General questions on the bulk business

[AngryChris]

Hi everyone.  I'm pretty active in the full-line forum but I rarely lurk around in the bulk section here.  I have a full-line business already so I am not completely clueless on some of the things that go on in the bulk industry but I am just interested as the bulk vending industry seems like something I could easily and quickly invest into if I wanted to.  I had some questions that I hoped some of you could enlighten me on.

Firstly, as a general idea, approximately what kind of margins should I really expect?  50%? 60%? 25%?  I know there are a lot of variables but I am really looking for a realistic range.

Secondly, would something like a hatchback car be future-proof enough in the long run?  I've seen a lot of guides showing that people just use a simple vehicle and carry backpacks with just about everything they need in them so they can just walk in, service the location, and walk back out without making any second trips.

Thirdly, having brought up walking in and walking out, how quickly can you realistically service a location?  If it's anything like vending, servicing 2 heads would probably not take much longer than servicing a single head.  Is that correct?  Also, how many can you realistically do in an hour *IF* the locations are no more than about 10 minutes apart?  Obviously route density helps with time but let's use 10 minutes for the example.

Fourth, how low do you comfortably want the machines to get before restocking?  I believe I have read before that having a machine look low can cause locations to feel like they aren't being serviced (which makes no sense to me since there's still product in it).  Is 50% ideal? 30%?  Also, how much money would that roughly equate to?  The reason why I ask is because I don't know how service cycles should be figured out.  I like my snack and soda machines to be near 40% before restocking.

Finally, if I was to start from scratch, are there certain equipment I should stick with?  Beavers? Something else?  Which machines should I absolutely avoid?

I could easily start buying bulk machines but my time is getting limited so I don't know if I would be wasting my time bothering with bulk when my full-line business could get near 90k/year in income if I just expanded it quite a bit more.  I don't know if bulk could get anywhere near that.  It would be wasting my time if I couldn't grow a substantial bulk business, hire someone to service it, AND make a decent profit.

[Mehehe]

7 hours ago, AngryChris said:

margins should I really expect?

50-75% is typical for candy.  Gumballs are much better; cost .025 ea and sell for .25 ea.  

7 hours ago, AngryChris said:

hatchback car be future-proof enough in the long run

Plenty of people run out of a car/small truck/SUV the problem with all of them is transporting the machines and them not getting beat to hell.  But running the route its perfect.

7 hours ago, AngryChris said:

how quickly can you realistically service a location?

I shoot for a MAX of 5 mins per head; empty money, check mech and wheel, refill and clean.  Sometimes its more if I have to make adjustments or there is a problem but honestly a double head you can be in and out in less than 5 mins and still get all that done. I can usually get an average of 6 locations done in an hour if the density is good.

7 hours ago, AngryChris said:

comfortably want the machines to get before restocking?

For me bulk really isn't about how much is left in the machine, unlike Full-Line.  On a vast majority of locations filling the globe to the top is a bad idea, it could take a year for that entire globe to sell and that candy will be nasty.  I try not to go more than 3 months between servicing, so it is about putting just enough product in to make it those 3 months.  I like to tell the locations that, "I don't fill it because I want you to have the freshest product possible."  Yes, there are people on here that will say stopping every 3 months is a waste, I get that.  One of my best locations in a town that was an hour and a half away jammed after 3 quarters were put into it, I waited 3 months and lost out on what was typically a $50-$75 pull.

7 hours ago, AngryChris said:

certain equipment I should stick with?

With how big you are in Full-Line I doubt you would want to spend time refurbishing machines.  New machine brands are Beaver and Eagle.  Northwestern is still technically in business but they are owned by NEN the largest (i think) bulk and amusement servicing company is the US.  There are conflicting reports if they are selling complete machines, I know parts are being sold through distributors.  Beaver is great however... many people dont like the idea of the plastic body protecting the money inside.  I have a couple beavers, not as easy to service like the Eagle.  The bulk of my fleet is Oak/Eagle/AA, they are essentially the same machines with interchangeable parts, couple very minor differences.  All metal, easy to tear down and easy to service.  If I were to buy new machines I would call Eagle at 909-447-7866.  There is a member on here that has a website gumballstuff.com, its all used equipment but he has some location ready stuff and it would be cheaper.  Stands are still an issue though, heavy and bulky to ship.

7 hours ago, AngryChris said:

start buying bulk machines but my time is getting limited

What about just adding in some bulk stops between Full-Line stops?  Having employees in Bulk is getting harder with so many states going to a $15 minimum wage.  The industry standard/minimum is $5 per machine per month in gross sales from a bulk machine. I have locations that do less than that but they are next door to another location, so I am saving on fuel and drive time to make up for that.

