RJT Posted July 22, 2011 Share Posted July 22, 2011 I turned down a 800 student college today. These numbers are only the students living on campus it does not include night students, facility, staff, or any visitors. So you are looking at around 1400 or so total people. I wanted to share something with you folks about how accounts can fool you at times. The reason I turned down this account is because I had it one other time a few years back when I was a sales/operations manager for another company. So knowing what I know is why I turned them down. This is the type of account that you can take a pro-forma and throw out the window. You would think this account would rock. You would think this account would be off the charts with all those kids. Keep in mind it is snack only because of the deal with the bottling companies. When I had it before we had cold food and coffee as well. We had 8-10 snack machines around campus including in dorms and common areas. Pricing was you average prices with nothing outrageous. .60 chips, .90 candy type prices. Here is the bad news the account only did $9500 gross revenue a year average. This is before taxes, commissions, COG’s, etc. I was shocked that this account did these types of numbers. I have stand alone snack machines that do more than this. So, that is why I turned down a chance to do them. Again, this goes to show you have to be careful how you go about financing accounts. Lets say you were just getting started and financed 12/14 new machines for this account thinking it was a homerun. You would have financed over 50k for an account that would take you over 10 years to pay off the equipment. This could get some people in some major financial trouble fast. Always plan for the worst and have an exit strategy and options if the worst happens. Just thought I would share with you folks a little info about how accounts can fool you. Link to comment Share on other sites More sharing options...
antoniocinisi Posted July 22, 2011 Share Posted July 22, 2011 thanks for sharing. if you had n`t known how sales were at this account what would you have done? Link to comment Share on other sites More sharing options...
RJT Posted July 22, 2011 Author Share Posted July 22, 2011 thanks for sharing. if you had n`t known how sales were at this account what would you have done? Good question, and a tough one to answer. First I would try and gather all the information I could from the college. The key piece to know (if they will give it to you) is if the current company is paying a commission. If so what is the precentage and how much total was paid last year. That way you should be able to get a pretty good idea of what the account does. Lets say I didnt have the school in the past, and they did not or would not give the commission information. I would have tried to place equipment that was used but nice and that I could buy at a decent price. I would also try and cut down number of machines out with the understanding that if sales are justified you would add more. Matter of fact I got them down to 5/6 snack machines total with no coffee, cold food, etc and I still could make the numbers look good to me. No matter the account always try and keep your investment to a minimum, that way your ROI is faster. This one is a TOUGH one and from the outside looking in looks like a nice account that most any vending company would love to have. This one would fool very experienced vendors. Think of it this way. Lets say you "predicted" ONLY one dollar a week from each student. That sounds reasonable and you would think that it would average one dollar a week from each student. That would equate to 800 to 1000 in gross sales a week. Now you are looking at around 52k a year gross. Now look at the real number of 10k a year. Ouch, how is this possible?? However, it is possible and the facts of the account. Like I said it would stump a LOT of people….. Link to comment Share on other sites More sharing options...
RJT Posted July 22, 2011 Author Share Posted July 22, 2011 I had something similar to this happen a few years back. I got a student housing unit at a college town. It was a hotel turned into student housing. I thought for sure this thing would rock but it was a flop also. You just never know about some account even with your best educated guess. Link to comment Share on other sites More sharing options...
mission vending Posted July 22, 2011 Share Posted July 22, 2011 I did that when I was in my first couple of years. 40K worth of equipment in 1997. One of a number of very expensive rookie mistakes that nearly killed me. Link to comment Share on other sites More sharing options...
ThankYouComeAgain Posted July 24, 2011 Share Posted July 24, 2011 Great read. Link to comment Share on other sites More sharing options...
