My thoughts on "Healthy VENDING"

[RJT]

This has been going on for sometime now and pops up on this forum fairly often with people asking about "Healthy Vending". Many that come on here are usually considering one of the franchise or biz-op companies that specialize in all "Healthy Vending". 

 

Firs let me say that in general people are more health conscious than ever however that does not mean an all healthy vending business will work. I have always advocated that my clients offer "healthy" selections to their customers. I recommend they have an actual "healthy program". These are sometimes modeled after the Fit Pick program NAMA created. You can come up with your own and call it what you like. However, I have also told my clients that if their customer or potential customer sets unrealistic demands on the amount they must stock in a machine to not do business with them. I have seen where a vending customer says they want 50% of the products offered to be healthy selections. This can be a disaster waiting to happen. What happens if you cant sell through that many items? Now what? The best approach is to work with a customer based on sales and and demand. So lets say you start out with 10 items and the usage and demand is their you will be happy to add more selections as needed. That is just good business practices that make sense. 

 

Now with all that said lets get back to an all "Healthy Vending" model. Yes, healthy options in vending is seeing more and more demand. However, it has not gotten to the level to sustain itself as the only type vending an operator does. Can an all healthy vending machine work in certain accounts? Absolutely it can.  The problem is scale. You will here this term used in business all the time. "How do we scale our business". This means how to we grow and what is the pinnacle we can reach. Unless you are in a very large city like LA, NY, Chicago, etc it is very hard or impossible to scale because their are only so many of these accounts that will support an all healthy vending type setup. Lets look at it from this stand point. What accounts can you think of in your area that would demand and allow all healthy vending? YMCA? Gyms? Hospitals? Schools? How many of those do you have in your area? Lets take hospitals for example. They are great vending accounts and do some major revenue. The issue is many of these hospitals are contracted by food service companies that do both the cafeteria as well as the vending. That is the way the RFP goes out and if you cant do both you do not have a shot at getting the vending. Second these hospitals are paid huge commissions and all healthy will hurt their bottom line. Simply because the sales volume will go down. I know this because I along with many of my clients even struggle with even offering a limited amount of healthy options. People will simply not buy or buy much less because it is not what they want to eat or drink.

 

Now lets look at schools. Schools are "ok" at best even with regular vending. 95% of the time you can not get the drink business because the bottling companies pay big commissions, give the stuff like score boards, banners, signage, donations, etc. You simply cant compete with that. Second is unless it is a college or alternative type school it is seasonal and closed during the summer. I pulled out of all schools in my area and turn many down this past year. It has become do difficult doing business with them it simply was not worth it. They had to many demands and requirements that it did not make business sense.

 

YMCA, can be good accounts. I have done many over my years in vending and currently have some my company does. We have "healthy selections" but would never do 100% healthy. Why because even with our limited selections we have it is a struggle to make it work. We are constantly having to watch dates and rotate items and throw the healthy selections out.

 

Gyms, are ok accounts at best but in the end their are only so many gyms in a given area. Also many in the true healthy lifestyle prepare and bring their own food. They ONLY grab a snack out of a machine as a last resort. They get their foods from specialty food store and because they use so much of it they buy it in bulk and take it with them. 

 

Now, if you think you are going to get the average vending account to switch to all healthy that is not going to happen 99.9% of the time. Employers want to keep their employees happy and their would be mutiny if some of these accounts enforced an all healthy vending program. Fact is you are not getting the accounts because the demand is just not strong enough. 

 

So that is the issue is being able to scale (grow) the business large enough to sustain you as a sole means of revenue. Unless you are willing to drive many miles between accounts their are just so many accounts that would work for all "Healthy Vending". 

 

In the end I say to have a healthy selection program in place because I think it is important to offer it and make sure it is part of your business model but all healthy simply will not work for 95% of the vending operators. 

