Vending Rules | Snack Soda and Bulk Vending Blog

How Many Venidng Machines Do I Need?

2008-11-30T16:16:00.002-05:00

First, I need to say thank you for everyone signing up for my Vending Newsletter. I cannot believe how many people have gotten on board to take such an active roll in learning about the vending business. For those of you who have not joined, I'll give a little teaser. All newsletter subscribers get to ask me any vending question they want, for free! I am happy to have been able to help out so many people so far and look forward to your question.

I have been getting a lot of questions lately from people who are looking at vending to replace their "normal" work income. Often the question will be stated like this, "How many vending machines do I need to replace XXX dollars a month?" I have also noticed that most of these people are referring to bulk vending machines. I suspect that the reason I am getting this question is twofold: #1 the economy has everyone scared and #2 I suspect the biz-opp scams are promoting hard (because of #1).

I would like to take this time to make a couple points. Vending is a great business, but if you are looking to it to get out of a job you hate, or feel no security with, then owning a vending business may not be the answer for you. Your answer may simply be to find a better job. If that is the case, I suggest you check out a site: 48 Days to the Job You Love by Dan Miller. His books helped get me on the right track.

If after reading his books you determine that having your own business, even a vending business, is right for you then I say welcome!

Vending is Everyplace - Don't Get "Tunnel Vision".

2008-10-17T23:34:00.002-05:00

I realize that this video has been floating around the internet for a little while now but I decided to post it anyway. I'm not trying to make any kind of political statement, I am trying to make a statement about vending:

Now like most people I watched this and thought, "Oh my God, you have got to be kidding me!". Actually the first thing I thought was, "How the cigarette vending industry is almost completely dead but somehow Marijuana vending is on the rise!?"

But then it dawned on me that this is a great example of how we need to stop thinking of vending as simply a gumball, candy or soda machine. Vending machines do everything from get us coffee, to our morning paper paper, to allowing us to drive on toll roads. Vending is everywhere, not just in the snack room. I am not suggesting we get into vending drugs but expand your mind and find a niche in the vending business.

Happy Vending!

Change your Vending Machine Locks

2008-09-23T20:33:00.004-05:00

Regardless of whether you buy a brand-new machine or a good-quality used vendor, the first thing you will want to do is change the locks. New vending machines are shipped with what is known as a "shipping lock", which utilizes an especially common key, so you will want to install a more secure lock from the get-go. With a used machine, you may never know if anyone else has ever had a key, so the best bet is to have a trustworthy locksmith change the locks. Often they will not have the locks you need in stock. Surprisingly your best source for replacement vending locks is eBay.

If possible, I would recommend that you key all of your vending machine locks with the same key so you will not have to be fiddling through a pocketful of keys searching for just the right one while on location. If you have a larger machine, especially if it is in a public location, you may want to add either a hidden shackle padlock or a shrouded hasp for an extra layer of security.

Is your Vending Business Profitable?

2008-08-26T18:58:00.002-05:00

The number one question people are asking me is how to fix a broken vending business. Before you can even begin to fix problems you MUST know your numbers. Are you even profitable?

What are your fixed costs?

What are your variable costs?

Remember that equation from school? - y=mx+b

OK, it isn't that complicated but that would be the best way to calculate it. Knowing your commission and product cost you can figure out your net profit. For sodas mine is about .40 = .75 (sales) - .36 (product cost) - 0.0 (0% commission, remember I do not pay commissions). Multiple that number by the average number of sales per service (obviously we would also add net profit from snacks but I want to keep this example as simple as possible). Now that you know your net profit you need to determine what your other costs are, i.e. fuel, machine depreciation and time. Subtract those costs from your total net profit. If it is negative you are not making money. If it is positive you are making money (you can then divide your cost of equipment by this number to get your ROI).

Sorry if this sounds complicated but you asked for it ;-)

Vending Route Fuel Cost

2008-07-20T20:31:00.002-05:00

High gas prices seems to be on everyone's mind. While I am the first to say that if the price of gas should never destroy your vending route's profitability it does indeed take too big of a chunk. The next few Vending Blog posts will be some strategies that will help you minimize the effect they have on your profits.

