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Questions & Ideas about starting an honor box route


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I've read pretty much all of the threads on this site about honor boxes and it's left me with several questions and a few ideas.

 

It's frequently discussed that you should do either snack boxes or mint/ candy boxes because the target demographic, and location for the boxes, is different.  I don't understand why you wouldn't incorporate both so that you could get a higher density route.  If you can place 5 snack boxes in a complex you might also be able to place 5 mint boxes in the same complex, but to retail locations where you wouldn't place a snack box.

You should also run across businesses where both types of boxes would do well.  A snack box in the breakroom for the employees and a mint box by the register for the customers.  This seems like a no brainer add on for the right customer.  The fact that you're already in that business with a snack box should make it incredibly easy to get them to add a mint box by the register or a bulk candy machine by the  door.

 

But most of the experiences, and recommendations, I read here are to specialize in one or the other.  Why not maximize your opportunity in an area and increase the density of your route allowing you to service more customers in less time with less driving?

 

 

 

 

There has been a lot of good discussion about what to put in the snack boxes.  Several of you have shared what amounts of each item, and different types of items, that you put in your boxes.  No one has mentioned selling anything other than food snacks.  I wonder why?  Wouldn't items such as  mini single packets of toiletry and health items do well? 

 

I've wondered about, in addition to the snack box, why couldn't you convince your customers to take an additional small box filled with things such as mini/travel size packets of:  Mouthwash, dental picks, lighters, aspirin,tylenol,cold medicine, tums, alka seltzer,allergy medicine, hand sanitizer, bandages, feminine hygiene, combs/brushes,  pony tail holders, and more.  There's a very long list of personal toiletry type items that employees/ and customers would utilize if they were right there to solve a problem.  All of these items have a very long shelf life so you'd have basically zero spoilage.

 

Creating a separate small box would make it easy to manage and you could price those items at a higher price of $2 and easily buy travel size items in bulk for $0.60-$0.80 each.  An employee or customer who needs any of the items I mentioned won't hesitate to spend $2 if they need it.

 

 

 

 

 

One of the biggest threats I foresee for this business is the fact that people are carrying less and less cash.  Coming up with a way that people can pay without cash would be great.  Of course this is a huge problem because you can't just add card readers or any other collection method.

What about Paypal though?  237 million people have Paypal accounts.  What if you had a sticker on the box with a scannable Paypal QR code, and a box #, as well as just listing your Paypal address?  People could scan your label with their phone and pay electronically via Paypal faster than they could go find a dollar bill, even more so if you're boxes charge an odd increment such as $1.25.  The only cost to the vendor would be printing the labels and instructions, along with a 2% paypal fee.  It might cut down on shrinkage considerably because someone who didn't have a dollar but "needed" that Snickers will almost certainly have their phone and ability to pay electronically with little effort.

The benefits of people paying w/ Paypal, assuming customers would adopt it, are great.  You'd have less shrinkage, money instantly deposited to your account, increased sales, and less work for you than dealing with physical cash.

 

Thoughts?

Edited by Deacon Blues
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You are complicating a simple business.  With honor boxes, simple is better.  Grow with quantity locations.  Notice I did not say "quality" locations.  You should average $20/box --- some boxes you schedule to pick up weekly (love those) and some may be two weeks or monthly.  The idea is to schedule it so that you pick up at least $20/box.  And, as your number of locations grow, then, you start grouping them by location and frequency of pickup.  Even if you only did 2 boxes per hour for an 8 hour day for 20 days a month; then, you make roughly $80,000 annually.  That's just doing 16 boxes a day.  Timing the pickup is critical.  Personally, I feel the higher the cost of the item for the consumer; the less likely to buy (and, of course, your cost of goods is higher).  I think the success of the honor box, is the low cost, donation to a worthy cause, and spur of the moment buyer.

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Thank you for the feedback.  

I'm just curious why no one offers non food items.  There have to be items that would sell well and there's no shelf life problem with them.   The other benefit is that many of the items I described are high value for the amount of space they take up

 

I'm not sure that placing a sticker on the boxes providing an alternative way for people to pay is really complicating things.  Has anyone tried it?  It would be basically free to implement.  It seems like it should reduce shrinkage.  Imagine how happy you'd be if it reduced shrinkage by even 5%.

 

Unless I'm misunderstanding some fundamentals of the business ,it seems a little misleading to me when you say "you make roughly $80,000 annually" using your example.  That's the gross right?  I've been following Bhumphery's thread here where he's detailed his results for about 4 yrs running honor boxes.  It seems he's netting about 47% of gross.  That means your example nets, or "makes", $36,000 annually right?