 

There is my 2 cents, feel free to do what you will with it.

[gumball guy]

8 hours ago, AngryChris said:

Hi everyone.  I'm pretty active in the full-line forum but I rarely lurk around in the bulk section here.  I have a full-line business already so I am not completely clueless on some of the things that go on in the bulk industry but I am just interested as the bulk vending industry seems like something I could easily and quickly invest into if I wanted to.  I had some questions that I hoped some of you could enlighten me on.

My responses are based on charity/commission, candy/gumball bulk vending. Generally 1-3 head machines.

Firstly, as a general idea, approximately what kind of margins should I really expect?  50%? 60%? 25%?  I know there are a lot of variables but I am really looking for a realistic range.

30 to 40 percent for me (that's for the whole business). Like you said there are alot of variables and every year brings new challenges.

Secondly, would something like a hatchback car be future-proof enough in the long run?  I've seen a lot of guides showing that people just use a simple vehicle and carry backpacks with just about everything they need in them so they can just walk in, service the location, and walk back out without making any second trips.

You can use any vehicle you want especially when you are starting out. The problem with a car is laying out the product in a manner that makes servicing easy. You don't want to be digging or stacking and un-stacking at every stop or it will slow you down. It also depends on how big a route you're running that day and what kind of variety you offer. Extra parts, an extra machine or a picked up machine can further the space crunch. It is really no different than full line. You could use a pick up truck or an SUV for your full line route but the layout will be a challenge and as you grow you will need more space to run larger routes. A mini van with three points of access is a great vehicle for bulk vending.

Thirdly, having brought up walking in and walking out, how quickly can you realistically service a location?  If it's anything like vending, servicing 2 heads would probably not take much longer than servicing a single head.  Is that correct?  Also, how many can you realistically do in an hour *IF* the locations are no more than about 10 minutes apart?  Obviously route density helps with time but let's use 10 minutes for the example.

Charity is much quicker to service than commission for obvious reasons. Single head gumball takes about 3-5 minutes (Oak or Northwestern machine). Unlock, take the globe off, grab or dump the $$, replace or add gumballs, re-assemble, lock and clean. Factor in walking back and forth across the parking lot, managing inventory as you go and updating location info on a sheet, product card or electronically and 10 minutes is realistic from parking to leaving the location. Candy (triple or double head) takes longer with at least 10 minutes inside on average especially if you have to change out product. I can generally service 30 to 40 locations in a day (approx 8 hours running the route not including driving to the region). Commissions, equipment malfunctions, chatty customers etc... all work against you when trying to stay on schedule. Bringing replacement parts for a quick change out is a necessity if you want to be efficient.

Fourth, how low do you comfortably want the machines to get before restocking?  I believe I have read before that having a machine look low can cause locations to feel like they aren't being serviced (which makes no sense to me since there's still product in it).  Is 50% ideal? 30%?  Also, how much money would that roughly equate to?  The reason why I ask is because I don't know how service cycles should be figured out.  I like my snack and soda machines to be near 40% before restocking.

I try to fill the machine so it is full enough not to run out before I get back (generally 60-90 day cycles). If you overfill you will be throwing away a ton of product. Most places don't care unless it runs out or the candy stales. I will occasionally have a location call to let me know the machine is getting low but that is rare. If a location is consistently running out I will change to a bigger globe so it will last for the 60-90 day period. If it is a triple and one product is getting hammered every cycle I will devote two heads to that product until it eventually slows down then I switch it back. Out of cycle service calls are a profit and time killer so I do everything I can to keep the routes on their service cycles.

Finally, if I was to start from scratch, are there certain equipment I should stick with?  Beavers? Something else?  Which machines should I absolutely avoid?

I use Oak, Eagle and Northwestern equipment as much as possible but have 1-800, Vendstar, T-Pico along with some other off brands still on route. Vendstar, Uturn and basically any Chinese import should be avoided. I have never used Beaver but by most accounts they are an excellent machine. I talked to the owner of Oak last month and right now they are not selling any equipment in the US but that could change anytime. Northwestern is gone and Eagle is still up an running. Best bet is to search for quality used equipment in your area.

I could easily start buying bulk machines but my time is getting limited so I don't know if I would be wasting my time bothering with bulk when my full-line business could get near 90k/year in income if I just expanded it quite a bit more.  I don't know if bulk could get anywhere near that.  It would be wasting my time if I couldn't grow a substantial bulk business, hire someone to service it, AND make a decent profit.

