How is your business doing?

[AngryChris]

I'm just curious/venting.  I have been struggling lately due to rising costs just like everyone else but I am wondering if I am alone with my struggles.  It seems like I can't keep up with these price increases.  Even though I keep raising prices in an attempt to keep up, prices just keep going up!  I am making far less money now than I did in 2019 (but way more than 2020/2021).  How are you guys doing?

[Gizmo Vending]

I stay on top of price increases.. vistar has raised my price on LSS tater chips 3 times this year where they previously went up once a year typically at the start of a new year.   However no one can gripe to you about price increases because it’s everywhere.  My sales went through the roof Q4 of last year (never happened before in Q4) but now sales are kind of going down in some locations.   Is it because I went up on prices or is it because some people know they need to cut back on expenses?   While everything’s prices keep going up our customers paychecks were not going up.  I use PayRange so I can market and give discounts to users but with limited results.  Just keep persevering and things will turn around.  

[Southeast Treats]

About the same.  First part of this year was looking pretty good, but I am falling behind on pricing.  Costs are climbing faster than I have been responding, and sales are getting softer even at the current prices.  Yet I think I am still going to finish the year pretty well overall, if I can keep getting inventory to sell.  Product shortages are unpredictable and we can't overbuy because items would go stale in the warehouse.  I'm in Florida and most of my client businesses are looking pretty stable.

[Snickers]

Unless your gross sales numbers are at least 20%-30% above what they were in 2019 then your making less money than you were 3 years ago. This is based on product alone not to mention all the other costs involved (gasoline,tires,rent,parts,etc.) I feel I am less profitable even after raising vend prices. A lot of uncertainties are ahead of us for sure. 

[AngryChris]

57 minutes ago, Snickers said:

Unless your gross sales numbers are at least 20%-30% above what they were in 2019 then your making less money than you were 3 years ago. This is based on product alone not to mention all the other costs involved (gasoline,tires,rent,parts,etc.) I feel I am less profitable even after raising vend prices. A lot of uncertainties are ahead of us for sure. 

That's exactly how I feel.  It's a sense of despair in a way but I keep telling myself that it's bound to turn around eventually.

 

[tc vending]

It feels like we are fighting a losing battle against inflation. Sales are good but products costs are out of control. We will do a round price increase which I doubt are enough. That's not counting parts for machines, insurance, gas, and a million other expenses.

[Zachsea]

Prices have risen on everything and we’re doing our best to keep up. Our sales are roughly the same because everyone understands that it costs more to run our business then it did a couple years ago. Our route size hasn’t grown lately and gaining new accounts has slowed drastically. At this point we’re waiting out the hard times and maintaining the current 105 machines we have. With all the people wanting into the business we’ve decided to open up a refurb/resell machine selling side and things are going well with it. The end game is to do both but only the future can tell where the industry will go.

[CapitalCityVendingLLC]

Our business is almost back to 2019 revenue numbers.  Looks like we will fall just a little short though. 

Our COGS have definitely gone through the roof though.  In the last 2-4 months, we have had to raise prices accordingly.  We should have done it earlier. 

There's only 2 of us running our company.  Historically we have tried to keep COGS at/below 50%.  Other expenses at/near 10%.  And then we take the rest, hopefully 40+%.  Pre-covid, we almost always hit these percentages. 

2020 we were somehow able to keep it close to that.  49% COGS, 12% other expenses, 39% take home.  2021, I got lazy and didn't notice the %'s getting off.  Should have kept a better eye on things and slowly gone up on prices.  COGS were 52%, 16% other expenses, and only 32% take home.  Expenses percentage ballooned up mainly due to our revenue being down.  About 4 months ago, we had to put our foot down and start going up on our prices more aggressively to keep up.   Before that though, the first half of this year our COGS were 55% (ouch), other expenses 12%, take home 33%.  Since then we have raised all our prices across the board. 

Since May or so, our COGS are down to 47%, other expenses 14%, take home 39%.  Much closer to pre-covid times.  These are just the numbers we shoot for.  Everyone and every company is different though.

