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DEvend

Newbie in Food Vending

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Hello community, my name is Josh and i am from Germany

I am looking to get into vending machines in my area, i see theres not many food vending machines and i was putting my eye on a Pizza machine. 

Due to high costs and low margins (25K machine, retail 5.5 euro 30% margins) and the fact that each pizza takes 3.5 minutes to prepare i decided to divert into other food machines.

My questions:

1. what is the credit card usage fee per transaction and do you add this to the price ?

2. do you need a health department license? and if so what is the financial average cost

3. do you insure for liability and injuries your machines, and damages? if so what is the average cost

4. my manufacture says they are working with IVend cloud, dose anyone knows what is the price per machine?

5. how do you solve the internet usage of the machine for updates (if no internet on premises)

6. Is there any statistics about how many are sold per day?

7. what is typically the rent for a food vending machine (double size than regular one)

 

most manufactures i reached out, sending ridicules business plans, based on 30 days a month (like a machine would work none stop, no holidays or down time)

also they calculate 50 sales per day X 365 days a year, which is for me (consumer) is also ridicules number to hit per day, every day, every year.

They don't calculate any labor, insurance, internet, waste, rent, VAT, cc fees etc which most time is almost 2.5X on what they present.

 

my calculations showed i would get a return on the machine (18K) in 4 years after operation costs based on 30 sales a day.

now obviously if you find a high traffic 24/7 location and yout machine is a hit, you may hit even 50-70 per day which will take the business plan to different return

 

what do you think.

Edited by DEvend
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Snacks and drinks only. No refrigerated foods until you are larger and understand vending.

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I don't know about Europe but here in the US, food machines are a luxury for the customer... meaning that you typically won't get one unless 1) you're a large customer with at LEAST 100+ employees on-site (if not MORE) or 2) you're just lucky that some vendor is dumb enough or pressured enough by the market to put in a food machine.

Perishable food doesn't last long (2-4 weeks on most items) and the margins are typically not that great, and food sales typically don't do as well as snacks.  Heavy industrial locations like huge steel plants, car manufacturers, and other places can absolutely do fantastic with food sales but that's not something you'll get.  Basically, think of it like this;  The locations that can really use a food machine probably already have one, and the locations that don't already have food machines probably don't need them.

Now, if you want to go after solid locations with 100+ employees on-site, offering food machines can be a good way to get your foot in the door, but trying a food niche market doesn't work here in the US.  In fact, the last niche was healthy vending and, frankly, I don't know if they have survived even before covid hit.

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If you are talking about cold packages food, not a great idea. Typically it’s a loss leader to get you the soda and snack business.

If you are taking about hot food even worse idea. Given the volume, labor, margins and initial cost profitability is hard, and even if it is eventually achieved it is way too long to be worthwhile. You could probably dump your money in the stock market and make more. Typically hot food only makes sense financially for a manufacturer of food as a marketing tool. They likely won’t make money but the real value to them is that it is a large ad.

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3 hours ago, AngryChris said:

the last niche was healthy vending and, frankly, I don't know if they have survived even before covid hit.

Is Healthy Vending in trouble?  I sure hope so.  They took a good thing that was a win/win in a lot of cases and turned it into something that most people don't want.

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12 hours ago, AZVendor said:

Snacks and drinks only. No refrigerated foods until you are larger and understand vending.

Market here is saturated with snacks and drinks

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7 hours ago, AngryChris said:

I don't know about Europe but here in the US, food machines are a luxury for the customer... meaning that you typically won't get one unless 1) you're a large customer with at LEAST 100+ employees on-site (if not MORE) or 2) you're just lucky that some vendor is dumb enough or pressured enough by the market to put in a food machine.

Perishable food doesn't last long (2-4 weeks on most items) and the margins are typically not that great, and food sales typically don't do as well as snacks.  Heavy industrial locations like huge steel plants, car manufacturers, and other places can absolutely do fantastic with food sales but that's not something you'll get.  Basically, think of it like this;  The locations that can really use a food machine probably already have one, and the locations that don't already have food machines probably don't need them.