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Welcome to the forum, Deacon.  All good questions.  Here's my take.  Honor Snack boxes and Mint/lollipop honor boxes are two different beasts.  While in theory, it may seem like a good idea to have both in the same location, the reality is that they are not meant for the same locations.  Mint/lollipop boxes are driven by PUBLIC access and primarily thrive on counters in restaurants, retail stores, etc.  Honor Snack trays are geared more for breakrooms and backrooms of businesses such as offices, shops, small industry, etc.  While both technically could be serviced in, say a beauty salon or gift shop, for example, they are still serviced differently and CASHED differently.  As a small operator, you could service both yourself, and some do, but if you get to the size where you would hire route drivers, this would be a huge mistake and lead to big problems down the road.

Your idea with the "toiletries" would require a much higher price point, thus requiring a separate box.  But most importantly, it would require DEMAND, which I can tell you thru experience that there is NOT.  Hotel/motel locations for vending would really be the only sensible locations and many vendors who have these type of locations (myself included) will tell you that it is a select market.  Meaning that even at THOSE locations, they seldom produce the volume needed.  Not too many offices are going to be in high demand of mouthwash or handiwipes, even though it sounds great in theory.  It just is not going to produce the results that you are imagining.  TRUST ME, we've tried.  

As far as a "Paypal" system, that is a project I have been working on for a while, and there is A LOT MORE INVOLVED than just moving money from Paypal to your bank account.  There are a 100 other things to consider (I won't bore you with them all), but the biggest issue is monthly fees PLUS transaction fees.  When you are dealing with shortages from customers and narrow profit margins, there is NO room to hand off extra fees to service providers.  Again, TRUST ME, it will kill your bottom line and put you out of business quickly.  That's just my experience and my two cents!  :)

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Flint,

Thanks.  I was curious about the toiletry type items simply because after spending many hours reading about honor boxes I haven't seen non food items mentioned even once. I've read pretty much everything you've written on this forum  so hearing you say that you've tried it, and there isn't demand, is the information I was looking for. 

Have you specifically tried things like  individual aspirin packets, alka seltzer,  Tylenol, and similar medications?  My initial thought is these are the types of things employees might want regularly.  They're cheap, you can get them wholesale for about $0.25- $0.30 each, they take up essentially no space in your box, and have a very long shelf life.

 

With regards to the paypal system I would enjoy you boring me with the issues you've run into.  I run a business that accepts a lot of Paypal payments.  I just double checked the fees.  I knew it was 2.9% but had forgotten about the $0.30 per transaction.  That means it'll cost you $0.33 for each payment you receive via paypal.

 

While $0.33 per transaction is far from ideal, it's still marginally profitable given the $0.35-$0.38 wholesale cost that I believe you said you use.  More importantly if it decreased your shrinkage by even a few % it seems like it would be a huge win.  I'd imagine it would increase sales and decrease shrinkage.  I think in the long run your per cost transaction would fall below $0.33 because you would have customers who would pay $5-$10 in one transaction for their week's worth of purchases.

 

Paypal doesn't charge a monthly fee, nor do they charge you any fee for standard transfers to your bank.  The only fee is 2.9% + $0.30 per transaction.  If you're a new user paypal will hold your funds for a period of time (I don't recall how long because I've been accepting Paypal for over 6 yrs).   Standard transfers are overnight to your bank for free.

 

One of my concerns is that we're rapidly moving towards a cashless society.  I don't believe cash is going away anytime soon but the amount of people carrying cash on a daily basis is rapidly decreasing since almost everything you need to pay for on a daily basis can be paid for with plastic.  I have to think that this is a growing concern for you given the scale of your operation.  It's a concern for me when debating on whether to spend several years building a business based on a model of only accepting cash.

Edited by Deacon Blues
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I thought the same about cash and cashless too, but we recently took our price to $1.25 and found that we have had no drop in volume because of the "odd" pricing (a dollar and a quarter).  In fact, our shortage (shrinkage, as some call it) has actually DECREASED (go figure).  I had several competitors in the area try a cashless system (there are a few on line to hook up with), but they  soon went out of business.  38 cents out of a transaction is A LOT in the Honor Snack world.  If you were priced at $1.00, you would run 38% short and NO BUSINESS could sustain shortages that high.  I don't care how small an honor snack company was, 38% shortage will have you closing the doors within a year (more like 6 months).  We have only ONE vending account (a large one at that) that has Tylenol, Advil, etc. in it and they are marginal at best.  Many companies think it would be a great idea to have "medicines" available, but most simply won't use enough to make it profitable to carry them.  Even the large micro markets don't see consistent volume with these items.  

