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yousef

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 Greetings everyone,

I am glad that I found this forum. 

 I am looking to start a micro business in vending snacks and beverages. Looking for a vending machine that is

1- reliable and easy to maintain

2- cashless

3- with a self operate and program guide

Would you please suggest brands for me?

Thanks and Regards,

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Welcome to the forum and to vending!  Be sure to read back over the older posts, there are a lot of good recent threads about starting vending in general.  Most modern machines of domestic manufacture are reliable, and cashless is available for any newer machine with an MDB (multi-drop bus) line for the validator and changer.  You can go all cashless but that is not the norm anywhere yet that I am aware. 

Some specifics about machines:

Most operators avoid combination machines - that vend both snacks and cold drinks from the same unit - for good reasons.  While they are a good fit for some special situations, in general you have half the capacity, meaning you will service the machine twice as often for any given sales volume, driving up your overhead costs.  If the location is too slow for full size machines it is probably too slow to be profitable.  Also, many combo machines on the market are imports with poor design and even worse technical support. 

The main machine companies in the US are Crane National/ Dixie Narco; Wittern/USI; AMS; Royal, and Vendo.  If you are looking at used units you will see AP (Automatic Products) that has been absorbed by Crane, but they are still good.   Refurbed units can also be a good choice.  In general you fit a machine to a location, so you need to know a little about the kind of account you will have and the products you want to provide when you start looking at equipment. 

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USI is to Wittern what Lexus is to toyota. Wittern owns USI and most parts are interchangeable. Wittern is like the "premiere" line whereas USI is the standard line.  On the other hand, AP and national are owned by Crane.  Everything depends on the model and the condition of the machine, just like cars.

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Like Chris said, Wittern Group is the parent company, they market under a host of different names.  Some machines are made cheaper and there is a lot of variation between models.  A lot of their machines come without DEX, for example, which makes them a little cheaper until you want to have telemetry data, then you have to upgrade the machine.  Lately they have gone to a more standard control board they refer to as GVC.  Those still have multiple versions but they can be upgraded in the field if you have the upgrade tool.   Mostly they are good machines, and their tech support is very good.  If you call them with a serial number of a machine they made, they can usually pull up all the details of the build and tell you whatever you need to know.  What I don't like about them is their in-house financing, which is very expensive.  If you want to buy and finance new machines from them, watch out for "add-on" interest terms, it can add as much as 50% to your total cost.

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22 hours ago, Southeast Treats said:

Like Chris said, Wittern Group is the parent company, they market under a host of different names.  Some machines are made cheaper and there is a lot of variation between models.  A lot of their machines come without DEX, for example, which makes them a little cheaper until you want to have telemetry data, then you have to upgrade the machine.  Lately they have gone to a more standard control board they refer to as GVC.  Those still have multiple versions but they can be upgraded in the field if you have the upgrade tool.   Mostly they are good machines, and their tech support is very good.  If you call them with a serial number of a machine they made, they can usually pull up all the details of the build and tell you whatever you need to know.  What I don't like about them is their in-house financing, which is very expensive.  If you want to buy and finance new machines from them, watch out for "add-on" interest terms, it can add as much as 50% to your total cost.

Good info Southeast, thanks.

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Hello-

I just started my business (on paper) but don't have any accounts yet; the business is literally 2 days old.

I would like to start out on a tight budget: Pop machines (cans) only, with no credit card swipe. 

Anyone else here doing this successfully?

Also: As I am in Minnesota, if I purchase a pop machine from one of the companies mentioned above, do they ship it to me, or do I have to go get it?

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You're generally going to purchase equipment either from a distributor or from somebody locally that's just selling vending machines (but not a distributor).  Since you want to start off with cans, it is absolutely in your best interest to start with a cheap, reliable can machine or a slightly more expensive used bottle machine that's multiprice.  Getting an older can machine will usually be the cheapest route and those machines are usually very reliable.  You can get a professionally refurbished can machine for $600-$1,000 depending on the model, condition, and who's selling it.  A used bottle machine will run you anywhere from $800-$2,000.  The benefit to a more expensive refurbished bottle machine is that they are usually multiprice (meaning you can set the price on every selection individually, allowing you to sell a variety of products at different prices.. such as cans, monster energy, water, bottled soda, etc...).  The downside is that they usually cost more.  Can machines are often (but not always) single-price meaning you can only set 1 price for all products in the machine.  So if you want to sell cans and water, you have to sell everything for the same price.

