the numbers

[terry]

So I'm crunching the numbers according to Vending Times the average cold drink machine does 160 vends a week. So if I can get pop at $.45 a can and sell it for $1.00 that is $.55 profit times 160 vends=$160 So my profit would be $88 a week. The average snack machine does 172 vends a week. If I can get chips at $.51 a bag and sell it at $1.25 that is $.74 profit times 172 vends per week=$215 So my profit would be $159.10. So if I total these two up $247.10 a week profit. This is where it gets tricky my expenses.

1. sales tax @ 13%
2. Fuel
3. Cost of goods
4. Commissions 
5. Bank services
6. Vandalism insurance
7. Bank loan payment
8. Business Licence 
9. Credit debit processing fees
10. Accountant fees
11. Lawyer fees

please let me know if I forgot anything. My plan is to get 10 new vending machines with debit credit readers. I live in British Columbia Canada we have the strictest guidelines when it comes to items we can sell in the machines. My target is going to be secondary schools, mines, mills, government institutions, offices, car dealerships and wherever else I didn't list. The reason I chose to go new machines is I am going after the hi profile locations. Any advice you could give me on my numbers or reasoning would be great. Thank you in advance of sharing your expertise. 

[AngryChris]

Those numbers aren't going to work and here's why:

 

Snack sales are generally going to be lower than soda sales at about a 40:60 ratio.  If you collect $180 out of a soda machine, you should see roughly $120 out of a snack machine.  This is a GENERALLY good ratio...   For the sake of making things easy though... we "say" that Soda accounts for around 60% of sales while snacks account for about 40% of sales.  Technically, the ratio (soda:snacks) is 3:2 when you condense it down but that might be a bit confusing so 60%/40% is a much easier pair of numbers to work with.

 

With that said, this ratio is VERY general and it applies to sales across the board when you are a full-line company with many accounts.  When you start off small, your numbers can be far away from this ratio.

 

Also, those average vends per week are meaningless.  Considering the source of the numbers (Vending Times), it is fair to assume that those numbers came from surveys done by larger companies who actually track quantities of items they sell.  Companies of this size are often selling a large quantity of bottles in addition to cans and their snack sales come from multiple sizes of chips, candy, pastries, cookies, and various other snacks.  It simply doesn't make any real sense to take those stats (160 vends per week for soda machines and 172 vends per week for snack machines) and plug in chips for $1.25 and cans for $1.00 since there are SO many other snacks/beverages that are part of these statistics.

 

Moving on, let's assume that those 160 vends per week were a mixture of 35% bottles and 65% cans.  Here in the states, we might purchase a 20 oz bottle of coke for 80 cents and sell it for $1.35 (I am just giving a wild estimate of an average cost to sell a bottle out of a vending machine).  We might also buy a can of soda for 35 cents and resell it for 75 cents.

 

So.... 35% of 160 is 56.... 65% of 160 is 104  Out of 56 bottles, we collect $75.60, pay $44.80, and profit $30.80.  Out of 104 cans, we collect $78.00, pay $36.40, and profit $41.60.  So in the total 160 vends, we collected $153.60 and profited $72.40.

 

Out of the snack machines, just assume a 100% markup in general as some things yield more profits than others and it is very difficult to keep things perfect.  Using the $153.60 figure used earlier (the amount we collected from 160 vends), we can assume that the snacks would account for about $102.40 in gross sales (amount collected).  So this would mean that we might profit around $50 from the snack sales alone.

 

This means that, using those same "vends per week" stats that you gave us, I would assume one soda machine and one snack machine would generate about $120 in weekly profits.  Here is the OTHER problem though.  160 vends per week = 6.5 cases per week.  While this is a good account, it doesn't exist everywhere.  In my area, you would need to find either an office with about 200 employees that utilize a single break room and ONLY a snack and soda machine.. or a blue collar location with anywhere from 50-100 employees depending on the environment they work in.  These are pretty big accounts and blue collar locations like these often want food as well.  Offices might want a coffee machine or OCS (and OCS is good, but coffee machines can be a pain).

 

My point is that it sounds like you might be looking at these "averages" and simply assuming that placing two vending machines at a location is going to give you a profit of almost $250 per week after COGS.  That simply isn't the case.  I would say that, on average, us small vendors are lucky to profit $50/week on average locations before taxes and other overhead costs are taken out.

 

So.. In summary... I will tell you that those statistics that you used from the Vending Times are absolutely useless for you and anyone else for that matter.  It's more of a "did you know?" stat that is completely biased and probably based off of large companies that are big enough to report everything that comes into and out of their inventory.