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Now that you've changed your price to $1.25 what are you shooting for as your wholesale per item cost?

What would you put into 20 item boxes just starting out?

How important is branding/ naming the business.  My initial thought is that a business name that highlights me being a one man business would hopefully help reduce shrinkage.  People are less likely to steal from a person than a large company.  Is there any drawback to highlighting the business as a one man operation?

 

Do you do any branding or graphics on your boxes beyond just the price, company name and contact info?

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6 hours ago, Deacon Blues said:

Thank you for the feedback.  

I'm just curious why no one offers non food items.  There have to be items that would sell well and there's no shelf life problem with them.   The other benefit is that many of the items I described are high value for the amount of space they take up

 

I'm not sure that placing a sticker on the boxes providing an alternative way for people to pay is really complicating things.  Has anyone tried it?  It would be basically free to implement.  It seems like it should reduce shrinkage.  Imagine how happy you'd be if it reduced shrinkage by even 5%.

 

Unless I'm misunderstanding some fundamentals of the business ,it seems a little misleading to me when you say "you make roughly $80,000 annually" using your example.  That's the gross right?  I've been following Bhumphery's thread here where he's detailed his results for about 4 yrs running honor boxes.  It seems he's netting about 47% of gross.  That means your example nets, or "makes", $36,000 annually right?

My COG is targeted at 11 cents per item.  Most items are 9 cents.  I sell them at 50 cents.  So, my overall COG is roughly 20%.  Out of $80,000 annual gross, net is roughly $64,000.  There is a cost in gas and vehicle usage that depends on your route set ups.

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1 hour ago, bghardin said:

My COG is targeted at 11 cents per item.  Most items are 9 cents.  I sell them at 50 cents.  So, my overall COG is roughly 20%.  Out of $80,000 annual gross, net is roughly $64,000.  There is a cost in gas and vehicle usage that depends on your route set ups.

What about shrinkage?

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Not a factor.  I do watch each location; but, if my average is $20/location pickup, I don't have a great concern.  I do pull locations that consistently demonstrate a great loss.  My target is $11/location for it to remain on my list.  This accounts for any loss issues.  So far after about 10 years doing this, I have only pulled probably 3 locations.  I am selective in choosing locations.  Try to stick with restaurants and high traffic customer areas.  I don't do the employee break area thing.  More headache than it is worth in my book.  There are too many other locations that are waiting.

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1 hour ago, bghardin said:

Try to stick with restaurants and high traffic customer areas.  I don't do the employee break area thing.  More headache than it is worth in my book.  There are too many other locations that are waiting.

I'm assuming that you are servicing the Charity Mint/Lollipop type boxes.  This would be ABSOLUTELY CORRECT!  Employee breakrooms are meant for Honor Snack trays. 

 

15 hours ago, Deacon Blues said:

How important is branding/ naming the business.  My initial thought is that a business name that highlights me being a one man business would hopefully help reduce shrinkage.  People are less likely to steal from a person than a large company.  Is there any drawback to highlighting the business as a one man operation?

You want your business to sound professional.  DO NOT go with a company name that is TOO small like "Uncle Joe's Candy Service" or "Betty's Snacks".  WAY TOO small potatoes, and customers will not respect you, especially with regards to a price increase or a change in menu.  You are running a business, so you want to present a professional image.  If they think you are a rinking-dink service, they will treat you as such.  Just my 2 cents.  :) 

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KISS

You are trying to turn a donkey into a war horse or a equestrian champ. No need and not possible. You are enthusiastic, but this is a case of being too smart for your own good. Get cheap boxes, use popular snacks, and keep it basic. Learn by doing a proven model, and then begin to tinker a bit if you want.

Managers do things right and leaders do the right things... snack boxes isn't really the realm for a leader who wants to be ultra-creative. You suceed by managing yourself, putting in regular consistent work of getting new locations and keeping good exisiting ones happy, having good overall sales skill, and plugging away. There is very low cost barrier to entry and much competition in all forms of vending... and therefore limited potential. The chance of success is high if you follow proven models, but the top end is limited by competion and pricing ability. It is a red ocean through and through.

If you want to be the inventor and the game-changer type, you would be much better off doing other entrepreneur endeavors or going to school awhile to get skills very few people have (and having disposable capital stream). I don't believe in blue ocean theory, but it certainly doesn't apply to vending. In vending, you will find many threads of graveyards of such "revolutionary" individuals (healthy stuff, weird pricing, niche vending, fancy box designs, etc etc). Just search.