 

NONE of the large vending companies offer all healthy vending? Why? If it was in such demand and was a money maker why wouldn't they do it? Fact is they don't do it for the very reasons I have already posted in this thread. No other reason why because it si not a conspiracy to keep people "addicted" to candy bars or to run any of the "healthy" companies out of business. The fact is all businesses work off supply and demand and the fact is the demand is just not high enough to do it. It may get their one day but right now it is not. 

 

I hope this helps clear some things up and answers some questions. 

[terry]

Thank you for shedding some light on this for me 

[PHX1]

I agree with you RJT. The one thing I never figured out is why people buy these healthy vending franchises? I mean the big boys such as canteen already offer healthy selections. Do they think these over priced AMS machines with stickers all over them are going to give them some competitive edge over a large scale company? 

[RJT]

I agree with you RJT. The one thing I never figured out is why people buy these healthy vending franchises? I mean the big boys such as canteen already offer healthy selections. Do they think these over priced AMS machines with stickers all over them are going to give them some competitive edge over a large scale company? 

 

I can tell you why. It is because of a few reasons but for starters these people believe the hype that this is the new trend based on the media coverage these type companies get. The media is always showcasing these companies as the "new thing". Plus it is constantly in the news about healthy this and healthy that.

 

Second these companies make it sound easy with them doing the heavy lifting with getting you accounts, delivering the machines and having products to sell. They make it sound "so easy" even a caveman could do it. They are also good at marketing and getting people to "buy in" to all the hype. I could be 100% more successful with my consulting if I used their tactics but part of the reason I started my consulting company was to keep people from making these type of mistakes.

 

At the end of the day they take a machine anyone can buy for a fraction of the cost and put some graphics on it, offer up products anyone can buy (Pirates Booty, Cane sugar beverages, nuts, granola bars, etc, etc)  offer "training" and "support" all for the low price of $12k a machine. 

 

 I could be 100% more successful with my consulting if I used their tactics but part of the reason I started my consulting company was to keep people from making these type of mistakes. Its tempting but just not my style. However, I could walk someone through the best and economical way to do an all "healthy" vending if they where dead set on it but usually I try and talk them out of it the best I can. Even after I tell them all the reasons why not to do it some still and go do it. Last one was a women that invested $75k and has lost her shirt in the deal. 

 

Like I said I think all vending companies need to have a "healthy" program that they can put in place if the customer request it. To be honest I am in and out of Canteen accounts all the time and they very rarely have healthy selections in their machines. They even buck it when demanded by the accounts.  

[KychrisKy]

I have places that say please put some baked chips in we want healthy

ok I do but guess what happens they set there an nobody uses them,

[RJT]

I have places that say please put some baked chips in we want healthy

ok I do but guess what happens they set there an nobody uses them,

 

Pretty common and happens all the time. Ever January we get all kinds of phone calls from existing companies about putting in "healthy" items. We buy them stock them and then after a few months start throwing them out after all the folks fall off the wagon.  

 

One of the main reasons I would NEVER work under a set "requirement" of healthy items that is not reasonable. I try and put it back on them by asking if they have any type of healthy initiatives like seminars, discounts to gyms, free classes, etc to their employees about living a healthy lifestyle. 99.9% do NOT have anything. It's not important enough to them to spend the time and money themselves and put it on the vending operator so they can make themselves look good to the employees.

 

In all my years of being around many true "healthy lifestyle" people (I try and lead somewhat one myself) they NEVER buy out of a vending machine unless it is a last resort. The bad part is what you can stock in a vending machine really is not all that healthy no matter what it is unless you are dealing with raw unprocessed foods like seeds, and nuts. Then many of those are high in sodium. Most every items will have some thing that is not "healthy" such as high sodium, high carbs, preservatives, high sugar content, etc.   

[65tremecgt]

Basically a vending machine is a really cheap indulgence purchase for the customer making the purchase.  I don't go to 7-11 get a soda and a $1 banana, I get the soda and a bag of chips.  I know the banana is healthier but for that same buck its just a little crunchy cheat!  Nice perspective RJT, I really enjoy your insight. 

