Saturday, May 15, 2010

Vending Machine Business Memories

by Nathan Stout

I want my own business! I want it! I want it! I want it! With that in mind I will convey the story of one of my attempts at a business. I am reconstructing this post from a diary I kept a the time.
Glossary:
Coil: The metal bar shaped like a spring that holds the vending items.
Vend: The machine ejecting the product when selected.

One morning in August 2005 while I was power washing at the Lake Worth Target (I was a Target Maintenance man) I had an idea. Target had recently moved into this new strip mall and was at the time the only open store. It was dark, and like 6:30 in the morning. As I was washing I was thinking about all the business coming into the area, like 5 anchors (larger stores) and a ton of small retailers. As I was thinking of ways to get out of debt it hit me. The idea that would spur me on to a new business venture...Vending.

It occurred to me that all these new businesses would need vending machines. I had thought about that particular business opportunity in the past (not very seriously) and now I revisited it. It was a lot like Renegade Anime, you bought really, really cheap, and sold for a good low price. You had less profit per item, but you sold more. The thought really excited me at the time. I thought about how I might advertise for business. I was working at that Target, and a Target in a new strip shopping mall in Weatherford, so I thought my opportunity was doubly good. I could make flyers that sounded like a great deal, and make up one of the websites I owned to advertise as well.

I called Chris that day and told him of my new idea. I thought vending machines didn’t cost too much (at the time I was thinking like $800-$1000) and with very little in expenses we could have something big on our hands. I had a hard time figuring Chris into the picture however. I really didn’t need anyone else since it was such a small expenditure of time and personnel. Chris didn’t have any money to help invest in the machines, so that was out. I figured that at some point I might have enough machines to actually employ Chris in a contract type position to help fill machines. But that would be the future (if all worked out).

The next step was to work on the site. I have had several domain names for several years now and have used them for various reasons. I owned the PirateAdventures.Com name (which I had some comics I had drawn on) and in 2004, I was able to sell it for 950.00 to a company in Florida for their tourist company. I have also owned other names I thought I might be able to cash in on at some point in the future (see my business thinking has been going on for years). I also owned the name WestFortWorth.com. If anything might bring me money it would be the website that encompasses so many high dollar neighborhoods such a Ridglea and Westover Hills. This website has been used for promoting my collectibles shop as well as our shop neighbor – ‘A Mirror Finish’ and my old comic book shop’s landlord Paul Lyons. After the Renegade Anime business fell through (see my other blogs on that subject) I cleared off the page and simply advertised all the domain names I owned and had for sale. Names like DataPirate.com, RickRanger.com, SkippingFrog.com, FrontMission.Org and so on and so forth. This WestFortWorth.com website was cleared again in August and became the new home of: Happy Worker Vending.

If the name Happy Worker Vending has some obscure meaning to you but you can’t place it then you are probably a Robin Williams, Barry Levinson, or Joan Cuisack fan. I got the idea for the name from the movie Toys. There is a song called ‘Happy Worker’ in the movie. Once I told Chris he got a big kick out of the name, a real big kick. To this day he still laughs when he thinks about it. I think that’s what’s most important to him, not the success of a business, not the work and effort you put into in, but catchy business names that mean something hardly no one else gets. He loves obscure references. Maybe he just likes having a reference for everything.

I changed the WestFortWorth.com website to the Happy Worker Vending website. This was a basic page which offered a vending machine for your place of business with no contracts, no problems, and no worries. You (the location owner) simply provided a power outlet and the space and we provide the machine. The area covered by the business was the Western portion of DFW including Fort Worth, Lake Worth, Weatherford, Burleson, Crowley, and the surrounding area. I really didn't expect anything to come of it. Around two weeks later I got an email from a Wells Fargo bank in Fort Worth. They were requesting a vending machine for their lobby. This really did surprise me. I was not expecting anyone to ever email me about the service. I do try to follow the philosophy: 'he who dares, wins' and ‘you won’t win unless you try’ I had been vague about info on the web page since I had not actually done this at all up to this point. I kind of skirted around that fact, leaving out phrasing like: 'we have satisfied customers' or 'in business since since 19xx'. At this point I had some serious thinking to do. I went to Sam's and took a look at the price of vending machines. They were high, really high. For some reason I thought they were much cheaper. The additional problem I ran into was the fact that they wanted a soda machine as well. I found better luck at checking their website for variety and information. I found a couple of different machines that had promise. They all held varying amounts of product (snacks and sodas) and were various price tags. The range was 2,800 to 4,300. I spent about 4 days mulling over if I wanted to spend this sort of money (rack up that much more debt actually). I decided to go for it (sorta). I emailed them back and told them I was going to check out machines and such and get back to them. This gave me more time to think. After another week I took the plunge and bought the machine online. I got back with the bank and let them know I ordered it and was just waiting.