Here is what you DO need to know:

 

For white collar locations (offices and people who sit idle most of the day, have access to long lunches, and work in climate-controlled facilities), expect your sales between SNACKS AND SODA to be about $1.25 per person PER WEEK.  An office with 30 people should generate between $35 and $40/week between SNACKS AND SODA COMBINED.  Yes, it sounds low, and it is.  This is true vending.

 

For blue collar locations (factories, warehouses, distribution facilities, hot places in general, places where people PHYSICALLY work a lot), expect anywhere from $2.00 to $4.00 per person PER WEEK.  If you see a facility with 30 BLUE COLLAR workers who work 50-hour work weeks in a warehouse that often gets about as hot as it is outside, they have a 30-minute lunch, and the nearest food place is 15 minutes away, you can expect a place like this to yield closer to $120/week between SNACKS AND SODA COMBINED.  That's because they might rely on the vending machines for much of their lunch, and they'll be thirsty throughout the day too.  I have a little gem in my area with about 15 employees... about 4 in the office and 11 in the warehouse.  This location generates about $80/week every week.  They will probably get closer to $100 in the hottest weeks of the summer, and I'm told that two people in the office barely buy anything.. so between about 13 people, I am generating about $6.00 per person every week.  

 

Blue collar locations is what you want to have, but large offices can do well too if they are big enough and don't demand EVERYTHING imaginable.  Some office people (corporate offices, law offices, etc..) feel like... because they are "so special" in what they do for a living... they deserve every perk that vending has to offer (ie. credit card readers, drop sensors, bottles instead of cans, food machines, coffee machines, etc...).  And, again because they are SO special, they feel like.. because their organization is such a hot-shot organization that can usually get products and supplies for cheaper than smaller organizations can, they should be entitled to have lower prices than other places too.  What they fail to realize is that their corporate office of 20 employees won't generate any money for vending at all.  The sucker that decides to put a vending machine in their office will be stuck with dealing with expired products, customers who have NOTHING to do all day but complain about how they don't see their favorite candy bar in the machine, and complain further about how that favorite candy bar that you put in the machine 9 months ago has expired already and you should take it out and put a fresh one in because it's their favorite and they would probably buy it one day... within the next 10 years.... but hey, they are corporate people and you should respect them because of it.

 

RANT OVER.

[tc vending]

Well said Chris. Projections aren't worth much even after years in this business their are few sure things.

[moondog]

So I'm crunching the numbers according to Vending Times the average cold drink machine does 160 vends a week. So if I can get pop at $.45 a can and sell it for $1.00 that is $.55 profit times 160 vends=$160 So my profit would be $88 a week. The average snack machine does 172 vends a week. If I can get chips at $.51 a bag and sell it at $1.25 that is $.74 profit times 172 vends per week=$215 So my profit would be $159.10. So if I total these two up $247.10 a week profit. This is where it gets tricky my expenses.

1. sales tax @ 13%
2. Fuel
3. Cost of goods
4. Commissions 
5. Bank services
6. Vandalism insurance
7. Bank loan payment
8. Business Licence 
9. Credit debit processing fees
10. Accountant fees
11. Lawyer fees

please let me know if I forgot anything. My plan is to get 10 new vending machines with debit credit readers. I live in British Columbia Canada we have the strictest guidelines when it comes to items we can sell in the machines. My target is going to be secondary schools, mines, mills, government institutions, offices, car dealerships and wherever else I didn't list. The reason I chose to go new machines is I am going after the hi profile locations. Any advice you could give me on my numbers or reasoning would be great. Thank you in advance of sharing your expertise. 

You can scratch Nos 6,10 and 11 as nobody pays those anyway.

[terry]

lol just got off phone with bank they want $600+ a year for the privilege of me depositing cash into a business account

[AZVendor]

Shop around.

[terry]

it's kind of funny I can make business acct. that just does credit and debit for free, but if I want to deposit cold hard cash it costs me $

[orsd]

Remember in Canada the banks charge more than in the US... Checks are like .80 per.

[terry]

Those numbers aren't going to work and here's why:

 

Snack sales are generally going to be lower than soda sales at about a 40:60 ratio.  If you collect $180 out of a soda machine, you should see roughly $120 out of a snack machine.  This is a GENERALLY good ratio...   For the sake of making things easy though... we "say" that Soda accounts for around 60% of sales while snacks account for about 40% of sales.  Technically, the ratio (soda:snacks) is 3:2 when you condense it down but that might be a bit confusing so 60%/40% is a much easier pair of numbers to work with.

 

With that said, this ratio is VERY general and it applies to sales across the board when you are a full-line company with many accounts.  When you start off small, your numbers can be far away from this ratio.