You can make 90k a year (in sales) in bulk but it will be alot of work like anything else. You will probably need at least 800 to 1000 locations and time to constantly be reworking accounts to remove and relocate under performers. My advice to you would be to stay on track with full line and focus your energies there. The bulk world is shrinking. The internet has changed the landscape of retail so we are seeing less brick & mortar locations every year. As a result I am putting equipment in locations I would never have even considered 10 years ago. The profit/price point for gumballs is still solid but it is getting harder and harder to make money on candy at 25 cents. Re-tooling coin mechs is expensive and no one I know has successfully moved to a large scale 50 cent bulk candy operation (That I know of). Another big issue is coin. Young people today like cashless and this will continue to impact the bulk and full line vending business going forward. Full line operators can deal with this change.....bulk operators cannot. Banks are slowly moving away from handling coin in heavy quantities as well. I hate to sound negative but if I was to start in vending today it would be in full line or honor box. If you are looking for another revenue stream I would suggest honor boxes since you already carry all of the product that is needed and you can work out of your existing vehicle. Hopefully some of this info helps you and others. Good luck either way going forward.

 

[AngryChris]

Thank you both a ton!  This is very clear and useful information for me.  I think I understood everything fully.

I asked about a car because I currently have a full size cargo van used for full-line and it seems like a really bad idea to use it for bulk unless accounts are right next to each other, but I'm looking for a mostly passive setup which is why I asked.  I have no problem with the idea of paying someone $15/hour IF they are good and IF it's still profitable.

You bring up a great point regarding how bulk is a shrinking industry.  I actually used to do honor boxes but I got tired of the theft and I didn't have the time to go out and locate as I was focused on my full line.

Based off of what you guys have told me, it seems like I should stick with what I'm good at... Not because bulk isn't good, but because my infrastructure is already there and the business has finally made it over a big hump anyway as it is now generating a substantial amount.  And when I say 90k, I mean net operating income IF I continue to grow and work myself.  It gets difficult enough as it is.  There isn't much time to work with the mover or to devote to upgrades and things of that nature.  Bulk interests me because there shouldn't be a mover necessary or any timely on-site repairs from what I understand.  

I'll take your advice and stick with full line.  I really appreciate the time you both took to answer my questions.

[orsd]

Bulk candy sucks and is dying a hard death.

If you were to do bulk, toy racks and amusements would be the way to go. But they are work, locations can be as hard as full line to get, and you would need a whole different operational structure. While full line is all about locations close to home and visited often, bulk (if you are not in a major metro area of at least 1,000,00 population, will involve a very large radius of operations (lots of guys serving an area with a radius of hundreds of miles), visited every couple months. This, because it involves overnight hotel stays, does not work well if you are also doing full line. However, you could pick up a rack for cheap and just focus on your own city. Keep in mind that the net margins will be similar to that of full line. For instance, FL COGS is like 40-50%, commissions like 10-15. Total 50-60%. Bulk COGS is 25-20%, but commission is 25-40%, so still 50-60%. A decent full line location will probably allow you to collect 300-400 every time you visit and take about an hour to get there, a good bulk location is like 2-400. So labor is about the same. At the end of the day, you should only go for bulk if you cannot find anymore decent full line locations.

[gumball guy]

2 hours ago, orsd said:

Bulk candy sucks and is dying a hard death.

If you were to do bulk, toy racks and amusements would be the way to go. But they are work, locations can be as hard as full line to get, and you would need a whole different operational structure. While full line is all about locations close to home and visited often, bulk (if you are not in a major metro area of at least 1,000,00 population, will involve a very large radius of operations (lots of guys serving an area with a radius of hundreds of miles), visited every couple months. This, because it involves overnight hotel stays, does not work well if you are also doing full line. However, you could pick up a rack for cheap and just focus on your own city. Keep in mind that the net margins will be similar to that of full line. For instance, FL COGS is like 40-50%, commissions like 10-15. Total 50-60%. Bulk COGS is 25-20%, but commission is 25-40%, so still 50-60%. A decent full line location will probably allow you to collect 300-400 every time you visit and take about an hour to get there, a good bulk location is like 2-400. So labor is about the same. At the end of the day, you should only go for bulk if you cannot find anymore decent full line locations.

Toy racks are are faring worse than small candy set ups in my neck of the woods. The real problem, as you alluded to in your comment, is locating a rack. I can set single, double and triple set ups 50 to 1 over racks and as a result have fazed out racks over 4 heads for that reason. So many of my locations just don't have the room or the traffic to support a rack either. I'm sure there are still great rack locations out there but they are becoming harder and harder to find so I would rather break em down and get the machines out then have a rack sitting in storage,