Micromarket Opportunity

[Chris B]

New to the site and looking for some advice. I’ve been doing vending machines for about a year but recently had a potential new account ask me for a Micromarket. I haven’t ventured into this space yet so wondering if this would be a good entry into it. They are a 4 story multi tenant office bldg. Currently around 400 employees working for various companies that rent space in the building. 2 tenants are call centers. VA is putting in an office with 30 employees and about 300 visitors a day. Have a space they’re renovating to turn into a break room/lounge area and that’s where they want the space, about 600 sq ft. I priced out the cost to put a micromarket in there and I’d be looking at about $10k investment. They want commission which I told them would max out at 15% gross sales at the highest sales performance tier. I’m trying to figure out what kind of sales activity I would see in this kind of location if anyone else has put a micromarket in a multitenant office bldg before?

[lacanteen]

It sounded great until you introduced the 300 visitors. Micromarkets are for employee only locations where they set up an account to use the market, not pay as you go. Outsiders will introduce too much shrinkage.

[AngryChris]

So basically, you want to install a micromarket in a location with 30 office workers and supposedly 300 visitors each day.  The 30 office workers hardly justify vending let alone a micromarket.  As for the visitors, i don't know how much usage you would get but i wouldn't put much faith in sales from visitors.  It sounds like a bad deal for you.

[PerformaVending]

So it's a 4-tennant building, where does your space factor into this? If you're front and center, or in an area all the employees from the various businesses have to pass through or near, it might be worth it. If this area is only really accessible to the VA and it's visitors, then you're looking at a completely different demographic.

$10K is a LOT of money to invest in one stop. If this one is make or break based on "visitor" traffic, I would be leery to invest.

All the same, if you could elaborate further, there might be other options that we haven't considered yet.

Whatever you do, good luck!

[lacanteen]

4 minutes ago, AngryChris said:

So basically, you want to install a micromarket in a location with 30 office workers and supposedly 300 visitors each day.  The 30 office workers hardly justify vending let alone a micromarket.  As for the visitors, i don't know how much usage you would get but i wouldn't put much faith in sales from visitors.  It sounds like a bad deal for you.

He had me with the 400 employees until the VA moved in with 30 and visitors.

[AZVendor]

Vending machines only.  The transient population may not buy and your security won't prevent the theft.  There is virtually no commissions paid by most operators on Micromarkets due to the shrinkage.  The Micromarket is a perk and a service provided to a fixed base of people.  Most locations appreciate the improved selections and the high tech ability to buy that keeps their employees on the property over the commission they no longer get from vending machines.  I'm not saying to install $10K in vending machines instead and pay 15% either.  Don't give in to the building management and if they are dead set on a Micromarket then you need to let them do that with someone else.  You don't need this to be your first one that ruins it for you.  Find a location that will allow you to be successful instead.

Get the vending machines in the tenants breakrooms instead.

[Southeast Treats]

I would turn this down quick, within your first week all your product would be shoplifted and the building management would still want their commission/rent.  Multiple employers, visitors... may be an excellent vending location but never a micromarket.  And 15% may be viable after a year or two but starting up I would not go that high first year because of equipment costs.

[Chris B]

8 hours ago, AngryChris said:

So basically, you want to install a micromarket in a location with 30 office workers and supposedly 300 visitors each day.  The 30 office workers hardly justify vending let alone a micromarket.  As for the visitors, i don't know how much usage you would get but i wouldn't put much faith in sales from visitors.  It sounds like a bad deal for you.

There are 400 employees already in the building that work for the various companies that lease space in there. The VA is moving into a space on the 4th floor. They have 30 employees and are expecting about 300 patients per day coming into the facility to visit medical staff. Thanks for the advice, I appreciate it. I'm trying to get some feedback before I decide to take it or not.

[Chris B]

9 hours ago, lacanteen said:

It sounded great until you introduced the 300 visitors. Micromarkets are for employee only locations where they set up an account to use the market, not pay as you go. Outsiders will introduce too much shrinkage.