VagabondVending Posted July 27, 2011 Share Posted July 27, 2011 This makes sense to me. I think that college students are a lot more picky about what they are eating. As a recent college graduate, I know that the few times I visited the vending machines I would seek healthier options as opposed to chips or candy bars. Not all colleges are the same of course and mine was a particularly health conscious school. I noticed that the 2 vending machines in our library (school full of nerds so very HIGH TRAFFIC) didn't move products very quickly. Students opted to buy more expensive and "healthier" pita chips and organic cookies at the coffeeshop 25 ft from the vending machines. Basically, I think that the product mix for college students definitely will affect the performance of the machines. The vending machines offered the standard chips, candy and chocolate bars and I feel like people didn't want these products. I'm sure that the operator at my school was unhappy with his results based on the hundreds/thousands of students going in and out of the library every day. Link to comment Share on other sites More sharing options...
snack dude Posted July 28, 2011 Share Posted July 28, 2011 Good question, and a tough one to answer. First I would try and gather all the information I could from the college. The key piece to know (if they will give it to you) is if the current company is paying a commission. If so what is the precentage and how much total was paid last year. That way you should be able to get a pretty good idea of what the account does. Lets say I didnt have the school in the past, and they did not or would not give the commission information. I would have tried to place equipment that was used but nice and that I could buy at a decent price. I would also try and cut down number of machines out with the understanding that if sales are justified you would add more. Matter of fact I got them down to 5/6 snack machines total with no coffee, cold food, etc and I still could make the numbers look good to me. No matter the account always try and keep your investment to a minimum, that way your ROI is faster. This one is a TOUGH one and from the outside looking in looks like a nice account that most any vending company would love to have. This one would fool very experienced vendors. Think of it this way. Lets say you "predicted" ONLY one dollar a week from each student. That sounds reasonable and you would think that it would average one dollar a week from each student. That would equate to 800 to 1000 in gross sales a week. Now you are looking at around 52k a year gross. Now look at the real number of 10k a year. Ouch, how is this possible?? However, it is possible and the facts of the account. Like I said it would stump a LOT of people….. RJT thanks for the info when I read the subject title I even said "they did what" But I have a question and that is "Do you have any theories or conclusions on why the account did not meet expectations? Type of students type of school ? Thanks Link to comment Share on other sites More sharing options...
RJT Posted July 28, 2011 Author Share Posted July 28, 2011 RJT thanks for the info when I read the subject title I even said "they did what" But I have a question and that is "Do you have any theories or conclusions on why the account did not meet expectations? Type of students type of school ? Thanks Its funny you ask that. Even the contact at the college was a little perplexed when I was telling him the numbers. He actually thought the current vendor was pulling his leg about how bad the numbers are. He figured he was just lying to pay less commission. He was "wondering" the same thing, why the low numbers? I would love to be able to put my consultant hat on and give you some grand answer and sound smart but reality is I cant. I have talked to several seasoned vendors about this account and we are all a little stumped. It is an average small four year college that is not expensive but not cheap to attend (it is average). My wife graduated from their a few years back after wanting to go back to school. I have no clue why it does as bad as it does. Maybe someone else can give some thoughts on what they think the issue is. Link to comment Share on other sites More sharing options...
snack dude Posted July 28, 2011 Share Posted July 28, 2011 Its funny you ask that. Even the contact at the college was a little perplexed when I was telling him the numbers. He actually thought the current vendor was pulling his leg about how bad the numbers are. He figured he was just lying to pay less commission. He was "wondering" the same thing, why the low numbers? I would love to be able to put my consultant hat on and give you some grand answer and sound smart but reality is I cant. I have talked to several seasoned vendors about this account and we are all a little stumped. It is an average small four year college that is not expensive but not cheap to attend (it is average). My wife graduated from their a few years back after wanting to go back to school. I have no clue why it does as bad as it does. Maybe someone else can give some thoughts on what they think the issue is. Thanks for the answer back I was just wondering, it just so happens I was just talking to a fellow vendor about this very thing at a small private collage with snack machines in the dorms and he cant figuare it out either. Thank again Link to comment Share on other sites More sharing options...
mission vending Posted July 28, 2011 Share Posted July 28, 2011 I have no clue why it does as bad as it does. Maybe someone else can give some thoughts on what they think the issue is. Some things just defy explanation. Link to comment Share on other sites More sharing options...