Now, if you want to go after solid locations with 100+ employees on-site, offering food machines can be a good way to get your foot in the door, but trying a food niche market doesn't work here in the US.  In fact, the last niche was healthy vending and, frankly, I don't know if they have survived even before covid hit.

Thanks, food machines are not common here, i am targeting 24/7 high traffic areas, like hospitals, airport, big train stations that operate 24/7

Factory's here already have there in house cafes.

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4 hours ago, orsd said:

If you are talking about cold packages food, not a great idea. Typically it’s a loss leader to get you the soda and snack business.

If you are taking about hot food even worse idea. Given the volume, labor, margins and initial cost profitability is hard, and even if it is eventually achieved it is way too long to be worthwhile. You could probably dump your money in the stock market and make more. Typically hot food only makes sense financially for a manufacturer of food as a marketing tool. They likely won’t make money but the real value to them is that it is a large ad.

thanks for the info, from my research volume is the key, if you position for example a 2.5 euro french fries machine (i get around 1 euro after all expenses) based on volume, if i can get a high volume place like a train station that hosts 500k people a day in average and make a 100 sales a day, i will hit 40K a year for one machine.

You only feed fries each 100 servings, and replace oil after 400 serving, the more i have the more i can increase my profit lowering costs and COG

 

Thoughts?

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added business plan, please advise 

Screen Shot 2020-10-29 at 10.51.50 AM.png

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Hi Josh, welcome to the forum.  I don't know how much US experience is relevant for your market.   I am not sure your sales goals are realistic for any location, especially with prepared hot foods.   Obviously, foot traffic must be very high, and you also need to factor in what other options the consumer has in the same location.  I had good experience with a high end hot coffee machine in an airport location, using a bean grinder and name brand product.  Even then, sales were closer to 100 units a week.  A train station with daily repeat passengers might be better if a number of them developed the habit of using your machine.  And the aroma of fresh brewed coffee is a big sales booster!  The down side was the additional service time to keep the machine clean.  Any type of machine that is processing on location needs to be kept spotless inside to insure product quality and reduce breakdowns.  That additional labor needs to be factored into your computations.  I also had good luck with ice cream bars and sandwiches in high traffic locations.  The margins on those products can be huge, and there is no on site prep.   That required a health department inspection, but it was not a problem to comply.  The machines I used had chest freezers and maintenance was not horrible, basically a good defrosting and cleaning every few months.  I don't operate either of those currently because I don't have a location that I think warrants them.  Another note on hot fries:  I understand those machines existed in the US years ago but went away because of the fire hazard.  Hot cooking oil is not fun to mess with, and your machine would need to keep oil hot basically 24/7.

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Thanks for the info, It's a dilemma the liability issue, and i could not find any other machine to operate as the basic ones are already out there.

However liability and fire hazard is for everything and i believe a good insurance and a serious company would address them (i hope)

Any other thoughts ? was is the average rent per machine you recommend in a high traffic space

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Most operators here will pay commission on sales here as opposed to a flat rent, it depends on what the owner of the space wants/ requires.  I try to limit commission to 10% of gross sales (and of course adjust my prices accordingly).  Some locations demand and get as much as 22 - 25% commission... that's one of the reasons everything in airports and such locations carries higher prices.  Sometimes you also see combination deals with a base rent plus commission (rare in vending but not unusual in other businesses).  Also, be sure you know if the landlord is providing your electricity or if you have to install your own meter.  In the US it's  always expected that the location is providing electricity for vending.  Make your best deal with the location of course and then work out what pricing needs to be. 

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Thanks! i will reach out to several locations to see if they are ok with hot vending machine, if they are i will continue negotiation with both parties, if not i will shift to other things.

appreciate the help

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Definitely wording is the key, like we say, don't say ugly, say not beautiful

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