Thanks. I've been in multi tenant office buildings before with micro markets but they had top tier, fortune 1000 type clients there. This building has smaller companies, independent insurance agents, call centers, etc. Some white collar but also some hourly employees so wasn't sure about security aspect. The property manager said that they were going to probably put in security cameras with signage and I was going to install an extra camera in addition to the one that comes in the kiosk. Based on the comments though I'm getting second thoughts. May just propose  a bank of 3-4 machines....

[Chris B]

8 hours ago, PerformaVending said:

So it's a 4-tennant building, where does your space factor into this? If you're front and center, or in an area all the employees from the various businesses have to pass through or near, it might be worth it. If this area is only really accessible to the VA and it's visitors, then you're looking at a completely different demographic.

$10K is a LOT of money to invest in one stop. If this one is make or break based on "visitor" traffic, I would be leery to invest.

All the same, if you could elaborate further, there might be other options that we haven't considered yet.

Whatever you do, good luck!

Thanks. No, it's 4 story, multi tenant, probably about 20 companies in there. There is a main area near the front entrance where they are making the space a breakroom area for the building with tables and chairs and some sort of vending option. They have also said that they will post signage around the building directing people to the space since it's on the bottom floor, and they have committed to sending out an email to everyone notifying them of the new vending space, since they said they get requests all the time for vending options. I also said that I would do a launch event when we open to help drive visibility. They also want to do OCS. I was looking at a K-Cup tabletop vending machine and Keurig Brewer for that. Honestly the $10K startup price scared me and made me make this post. For that kind of cost I need more assurance of my ROI....

[Chris B]

8 hours ago, AZVendor said:

Vending machines only.  The transient population may not buy and your security won't prevent the theft.  There is virtually no commissions paid by most operators on Micromarkets due to the shrinkage.  The Micromarket is a perk and a service provided to a fixed base of people.  Most locations appreciate the improved selections and the high tech ability to buy that keeps their employees on the property over the commission they no longer get from vending machines.  I'm not saying to install $10K in vending machines instead and pay 15% either.  Don't give in to the building management and if they are dead set on a Micromarket then you need to let them do that with someone else.  You don't need this to be your first one that ruins it for you.  Find a location that will allow you to be successful instead.

Get the vending machines in the tenants breakrooms instead.

Thanks. I appreciate the feedback! I'll probably take your advice and recommend vending machines or nothing.

[Chris B]

5 hours ago, Southeast Treats said:

I would turn this down quick, within your first week all your product would be shoplifted and the building management would still want their commission/rent.  Multiple employers, visitors... may be an excellent vending location but never a micromarket.  And 15% may be viable after a year or two but starting up I would not go that high first year because of equipment costs.

Thanks. I proposed a tiered model of 10% if gross sales hit $800, 15% if gross sales hit $1200+, 0% if less than $800. Would you still say no deal on the commission even w/ performance guarantees?

[AngryChris]

Sorry, when you mention a break area immediately after mentioning the VA moving in with 30 employees, it reads as though the micromarket space is only for the VA tenant and its visitors.

Regardless, it seems as though you could potentially have a significant theft problem.  I know of vendors who hate doing micromarkets because of the disputes between them and management over theft (shrinkage).  With vending machines, you can still offer a lot.  To my knowledge, 10k for a micromarket is on the low end.

[Southeast Treats]

If that is monthly sales you should be ok commission-wise.  Be sure to set prices with that expense in mind so you don’t end up just giving away the farm.  Get a good set of machines and equip them with cashless.  

Also, do you know if any of the current tenants have their own vending already?  That will have a great impact on potential sales.

[Chris B]

36 minutes ago, Southeast Treats said:

If that is monthly sales you should be ok commission-wise.  Be sure to set prices with that expense in mind so you don’t end up just giving away the farm.  Get a good set of machines and equip them with cashless.  

Also, do you know if any of the current tenants have their own vending already?  That will have a great impact on potential sales.

Absolutely. I have Greenlite on all my machines. I was told that none of the tenants currently have vending.