RJT Posted August 7, 2011 Author Share Posted August 7, 2011 This makes sense to me. I think that college students are a lot more picky about what they are eating. As a recent college graduate, I know that the few times I visited the vending machines I would seek healthier options as opposed to chips or candy bars. Not all colleges are the same of course and mine was a particularly health conscious school. I noticed that the 2 vending machines in our library (school full of nerds so very HIGH TRAFFIC) didn't move products very quickly. Students opted to buy more expensive and "healthier" pita chips and organic cookies at the coffeeshop 25 ft from the vending machines. Basically, I think that the product mix for college students definitely will affect the performance of the machines. The vending machines offered the standard chips, candy and chocolate bars and I feel like people didn't want these products. I'm sure that the operator at my school was unhappy with his results based on the hundreds/thousands of students going in and out of the library every day. Not sure how I missed this post. So, this "makes sense to you"? Really? Well, we had a mix of both healthy items and regular items with these revenues. You said "Basically, I think that the product mix for college students definitely will affect the performance of the machines." Really? That is how it works in ANY account much less a college. Have an account with mostly women then they usually don’t eat spicy snacks, meat snacks, etc. but like chocolate. Have an account with mostly blue collar men then things like Granola bars ,Fig Newtons and rice cakes don’t fly out of the spirals either. Mostly Hispanics, then spicy snacks, and such sells well. Big part of vending is learning your accounts and what they like and dont like. We had the account for three years trying different product mix with the same results. It was so bad in the end we didn’t bid it out the last time it came up. The vendor in now is getting the same results. I know because they shared with me the commission numbers.... Link to comment Share on other sites More sharing options...
RJT Posted August 11, 2011 Author Share Posted August 11, 2011 After I turned these guys down they then wanted me to consult with them about their vending options. I did this pro-bono because my wife is an alum their. Based on what I told them and who to contact they now have the "largest" vending company and they gave them all the bells and whistles to include card readers, two cold food machines, two coffee machines, snack and drink machines in all the dorms, etc, etc. Couldnt had happen to a better vending company. Link to comment Share on other sites More sharing options...
coinvestor Posted August 11, 2011 Share Posted August 11, 2011 Couldnt had happen to a better vending company. Like! Link to comment Share on other sites More sharing options...
dogcow Posted August 11, 2011 Share Posted August 11, 2011 After I turned these guys down they then wanted me to consult with them about their vending options. I did this pro-bono because my wife is an alum their. Based on what I told them and who to contact they now have the "largest" vending company and they gave them all the bells and whistles to include card readers, two cold food machines, two coffee machines, snack and drink machines in all the dorms, etc, etc. Couldnt had happen to a better vending company. LOL!!! Link to comment Share on other sites More sharing options...
mission vending Posted August 12, 2011 Share Posted August 12, 2011 LOL!!! Same here. Link to comment Share on other sites More sharing options...
snack dude Posted August 12, 2011 Share Posted August 12, 2011 After I turned these guys down they then wanted me to consult with them about their vending options. I did this pro-bono because my wife is an alum their. Based on what I told them and who to contact they now have the "largest" vending company and they gave them all the bells and whistles to include card readers, two cold food machines, two coffee machines, snack and drink machines in all the dorms, etc, etc. Couldnt had happen to a better vending company. dont mess with RJT, the dude gets even Link to comment Share on other sites More sharing options...
RJT Posted August 12, 2011 Author Share Posted August 12, 2011 dont mess with RJT, the dude gets even LOL not really but they did just take an account from a good friend of mine that had it for 15 years. That is a loooong story but they deserved this dog account with all that equipment. What is real funny is they think they did the right thing by throwing everything but the kitchen sink at this account to get it. That is why I said this account will fool many companies even the worlds largest one that has high dollar people on the payroll to figure these things out. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.