Vending Business - How Your Choice of Product Can Affect Your Operation

Profitable vending locations are without argument the most important factor in getting your vending business off to a good start. No less important is choosing which product to vend. Your product choice will affect your business on numerous levels, from the machines you use to how you service your route.

Obviously, your product choice will dictate the type of machine you use in your vending business. What might not be so obvious, however, is exactly what factors you should examine when considering what to vend. At the very least you'll want to ask yourself the following questions. How much money can you afford to spend on inventory on a monthly basis? What type of gross margin do you want to realize? How much time can you devote to servicing your route? How much overall income do you want to derive from your vending business?

The cost of inventory is a major expense and your gross margin determines how much you'll spend on inventory. Gross margin for bulk candy vending is higher than it is for a soda or snack vending. It also takes less time servicing each bulk candy machine than it does for a soda or snack machine. On average a bulk candy machine can be serviced (i.e. money collected, machine stocked and cleaned) in about 5 to 10 minutes. Whereas a soda or snack machine might take as much as 30 to 60 minutes to service. While a high gross margin and a short service schedule are appealing advantages, there's still the question of how much total income you want to make from your vending route and what will it require to achieve that income level.

Contrary to the sales hype, the overall average revenue derived from a bulk candy machine on a typical route is between $8 and $15 monthly and for a soda or snack machine route it's between $75 and $150 monthly. Gross margin can average around 70% for bulk candy vending and 55% for soda and snack machines. At those gross margins, if your bulk candy machines were averaging $10 monthly, you'd need approximately 570 machines to earn $4,000 gross profit ($5,700 minus $1,700 for inventory). To earn the same amount of gross profit with soda or snack machines averaging $100 monthly, you'd need approximately 73 machines ($7,300 minus $3,285 for inventory). Assuming 10 minutes service time for bulk candy machines and 40 minutes for soda and snack machines, it would require around 95 hours per month to service your candy machines and 50 hours to service your soda and snack machines. The latter figure could be higher as you'd probably have restock soda and snack machines more frequently.

A final consideration in choosing a product is the shelf life of the product you intend to vend. Shelf life is defined as the length of time that perishable items are given before they are considered unsuitable for sale or consumption. For canned sweetened sodas this is not much of an issue. Nine months is the shelf life. For bottled sodas as well as diet canned sodas it's around 3 months. Amazingly, many of the bulk candies have a long shelf life but public perception of how long any bulk candy item can remain in your machines without it being replaced is far short of what the official shelf life figures are. Snacks are frequently marked with a "sell by" date stamped on the packaging and will need to be checked regularly. Failure to heed the public's perception of freshness can substantially affect your gross margin. See the following to get more information about the shelf life of many products.

Your inventory will have a major influence in your business. It is the most costly aspect of your daily operation. What you choose to vend should be carefully considered as you begin planning your vending machine business.

The author currently operates an 80 machine vending route composed of bulk candy, soda and snack machines in Dallas, Texas. Additionally, he recently launched a vending locator service that uses telemarketing to support new vendors nationally needing locations for their machines. His web site can be viewed at http://www.yourvendinglocators.com

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