[NYvending]

I agree with many of the things RJT says, operating in NY healthy vending is a niche market that you can do well with as an operator but that's what it is, a niche to get you in the door with some companies that are tired of junk food vending or for an account that has a large amount of foot traffic concerned with healthy eating and the cash available to spend like a luxury gym. About 70% of my accounts run mainly junk food however I probably have 50% of my fleet branded as "healthy" vending machines from buying out people who got tricked into buying from 1800vending or heathy you machines. That being said I also have refurbished machines that sell almost exclusively healthy food in gym accounts because I needed the right machine for the products they wanted so I matched there needs to the right machine and bought refurbished which is my preferred way to do business.

 

Healthy vending has two distinct advantages over traditional vending which is why I utilize both and I much prefer healthy vending accounts.

 

1 -  Very large accounts that may already have a junk food vendor. I have a few "healthy machines" in large corporate buildings where the junk vendor has a fleet of 4-8 junk food/drink machines. The junk food vendors don't seem to mind my machine since my products don't compete with them and at the end of the day I've found no matter how great a contract if a location wants vending choices there junk food vendor won't provide them they are allowed to give me the business. So I tend to consistently gross about $350-$600/month in these accounts and it only requires service twice a month on a single combo unit. 

 

2 - I'm giving away my trade secrets here LOL...the profit margin on healthy food is MUCH higher. When I do an analysis of my business my junk food is about 70% of my total volume of sales yet "healthy" food is 50% of my profits because I sell junk food at a 62-68% margin where I can sell healthy food for 80%+ margin. My top account is a small luxury gym in an affluent neighborhood. The membership alone is $600 a month to get in the door. I sell bottled water in that account for $3.00/bottle yet only pay $0.30/bottle and that's the cheapest thing in the machine. The machine simply crushes sales because to the clientele $5.00 is pennies so most buy a bottle of water for $3.00 then mix a $5.00 packet of protein powder into it. Then grab a $6.00 protein brownie on the way out the door and it's still meaningless to them. Now you can certainly ignore this as an anomaly but as I scale my business to focus on profit per sale rather than turns per coil I'm finding this same trend throughout all my accounts as I sample more "premium" products in the machines. I just added two more gym accounts based on this premium price point model so I'm excited to see how there sales do this next month.

 

Now I don't believe this business model works in the non-metro area's where people's disposable income isn't as high. As well I do not place machines in low income area's as I'm simply not interested in selling soda for $0.75/can. My accounts that get soda pay $1.50/can because I decided after selling a few thousand cans that it's just not worth the labor to me to make less than $1.50 per sale. I have a standardized price sheet customers review before signing and the few that comment my prices are high I remind that they are still lower than the 7-11 a mile down the road but if they prefer to go to 7-11 I won't be offended.

 

Time is not an unlimited resource so I would rather sell less at a more favorable margin and fill the machine less often so my long term business model will eventually focus on growing "healthy food" accounts. Perhaps my business is a complete anomaly but it's working fantastically well for me so I do believe there are trends smart operator can capitalize on to increase there bottom line.  

[RJT]

NYvending,

 

Thank you for posting. You basically made my points of what I was trying to explain. You do "regular' vending with some all healthy mixed in which I think can work and that why I said in my post all healthy machines can have their place and work. You also are in a large metro area which makes scale much easier. Like you said it really depends on demographics also. All healthy might work in one part of the state, country, town, etc but not in the same type location in a different area.  This is what I try and explain to everyone that calls me wanting to hire me to help them with all healthy vending. I tell them to do both that way they can scale and make the numbers work. I appreciate the comments and insight from someone that is doing it the way it can and does work.  

