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Vending business-Any advice

ouie

New Contributor
Oct 22, 2007
21
5
12
Philadelphia area
I recently started a new venture in vending. Sold a contract for 10 locations and now scrambling to buy equipment. Planning on buying machines used (have bought 3 already), planned my route in clusters, and expect to pull about 50 dollars per week per machine from the research I have done. My exit strategy is to eventually sell the equipment and route after it has produced a steady cashflow and repeat. I know this isn't exactly fast lane but I am new to this business and I am learning the ropes. Anyone else here involved in vending and is there any advice you can give someone starting out?
 

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Yankees338

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Jul 24, 2007
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I actually considered this for awhile. Have you read anything by "The Vending Guy" or something like that? I can't remember where I found him - possibly RD boards. My idea was practically the same as this. Are you planning on using large vending machines (sodas and snacks) or the smaller 25 cent candy machines?
 

mglshark

New Contributor
Oct 18, 2007
36
5
14
Amazon had a digital download on vending machines business - about $15 - $20 I think - it may have been that book you mention, I was tempted to buy just because it seem so detailed on an usual subject. I guess the biggest cost is buying and maintaining the machines, accounting for theft and breakage. Still I like to hear more about it, are you putting them in schools, malls, bars, laundry areas? What is the % profit at the end of the day (or week?). And what is the costs on new machines?


Marc

PS - what ever happen to cigarette machines, have not seen them in years!

Marc
 
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ouie

ouie

New Contributor
Oct 22, 2007
21
5
12
Philadelphia area
I actually considered this for awhile. Have you read anything by "The Vending Guy" or something like that? I can't remember where I found him - possibly RD boards. My idea was practically the same as this. Are you planning on using large vending machines (sodas and snacks) or the smaller 25 cent candy machines?
I do own vending Guy's ebooks and I am using him as an informal mentor. I have communicating with him, purchased some product, and have gotten some invaluable advice. I'm going with the Antares combo machines (larger machines) just to increase the potential sales, plus larger machines are harder for people to walk away with. This is going to be labor intensive though so I have recruited some help with the route.
 
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ouie

ouie

New Contributor
Oct 22, 2007
21
5
12
Philadelphia area
Amazon had a digital download on vending machines business - about $15 - $20 I think - it may have been that book you mention, I was tempted to buy just because it seem so detailed on an usual subject. I guess the biggest cost is buying and maintaining the machines, accounting for theft and breakage. Still I like to hear more about it, are you putting them in schools, malls, bars, laundry areas? What is the % profit at the end of the day (or week?). And what is the costs on new machines?


Marc

PS - what ever happen to cigarette machines, have not seen them in years!

Marc
The Amazon Down load is the "The vending Guy's" ebook from the RDPD forums. You're right the biggest one time cost is the purchase of the machines. The key there seems to be BUY USED ! BUY USED ! BUY USED !. A new machine goes for a 50% to 75% discount when sold used. Machine that were $6000 new can be bought for $1500 used (in working condition) dependent upon how old they are some can go even lower. That makes a big difference on the break even timeline.

I lucked out on my contract with a quasi-state government agency (luck meaning I have , made the right contacts and "dripped" this idea on the right people for 5 years) and picked up an exclusive contract for 13 (3 just added today yippee) locations before I owned even one machine. I keep thinking of the way Onasis started his shipping empire and scaled the idea waaaaay down. That equipment problem should be rectified by tomorrow end of day.

From all my research and contacts you can expect $200 a month gross (roughly fifty dollars a week) average per machine per location, of course some will do better than others. Of that $200 60% to 75% of that will be profit. Taking the conservative number that is $120 profit average per machine per location. As you can see this isn't a get rich quick scenario but it does give me an additional stream of income to compliment my rentals, paper assets, and my full time Job (GASP! dirty word), After a couple of months i'll have some hard data to back all this up and will share with you how close this is.

As far as cigarette machines go in the late eighties municipalities started passing laws on these machine that made them much less profitable. Some newer machines hope to make them viable again but I don't think it is gonna fly in the court of public opinion. A lot of these can be picked up for a song for nostalgic reasons.

I'll keep you guys posted on how this all works out.
 

mglshark

New Contributor
Oct 18, 2007
36
5
14
Great guys, thanks for the valuable information. Like medical equipment (I,m a chiro) the price on used machines drop like a rock once off the showroom floor. Just like a new car!
That affects your bottom line profit, much higher with used machines. I like the idea of lining up contracts FIRST before buying machines. Just like we are doing in a new collection business we are starting, before we buy the high end software we are contacting insurance co.'s to get their "dead" files. Service businesses share a lot of similar processes to get the business up and running using the bootstrap methods. Well done!