 

Also, those average vends per week are meaningless.  Considering the source of the numbers (Vending Times), it is fair to assume that those numbers came from surveys done by larger companies who actually track quantities of items they sell.  Companies of this size are often selling a large quantity of bottles in addition to cans and their snack sales come from multiple sizes of chips, candy, pastries, cookies, and various other snacks.  It simply doesn't make any real sense to take those stats (160 vends per week for soda machines and 172 vends per week for snack machines) and plug in chips for $1.25 and cans for $1.00 since there are SO many other snacks/beverages that are part of these statistics.

 

Moving on, let's assume that those 160 vends per week were a mixture of 35% bottles and 65% cans.  Here in the states, we might purchase a 20 oz bottle of coke for 80 cents and sell it for $1.35 (I am just giving a wild estimate of an average cost to sell a bottle out of a vending machine).  We might also buy a can of soda for 35 cents and resell it for 75 cents.

 

So.... 35% of 160 is 56.... 65% of 160 is 104  Out of 56 bottles, we collect $75.60, pay $44.80, and profit $30.80.  Out of 104 cans, we collect $78.00, pay $36.40, and profit $41.60.  So in the total 160 vends, we collected $153.60 and profited $72.40.

 

Out of the snack machines, just assume a 100% markup in general as some things yield more profits than others and it is very difficult to keep things perfect.  Using the $153.60 figure used earlier (the amount we collected from 160 vends), we can assume that the snacks would account for about $102.40 in gross sales (amount collected).  So this would mean that we might profit around $50 from the snack sales alone.

 

This means that, using those same "vends per week" stats that you gave us, I would assume one soda machine and one snack machine would generate about $120 in weekly profits.  Here is the OTHER problem though.  160 vends per week = 6.5 cases per week.  While this is a good account, it doesn't exist everywhere.  In my area, you would need to find either an office with about 200 employees that utilize a single break room and ONLY a snack and soda machine.. or a blue collar location with anywhere from 50-100 employees depending on the environment they work in.  These are pretty big accounts and blue collar locations like these often want food as well.  Offices might want a coffee machine or OCS (and OCS is good, but coffee machines can be a pain).

 

My point is that it sounds like you might be looking at these "averages" and simply assuming that placing two vending machines at a location is going to give you a profit of almost $250 per week after COGS.  That simply isn't the case.  I would say that, on average, us small vendors are lucky to profit $50/week on average locations before taxes and other overhead costs are taken out.

 

So.. In summary... I will tell you that those statistics that you used from the Vending Times are absolutely useless for you and anyone else for that matter.  It's more of a "did you know?" stat that is completely biased and probably based off of large companies that are big enough to report everything that comes into and out of their inventory.

Here is what you DO need to know:

 

For white collar locations (offices and people who sit idle most of the day, have access to long lunches, and work in climate-controlled facilities), expect your sales between SNACKS AND SODA to be about $1.25 per person PER WEEK.  An office with 30 people should generate between $35 and $40/week between SNACKS AND SODA COMBINED.  Yes, it sounds low, and it is.  This is true vending.

 

For blue collar locations (factories, warehouses, distribution facilities, hot places in general, places where people PHYSICALLY work a lot), expect anywhere from $2.00 to $4.00 per person PER WEEK.  If you see a facility with 30 BLUE COLLAR workers who work 50-hour work weeks in a warehouse that often gets about as hot as it is outside, they have a 30-minute lunch, and the nearest food place is 15 minutes away, you can expect a place like this to yield closer to $120/week between SNACKS AND SODA COMBINED.  That's because they might rely on the vending machines for much of their lunch, and they'll be thirsty throughout the day too.  I have a little gem in my area with about 15 employees... about 4 in the office and 11 in the warehouse.  This location generates about $80/week every week.  They will probably get closer to $100 in the hottest weeks of the summer, and I'm told that two people in the office barely buy anything.. so between about 13 people, I am generating about $6.00 per person every week.  

 

Blue collar locations is what you want to have, but large offices can do well too if they are big enough and don't demand EVERYTHING imaginable.  Some office people (corporate offices, law offices, etc..) feel like... because they are "so special" in what they do for a living... they deserve every perk that vending has to offer (ie. credit card readers, drop sensors, bottles instead of cans, food machines, coffee machines, etc...).  And, again because they are SO special, they feel like.. because their organization is such a hot-shot organization that can usually get products and supplies for cheaper than smaller organizations can, they should be entitled to have lower prices than other places too.  What they fail to realize is that their corporate office of 20 employees won't generate any money for vending at all.  The sucker that decides to put a vending machine in their office will be stuck with dealing with expired products, customers who have NOTHING to do all day but complain about how they don't see their favorite candy bar in the machine, and complain further about how that favorite candy bar that you put in the machine 9 months ago has expired already and you should take it out and put a fresh one in because it's their favorite and they would probably buy it one day... within the next 10 years.... but hey, they are corporate people and you should respect them because of it.

