Looking to go big

[Vendstart]

Hi all,

New here and thinking of getting into the gumball/candy vending business for the cash. Planning to finance the purchase of 200+ machines for ~$30K(locations all already secured in one city in south east texas, door to door, hair dressers, doctor offices, restaurants, child care businesses etc). Would put $0 down and pay off the debt using the money the machines make.

Was thinking of going with these double head machines, ~$140 when you count machines and shipping per machine. Are they good quality? https://www.candymachines.com/50-Double-Barrel-Vending-Package-P1381.aspx

Figured I would do double head so I can put both gumballs and candy. Also means I have to collect less often than a single head. Was planning to have them be both at 50 cents or gumball 25 cents and candy 50 cents, any thoughts?

Figured I could buy the gumballs for 4 cents each online pre shipping, anyone has a better source?  Also how much average revenue and profit do you make per machine.

 

Ultimately I am looking for a scalable business so happy to buy the machines if theyre in good condition used in bulk bit doesnt make sense for me to buy machines that need lots of maintenance given volume.

[ginger vend]

Get some good high quality used machines such as  Oak, Eagle. This is not a get rich with loads of cash business especially in today's world of cashless systems.  Do you realistically think people will buy candy at 50 cents?  Do your research using this forum.    

[gumball guy]

17 hours ago, Vendstart said:

Hi all,

New here and thinking of getting into the gumball/candy vending business for the cash. Planning to finance the purchase of 200+ machines for ~$30K(locations all already secured in one city in south east texas, door to door, hair dressers, doctor offices, restaurants, child care businesses etc). Would put $0 down and pay off the debt using the money the machines make.

Was thinking of going with these double head machines, ~$140 when you count machines and shipping per machine. Are they good quality? https://www.candymachines.com/50-Double-Barrel-Vending-Package-P1381.aspx

Figured I would do double head so I can put both gumballs and candy. Also means I have to collect less often than a single head. Was planning to have them be both at 50 cents or gumball 25 cents and candy 50 cents, any thoughts?

Figured I could buy the gumballs for 4 cents each online pre shipping, anyone has a better source?  Also how much average revenue and profit do you make per machine.

 

Ultimately I am looking for a scalable business so happy to buy the machines if theyre in good condition used in bulk bit doesnt make sense for me to buy machines that need lots of maintenance given volume.

You are considering getting into a business that is in an inevitable decline so you may want to rethink investing a large sum of money into it. As ginger vend pointed out, the world is going cashless and long term bulk vending operators such as myself can tell you that the glory days of this business are in the past. The cashless movement will continue to erode bulk vendings viability more with every passing year and nothing will stop that. 

I will give you a few other bullet points to consider before you decide:

Bulk vending locations are very transient these days so you need to always be locating. So many people get into bulk vending thinking they will secure a location and that it will stick for years. Unfortunately that just isn't the case. Even with the best of service you will still lose locations frequently so you will need to find new homes for those machines quickly because they won't be making money in your garage. Inability to self locate and the frustration over losing locations are two of the main reasons people fail in the bulk vending business. 

Vending candy at 50 cents is not the industry norm so you are sailing into uncharted territory. It has been done successfully with capsules but candy is a different animal when it comes to the customer's perception of value. It would make expensive items like M&Ms & Reece's Pieces more financially feasible to vend but you would probably need to increase the amount of product you are vending. I applaud the idea of going to 50 cent candy vends but I have doubts that it would be widely embraced by our customers anytime soon. Gumballs are still a solid item with a great margin at 25 cent vends.

I would suggest looking on Craigslist for used routes and equipment before dropping a big chunk of money on Chinese imports. You can also go around to local businesses who already have vending machines, get the contact number off of the machines and reach out to them to see if they would be interested in selling their route. I will go a step further and suggest starting out smaller (50 locations) to see if you like the business enough to pursue growth. If you end up dropping 30k right out of the gate and decide you hate the business, it won't be easy to sell it for what you have in it. I have personally bought out over a dozen bulk vending competitors over the years at fire sale prices because they just couldn't find a financially viable buyer.