Increasing Machine Capacity:
Increasing the globe size (for gumball machines), or adding a extensions to the backs (for machines commonly found on racks) help eliminate the need for frequent refills. At some of my locations I have given them free machine upgrades. Many of my snack/soda locations have been upgraded to larger machines and most of my "toy ranks" have been sdjusted to 25" (and larger) tower machines (with extensions on the back). Locations love it plus now I can go to them half as often (with twice the money waiting for me).

With the number of vending operators out there going under I have been able to get all the larger equipment at great prices. I will then list and sell my smaller machines on craigslist or eBay. If you sell and buy right this should not be a big cost - certainly with a payback of 6 months or less. I've even had several instances where I made money changing the machines!

Vending Question #4 - Where do you buy bulk candy?

2008-06-12T20:55:00.003-05:00

Question: Where do you buy bulk candy?

Answer: There are many options for purchasing bulk candy. I buy for a wholesale distributor but I realize most people wouldn't want to order several hundred pounds at a time (especially since you only have two machines). I would suggest three techniques:

#1 - Local wholesale clubs (i.e. Sams, BJs, Costco). They usually have entire isles dedicated to vending supplies and they have the best prices. However if you only have a couple machines it may not be worth buying the membership.

#2 - Wal-Mart usually sells bulk bags of candy cheap, just watch your numbers. Each vend will be about 1/2 oz so a 2 Lb bags contains 32 vends and you should not pay more than $4 for it (that assumes a 50% ROI - return on investment).

#3 - Often I sometimes buy candy when it goes on sale after the holidays (50 - 75% off) at Wal-Mart or Target.

Vending Blog Question #3 - Placing Honor Boxes

2008-04-22T20:06:00.003-05:00

Question: I just recently added honor boxes to my business, and as I'm trying to get them out I get a lot of customers tell me that we had one before and it was always short, so they don't want one. Is their anyway to persuade them otherwise, or am I better off not to put it there. I have only solicited to employee based firms, I do not want to place them out for the public.

Vending Rules Answer:

I would like to first confirm that your placement ratio will be able 1 in 20 the first couple times you try. Once you've placed a couple boxes you'll not only gain confidence but you'll also have spoken with customers and have a better idea of what "sells" them on the idea of letting in an honor box. Plus once you get a few customers word-of-mouth really begins to help. Unfortunately in the beginning you have a little bit of "the chicken and the egg" dilemma.

Read the rest of this answer at the Vending Rules Website.

Vending Rules Blog - Question #2 - How Much Do Vending Machines Make?

2007-09-05T20:16:00.001-05:00

Here is another vending question I got last month:

"Well i have a drink and snack business, and i would like to know what i sould be making per machine, I do (Ok) but i think its under performing and i can't seem to find out any real $ averages in the business i want to expand but i feel that i need to know if its worth it. "

Vending Rules Answer:

OK, I got this email late at night. I'll assume the writer was just a little tired when he wrote it ;-) Anyway, I understand what he is asking so here is my answer.

The reason that you will not find specific numbers is because there are no specific numbers - every location is different. I have locations with 20 people that eat and drink more from my machine than locations with 50+ people.

If you feel a location is under-performing you need to first talk with the location employees and find out what they like. Then look at what does sell and see if the sales reflect what they say. For example, I had a location mention to me that people eat from my machine for breakfast. When I took a second look at sales I could see that coffee cakes and pastries always sold well. So I removed a row of chips and added more pastries - my snack sales doubled! I then added canned juices to my soda machine and began selling out of those selections on a weekly basis.

Occasionally though you will find that NOTHING helps. The people simply do not eat from your machine. If that is the case, move the machine. Find another location and place your machines there instead. Sure it is a pain, but not making money is a bigger pain.

How do Dollar Bill Validators Work & Why Do They Fail Sometimes?

2007-08-14T20:41:00.000-05:00

If you have vending machines that use Dollar Bill Validators the most common complaint you will get is, "Whay doesn't the machine take my bill?" Or you may hear, "Sometimes it takes my bill, sometimes it doesn't." Below is a crash course in how dollar bill validators work, and why they fail. I hope this information is helpful.