[KychrisKy]

Boy I'd love to sell water for 3.00 but my accounts would never buy it or support it,

My accounts are in just average areas. We just have two gyms in our area and one of the the gym has a vending machine there with water protein drinks etc

They want me to put in a machine with soda drinks in it but I don't know if it would be worth it or not, since they already have one

[NYvending]

I'm just glad to be able to contribute RJT, you've got a wealth more experience than me so I can only add what my experience has been thus far.

[NYvending]

Kychrisky,

 

$3.00/water isn't unusual for gym's here. Heck even at our local mall coke moved all the Dasani machines up to $2.50/bottle. Most gym's in my area realize the profit margin on these sales which is why the juicebar in large gym's now account for 30% of there total operating profits. 10 years ago most gym's didn't want the hassle of even selling a t-shirt but the influx of them has driven down membership costs. When I joined NYSC 15 years ago it was $80/month now the memberships are down to $15/month so they have to make up the lost revenue elsewhere so the items that should go in a vending machine are now sold from behind a glossy counter.

 

The only things I could share the helped me improve my margins in average income level accounts is I sell 2 sizes of water. The tiny bottles for $1.00 and the large sport cap bottles for $2.00. 

 

In regards to soda I've found if the gym has a daycare you can get away with coke and diet coke in a bin and the parents will usually buy them for the kids. In NY there is a big movement towards diet soda so diet and regular sell similarly and in a gym more people will opt for diet so a bin each is worth trying but I wouldn't buy a machine to just sell soda for them. If you have an extra in inventory you can try it and I would load up cans of flavored seltzer. One of my gyms wanted all traditional soda replaced with seltzer and it's sales are passable but only cause the snacks are picking up the slack. Soda alone I don't think will make enough sales or they probably would have put it in there machine since they are already comfortable vending the popular items. 

[PHX1]

Kychrisky,

 

$3.00/water isn't unusual for gym's here. Heck even at our local mall coke moved all the Dasani machines up to $2.50/bottle. Most gym's in my area realize the profit margin on these sales which is why the juicebar in large gym's now account for 30% of there total operating profits. 10 years ago most gym's didn't want the hassle of even selling a t-shirt but the influx of them has driven down membership costs. When I joined NYSC 15 years ago it was $80/month now the memberships are down to $15/month so they have to make up the lost revenue elsewhere so the items that should go in a vending machine are now sold from behind a glossy counter.

 

The only things I could share the helped me improve my margins in average income level accounts is I sell 2 sizes of water. The tiny bottles for $1.00 and the large sport cap bottles for $2.00. 

 

In regards to soda I've found if the gym has a daycare you can get away with coke and diet coke in a bin and the parents will usually buy them for the kids. In NY there is a big movement towards diet soda so diet and regular sell similarly and in a gym more people will opt for diet so a bin each is worth trying but I wouldn't buy a machine to just sell soda for them. If you have an extra in inventory you can try it and I would load up cans of flavored seltzer. One of my gyms wanted all traditional soda replaced with seltzer and it's sales are passable but only cause the snacks are picking up the slack. Soda alone I don't think will make enough sales or they probably would have put it in there machine since they are already comfortable vending the popular items. 

We used to do vending for a hand full of LA fitness. They were some of the worst accounts we ever had. Every LA fitness across the US does NOT run the juice bars. LA fitness sells the rights to the juice bars to individual contractors. When we were doing the vending we were charging 2 bucks for water. Which was great and all until the juice bar undercut us and all the people started going to them instead. We used to sell a pretty good amount of soda at the gyms, here in AZ most of the cleaning crew were Hispanic and they would buy the heck out of the coke because it "wasn't healthy enough for the juice bar to sell". sense moving out I still get calls to do vending at some of the LA fitness, but I just tell them to call the coke bottler who is the authorized vendor for all the LA fitness.

[KychrisKy]

Our economy here cant support those prices which would be nice if it could.