I really hate to sound negative but I just want to be honest with you about the tough sledding that lies ahead in bulk vending. Whatever you decide I wish you good luck.

 

[Vendstart]

3 hours ago, ginger vend said:

Get some good high quality used machines such as  Oak, Eagle. This is not a get rich with loads of cash business especially in today's world of cashless systems.  Do you realistically think people will buy candy at 50 cents?  Do your research using this forum.    

Thank you, is the one I posted bad? It ended up at $115 for a double head.  For the 50 cents, I assumed that the biggest barrier here was people just not having coins, but if they did have coins whether it was 0.25 or 0.50 wouldn’t make a difference… Which might not be true….

[Singod]

I wouldn't jump in that deep that fast. and i agree buy better machines oaks, a&a, eagle, or beaver. if you were local to me i would sell you 50 double Oak Vistas for 3500. honestly though I would recommend you find maybe 10 of them to start with and see if you like it. 

Edited June 1, 2022 by Singod

[ginger vend]

On 5/31/2022 at 9:42 PM, Vendstart said:

Thank you, is the one I posted bad? It ended up at $115 for a double head.  For the 50 cents, I assumed that the biggest barrier here was people just not having coins, but if they did have coins whether it was 0.25 or 0.50 wouldn’t make a difference… Which might not be true….

Oak, Eagle, Beaver, NW, and A/A are in for the long haul, tried and true. Places were my toys are all now 50 cents I've noticed people are now buying more of the Skittles which are still 25 cents.  So I believe it does make a difference at this point in people's mindset. 

[RoadDogAmusements]

My advice is don't finance something unless you are willing to accept that the machines may not pay for the financing. As in you may end up netting less profit than the finance fees. Let's say each head makes $10/mo and it takes 18 months or so to pay off the machines and expenses... are you willing to grind for 18 months without making any money? Also you will need to keep buying product every month to put into the machines, so you need capital for that. If everything you make goes into paying the debt... then where does the restock money come from? 200 machines if they empty once a month will cost like $3500 in product per month, wholesale cost.

How in the world do you have 200 or even 100 locations secured without owning a single head? Is it a contract you have with a locator? I would imagine the majority of them are not going to be breakout winners. Probably a few home runs... sure, but that doesn't pay the bills. If they're new locations they're untested... if they're old locations then have them show books/receipts. If they are old locations though, why would someone sell a profitable location they've set up? Unless they're retiring or moving I would avoid it as a new vendor.

[Vendstart]

3 hours ago, RoadDogAmusements said:

My advice is don't finance something unless you are willing to accept that the machines may not pay for the financing. As in you may end up netting less profit than the finance fees. Let's say each head makes $10/mo and it takes 18 months or so to pay off the machines and expenses... are you willing to grind for 18 months without making any money? Also you will need to keep buying product every month to put into the machines, so you need capital for that. If everything you make goes into paying the debt... then where does the restock money come from? 200 machines if they empty once a month will cost like $3500 in product per month, wholesale cost.

How in the world do you have 200 or even 100 locations secured without owning a single head? Is it a contract you have with a locator? I would imagine the majority of them are not going to be breakout winners. Probably a few home runs... sure, but that doesn't pay the bills. If they're new locations they're untested... if they're old locations then have them show books/receipts. If they are old locations though, why would someone sell a profitable location they've set up? Unless they're retiring or moving I would avoid it as a new vendor.

Thanks for the answer. I come from a fonance backgroubd and the reason I found this interesting was because of the relatively short pay back period. Each machine costs ~$150 new with shipping. Each gumball costs $0.04 on average and sells at $0.25. That is $0.21 of profit per gumball. To recover cost of machine you would have to sell $150/0.21 = ~715 gumballs, or in other words basically filling up the double header once and leaving it to sell. This means that once the gumballs in the machine are all bought the machine paid for itself and all the candy costs. 365 days in a year. Conservativelythe machine will sell 1-3 gumballs a day (an average of 2 a day). That  means the machine should pay itself off in a year which is a 100% return on invested capital. Now if you finance the purchase of all the machines at 19% interest rate (most credit cards have that APR) you will pay back the machine with interest costs in ~1.5 years, which you will have to service twice only to pay back the machine+ interest and make an additional 50% of the machine. Therefore the machine basically paid itself off and the loan with very little time investment on your end (setting up the machine and collecting twice), and this is being conservative. Then all the money you make from fhe machines is yours, and you own the machines which you can resell. Therefore it makes sense to scale this on as many locations as possible given it basically free money (you don’t put a single dollar down). Using a credit card is also pretty extreme, I’m using a 4.5% 7 year loan, so I am actually making money every month on top of the interest and using it to buy more machines.