Dollar bill validators work using one of several techniques. The higher quality validators use multiple techniques to allow for wrinkled bills but still detect counterfeits. It also has to be able to determine if the bill is the correct denomination (meaning did you put in a $1, $5, or $10 bill).

Most bill validators have a sensor similar to the one found on an old tape cassette because US Currency uses magnetic ink on bills.

The second most common method for identifying the bill is using a photocell (similar in function to a tiny camera) and compares it to valid patterns stored in memory. Different patterns from different bills can determine the denomination.

Now that we know this lets look at why the bill "failed" in the first place. The wrinkled or crumpled bill had too many deep creases in it. Most likely the folds occurred at the spot the validator "looks" with the photocell. This makes the bill appear incorrect to the validator.

By folding the bill, or using some other type of "flattening method" you smooth out the wrinkles in the bill to allow it to pass the photo check. Better validators allow a certain number of failure points on the bill, cheaper ones allow only "crisp" bills to pass.

Vending Question #1 - Moving Vending Machines

2007-08-03T21:12:00.001-05:00

Here is a vending question I got just the other day:

"WHAT DO YOU DO IF A SITE MOVES YOUR MACHINES' AND DON'T TELL YOU .IT LOOKS LIKE NOTHING HAPPENED TO THEM. THEY WERE MOVED DOWN A LITTLE."

Vending Rules Answer:

While this is not uncommon there are a few issues you should address if this happens to you. Read our answer at our new Vending Blog...

How much do vending machines cost?

2007-06-10T21:37:00.001-05:00

Vending is a great business. I started my own full-time vending business several years ago. With that said I just want to warn you that there are LOTS of Biz-Opp salespeople who will promise you that this is the easiest business in the world. Of course they are trying to sell you $25,000 worth of equipment. Never buy from these guys - they are all rip-offs. You can start in this business for LESS THAN $2000 dollars, easily.

The last point I want to make is that this business does take time. If you are looking for this in addition to your current jobs you may not have the time to properly service your route. If you are looking to replace one or all your jobs then start small and build from there.

As far as how much vending machines cost; the answer to this question depends greatly on the type of machines you need and whether they are new or not. I run a route with lots of different types of machines. The best answer I can tell you is what I do; I only buy used machines - you get he best prices. I'll list the prices I pay for used machines.

Bulk Candy Machines - New $350 Used $100
Snack/Soda Combo Machines - New $5000 Used $500
Full Sized Snack or Soda - New $3000 Used $500
Spiral Gumball Machines - New $1500 Used $100

I hope this information helps!

Charity Vending Blog

2007-05-21T00:14:00.000-05:00

I want to make one thing clear about the vending business. You WILL NOT become successful unless you learn how to locate machines. I have NEVER heard of a "success story" where someone used a locator. In general the whole locator/national charity deal is a scam designed to sell you lots of expensive machines - and transfer your hard earned money into someone else's bank account.

Using a LOCAL charity is a great idea but it mut be approached and implemented properly. Most charities will not understand the value of the passive income you are providing them so you have to take time to explain it. Most importantly you have to show them how it will benefit them as an organization. You also need to pick a charity that you truly believe in and want to help. If they feel you are merely trying to use their name to build your make your business money they will not be very receptive.

I have actually created a little hand-out for them (with pictures and everything) I then follow-up (in person) and review how the program works. It takes a little while but once they get their first commission check they'll be placing machines all over town for you.

New Subscription and Email Newsletter

2007-01-21T01:18:00.000-05:00

I've made a couple changes. I will be posting here much more often. To save time you do not have to come to this site every week. If you sign up with the form to the right the updates will be sent directly to you email inbox. As a bonus, for signing up we will send yor, for FREE, our 10 Rules for Vending Success newsletter!

Lisenses and Permits

2006-02-14T01:59:00.000-05:00

This is a subject I have wrestled with myself while building my vending business. Vending is an not your typical business since you could have "store-fronts" in several counties or even states so you are definitely atypical and many agencies don't even know how to treat the business. Of course I'm going to be giving some information that will probably vary greatly from state to state so you may want to double check with your local small business organization (if one exisits in your area).

