party. SOOOOO I printed yet another copy of the contract, highlighted the portion that gives me "full and exclusive rights" to be the only entity selling snacks and drinks on the property .... dropped this off to the Director and waited for her response. Within a few days she responds that they are simply trying to "help the elderly and disabled" and she did not see how this was a breach of contract at all. I called and let her know that regardless of the purpose, they were indeed violating the contract and if it did not stop, she would hear from my attorney. The next time I serviced the location I was told they had quit selling. Perfect!! The contract renews in 5 months or so and I'm not sure what to expect. I'm hoping that management will have forgotten the whole ordeal and I'll renew for another year without a problem. I do not pay them commission so my plan, if they discuss ending the relationship under contract terms at renewal, is to offer them commission and slightly higher prices - I'll have a written proposal that will show how much money they can actually save for the Company parties, without having to do any work at all. It is a very convenient and profitable account and extremely steady. As much as the Director pissed me off, I'd still like to keep the location if I can. So the moral of the story is that without a written contract, I would have lost the account several months ago. I had "something" to stand on and it worked. Anytime I open a new location I ALWAYS try to get a signed written contract in place ... if the location is not interested in having something in writing, no problem, I'll take the location on a handshake. Link to comment Share on other sites More sharing options...
orsd Posted May 10, 2015 Share Posted May 10, 2015 Actually, if they are douches and are selling their own stuff see their prices...if they are losing money then keep you mouth shut... in a few weeks they be scratching their heads wondering why they are losing money... and they won't try again hopefully...or they'll get tired of humping pop or bickering over who goes to Costco. Link to comment Share on other sites More sharing options...
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