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When do you know it is time to move a machine


kaser100
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When I first started this route I was working with my son who was one of the owners at the time. The route had 20 machines and would bring in around $1200 every week. This was a year and a half ago I worked with him. In May of 2017 my son and his partner went to work for pepsi, and I purchased the business from them.  Due to some layoffs and business closings I now have 9 machines on locations. The amount I get from these machines has been falling fast, and I do not know why. I replace the inventory and check dates every month. I use the same inventory, but have been stuck with high out of dates due to the lack of sales. I cannot afford to keep these machines at these locations when I have to pay so much for the expense. Has anyone had this happen, and is it just our economy causing this ? My vending locations are all set up at small businesses with 12 to 20 employees.

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The businesses you have your machines in do not have enough employees to support vending machines.  In my experience, it takes at least 30 employees to make a location worthwhile.  Yes, I have a few smaller accounts like yours, but I also have 250+ employees accounts that make the bank.  Hit the bricks and try and find some other accounts.  Move the machines out of the dog accounts.  Otherwise, you'll be selling for pennies on the dollar.

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Kaser, welcome to the forum.  As Golfdogs said, those accounts are too small.  One thing you might learn if you haven't already is that it only takes a couple people to really bring in the money at a single location.  Literally, if one single person bought a can for 75 cents, a bag of chips for 60 cents, and a candy bar for $1.00 every day, that single person would generate you $2.35 in sales every day or $11.75/week.  Multiply that by 3 people, and you are generating $35.25 out of a snack and soda machine per week because THREE out of xx people buy 3 things every day.  What you also learn is that having a few of those people leaving the account for one reason or another.. it can dip significantly into your sales.. all because the right people are gone.  When you have 50+ people at a single account, the chance of this happening is much less, because there are more people and thus a greater chance that there are far more than just 3 or so big spenders.  Even if 5 people leave over the course of a year, 5 more new hires may just offset that loss.  Maybe all 5 new hires are big spenders, maybe they hardly buy anything.. but you have 45 more people there with an overall consistent pattern.  Basically, small accounts can make money but it all comes crashing down when the people who bought everything are no longer there.  The solution is to simply have better accounts.  

When I started, I had grown to something like 5 locations.  One was sheet metal place with something like 60-75 employees, but over half of those were delivery drivers and gone all day.  Another was a steel company that literally distributed sheet steel (totally unrelated to the other account) and had maybe 15 employees.  Another was a school with about 60 staff and over 100 students on site.  My 2nd best location was an office with an attached warehouse where workers would come and go.  It had about 15 people in the office and a regular flow of workers in and out of the warehouse... maybe 30 of them.  And finally, I had a small fab shop with 10 people.  Of those, you might be amazed to learn that the sheet metal place with 60-75 employees generated about $3,000/year, while the fab shop with 10 people was doing about $2,000/year at the time.  The steel distributor never did more than $1,600 in a single year from cans and snacks.  My point is that... although there are exceptions to the rule, generally you need dozens and dozens of people ON SITE before you make any money.

Starting last year, I began cutting small accounts out of my route.  By small, I mean they didn't produce enough money.  What I did is I estimated their annual profit based off of my net profit %.  With this, I came up with a few numbers.  For can accounts, I needed at LEAST $1,500/year (combined) for a can and snack machine with the snack machine doing at least $800/year.  Anything less than that and you have massive problems with stale products unless your snack machine is really small, which isn't worth your time anyway.  For bottles, I needed $2,000/year combined with the bottles doing $1,200 and snacks doing at least $800.  Anything less and you simply lose money unless you spend WAY more time than you should rotating product.  I probably cut 8 accounts last year alone.  This year, two of my smallest accounts are a small clinic that probably has 30 employees total and a janitorial distributor that probably has 12 employees.  Either location does about $1,300/year.  The ONLY thing that holds me back with either account is that I have had them for years, the machines are worth nothing, and I have no where else to put the machines.  Both locations have 24 selections of snacks at the most and BOTH locations complain about every little thing.  I have explained to them multiple times that they don't buy enough and there's always one person trying to tell me how I should run my own business.  It simply isn't worth doing BUT I would rather make a couple bucks every 3 weeks off of these locations than pay the mover to scrap them while the compressors still work in the soda machines.  I don't know what else to do with a rock-o-la or a national 474 that is only setup for snacks (16 selections).

Anyway, I have either lost or canceled about 16 accounts over the last 7 years.  Many of those locations were canceled because their sales were low and kept going down as people lost interest in what I stocked and/or badmouthed the machines for things that were often not even true (ie. the products are too expensive when they were well below my market's average prices).  I can't speak for your local economy, but around here in Dayton, a lot of places are hiring left right and center.  There seems to be a pretty significant hiring spree going on in most of the area with the exception of a few cities having big layoffs that seem to be more related to buyouts than a bad economy.  Your local market might be suffering, but you have to do your due diligence as a vendor to get more accounts.  If not, you'll suffer from your current symptoms.  You would literally make far more money if you took 2 good machines from a slow account (I mean good machines,  not okay machines) and you cleaned them up and set them up to be location-ready and hunted for a location with 50+ people.  If it's the right location, it could easily do over $150/week in sales.  A single location like that could really make you feel like things are turning around and perhaps give you the motivation to look for more.

From the sounds of it, your locations were either over-performing as it was OR you had a couple really good locations to get you up to $1200/week in sales.  You simply have to get the numbers back up by getting more accounts and CANCEL your slower accounts that keep having expired products.  If you have to check the dates every time you service the place, you need to get rid of that location and find a better location.  Also, if the machines are very old, then it may be worth scrapping them and getting something more up-to-date.  If all of this just sounds like too much work, it's time to sell out and move on.

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I agree the location does sound to small, but I do have a couple small locations also. I change product selections a lot though. If something doesn’t move in a week I’ll swap it out with something else, I put what didn’t move in a machine that it does sell in before the dates expire. 

I have had certain snacks I would eat all the time, but there was always an ending point, to the point of not eating again for months or even years. 

While your looking for a new location, try a different selection. Or put together a list of items you could get to put in it and leave a copy of it with them. Some locations LOVE having a list to pick from. 

I have an accumulated over the past couple years 600 items that have been in my machines. Not all the items on the list I can even find at the moment, and I tell them that some items aren’t and other are subject to availability at any given moment. 

 I have a card on all the machines saying that they can text me with the name of an item and their location and I will try to have it my next visit to the machine. I have one location that will text me what item they would like to swap out for another almost weekly/bi-weekly. Another location likes to leave me want notes on the side of the machine.

Good luck! I hope it works out for ya soon!

 

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