The reason why you want to start off with something cheap is 2-fold.  Firstly, you want to make sure you're still into vending before you invest thousands of dollars into newer machines.  A new soda machine can run you $3,000+ for a traditional stack vendor (what you usually see) up to $6,000+ for a glassfront machine (where you can see the product through the glass and the product is delivered by a robotic delivery system, such as what's often seen at malls and other high traffic areas).  The second reason you want to start cheap is because larger accounts DEMAND snacks in addition to soda.  Even bigger accounts might demand food or coffee machines in addition to soda and snacks.  You simply cannot convince a large account to cancel their soda/snack service so you can provide only soda, and virtually no one is going to agree to service snacks so you can service the soda.  If you want to do soda only, you have to go for smaller accounts.

Having said that, it's a great idea to start off with cans only.  The best thing to do is to find places with 10-30 people where you can get away with offering cans only.  A lot of places such as automotive shops, tire shops, tool shops, and various other places with too few people for a snack machine but enough blue collar workers to sell some cans is what you want.  Also, ideally, you only want to stock about half the number of selections as there are employees.  if there are 15 employees, stock no more than 7 or 8 varieties.. but 5 varieties would probably be fine.  It's good to learn with smaller accounts because you'll get a feel for how things work and how people request stuff (which they sometimes buy and sometimes don't).  You just don't want to have your prices too high or too low.  Starting off, it may be worth while to sell a little cheaper.. such as selling cans for 65 cents, but 75 cents is great.  In many areas, people sell them much higher but not in my region.  The bigger matter is to allow for some cash flow and learn the business without spending too much.  If you want a BALLPARK average for how much you can expect to gross, figure $0.75 for every employee that is ON-SITE per week.  So if a location has 25 employees but 10 are drivers, then account for the remaining 15 employees and multiply that times $0.75, which is $11.25.  If you add snacks, you can double that.  If you sell bottles instead, then it's even more, but that doesn't mean you should sell bottles or snacks at these locations due to expiration dates.  Just figure 10 people at 75 cents per person.. which is $7.50/week or about $32.50/month.  In all fairness, you can make more than this with thirsty employees so try to find places where it's hot and they have no access to other beverages.  Can profits are about 50% of what you collect.. so if you find a good location where you collect $100/month from a can machine, then you can expect $50/month in profit or about $600/year, which would be an excellent location.

There are far more variables and formulas that I use when estimating revenue, but you're just starting out.  The bigger point is that you should consider things.  An office with 20 women might hardly sell $10/week in sales, whereas a hot tool shop with 15 men might do as much as $30/week in sales.  Everything is relevant but you need to get your feet wet before you try moving onto the big stuff.  Mind you, you WILL have problems with stale products once you get into snack machines, but it's a necessary issue unless you land a large account.  Vending isn't easy, but it's good to get the ball rolling and to make sure you actually enjoy it before you spend too much money.  There are FAR more vendors out there than people realize, and I would say the vast majority of them have less than 12 machines and come and go into the industry regularly.

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Wow.  I can't believe this advice is free!  Thanks so much for this response.

A little discouraging though, to read how low the revenue estimate is for the type of account I would need to target with an older can machine.

What do you think about this craigslist ad to jumpstart the business; anything to be leery of here?

https://minneapolis.craigslist.org/csw/bfd/d/minneapolis-vending-route/6223406482.html

 

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17 minutes ago, MVS said:

anything to be leery of here?

YES!

Look, I understand their business model, but it is not a cost effective way to get into an industry you may not like going forward.

Basically they are offering you a contact with a local bottler and phone locating for 10 bottler owned machines.