Some accounts have definitely slowed though, but our good ones haven't slowed too much.  We have tried to slim up a little bit.  We try and kill off our bottom 1-2 accounts each year.  If you can walk away from your bottom 1-2% of accounts, pick up those machines and either sell them or put them out at a better location, that improvement/decision can add up to $ on your bottom line.  Do you have an account that is a tiny % of your total business and it's really far out of the way?  Raise the prices to make it worth your time to work the account.  If you can't or the sales drop, or they raise a big fuse, pick up the machine(s).  Save on gas $ by making your route more tight, and find a new home for that machine(s).  Spend less time going to small accounts were you are just wasting your time.  This idea used to be true.  It's now very very important/true.  

Big picture, hang in there.  Shop around for deals on product.  Figure out margins for each specific item and try and add an extra row of the high profit items while cutting back on the lower margin items.  Stay out of debt if you can.  When covid hit, we easily made it because our company didn't have any debt (other than small credit card balances).  Getting through covid wasn't easy at all, but being debt free helped us tremendously as our revenue dropped off 80%.  

Cheers

[AngryChris]

34 minutes ago, CapitalCityVendingLLC said:

Our business is almost back to 2019 revenue numbers.  Looks like we will fall just a little short though. 

Our COGS have definitely gone through the roof though.  In the last 2-4 months, we have had to raise prices accordingly.  We should have done it earlier. 

There's only 2 of us running our company.  Historically we have tried to keep COGS at/below 50%.  Other expenses at/near 10%.  And then we take the rest, hopefully 40+%.  Pre-covid, we almost always hit these percentages. 

2020 we were somehow able to keep it close to that.  49% COGS, 12% other expenses, 39% take home.  2021, I got lazy and didn't notice the %'s getting off.  Should have kept a better eye on things and slowly gone up on prices.  COGS were 52%, 16% other expenses, and only 32% take home.  Expenses percentage ballooned up mainly due to our revenue being down.  About 4 months ago, we had to put our foot down and start going up on our prices more aggressively to keep up.   Before that though, the first half of this year our COGS were 55% (ouch), other expenses 12%, take home 33%.  Since then we have raised all our prices across the board. 

Since May or so, our COGS are down to 47%, other expenses 14%, take home 39%.  Much closer to pre-covid times.  These are just the numbers we shoot for.  Everyone and every company is different though.

Some accounts have definitely slowed though, but our good ones haven't slowed too much.  We have tried to slim up a little bit.  We try and kill off our bottom 1-2 accounts each year.  If you can walk away from your bottom 1-2% of accounts, pick up those machines and either sell them or put them out at a better location, that improvement/decision can add up to $ on your bottom line.  Do you have an account that is a tiny % of your total business and it's really far out of the way?  Raise the prices to make it worth your time to work the account.  If you can't or the sales drop, or they raise a big fuse, pick up the machine(s).  Save on gas $ by making your route more tight, and find a new home for that machine(s).  Spend less time going to small accounts were you are just wasting your time.  This idea used to be true.  It's now very very important/true.  

Big picture, hang in there.  Shop around for deals on product.  Figure out margins for each specific item and try and add an extra row of the high profit items while cutting back on the lower margin items.  Stay out of debt if you can.  When covid hit, we easily made it because our company didn't have any debt (other than small credit card balances).  Getting through covid wasn't easy at all, but being debt free helped us tremendously as our revenue dropped off 80%.  

Cheers

I'm actually in the process of removing 10-15 locations over the next 2 weeks.  I'll have a lot of machine sent off for scrap because quite a few are just too old, but the rest will be refurbished at some point.  I probably have enough to add an extra 15 locations as it is but I need money to refurbish everything!!  It's a huge catch-22 right now and that's what has been bugging me.  I need to get rid of smaller locations so I have more time to get new locations and focus on better existing locations, and I also need more money so I can refurbish old equipment and put it back out in the field.  It's a tough life!

In 2020, things were really bad because I had to pay rent each month.  My personal expenses weren't too bad but I am the only one that works in a house of 5, so we took a hit and lived off of savings for the first 6 months until we essentially ran out of money.  I had to charge up credit cards to keep the business afloat.  I also delayed price increases but relented in 2021 and started going up and continued into early this year... but then the big increases began like candy going to 90c and bottles/LSS going up.  I figure the big guys still can't keep up and I really believe (but I could be wrong) that the little guys aren't worried too much about raising prices because of low overhead anyway... 