 

RANT OVER.

ok so they weekly numbers you are talking about is that gross or profit

[RJT]

One main thing left of the list is labor. What is your time (or an employee) worth? You still have to factor that in and then see what "profits" are left over after that. If you can't see an actual profit after all expenses and labor you will NEVER be able to grow enough to hire someone.  

[moondog]

it's kind of funny I can make business acct. that just does credit and debit for free, but if I want to deposit cold hard cash it costs me $

That's not exclusive to Canada.  Down here many banks start charging a fee if you deposit more than $2,500 per month.

[terry]

One main thing left of the list is labor. What is your time (or an employee) worth? You still have to factor that in and then see what "profits" are left over after that. If you can't see an actual profit after all expenses and labor you will NEVER be able to grow enough to hire someone.  

My problem is I need to forecast some kind of numbers to the bank. From what I see here there isn't enough money in this business to warrant the cost of a new machines

[Jimoutside]

That's not exclusive to Canada.  Down here many banks start charging a fee if you deposit more than $2,500 per month.

I've got a REAL easy solution to that problem. . . . . LOL

[RJT]

My problem is I need to forecast some kind of numbers to the bank. From what I see here there isn't enough money in this business to warrant the cost of a new machines

 

Not so, it depends on the accounts. You can have new equipment (or they wouldn't make new equipment) it just has to cash flow. With new equipment account selection is more crucial but also can be problematic even with used equipment if you have bad accounts. I know plenty of vending operators (including myself) that either run new of factory refurbished (like new) and finance the equipment with no problems.

 

Matter of fact if the accounts are good enough and an existing vendor has older equipment in it I will offer up new equipment as an "incentive" for them to switch to my company. Many of my consulting clients and other vending operators use the same tactic with much success.  

 

Just wondering why you are trying to get financing from a bank? Why not get financing from a one of the vending machine companies that does in house financing or one of the leasing companies that specialize in vending operators. 

[terry]

Not so, it depends on the accounts. You can have new equipment (or they wouldn't make new equipment) it just has to cash flow. With new equipment account selection is more crucial but also can be problematic even with used equipment if you have bad accounts. I know plenty of vending operators (including myself) that either run new of factory refurbished (like new) and finance the equipment with no problems.

 

Matter of fact if the accounts are good enough and an existing vendor has older equipment in it I will offer up new equipment as an "incentive" for them to switch to my company. Many of my consulting clients and other vending operators use the same tactic with much success.  

Just wondering why you are trying to finance through a bank? Why not finance through one of the machine companies or leasing companies that have in house financing for vending operators? 

Just wondering why you are trying to get financing from a bank? Why not get financing from a one of the vending machine companies that does in house financing or one of the leasing companies that specialize in vending operators. 

Its the % on their financing I can get 5.5% with my bank instead of 12% to 29%

[terry]

I am recently Widowed (she's dead to me lol) I kept the kids so I have to quit my 75K a year job to stay at home for my boys. I need to find an income that will keep me home for them and pay our bills. I like the concept of vending because its not 5am till dark, it has no receivables and I get to choose when I start work.

[RJT]

Its the % on their financing I can get 5.5% with my bank instead of 12% to 29%

 

I understand but getting financing from a traditional lender like a bank is very hard for vending. Second I wouldn't worry so much about the % rate and worry more about the payment. Nothing says you can pay it off early if you choose and save you some % that way. Normally I always worry about % (in my personal life) but when it comes to business I look at cash flow no matter what the % rate is if it makes sense. Ever watch the show Shark Tank? Ever see some of the deals they make? Yes, they are dealing with "sharks" but the sharks want the business to succeed because that is how they get their return on their investment. Sometimes in business you have to look at it from a different angle. 

[terry]

I have already talked to the bank they are willing to jump aboard but first I need business plan with cash flow #'s and income projections this is why I'm asking these questions. I understand in vending its all about location, location, location but there must be an average of lets say 10 drink machines and 10 snack machines will in a day, week, month..... that is why I joined this forum you guys have the experience that I do not have yet.

[RJT]

I am recently Widowed (she's dead to me lol) I kept the kids so I have to quit my 75K a year job to stay at home for my boys. I need to find an income that will keep me home for them and pay our bills. I like the concept of vending because its not 5am till dark, it has no receivables and I get to choose when I start work.