If this goes badly you are out all the money you 'invested' and have no tangible assets. The locations are not guaranteed to be yours forever, and the machines are owned by that bottler.

There will also be conditions on product purchasing (minimum cases per machine per week) which means you cannot buy the cheapest product and may have to buy more than you can sell.

DIY with one or two cheaper machines is a better start, locate them yourself, and reinvest income into newer machines/better locations (generally the 2 go together) as you can. 1 or 2 machines won't make you rich, by the time you get to 8-10 machines you'll know the business and have assets you can sell (machines either by themself or on location) if you need to get out. Like everything else in business it's a numbers game, more machines should make a decent income, at which point start trying to lose your worst accounts and acquire better ones

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Hello Falls-

 

More excellent insight; thank you so much!

If I understand the pro's/con's, do they basically amount to these:

Pro's:

-jump-start business and revenue intake; no service costs; no moving expenses or need to purchase moving equipment; presumably the bottler will be able to document revenue streams for the locations being picked.

Con's:

-Pretty much in it for the long haul, if I'm going to plop down $12k; may be obligated to purchase more product than I can sell; no tangible assets (i.e., bottler owns machines); uncertain how long I will be able to retain "ownership" of these accounts.

WIth regard to the Con's:

1) Will I be able to negotiate product purchases to make them compatible with documented product revenue/sales history?

2) Will I be able to negotiate how long I will retain rights in these accounts?

I have to admit, there is a certain value to me in not having to worry about moving and service costs, investing in moving equipment (e.g., truck with lift gate; pallet jack; specialized dolly; warehouse space to put all this stuff; etc), and getting an immediate revenue stream is also attractive.  

Do you think these perceived benefits mitigate the risks you mentioned, or would the risks you mentioned still outweigh the benefits?

 

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PS: I noticed the guy who posted the CL ad I supplied above also seems to be the same person who posted this ad (if it sheds any light into this opportunity):

https://minneapolis.craigslist.org/dak/bfs/d/vending-routes-for-sale/6232384852.html

He seems to use the same wording in parts of this ad as in the previous ad.

Also: His Minneapolis route pretty nearly matches the sale price in the other ad mentioned.

Any new thoughts with the two ads maybe showing the bigger picture?

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FInal note: 

I Googled the CL phone/contact number supplied in the ad, and apparently this company is a bona fide vending company (per Manta) in Minnesota (i.e., not a locator).

It was started in 2015, and Manta estimates it has an annual revenue stream of $52k (and 2 employees).

Now that we know this is not a "locator," does that affect/mitigate Falls' concerns in his original response?

Seems it is just a regular guy selling his business (but need to know why)?

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A "dedicated team member assigned to you for the duration of your purchase" doesn't sound to me like an individual selling his business. And the description of the equipment and sites you'd be getting don't sound like the way an individual would be describing his business. I think this is a company that manages to place some equipment and then sells you the stops and equipment at top dollar. They'll make more off each placement up front than you might make in a year.

Suggestion: maybe there is a way to approach a smaller company in your area which would be willing to work you a deal to sell you a couple of their smaller stops just to get you started - maybe a location or two that's out of their way or something. Maybe there are stops that are smaller than they care to get involved with or perhaps the owner is a one-man-band who isn't able to add anyt more business and he could refer them to you. You'd stand a much better chance of getting going that way than via a Craigslist ad.

Start your business out carefully and grow it gradually. It will take time for you to get a feeling for how things work in this industry. Don't spend a lot of money up front, don't spend more than you need to. Offer quality items and brands and keep the equipment properly filled, clean and working at all times. Don't get in over your head; take it slow and easy. And if there's sufficient traffic,  don't rule out credit cards. While I can't speak to the business angle, I know that as a customer I almost always use my CC because I seldom have or want to dig out coins or acceptable bills for a vending machine. No credit card reader, no sale. I don't know what the extra cost is of these but for sufficient traffic, keep an open mind.

One last thing, try to look like a business. Wear appropriate clothing and at least use a mini van with a magnetic sign on the door with your business name. Try not to look like you are working out of your garage, even if you are.

