mwinn33 Posted January 6, 2009 Share Posted January 6, 2009 Can someone offer advice about how you make the decision to place a single, double or triple head at a location? Do you start with a single and if it does well, move up to a double? Or the other way around - start with a triple and move down? My thought when I started, which wasn't very long ago, was that triples are better since it gives more options. Even though one candy may not do very well, it will at least capture some customers who don't like the other 2 and make a sale rather than not. I'm not considering quads and 8s at this time so I'm leaving those out of the equation. Link to comment Share on other sites More sharing options...
bacho Posted January 6, 2009 Share Posted January 6, 2009 I started with triples in most of my locations. I switched out the slow moving candy every month. If only two products were the big seller, I replaced it with a double and relocated the triple. It gives me an idea of what is going to sell in each location. Link to comment Share on other sites More sharing options...
philo Posted January 6, 2009 Share Posted January 6, 2009 Unless I'm sure of the locations traffic I start with a single head. If it proves to be a good location I bump it up to a triple. I usually leave the single for 3 months before deciding to make the change. Regards, Philo Link to comment Share on other sites More sharing options...
Bravo Duck Posted January 6, 2009 Share Posted January 6, 2009 The short answer is this number is a ratio based on the cost of goods and desired ROI. You should have a dollar figure that represents the minimum amount of sales that you will accept per month to continue selling a product at a location. You should have this number for every product that you sell. Lets take the two extremes, gumballs and Peanut MMs. Gumballs cost approx. .025c. I don't have the numbers in front of me but if memory serves me correctly my PMM cost is .10-.12c. Now lets take your equipment, hypothetically lets say it costs $200 to buy, ship, label, fill and locate a double headed machine and at the longest you want to get your money back in 16 months. Divide $200 by 16 and you get $12.50. This is the NET after COGS that you want. To net $12.50 selling gumballs you have to sell $13.75 worth of gumballs. To net $12.50 selling PMMs you have to sell $26.00 worth of PMMs. In a double, if both sides contribute equally you have to sell approx. $6.75 of gumballs and $13.00 worth of PMMs. So in this scenario $6.75 would represent your minimum level of sales for continued operation for gumballs and $13.00 would be the same thing for PMMs. If you put in a double and both sides are above your minimums, then try a triple with different products and see if you can find a third product that sells well and so forth. Conversely you can go the other direction and reduce heads if something is not selling well Link to comment Share on other sites More sharing options...
mwinn33 Posted January 6, 2009 Author Share Posted January 6, 2009 Tom, great response. Very helpful! How did you figure the dollar amount to sell in order to make $12.50 net? Link to comment Share on other sites More sharing options...
caserri Posted January 6, 2009 Share Posted January 6, 2009 Tom, great response. Very helpful! I agree and it got my first daily vote for POTD. Thanks Tom! Remember we all have 3 votes per day, use them wisely. Steve Link to comment Share on other sites More sharing options...
Bravo Duck Posted January 6, 2009 Share Posted January 6, 2009 Tom, great response. Very helpful! How did you figure the dollar amount to sell in order to make $12.50 net?For a .25c vend each penny of product cost = 4% of cost of goods. So a .025c product cost = 10% COG. 12.50 x 1.10 = 13.75. This works well for lower cost items but for higher cost items you have to compensate for the COG paying for COG, if that makes any sense. Link to comment Share on other sites More sharing options...
pdavid Posted January 6, 2009 Share Posted January 6, 2009 tstrong wrote: Lets take the two extremes, gumballs and Peanut MMs. Gumballs cost approx. .025c. I don't have the numbers in front of me but if memory serves me correctly my PMM cost is .10-.12c. How many do you give out to arrive at that number? Seems a little high?:? Link to comment Share on other sites More sharing options...