Marc

PS - mabye those smoke machines one day be worth big bucks on e-bay!
 
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ouie

ouie

New Contributor
Oct 22, 2007
21
5
12
Philadelphia area
Despite the weather in the Northeast today I managed to get the first two machines picked up. Hopefully we can have them placed by Friday. I got that feeling in my gut again when I handed over the money. Whenever I make a deal I get this feeling. When I bought my rental. When I started my first business as an IT contractor, and now. That feeling is unbridled terror.:smxD: I can be be 100 percent sure, do all my homework, and have numerous back up plans. But at the moment I write the check, hand over the cash, or sign on the dotted line I feel it again. The great thing is 30 seconds after the event it is gone. I have commited now. No turning back. and because of that I make it work. Because now I have no choice. I have made a true decision. To decide comes from the root latin word that means "to cut off from". Any decision is a "cutting off from" any other possiblity. So now i'm in the vending business. Tonight I will probably open up some spreadsheets and play with the numbers just to run a couple different scenarios again. I did this all before but I'm compulsive.
 

MJ DeMarco

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Despite the weather in the Northeast today I managed to get the first two machines picked up. Hopefully we can have them placed by Friday. I got that feeling in my gut again when I handed over the money. Whenever I make a deal I get this feeling. When I bought my rental. When I started my first business as an IT contractor, and now. That feeling is unbridled terror.:smxD: I can be be 100 percent sure, do all my homework, and have numerous back up plans. But at the moment I write the check, hand over the cash, or sign on the dotted line I feel it again. The great thing is 30 seconds after the event it is gone. I have commited now. No turning back. and because of that I make it work. Because now I have no choice. I have made a true decision. To decide comes from the root latin word that means "to cut off from". Any decision is a "cutting off from" any other possiblity. So now i'm in the vending business. Tonight I will probably open up some spreadsheets and play with the numbers just to run a couple different scenarios again. I did this all before but I'm compulsive.
Taking action ... great to see!

Nice to see some action. Adding speed ++

Ditto!!
 
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ouie

ouie

New Contributor
Oct 22, 2007
21
5
12
Philadelphia area
Re: Vending business-Any advice (business structure question)

Sorry if this thread is becoming bloggish (is that even a word ?), but I find posting at the end of the day helps me relax and reflect on my accomplishments.

Right before the end of the day at the dreaded J_O_B I was looking for deals on machines on craigslist. Low and behold I found an older model of one of the exact machines I had just purchased for a third of the price. A quick email and phone conversation led me to the seller whom made their full time living from vending and whose family always had. She grew up in the business and was happy to sell me the machine (it does need a lot of TLC...paint,new stickers, some cleaning, new locks...nothing I can't handle) She had just posted today and had some people scheduled to "take a look" tomorrow. I asked her if I could get to her tonight with CASH would she sell it to me on the spot (she was only 20 minutes from my house). She agreed so at 5pm on the dot I dashed home. Picked up my 16 month old from daycare, handed her to her mother, told the 7 year old to finish his homework and not give his mother any trouble. I quickly cleaned out the truck that can just barely fit a small machine in it and proceeded to call my buddy...my father...and my cousin to see if anyone had free time to help me pick it up. My buddy got back to me first so off to pick him up and be on my way.

When we got there the seller was very pleasant and was all too happy to share stories and advice and tips on the business (everyone I have met has been very helpful and nice....but then again I have brought them all rather large sums of cash...:).

She said she had contacts who sold, machines, spare parts, routes the whole nine yards and if we ever had any questions about the business to just call her. So today I made a great new contact and lowered my cost per machine significantly.

Tomorrow I plan on placing my two machines that are ready to go and this weekend I will start sprucing up the third to hopefully place next week.

Just a quick question to the group. I want to structure this company as an LLC. I was reading Diane Kennedy's post on the subject but I have a question of timing. Right now I have made 0 dollars. Given that fact should I wait till I make some money to put it into the proper structure, should I do it immediately ? Or should I just make sure it is done before I place the machines.

I don't want liability issues but don't want to put the cart before the horse either. Any thoughts?
 

MJ DeMarco

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Get the LLC immediately. If you sell something out of your machine and it kills someone, you'll be up a creek without a paddle. Or, the machine falls over and crushes someone, you're liable. Those damn vending machines weigh a TON!!
 
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ouie

ouie

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Oct 22, 2007
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How could I be stupid enough not to think of that? Thanks MJ -TOP of Tomorrow's LIST. I should have remembered how much they weigh.. my arms an back sure do!
 