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9 hours ago, MVS said:

Hello Falls-

 

More excellent insight; thank you so much!

If I understand the pro's/con's, do they basically amount to these:

Pro's:

-jump-start business and revenue intake; no service costs; no moving expenses or need to purchase moving equipment; presumably the bottler will be able to document revenue streams for the locations being picked.

Con's:

-Pretty much in it for the long haul, if I'm going to plop down $12k; may be obligated to purchase more product than I can sell; no tangible assets (i.e., bottler owns machines); uncertain how long I will be able to retain "ownership" of these accounts.

WIth regard to the Con's:

1) Will I be able to negotiate product purchases to make them compatible with documented product revenue/sales history?

2) Will I be able to negotiate how long I will retain rights in these accounts?

I have to admit, there is a certain value to me in not having to worry about moving and service costs, investing in moving equipment (e.g., truck with lift gate; pallet jack; specialized dolly; warehouse space to put all this stuff; etc), and getting an immediate revenue stream is also attractive.  

Do you think these perceived benefits mitigate the risks you mentioned, or would the risks you mentioned still outweigh the benefits?

 

You will have to purchase startup inventory, so the revenue "jump-start" is mostly an illusion.  You will probably get new locations with no track record, if the bottler is already servicing it and it is worthwhile they won't give it away.  The company that wants to sell you this deal will find X number of new places to put the machines so they get their fees, even if all the locations are duds.  Moving costs are minor compared to trying to buy the DIY moving equipment, so don't worry about that.  If you are an established vendor you can usually get machines from a local bottler WITHOUT paying a middleman thousands of dollars to sell you something they don't own...

Bottlers will not negotiate with you; you are small fry, they will dictate to you and you will like it or else.  I have one right now chirping at me because I have "only" bought about 1,000 cases so far this year and it's about the same as last year...

You will be stuck with whatever promises the locator makes to get you in the door for as long as they made the promise.  Always better to find your own accounts and make your own deals.  It's hard for a small operator to get a location under actual contract, but if you provide good service your turnover will be pretty low. 

You will need somewhere to store inventory, even if it's your garage or a spare bedroom.  BUT, in many cities you can't get commercial deliveries in a residential area, so if you have to buy from the bottler you will need a mini-storage or somewhere to receive and store product. 

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Wow, I knew there would be things I didn't know, but I did not know there would be so much.

Particularly confusing is this new terminology of "locators" and "bottlers." 

Basically, a locator is someone who approaches a distributet, and says if you give me x locations, I can find someone to sell x amount of product?

If I have that much right, is it ever worthwhile to approach a distributer directly (I.e., without a locator), to cut a deal?

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A locator's only job is to find a location, hence why they are known as "locators."  A locator is essentially a salesperson who typically cold calls locations and tries to get you the lead so YOU can get the account.  Their terms vary but the general idea is that they get you a decent location and you pay them for "finding" the location.  You can totally do this yourself and many of us don't bother with locator services because they are almost never local and you can usually do a better job yourself.  Aside from that, the locator's job is nothing more.  Some companies may offer locating in addition to other services, but a locator just finds the location.  You're pretty much on your own from there.  Just remember that locators find locations for you to provide your vending services.

A bottler, on the other hand, is completely different and not related at all... nor is a distributor.  The bottler is essentially Pepsi, Coke, 7up (aka Dr Pepper/Snapple Group or DPSG), and whatever else is out there but those are the main 3 bottlers.  The bottlers are the ones that put the beverages in the cans or bottles.  Now.. let's leave it at that for now.... 

A distributor is a company that distributes the products to you OR has the products available for you to pick up.  Basically, the distributor is the company that sells the product to you.  Companies such as VSO, Vistar, Sam's Club, Costco, and others are places where you can buy goods at WHOLESALE prices.  Aside from Sam's Club and Costco, distributors typically carry stuff mostly geared toward resale, so almost everything you purchase there is made to be sold at a higher price somehow.  Sam's Club and Costco are stores that also sell retail items so they have things that don't apply to this (general grocery, clothing, etc...).  If you call Vistar for example, you can order 20 oz bottles, 12 oz cans, 1 oz chips, LSS chips, pastries, candy, etc.. and there are SO many selections.  They literally have hundreds of different items in their catalogs geared toward resale, most of which is used specifically for vending.  These places are distributors.