Bravo Duck Posted January 6, 2009 Share Posted January 6, 2009 How many do you give out to arrive at that number? Seems a little high?:? 8-9. Once again I don't have the exact numbers in front of me but this was just an example and its in the ballpark. It IS high. Its hard for us vendors to make money on PMMs except in high volume locations. If we have any significant spoilage it goes from hard to impossible. Link to comment Share on other sites More sharing options...
nepavend Posted January 7, 2009 Share Posted January 7, 2009 Mwinn33, I start nearly all of my locations off with a Assorted Gum/Assorted Toy Double. After the first one or two cycles I determine if I need to upgrade/downgrade/pull the spot based on revenue. I do this because gum/toys are my two most profitable products, have a long shelf life and give a pretty good indicator of the quality of the spots. An obvious exception to this are hot ticket spots like Chinese Buffets, I will immediately try to get at least a 4-way or 5-way rack in at the start with gum/1"toys/2"toys, and then if it performs add a 4x column sticker machine. Another strategy I will try is to put a candy in the rack to keep someone from coming in behind me with it. The biggest thing to remember when you are out there is you can't be afraid to pull crappy spots and try to get permission to upgrade spots doing well. You would be surprised how fast a $30-40 spot with a double can become the next $300-400 rack/sticker spot. Link to comment Share on other sites More sharing options...
Jax Snacks Posted January 7, 2009 Share Posted January 7, 2009 Once again, I agree with Joe. Vending is a guessing game and we never really know how any location will actually perform. Making adjustments (upgrades/downgrades) is crucial to maximizing profits and assuring your survival. So start somewhere in the middle (2 or 3 heads) and work your way up or down. However, be careful upgrading in charity spots, too many heads can spoil the charity image. Jax Link to comment Share on other sites More sharing options...
nepavend Posted January 8, 2009 Share Posted January 8, 2009 Good observation Jax, this is another shortfall of the charity vending strategy. By trying to avoid paying commission you have the other problem of limited upgrading potential when you do get a good charity spot. That is why I phased out a lot of my charity stops. I only have about 10-15 left that are halfway decent to viable with the Ronald McDonald House in my hometown, I think having a small local charity helped me out a little more. Getting back to the topic, since there are so many variables in vending, keeping with a uniform strategy is one way I think you must do to be successful, much like an investment strategy of dollar-cost averaging, you just keep putting machines out (like a IRA contribution) in relatively equal amounts over time and see what sticks and sweep up what doesn't. Sometimes, businesses take variables out of the equation, i.e., dance schools who don't want gum; it can end up on the floors, barber shops without a lot of kid traffic, or owners who just don't want one product or another, those are obvious exceptions. Link to comment Share on other sites More sharing options...
pdavid Posted January 8, 2009 Share Posted January 8, 2009 Joe, What commission rate do you pay out? I usually do 30% of the gross. Link to comment Share on other sites More sharing options...
nepavend Posted January 8, 2009 Share Posted January 8, 2009 I give anywhere from 0-30% gross sales in almost all cases, it is the easiest for owners to understand. I have the occasional stickler that wants half but I try to compromise at 40% gross or just say "thanks but no thanks." If you are doing candy it is much more difficult or impossible to do this and be profitable enough with the current situation discussed in other threads. If you can keep your total COGS (inventory & commissions) under 35% you will make money; or at least pay your debt, depending on your situation. At 30-32% total COGS you are whistling Dixie (hopefully). This is a lot more doable if you have high margin products (less than 30% COGS, i.e. gum/toys/2" toys/stickers). By having some decent charity or 0% spots you also lower your average COGS by not having commission or very little commission. With gum as my #1 item in 80% of my spots it drags the overall average COGS of the spot down toward the 20% range. Doing this business-wide figuring in higher cost toys and candy works to keep COGS in check. Link to comment Share on other sites More sharing options...
pdavid Posted January 8, 2009 Share Posted January 8, 2009 Thanks, I'm trying to get a handle on costs, but it's tough to get into good locations without paying dearly for them. Link to comment Share on other sites More sharing options...
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