MJ DeMarco

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How could I be stupid enough not to think of that? Thanks MJ -TOP of Tomorrow's LIST. I should have remembered how much they weigh.. my arms an back sure do!
No problem, glad to have helped.
 
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ouie

ouie

New Contributor
Oct 22, 2007
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Philadelphia area
Made very little progress today due to family commitments. Have a line on one more machine at a discounted price (only half price this time). Have to get the Paperwork filed for the business structure and have to start looking into building business credit immediately afterward. This is actually happening and I'd like to thank the forum. I use you guys as not only mentors and a sounding board,but more importantly as my ACCOUNTABLITY. If I do not take action I feel as though I let the entire board down.
 

phlgirl

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Congratulations on the forward progress, Ouie!

Don't worry too much about that 'unbridled fear' feeling..... I used to have it all the time myself but after a while, it becomes less like a 'sick from fear' feeling and more like warm rush - likened to that of a roller coaster or skydiving, etc. You actually begin to look forward to it. :)

Keep up the good work. As a philly girl, at heart (and one who will be home soon!), I am pulling for you!!
 

MJ DeMarco

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I recently started a new venture in vending. Sold a contract for 10 locations and now scrambling to buy equipment. Planning on buying machines used (have bought 3 already), planned my route in clusters, and expect to pull about 50 dollars per week per machine from the research I have done. My exit strategy is to eventually sell the equipment and route after it has produced a steady cashflow and repeat. I know this isn't exactly fast lane but I am new to this business and I am learning the ropes. Anyone else here involved in vending and is there any advice you can give someone starting out?
Have you secured locations? You say "sold a contract for 10 locations" -- does that mean you have solid commitments from companies to hold your machines? Where are they located? Office? Warehouse? Retail? Do the locations get a cut for holding your machine? Just curious how the industry operates.
 
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ouie

ouie

New Contributor
Oct 22, 2007
21
5
12
Philadelphia area
Have you secured locations? You say "sold a contract for 10 locations" -- does that mean you have solid commitments from companies to hold your machines? Where are they located? Office? Warehouse? Retail? Do the locations get a cut for holding your machine? Just curious how the industry operates.
All locations are secured and ready to go, solid commitments in an office setting with about 10 empolyees per office and traffic of about 20 clients per day in the office. If possible the industry standard is never give anything away. The machines are seen as a service for customers and employees in break rooms and waiting areas. Now some locations will insist on a cut. The rule there is to give as little of the profit away as possible I have seen people go as high as 20% but that would have to be a hell of a location with a lot of turn over. You basically double your money on what ever is sold . The big selling point with a lot of these places I have found is personalized service. When something goes wrong no one wants to deal with a large corporation. If you can keep the cleaning crew and admin staff in these places happy, you will get more valuable information on sales, what people like, and the security of your machine than you ever will get out of a manager.
 

RealOG

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Hi Ouie,

My wife works for the Canteen division of Compass Group and they do huge vending contracts. They shoot for anything over a $50k/year gross threshhold. Anything lower than that aint worth their time. It sounds like the SMB market is very underserved. Currently she sells in Phoenix-Metro, but they are a national company that focuses on all realms of food service.

Its a growing interest, primarly on the "fresh food" tip. Vending machines have a negative connotation with some people as "old and stale", Canteen overcomes this with high end service and product. They have sales folks all over the country and my wife's revenue target is $1.5M this year.

Finally, one sales tactic that might scale down well for you is "food drops". Come to the location where you have your machines and do a food tasting. Allow your customers to try out the various items (cut up a bunch of candy bars, chips or whatever) that you can offer and let them tell you what they want. Might help optimize sales.

All this info is second hand from what my wife does, but it seems to work for them pretty well.

Good luck, I will be following your success!

RealOG
 

MJ DeMarco

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Hi Ouie,

My wife works for the Canteen division of Compass Group and they do huge vending contracts. They shoot for anything over a $50k/year gross threshhold. Anything lower than that aint worth their time. It sounds like the SMB market is very underserved. Currently she sells in Phoenix-Metro, but they are a national company that focuses on all realms of food service.

Its a growing interest, primarly on the "fresh food" tip. Vending machines have a negative connotation with some people as "old and stale", Canteen overcomes this with high end service and product. They have sales folks all over the country and my wife's revenue target is $1.5M this year.

Finally, one sales tactic that might scale down well for you is "food drops". Come to the location where you have your machines and do a food tasting. Allow your customers to try out the various items (cut up a bunch of candy bars, chips or whatever) that you can offer and let them tell you what they want. Might help optimize sales.

All this info is second hand from what my wife does, but it seems to work for them pretty well.

Good luck, I will be following your success!

RealOG
Great info, thanks for helping! Speed+
 

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