Wholesale.. in case you aren't familiar.. is simply a term used to describe an item that is intended to be resold later.  When you buy something "retail," you are essentially buying it as the consumer.  You have no intention of selling it; you are going to use the product for yourself (or family).  When you buy fast food, you are buying it retail.  When you buy a 20 oz soda from a vending machine, you are buying it retail and at the retail price.  When you go to a restaurant, that's retail.  When you go to the grocery store, that's typically retail.  It doesn't matter WHERE you get it or HOW MUCH you paid, if you are the consumer, it's retail.  The catch is that it's all a question of are you going to USE the product or RESELL it?  If you are going to resell it, it's wholesale.  So, if you go to Sam's Club and buy a variety pack of chips for yourself, that's a personal expense and not a business expense, and it's also a retail item now.  if you buy that same variety pack so you can sell each bag individually out of a vending machine so your customers (the consumers) can purchase it for retail prices, then it is now a wholesale item and it is a business expense.  If you understand the different between wholesale and retail, great.. moving on..

Here is where it starts to get confusing if you aren't familiar with the terminology or the industry.  The bottlers are often the distributor for their own products as well as a sort of middle-man distributor for machines.  You might call coke up (if you're lucky and your region is nice about 3rd party vending) and say "Hey, I would like to get a coke machine and sell some coke out of it." If you have your ducks all in a row, then they might lend you a soda machine with an agreement that you have to purchase x amount of soda from them every year...and it's probably north of 100 cases per year which isn't difficult if you have good locations.  So, Coca-Cola, the bottler, is now going to deliver a coke machine to you (or a location) at no cost to you but you now have to purchase soda from them.  You call them every 3 weeks and order 10 cases of coke products (as an example) and they come out and deliver it to you if your location allows for their trucks to make deliveries (they typically won't deliver to residential neighborhoods).  On the other hand, Coke might let you take over some of their locations.  The same deal applies regarding ordering a minimum number of cases but the difference here is that the machine is already on location.  So now they have essentially located a location for you and already placed a vending machine there and they act as your distributor by selling you soda.

If that all makes sense, excellent.  There is much to learn in the industry, but here is where it all comes crashing down.  EVERYTHING is relevant when it comes to distributors.  Your region might not have bottlers that are friendly to 3rd party vending (3rd party vending is where you use lease their machines at the cost of buying soda from them as discussed above.. the process is known as 3rd party vending).  They might not deliver to residential neighborhoods, meaning you'll either need some sort of business or commercially zoned building, or you might have to constantly meet up with them in a parking lot of a business somewhere to pick up orders.  They might have stricter requirements such as requiring you to order a minimum quantity of things you don't want.. such as gatorade or powerade.  They might have stricter minimums on deliveries (ie. you need to order at least 15 cases per order or they won't deliver).  They might not do 3rd party vending at all.  Every region is different.  On the flip side, you can call up a vending machine distributor (which usually only sell vending machines) and buy a used machine yourself and stock it with cans that you can purchase at your leisure for probably cheaper than you could get from the bottlers.  For example, cans can cost over 33 cents when purchased directly from Coke or Pepsi, but I pay a little over 27 cents per can from Sam's Club for Pepsi and Coke products.. that is a HUGE difference, but I had to purchase my equipment and pay for all repair costs myself.