Now as far as licenses you have several levels to think about:

FEDERAL - Nothing is required by law for this but you may want to setup a separate business entity and obtain a separate EIN for your vending business. The only thing the fed require is that you report any income you collect. This doesn't mean that you have to pay taxes, with a savy account you can even show a loss from year to year and help offset other taxable income.

STATE - If you live in a state that has a sales tax you may be required to pay sales tax on all or part of the vending revenue. You will also be required to pay any fees relateing to the entity you chose (for example corp. tax) and of course income tax on revenue you collect (assuming your state has an income tax). Warning - with state budget cruches most states are raising or levying "minimum taxes" on ANY entity that business int he state, regardless if it shows a loss or profit.

TOWN / COUNTY - If you have a business you are probably required to have a local business license. Plus since you are in the foodservice industry every town /county you have a machine may require an annual fee per machine (this can get expensive).

OK, that that was the hard part. As you can see if you own a business everyone has their hand out to collect a fee/tax of some kind. The interesting thing about vending is that it is an all cash business that is almost impossible for a gov't agency to track. I am NOT suggestion you should break the law. I follow all the local, state, and federal laws - and sleep much better at night because of it.

I hope this helps!

On the Subject of LOCATORS & LOCATING

2005-07-24T18:16:00.000-05:00

If I am asked one question consistently, and relentlessly it this, "Where can I find a good locator to locate my machines?" I hope at least a couple of you have noticed the HUGE assumption made in that statement (if not, that's OK). The assumption is that you SHOULD and/or CAN use a locator to place your machines. I never even try to answer the first question, I answer the second question (the one not asked) whether they like it or not.

The short answer is NO.

The long answer is yes - you. OK that wasn't all that long. If you have any desire to run your own vending business (or any business for that matter) you need to learn how to sell, period, no exceptions! Again, regardless of the business you get into you'll need to learn how to sell. Those that learn this skill will ALWAYS have the opportunity to make money. I suggest that anyone interested in placing their own vending machine check out my eBook on the subject. You can order it by clicking here (yes, you just witnesses a shameless plug ;)

But even if you do not get or read my eBook remember that the key to vending machine placement is only eight simple words, "Are you happy with your current vending service?"

Don't be afraid to let people know what you do and how you can help them. Most people don't mind because usually they don't have machines (but would like some) or they have service that sucks (that's how I get most of my business).

There is no simple answer other than to find all the local businesses and start hitting the pavement. You will gets lots of "No's" but hey "No's" don't cost you anything so you have nothing to lose.

Good Luck,
Charles

Buying Vending Machines Part I - "Why Buy Used?"

2005-03-20T17:07:00.000-05:00

When I an on my route or once someone finds out that I own a vending route I am often asked by people, "What is the best type of venidng machine to buy." I am able to quickly reply, "Used." Yes, I realize this isn;t exactly what they were asking; but it was the answer they needed ;-)

You see, the most critical part to being successful in the vedning business isn't what type of vending you are in but how much you initially pay for the machine(s). The most important number you need to know in vending (or any business) is your ROI (Return on Investment). That is a fancy way of saying, "How much are you making based on how much you spent?" Obviously then the two numbers that affect your ROI will be #1 Cost of your machines and #2 Revenue per machine. Now the second item, we have very little control over. Unless you keep very dirty looking machines your machine will vend about as much as any other machine in that location. The first part of the equation is another matter. How much you pay is completely controllable by you.

Let's look at a simple example of Lazy Larry and Hardworking Harry:

Lazy Larry buys a Vendstar 3000 brand new from the company. Why? Because it was easier to deal with the Biz-Opp salesman's "package deal" than to go looking for a deal on his own (his time is too valuable he tells himnself). He paid at least $350 per machine and was forced to buy about 30 machines to get the "package deal" - his total investment is about $10,000.

Hardworking Harry knows a scam when he sees one and loves looking for a deal. He ignores the Biz-Opp salesman and starts calling ads in the paper. Finding mostly other Biz-Opp salesman he decides to check eBay (a great place to buy machines) and finds (and buys) a Vendstar 3000 for $125 (including S&H).

Now assuming they both get similar locations and profit $15 per month what is Larry's ROI and what is Harry's ROI?