I do basic snack boxes as a hobby/side hustle. I do make money... not much. I could probably make a living if I did it full tme, but my day job pays a lot better and there is no reason to do that. I will likely do snack boxes in retirement for the social aspect and exercise. My basic econ goes something like:

100c Item price

35c item cost (avg)

15c shortage

...leaves 50c per item to cover all else (gas, boxes, labels marketing, etc etc). It's a numbers game.

Like grocery or nearly any consumer staple, vending is a numbers game with a very low profit margin. Very simple and basic typially wins. There is a reason that grocery stores and gas stations and laundromats and mechanic shops and vending machines that last awhile usually look 95% similar to local competition. Don't reinvent the wheel. GL man

Edited by FlyGuy
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ABSOLUTELY Keep It Simple!!    Just remember this simple formula:  Total sales - Cost of Goods = Gross Profit.  DO NOT mix up GROSS profit with NET profit.  GROSS profit is what you have BEFORE you pay your expenses and NET Profit is what is left for YOU (or to put back into the business for growth).  TOTAL SALES is the money you bring in, period.  Do NOT complicate it by trying to figure Retail Sales - Shortage and any convoluted formula.  TOTAL SALES IS THE MONEY YOU COLLECT.  Also, do NOT figure shortage as some sort of expense.  It is NOT!  The money you collect is the what you sold your snacks for.  Your COGS should be roughly around 50% of your Total Sales.  It may fluctuate by a percentage or two, but should NEVER exceed 55%, that is trouble.  Just thought I would try to simplify the business end of things.  It's Honor Snacks!  It should be FUN (you are selling snacks afterall), it should be run like any other business, and you should be committed (to hard work not an insane asylum...LOL).  Best of luck to you!!  :)

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  • 3 weeks later...

Hello: I am new to this site, and I was wondering were do I even get honor boxes or do you guys make your own?. Also can you give me any distributors of the candies you use or do you just go to a store and buy them? I hope I don't sound to ignorant in this but I would like to start my own vending box route. Don't know how to begin or what charity to support? or how much to donate? Also was wondering if the loss taxable, you know if people are taking and not leaving any money, is that kicked over to the donation end on your taxes or is it even a tax deductible? Please help. Thank You - Jesse Carter

 

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  • 5 weeks later...
On 8/18/2019 at 3:43 PM, Jescarter said:

Hello: I am new to this site, and I was wondering were do I even get honor boxes or do you guys make your own?. Also can you give me any distributors of the candies you use or do you just go to a store and buy them? I hope I don't sound to ignorant in this but I would like to start my own vending box route. Don't know how to begin or what charity to support? or how much to donate? Also was wondering if the loss taxable, you know if people are taking and not leaving any money, is that kicked over to the donation end on your taxes or is it even a tax deductible? Please help. Thank You - Jesse Carter

 

HI Jesse!  All good questions.  Let's try to tackle them one at a time:  #1 - where to get snack trays.  Most on the site get them from Cameron or Sheridan Systems.  If you Google their names, you should find their websites.  I would avoid making your own; usually that looks cheap OR not cost-effective if you make them look really nice.  Stick to ordering them from one of those providers.  #2 Distributors for product.  Again, MOST on the site, particularly those just starting out, will get all their product from a Club store; ie. Sam's Club or Costco.  Starting out, you really aren't large enough to order from Vistar or another distributor and your cost would be much higher.  Sam's Club is really geared for someone starting out.  #3 Which charity?  PERSONALLY (and this is just me speaking), I don't believe in using a charity for your Honor snack business.  I DO believe in giving back to my community and to charitable organizations, and I do that on my own.  But I do not believe in "hitching your wagon" to a charity.  In my opinion, I think it actually "cheapens" your business and makes you look "flight-by-night".  HOWEVER, some here DO use charities and I believe Sheridan Systems can help you out with that when you purchase boxes from them.  #4 Is shortage (or shrinkage) taxable?  DO NOT FIGURE SHORTAGE INTO YOUR SALES (Total Money Collected)!  The money you collect at each site IS the money you sold your snacks for.  Example:  Your price is $1.25 and you service and account that purchased TEN pieces.  You SHOULD collect $12.50, but let's say you only collected $10,  leaving the box $2.50 short.  You then, in effect, sold your items for $1.00 each.  SHORTAGE is ONLY used to tell you how the account is paying you.  NEVER is it used in your sales figures OR as an expense.  The money you collect IS your SALES.  It is NOT a tax deduction either.  Your donations to charity come out of your sales.  I hope this helped!  Just my 2 cents!  :)

 

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