 

Not true at all. Vending has plenty of "receivables" because essentially all that product in those machines is on "credit" to the machines till it is sold. Not like "receivables" in the traditional sense but similar. It is like a big consignment machine waiting for someone to buy something.

 

Second depending on how you set up your business and types of accounts you have you can not choose when you work. Yes it is very flexible but it also it can be demanding because of service calls and if the account calls and says we are out of something you will need to be flexible enough to get it done in a timely manner. Also some accounts set a requirement when the want the machines worked (before first break) which could mean early morning.

 

Now, that doesn't mean you have to do business with these types of accounts but it will limit who you can do business with.  

[RJT]

I have already talked to the bank they are willing to jump aboard but first I need business plan with cash flow #'s and income projections this is why I'm asking these questions. I understand in vending its all about location, location, location but there must be an average of lets say 10 drink machines and 10 snack machines will in a day, week, month..... that is why I joined this forum you guys have the experience that I do not have yet.

 

Sorry no "average" exist in vending because it can vary so much from account to account. No true average exist that can be put on paper.  What you need to show your bank is what averages it will take to cash flow correctly and that can be achieved with proper account selection based on required cash flow. You can have accounts that do $9k a week or an account that can do $50 a week. 

 

My averages is going to look a lot different than another company and in many cases on this very forum my averages do look much different. I want/need my averages to be a minimum of $100 per week per machine. This is because this is the cash flow I need to run my business and pay my expenses with money left over for "profits". Next guy may be perfectly ok with a $50 a week average per machine. 

I saw in your other post you have "budgeted" for 10 new machines. What brand machines are you looking at? 

[terry]

Not true at all. Vending has plenty of "receivables" because essentially all that product in those machines is on "credit" to the machines till it is sold. Not like "receivables" in the traditional sense but similar. It is like a big consignment machine waiting for someone to buy something.

 

Second depending on how you set up your business and types of accounts you have you can not choose when you work. Yes it is very flexible but it also it can be demanding because of service calls and if the account calls and says we are out of something you will need to be flexible enough to get it done in a timely manner. Also some accounts set a requirement when the want the machines worked (before first break) which could mean early morning.

 

Now, that doesn't mean you have to do business with these types of accounts but it will limit who you can do business with.  

Ok I agree with the consignment concept. I and equipping my machines with remote monitoring so I can set my route accordingly. I will know how much cash is in machine what products it sold and so on. before I leave my house  

[RJT]

Sorry no "average" exist in vending because it can vary so much from account to account. No true average exist that can be put on paper.  What you need to show your bank is what averages it will take to cash flow correctly and that can be achieved with proper account selection based on required cash flow. You can have accounts that do $9k a week or an account that can do $50 a week. 

 

My averages is going to look a lot different than another company and in many cases on this very forum my averages do look much different. I want/need my averages to be a minimum of $100 per week per machine. This is because this is the cash flow I need to run my business and pay my expenses with money left over for "profits". Next guy may be perfectly ok with a $50 a week average per machine. 

I saw in your other post you have "budgeted" for 10 new machines. What brand machines are you looking at? 

 

In case you missed this post. 

[terry]

Sorry no "average" exist in vending because it can vary so much from account to account. No true average exist that can be put on paper.  What you need to show your bank is what averages it will take to cash flow correctly and that can be achieved with proper account selection based on required cash flow. You can have accounts that do $9k a week or an account that can do $50 a week. 

 

My averages is going to look a lot different than another company and in many cases on this very forum my averages do look much different. I want/need my averages to be a minimum of $100 per week per machine. This is because this is the cash flow I need to run my business and pay my expenses with money left over for "profits". Next guy may be perfectly ok with a $50 a week average per machine. 

I saw in your other post you have "budgeted" for 10 new machines. What brand machines are you looking at? 

I think the wholesale said they were AP'S the manufacturer is in the states they have been in business for 85+ years the machines are night and day to anything else he had in his warehouse.  

[RJT]

I think the wholesale said they were AP'S the manufacturer is in the states they have been in business for 85+ years the machines are night and day to anything else he had in his warehouse.  

 

Nothing wrong with AP (nice machines) but they are no longer produced because Crane bought them out and stopped production a few years back. 

[orsd]

New APs have less parts availability than the older ones (7600).

5 of those with the new revision doors or UCB's and you got a machine with all the remote features cc card reader for a fraction of the cost in a more durable cabinet.

Complement that with Dixies or Royal pop machines and you got a rockin route.