[Global Vending Group]

I feel like no vendor should ever assume anything in regards to locations and what they (customers) want. Alot of startups in particular tend to look for an angle and want to be different. (the next big thing)

In my experience, Its not at all about what we (vendors) want, or what we think will do good, its all about fulfilling a need. Sometime that need is healthy, sometimes its regular junk food...sometimes its coffee.

 

Some newbie vendors only think about whats most profitable and "fresh"....and try to just do that, but by doing so you forgetting the main reason vending machines were even invented!

 

Keep yourself open and let the location tell you what THEY are looking for! Remember, all youre doing is providing a service... "trying to sell flip-flops at a ski resort is bad business, doesnt matter if flip-flops have the highest profit margin and are the latest craze". 

 

 

Sincerely,

Shawn “Skip” DeLuca

1-800-592-4220  x103

Shawn@globalvendinggroup.com

[RJT]

I feel like no vendor should ever assume anything in regards to locations and what they (customers) want. Alot of startups in particular tend to look for an angle and want to be different. (the next big thing)

In my experience, Its not at all about what we (vendors) want, or what we think will do good, its all about fulfilling a need. Sometime that need is healthy, sometimes its regular junk food...sometimes its coffee.

 

Some newbie vendors only think about whats most profitable and "fresh"....and try to just do that, but by doing so you forgetting the main reason vending machines were even invented!

 

Keep yourself open and let the location tell you what THEY are looking for! Remember, all youre doing is providing a service... "trying to sell flip-flops at a ski resort is bad business, doesnt matter if flip-flops have the highest profit margin and are the latest craze". 

 

 

Sincerely,

Shawn “Skip” DeLuca

1-800-592-4220  x103

Shawn@globalvendinggroup.com

 

I agree with you for the most part but many times the "customer" may want or be looking for things that are not reasonable. So as vendors we have to make decisions that make sense no matter what the customer sometimes looking for. I have had many times where a customer is looking for a cold food machine and it simply would not work. I have had customers want more pastry in their machine yet a month later I was throwing out half the selections we put in. It is about balance and good communication with the customer and being able to explain things to them about what is the best approach. I have been in situations where the customer "wants" where beyond what I was willing to do based on my knowledge that it would not work. I am willing to try things the customer request if it makes sense. Lets say a customer is border line on justifying a cold food machine. Then I may be willing to try it with the understanding if it does not perform at a certain level it will need to be pulled. 

 

This come with experience and understanding what will and what will not work.  

[Global Vending Group]

Oh for sure, Alot of places will have like 30 employees and be like " we wants snacks machines, soda machines...and we really need something for sandwiches ...and you know what!?!? we could really use a coffee machine, my people love coffee".

 

They want over 10k in equipment, bet we all know they just need a combo or something small : )

Everything in vending is situational!

 

Sincerely,

Shawn “Skip” DeLuca

1-800-592-4220  x103

Shawn@globalvendinggroup.com

[RJT]

Oh for sure, Alot of places will have like 30 employees and be like " we wants snacks machines, soda machines...and we really need something for sandwiches ...and you know what!?!? we could really use a coffee machine, my people love coffee".

 

They want over 10k in equipment, bet we all know they just need a combo or something small : )

Everything in vending is situational!

 

Sincerely,

Shawn “Skip” DeLuca

1-800-592-4220  x103

Shawn@globalvendinggroup.com

 

Dont get me started on combo machines.

[Global Vending Group]

hahah....why whats wrong with combo's? besides the obvious over abundance of low end generic ones out there that you cant get parts for.....I'd like to buy your book btw (just to show some support) but you have it in pdf or something, we dont use kindles here.

[Global Vending Group]

Nevermind....I just got the PDF version of ebay. will give it a read when i get a chance.

 

Sincerely,

Shawn “Skip” DeLuca

1-800-592-4220  x103

Shawn@globalvendinggroup.com

[RJT]

hahah....why whats wrong with combo's? besides the obvious over abundance of low end generic ones out there that you cant get parts for.....I'd like to buy your book btw (just to show some support) but you have it in pdf or something, we dont use kindles here.