I've lost a lot of sleep over it but I recently began making changes.  I'm reorganizing the route so it's way more efficient.  I'm getting rid of low performers as mentioned earlier.  My wife is also helping me by taking care of warehouse duties and prekitting for me when kids return to school.  That's going to free up so much time and I really do believe I will see my bottom line go up a few percentages just from that.

[AZVendor]

You should always be culling your bottom 10% of accounts and looking for better ones.  That is good business.  The criteria is always based on profits and not gross sales.

[Gizmo Vending]

That’s great.   Have you obtained any locations or equipment yet?

[AngryChris]

On 2/6/2023 at 7:06 AM, Legiboka said:

At the beginning of 2022, I saved enough money to start my own business, and inspired by this forum, I decided that it was time to do it. However, I realized at the very beginning that I myself would not be able to start my own business competently, since I had no experience in this field, and also did not know what documents were needed, what insurance was needed, and so on. Therefore, one guy on this forum advised me to contact his friend on this site [Link Removed] who works as a financial adviser, and it was the experience and knowledge of this person that helped me quickly develop my business. And even though prices have risen now because of the war in Ukraine, I earn well.

Although the russo-ukrainian war has contributed a bit to prices, the bulk of inflation is due to lack of labor domestically and later intensified by global COVID shutdowns.  Maybe the war contributes 10%.

[tblake05]

Right, and don't forget the 15.00/hr minimum wage for entry level part time jobs.  Love me a Mcdonalds single hamburger for 3.00.

[Magiccity726]

Has it been harder getting new locations lately? I used to get new locations almost every month but that hasn’t been the case lately. I feel like I’ve been getting better leads but I’ve had to turn some down because they want like 40-50% commission. Just lost an account today because the owner decided to buy his own machines. Prices continue to rise. Somebody talk me off the ledge please lol

[AngryChris]

Around here I think there are plenty locations available because vendors still struggle with labor shortages.  I'm taking on some locations that I probably shouldn't because I'm trying to get something out of my paid-for equipment that came off locations during covid.  It's just easy extra money plus I need the space for more product.  Overall, sales have been booming.  Yeah, I think it's better now (for keeping employees) which means it's probably getting harder to find locations but I'm also in a spot where I can grow any direction I want.  I can go vending, micro markets, retail chains, I can venture out farther and get big locations that have satellite locations.  There's so much I can do. 

The costs ARE a problem but I'm combatting that, partly, by adding lots of non-core items like energy drinks and iced coffee.  I'm also starting to realize the major benefits to having markets too.  I just ordered my first cooler and I'll settle on a kiosk soon.  Markups on those energy drinks are great and people don't mind paying from what I have seen.  It's like they don't mind paying higher prices as long as the variety is good.  But put a single price can machine with cans for $1 and they'll have a fit!

[Talidus]

According to the June CPI from BLS states a 50bp month over month increase in "food away from home" raising prices 7.7% over the previous 12 months pricing while "food at home" raising 4.7%. This gives a range to adjust prices for substitutions. This will likely continue to pressure prices in the US based on the feds 2 planned rate increases by EOY - expect it to continue for another 5 months unless the fed changes its rate adjustments. Fuel prices have dropped 36.6% over the previous 12-months but, transportation services have increased 8.2% over the period likely due to more tight labor market with a 3.6% unemployment rate driving up salaries and less to do with the softening prices on vehicles and gas.

In short operating margin will shrink as discretionary spending reduces due to inflation and variable expenses increase as COGS is impacted in retail.

[Snickers]

I don’t know how the average person is making ends meet much less buying energy drinks and iced coffees. The news lies about true inflation. Everything is 25% more expensive. MINIMUM 25% some things much more. I just don’t know how they have been able to keep this house of cards propped up. 

[AngryChris]

13 hours ago, Snickers said:

I don’t know how the average person is making ends meet much less buying energy drinks and iced coffees. The news lies about true inflation. Everything is 25% more expensive. MINIMUM 25% some things much more. I just don’t know how they have been able to keep this house of cards propped up. 

I'm not saying they are making ends meet, but they are buying.