Larry - $15/$350 = 4% (don't forget he also had to spend $10,000 just to get started)
Harry - $15/$125 = 12%

Now who is in a better position to expand his route? How long will it take each of them to "pay off" their machine cost? Who is more likely to have financial problems if the business doesn;t work out?

Now take the following example and assume that Larry bought a $6000 Snack and/or Soda machine and Harry bought that sames machines used for only $1500. Like I said eariler. It doesn't matter what type of vending machine you buy - it's how much you paid for it.

Do you know what you're making?

2005-03-17T01:48:00.000-05:00

Do you really know how much money you're making on your vending route? I'm not just talking about the spread between the cost of goods and their selling price. I'm asking if you've taken the time to calculate exactly how much you're making per hour (after ALL your expenses).

If you are tracking your business via accouting software (like QuickBooks or Quicken) then the answer is easy. If you track it using some other electronic method (or even manually) then the answer may take a couple extra minutes - but still worth your time. Take the "Profit" number from one of your P/L statement - I recommend you use at least a quarterly or semi-annual reporting period. Once you have this number divide the amount of time you spent in your business by it. The answer you get may surprise you - hopefully for the better.

Do you even track your business? If not, then my first question is, "Why not?" How can you be expected to make intelligent decisions if you do not even know "where you stand"? So this week's assignment is for you to review exactly how much you are making. If you have no way of knowing then first you need to start tracking your business.

Don't touch the candy !

2005-03-09T16:21:00.000-05:00

OK, here i am getting gas at the local "cheapie" station (with gas prices these days the vendor's life is getting hard). Anyway, I have a van so it usually takes about 5 minutes to fill-up. I was bored so I was looking at the Office Strip Mall across the street. You know the type, they are setup like a regular strip mall but they only have offices, no food (OK one Pizza Shop). I always like to look around because it occured to me that I shuld get machines in those offices (not sure why Inever thought about it before). Almost as if my mind summoned him out of the RE Office walks a vendor with a Vendstar (too expensive at $350 each bbut OK for less than $150 on eBay) in his hands. He was servicing his route! I rarely get a chance to watch my competitors so I took the opportunity now - since I was just sitting there anyway.

So I sat there watching him. He did all the right things. Wiped down the machine, filled with product, emptied the coins, and lastly he tested the vends. To my utter horror he was catching the candy in his hand (yes he even tasted some) and then dumped the rest back into the machine. This was done in plain sight of everyone. Worse yet, this guy didn't give off the "nice and clean" look - he actually scratched himself (I won't say where) during the whole process too. I am not making this stuff up. I wish I had a video camera handy to use the footage in future training videos.

Folks, when you stocking your bulk candy/gumball machines, please do not touch the product. And if you have to, DO NOT put it back in the machine. Throw it away. You'll only make the rest of us look bad.

Stay on your toes - or you'll lose your shirt.

2005-03-06T02:57:00.000-05:00

The main reason I started this blog was so that I could vent my own frustrations and hopefully everyone reading this would learn from it. So let me give you guys a good one - no matter how well you think you're doing - don't get lazy!

Look I am no different than any of you out there reading this blog. I get complacent and lazy and sometimes it takes a while to snap out of it (often I need a good kick in the butt). It only takes a day like I had on Friday to make me realize that sometimes you have to stop working harder and start working smarter. It all started with a nice simple route of about 10 locations. As time went by I picked up a couple smaller acccounts since I was driving by anyway ( so far so good ). Over the last 18 months something has happened. I lost two accounts because the chain store went out of business and two other accounts started out-sourcing so the sales were cut in half. Last week we got a call and we lost another location (that was my kick in the butt I needed). It took a while to happen but suddenly the once good route is "piss poor". I spend more time driving than I do pulling money (the locations I lost were in the center of the route - of course).

I haven't been working to get new locations for this route (I didn't feel like doing more than 10) so now I have to get 3 new locations (5 if you count the two accounts I need to dump) just to stay even with last year. Not a great position to have allowed myself to get into. Did it happen overnight? No. Could I have acted proactively to prevent this? Easily, but I got lazy.

Two lessons here: #1 Don't let success make you lazy. #2 You're going to lose accounts so make sure you have a strategy to get new ones on an ongoing basis.