My advice for something just starting is usually always the same... start off with a can machine or two (make sure they work properly) and find a couple locations and get your feet wet.  You can get cans of soda at 2am from Walmart on a Sunday if you need to, whereas you need to order by a certain time and date in order to receive an order on a certain date (and uncertain time) from the distributors.  Plus, if you own your own machines outright, there is no minimum orders.  You could go and pick up 5 cases of cans with your car.  Cans also last much longer than bottles do, which is the deal maker when it comes to low volume accounts.  Right now, my MINIMUM for an account doing bottles and snacks is $2,000/year.  If they can't make $2,000/year from bottles and snacks, they need to go.  I have several locations under that number that need to be canceled.  The reason for the minimum is that $2,000/year in bottle/snack sales equates to roughly $1200/year in bottle sales or less than 3 cases per month.  Since bottles really don't last long at all, selling only 3 cases in a month is horrible and requires extra labor to rotate product.  When you start out, you have no where else to put that product and it just expires, plus you have to order an entire case at a time and not just the 6 bottles or coke zero that you think you need.  On the other hand, my minimum for cans and snacks is $1,600/year.  That equates to roughly $800/year in cans or about 90 cans per month.  With cans, selling low volume can still work out.  You can even stock up on the high selling items such as mountain dew, pepsi, coke, and anything else you sell a lot of.  Back in the day, I would go to the grocery stores during the holiday sales and get cans at low prices.. my house was full of probably over 100 12-packs which lasted me maybe 3-4 months before I had to restock.  Nowadays, I think I sold the same quantity of cans this week alone.. if not more.  I push cans wherever it is realistic to do so.  Cans are also better when it comes to pricing because their prices don't change very often and, if they do, it's not by much.  Bottles are a whole different animal.

So there you go for today's lesson in vending terminology.

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Hello AngryChris-

You don't seem like an "AngryChris."

Thank you for taking the time to spell it out for a greenhorn.

VERY helpful.

Man, I sure was tempted to buy a route, but not a single experienced vendor on this forum had written in favor of it, and that speaks volumes.

1-2 pop can machines it is.

Am I able to ask what a good, reliable brand of used pop machines is, or should that go to another thread?

PS: Supposing I need to ask the same question about coins/bills only machines vs card swipe ;-)

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The most common can machines out there are probably Dixie narco 501T's and they are good machines as are totals and some other brands. Here's the thing... if someone asks a general population if a Ford F150 is a "good truck", you'll get a mixes of yes, no, and "it depends".  Vending is the same.  What you should do is re to find out where the nearest reputable vending machine distributor is, and start searching craigslist. Simply come here and tell us what you found and we can give you insight. The thing is that the condition of a vending machine is as important as the model or brand.  A piece of crap, rusted out 1995 f 150 isn't worth much.. neither is a rusted out dirty 501T, but that doesn't mean it's completely worthless. If it's clean, works perfectly, and looks nice, an old 501T can easily cost $600+. But even an ugly 501T that works properly can be worth $100.  

As for card readers... You really don't want to mess with that unless you're ready to move onto larger accounts. The cost for the reader alone is $300'ish, and that doesn't include the cost to upgrade the machine if necessary,  and older machines weren't designed for it. It's possible, but you're investing at least $500 just to be able to spend $300 on a reader AND pay monthly fees. That's something to think about when you know you want to go further into vending. Besides, for that amount of an investment, you could have simply gotten a later model machine that was designed for components such as a card reader without needing upgrades.

For now, you should just try to see if you can land accounts.  Just be straightforward. You're offering to place can machines and you might need to under bid the existing vendor. Use this simple formula... 70 cents per person per week for white collar (cans only) and 1.25 cents for blue collar. So, an office with 10 women might barely make $7/week but a tool shop with 10 people might do 12.50 per week. But, as to give you a real feel for the volatility of sales, here are a few examples of some accounts :

I have one location with 100 employees. About 25 are office and the rest are production. They generate a little over $200/week. That's about $2/person. Another location has 30 full time with about 40 temps that constantly change. In the last 6 months, they have averaged  $250/week.  Another location has 35 employees with about 20 in the hot warehouse. their sales have dropped to about $25/week.  Another location has about 7 in the office and 20 in the factory. They are doing $80/week. And finally, my most impressive location in terms of exceeding expectations.. a fabrication shop with about 15 employees. They do $75-$100/week.  All examples are snacks and soda combined. 

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