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HOW NOW? Veteran Bulk Vendors Imagine Launching A Business Today

Posted On: 6/26/2010

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Beaver"Prospective bulk vending operators always have faced a daunting task when first starting out. Perhaps they have purchased one or two machines as a test. Now comes the hard part: placing them on location.

In a perhaps unscientific "thought experiment," VT asked several experienced and successful bulk operators what they would do right now, if they were just starting out. The scenario was simple. Participants were asked, "Imagine that it's your first day as a bulk vending operator. You have one machine and a few boxes of product in the back of your car or van. What would your first stop be when getting started?"

Not surprisingly, all the respondents operators provided solid, real-world advice. What was surprising is the optimism they express about the industry. They are nearly unanimous in the belief that a small operator starting out today, with low overhead and plenty of hustle, could build a profitable business. Here are their responses:

Dave Siegel, Great American Vending Co. (Hauppauge, NY): "I would put it in either a busy laundromat in the Bronx or a restaurant/diner type place on Long Island. Both those locations are open 24 hours, which maximizes profits. It's not the demographic -- it's the traffic. In the laundromat, they have quarters readily available; and in a diner location, customers are leaving with change. Both locations are really, really good for bulk vending."

Larry Freshman, Kworterz Vending Inc. (Punta Gorda, FL): "You want to find a high-volume location and you want to use high-count gum, like 1,430-ct. Most bulk vendors, when they get in the business, buy 850-ct. because they can get them at Sam's Club. It works like this: 850-ct. gum returns about $212 retail, but if you spend a little more on high-count gum, your return becomes $357 a box. You can also get a lot more product in a head, so you don't have to service as often.

"That's why we like to use 14" heads from Northwestern," he explained. "We can put 3,000 gumballs of 1,430-ct. size in the 14" round globe and service it 10 times a year, which is better than 20 times a year.

"As for locations, we like busy pizza places, Chinese buffets, anyplace with a high traffic count," Freshman reported. "If you're not making money at a pizza place, deli or buffet, it means they're going out of business."

David George, Gus's Gumballs (Laurel, MD): "Dry cleaners, Chinese buffets or any single-owner convenience store. These people normally identify with the operator; they're struggling themselves, and they always have one or two square feet by the front door they can spare.

"Superballs are always -- always -- a good seller," George said. "And one of the little tricks we've learned is that when you're selling M&M's, you mix the bags of plain and peanut, so it's a win-win: you use one head to take care of two customers. The important thing is to feel out the individual location. You have to see what they need and try to fill that need."

John Honeycutt, Great Dane Cranes (Hooper, UT): "I'd head for a dance studio where they teach little kids to dance. Carnecerías are also good; a carnecería is a Hispanic market. The demographics are perfect. The people who shop there, I'm convinced, don't go to the big-box stores. They go to the local market because it caters to their needs. They speak the language. Also, starting small like that, I'd take Northwestern or Beaver machines and put them out slowly, and then eventually put them on five, seven or nine stands and start putting them in bigger stores. You step into it easy that way."

This allows the startup operator to grow at minimal cost, Honeycutt pointed out. "Initially, you don't need a special vehicle, storage or a lot of tools; you almost need nothing. Then, when you start making money, you can add one or two or three at a time to those bigger stores."

Larry Schatz, Schatz Vending Co. (London Mills, IL): "I believe what I would do is start looking at offices, places that aren't served by the large vendors. They might like a bulk vender in their coffee or break room. I would shy away from places that are not under a watchful eye," he observed.

"I'd say there probably are fewer locations available today, and greater competition," Schatz added. "As the lake shrinks, there is still the same number of fishermen. I'd look for other places where people might congregate, like automotive service places, quick-lube places, and car washes -- believe it or not, I've had some car washes that were pretty successful over the years."

Such locations usually can be served successfully at minimum cost, the Illinois operator reported. "When you're starting out you usually don't have the overhead, so you can do pretty well with the one- and two-head machines. As your business matures, you need the bigger accounts because the overhead grows. I believe there's a lot of real opportunity right now."