All the expenses (machine, candy etc is financed).

 

For locations I went door to door (50 businesses a day) for 3 weeks and got yeses. The limit is on how many locations I can be in rather than costs. So even if it is a declining business it still is very profitable given the payback period. Only reason this would not work is if it is not possible to sell 1-2 gumballs a day.

 

[gumball guy]

4 hours ago, Vendstart said:

Thanks for the answer. I come from a fonance backgroubd and the reason I found this interesting was because of the relatively short pay back period. Each machine costs ~$150 new with shipping. Each gumball costs $0.04 on average and sells at $0.25. That is $0.21 of profit per gumball. To recover cost of machine you would have to sell $150/0.21 = ~715 gumballs, or in other words basically filling up the double header once and leaving it to sell. This means that once the gumballs in the machine are all bought the machine paid for itself and all the candy costs. 365 days in a year. Conservativelythe machine will sell 1-3 gumballs a day (an average of 2 a day). That  means the machine should pay itself off in a year which is a 100% return on invested capital. Now if you finance the purchase of all the machines at 19% interest rate (most credit cards have that APR) you will pay back the machine with interest costs in ~1.5 years, which you will have to service twice only to pay back the machine+ interest and make an additional 50% of the machine. Therefore the machine basically paid itself off and the loan with very little time investment on your end (setting up the machine and collecting twice), and this is being conservative. Then all the money you make from fhe machines is yours, and you own the machines which you can resell. Therefore it makes sense to scale this on as many locations as possible given it basically free money (you don’t put a single dollar down). Using a credit card is also pretty extreme, I’m using a 4.5% 7 year loan, so I am actually making money every month on top of the interest and using it to buy more machines.

All the expenses (machine, candy etc is financed).

 

For locations I went door to door (50 businesses a day) for 3 weeks and got yeses. The limit is on how many locations I can be in rather than costs. So even if it is a declining business it still is very profitable given the payback period. Only reason this would not work is if it is not possible to sell 1-2 gumballs a day.

 

You're oversimplifying and omitting a few things such as gas, vehicle maintenance, insurance and taxes in your cost analysis. Additionally, you will have machines that won't sell 1-2 gumballs per month, let alone per day. You will have some strong locations that will make up sales for those slower locations but you will need to relocate those slow earners pretty quickly to stay on the sales pace you want.

[Vendstart]

5 hours ago, gumball guy said:

You're oversimplifying and omitting a few things such as gas, vehicle maintenance, insurance and taxes in your cost analysis. Additionally, you will have machines that won't sell 1-2 gumballs per month, let alone per day. You will have some strong locations that will make up sales for those slower locations but you will need to relocate those slow earners pretty quickly to stay on the sales pace you want.

Agreed, for gas and vehicle, all my locations are in one small city and maximum 15 mins away from eachother (farthest) most are within 8 mins so gas and vehicle are pretty minor. General liability insurnace is ~$100 a year and taxes are only there if it’s profitable. Given the depriciation and interest tax write off, I would only pay taxes on this when it pays itself off, which is great if it does!

I do agree that this hinges on the ability to sell an avg of 2 gumballs per machine per day. Not sure how likely that is.

[AZVendor]

Interesting.  A "fonance backgroubd" guy who doesn't appear to understand the financial aspects of running a business, let alone how financing one can put you in the hole.  The OP reminds me of my son in law with his MBA who doesn't have the intelligence to even get promoted at work.