Vending Thieves - Your Silent Partener

2005-03-01T20:31:00.000-05:00

Do you have silent parteners in your vending business? I know I have had silent parteners from time to time. Fortunately I figured it out pretty quickly and was able to stop them. How did I do this? I simply changed the locks on my machines.

Did you know (I sure didn't) that most vending manufacturing companies use a very small set of keys for the machines they sell. Of course they deny it - but then we all know that they are lying. While this is more of a problem with the gumball and bulk candy vending machines it is certainly not exclusive ti these machien either. Most companies have 4 - 8 keys and they "try" not sell other vendors in your area the same key. I say try because if they have more than 5 people buy machiens in your area you can be sure they aren't getting an entire new keyset created. Add to this the fact that so many people are buying and selling machines on eBay you can be sure that your "unique" key is anything but unique. Unfortunately, if you bought machines from: Vendstar (aka Multivend), North American Vending, Silent Sales Force Antares (aka Orion Corp or Natural Choice), Ultravend, and any number of other companies the key on your machine is NOT unique.

The first thing to understand is that your machine IS NOT as secure as you may think. Don't worry though the solution is simple. For about $10 a lock you can replace the lock/key for you current vending machines. If you have lots of vending machines this may be expensive but I can guarantee it is cheaping then having a "silent partener" stealing from you every month. Change you locks today and fire you silent partener.

Museums, Malls, and SuperMarkets

2005-02-27T23:19:00.000-05:00

Lately I've been thinking alot about "Good Locations". I am often asked what locations are best and I never know exactly what to tell people. As I said yesterday the two primary things I look for are corporate offices and low hassle accounts. Now while these locations are nice they simply don't make that much money - usually about $40 - $50 a month. Now don't get me wrong. So long as you buy machines at the right price you'll have a nice ROI (return on investment). I could easily run my business on only small locations - I just wouldn't have a huge profit (in dollars - NOT percentage).

I like having several "big locations" that gross $200+ a month. The best way to get these locations is to approach Museums, Malls, and Supermarkets. The locations don't rely on the comission income (but they do expect 25%) so the "hassle factor" is very low plus the shear volume of foot-traffic makes it a vendor's dream. Realize that most of these accountants have contracts with Vending Management companies - so placement will be difficult. I only acquire about 3-4 a year (I also lose about 1 a year) but that still leaves me with a net gain in my number of "big locations". I've found that if you use a specialized machine (i.e. stickers or super balls) that does not compete directly with the current machines a manager will let you place your machine there.

Once you have about a dozen or so of these locations your monthly numbers start looking real nice. Personally I hit the my "small office" locations during the week. This revenue pays for all my costs. At the end of each month I hit my "big locations" and they provide me with my profit. It is a two tiered system that has worked very well for me. Good Luck!

The trouble with comissions

2005-02-26T19:08:00.000-05:00

The subject of comissions is always a troubling one for both new and experienced operators. Unfortunately there really isn't any easy answer to the question. Typically I only pay comissions to "Bulk Candy" locations and usually NEVER pay comissions on "Snack/Soda" locations. T his is due to profit calculations - being that bulk candy has a greater margin than snack or sodas.

Here is the problem I run into though. About this time of year (i.e. the holiday spending season) many location owners are low on cash. They sit and stare at my machine all day thinking about how the comission money in the will solve their problem. They dream and hope that it'll be a "good comission" this month. Of course when I get there and the comission isn't as high as they hoped they get mad at me - the vending guy. If the consequences weren't so dire to my business (they may kick me out hoping to get a "better" machine) the situation would be comical. I mean why get made at me? I'm not the one who spent too much money during the holiday.

Anyway because of this recurring problem I've developed a few placement strategies you should implement and follow. I prefer to use a charity system (local charities only), and perfer corporate locations were the money goes into an "employee party fund", and above all I avoid locations if the owners are constantly telling me stories of financial woe.

I realize the "newbies" out there will take any location in the beginning (just as I did) but as you grow begin to filter and sort your potential locations. You want consistent earners with as little hassle as possible. No one (other than you) should be depending on he money coming out of your machine.