 

I appreciate the support!! THANK YOU FOR THE PURCHASE!! 

 

 

Besides the over abundance of low end combo machines on the market in my book (and on here) I talk about why combo machines are only best for two things. On,e a person or owner of a business that is wanting to do their own vending such as a beauty shop, small mechanic shop, barber shops, etc.They may not be able to get a vending company and this is a good solution for them.   Second, is in a satellite location of a larger account a vending operator is already doing business with such as in an office area, shipping area, etc of a large manuf. location. 

 

If an account justifies vending and you put a combo machine in it you will work yourself to death keeping it full. Case in point is a YMCA location I got from a vendor that had 4 combo machines in it. They where working them three days a week trying to keep up with usage. I put in two five wides and work them once a week. The other issue is selection. If you have a combo machine in a location and I come in and offer them a 32 or 40 select machine they will gladly change for more selections. 

[Discount Vending Store]

Combo vending machines work for most small and mid-size businesses (which accounts for most businesses) where putting a full size snack and a full size soda machine there will just make a lot of stale product and take up twice the space.  No I wouldn't put one in a large office complex with 200 employees but it's great for a car dealership, salon, hotel, auto repair shop, dance studio, etc. We sell mostly combos for this reason and our customers are happy with them.

[Global Vending Group]

yeah, when we sell machines, we usually tell people about 80+ is the "cutoff". depends how breaks work and if there's a store next door etc.... but 80-100 people is pushing into full size territory if you ask me.

 

Sincerely,

Shawn "Skip" DeLuca

1-800-592-4220  x103

shawn@globalvendinggroup.com

[RJT]

Combo vending machines work for most small and mid-size businesses (which accounts for most businesses) where putting a full size snack and a full size soda machine there will just make a lot of stale product and take up twice the space.  No I wouldn't put one in a large office complex with 200 employees but it's great for a car dealership, salon, hotel, auto repair shop, dance studio, etc. We sell mostly combos for this reason and our customers are happy with them.

 

No offense and I understand your position of combo machines but they are ONLY good for what I stated they are for. The reason I know? Because I have 15 years in the business actually working accounts. Again, not trying to argue but that is just reality. You mention a repair shop or dance studio you are correct they are great for that for the OWNER of that business to buy a combo and do it themselves. It would not be a good account for a vending operator to do with any machine including a combo. 

 

I have an account right now that is a trucking company with a truck repair shop across the parking lot with a 4 wide in it. They have 15 employees and truck drivers in and out all day and night. It does a total of around $12.00 a week in snack sales. Even though it is associated with the trucking company and a requirement to getting the account when we first installed. After speaking with the contact and explaining things we are pulling the machine.  So even a combo would not work in this situation. Just how it is not every location deserves vending, they need an honor box or bring it from home and stick it in a fridge. 

[PHX1]

No offense and I understand your position of combo machines but they are ONLY good for what I stated they are for. The reason I know? Because I have 15 years in the business actually working accounts. Again, not trying to argue but that is just reality. You mention a repair shop or dance studio you are correct they are great for that for the OWNER of that business to buy a combo and do it themselves. It would not be a good account for a vending operator to do with any machine including a combo. 

 

I have an account right now that is a trucking company with a truck repair shop across the parking lot with a 4 wide in it. They have 15 employees and truck drivers in and out all day and night. It does a total of around $12.00 a week in snack sales. Even though it is associated with the trucking company and a requirement to getting the account when we first installed. After speaking with the contact and explaining things we are pulling the machine.  So even a combo would not work in this situation. Just how it is not every location deserves vending, they need an honor box or bring it from home and stick it in a fridge. 

Indeed RJT!

In my opinion, an account that justifies a combo is account that does not justify my services. Ill just give them canteen's number.