After making the decision and adding that much more debt to my overwhelming debt collection I started looking for deals on the product front. Sam's had the best deals on snacks but various retailers had the better deals when it came to sodas. It's true I would be paying tax to the state two times on these sodas; it was still a better deal than buying in bulk.
I dealt with the lady at Fromac (the vending machine company) and we set up a delivery location. I didn’t want it to be sent to my home because it would have been like an extra 200 in shipping. She got them to deliver it to a local Sam’s. It was now several weeks since my first email from the bank and I think they were getting a little on the antsy side. I just assured them it would be there in the next week. I finally got a delivery date and I asked Chris to help me pick it up. What I wanted to do was pick the machine up and take it to my house. At this point I would read the manual, figure out how to load it, and how to change prices. The next day I would take it to the bank. It would have been easier to just have it delivered to the bank in the first place but I didn’t want to look like a dork when I couldn’t figure out how to even open the machine up. On the day I got Chris to come over and we went to get it. When the guy brought it out I was pleased to see it wasn’t a colossus. Speaking of the guy who brought it out to us, that is whole different story...

When I went into the Sam’s I stood around waiting for someone who would know what the heck was going on. I got passed from manager to manager and finally this guy comes out and helps me. This guy (I can’t remember his name) was later (3 days to be exact) to be seen in the newspaper and on TV for being caught embezzling over 25,000 from that Sam’s club. Apparently they found the cash stacked in luggage in his apartment.

I digress; this guy came out and loaded the machine into the truck. I began to tie it down for all I was worth. Out of all the trouble I have had to go through to see my dream of getting a vending machine into a location, moving the thing was the worst. I was having flashbacks of moving the fridge Chris gave me and my wife when we moved into our house. When you have something that tall and top heavy it makes moving it in a tiny pickup a gut wrenching nightmare. We tied it down and made our way up Bryant Irvin at a snails pace. I could feel the thing rocking on each turn. Finally we made it and then spent the better part of 45 minutes trying to get the thing out of the back of the truck. It was just too heavy to get down. We finally had luck by using two pieces of wood and slid the thing off. We got it in the garage and then the problems began.
When we unwrapped the vending machine I noticed the insides. The middle drawer was loose and sideways. It came loose in transit and played havoc inside the machine. It scrapped the sides and bolts came loose. All 3 of the shelves had bent sliders and a few of the coils came out. When I inspected the outside of the machine I could see big dents on the sides. Chris had to leave so I finished unwrapping it and I started to put it back together. I then ran all the tests and it seemed to work fine. I was reluctant to call but I knew I needed to. I called Fromac back and got a hold of the lady who helped me originally. I got her email and sent her some pictures I had taken. She told me she would get back to me the next day.


D-Day arrived and I made a stop by Sam’s to pick up the snacks for the machine. I used every last bill I had in my wallet and got what I thought would sell. After I got home I got a call back from the service manager and we came to the agreement that I could email a list of parts I needed to replace and he would UPS them to me. I called Chris back and he was able to come over but it was going to be a bit. I loaded up all the snacks and got the machine in place at the rear of the truck. Earlier that day I had bought some real tie downs so maybe the trip to the bank wouldn’t be so bad. When Chris got there we came up with a new strategy for getting the machine in the truck bed. We decided to simply lay it down in the bed and then stand it back up once it was in there. It worked like a charm. I started tying the machine down with the new straps when I messed one of them up trying to loosen it up. After all that I had to ditch one of the 2 new straps I bought and use the crappy old rope again. The strap that I did get to work fine did a great job of securing the machine to the truck. We made an event free trip to the bank. I was worried about taking the freeway but Chris thought it would be the least bumpy route. He was right and it was even better because it was getting late and traffic was real heavy so a good part of the trip was driving really slow (fine with me). We got there and unloaded and placed the machine in the corner under this US flag they had hanging there (come hither to the freedom of sugary snacks and drinks!) Chris began making the quip: “Happy Worker Vending: An American Company”. It was too late to fill the machine so I decided to come back on Friday.

Friday came and I loaded the machine up with snacks, drinks, and money. I said my goodbyes to the lady who had originally contacted me and told her I would be back on Monday. Monday rolled around and I eagerly drove to the bank. The whole time I was thinking to myself: I bet nothing has sold. I was of course hoping that was wrong and whole coils would be empty but I wanted to make sure I didn’t set myself up for a fall. The machine had been available for business for two days (the rest Friday, Saturday and most of Monday) so I hoping that something sold. Now that I write it out and realize that it was only available for about 2 days I feel a little better about it. When it came down to it I sold 13 sodas and about 15 snacks. I was expecting to see a bunch of coins in the catch pan but there wasn’t any. There was however 12 dollar bills in the bill slot. I guess the claim that dollar acceptors on vending machines do work wonders for sales. I loaded the empty snack slots and took the cash. It wasn’t bad but it wasn’t good.

The next day I showed up to fill the machine was the following Thursday. Sales had been almost the same as the previous take. I did notice that Dr. Pepper sold 2 to 1 over all the other drinks (with Coke and Pepsi doing exactly the same as each other). I emptied the cash and noticed that the quarter slot was full and spilling into the reservoir. The nickels and dimes were low so it appears people are using dollar bills and quarters. I knew the next time I would need to bring some more change.



The next Monday 3 large boxes were up on the front porch. The guy at Fromac came through with the replacement parts I requested. Inside were all 3 replacement drawers and more vinyl for the inside of the compartment.

The next thing I needed to wrap my head around was the accounting of the whole thing. Vending accounting is like keeping track of all the individual bits of straw in a straw stack. It’s daunting. Not only the items but the actual money aspect since you are dealing with small change. I used a sprial notebook to keep track of the snack's empty spaces and did my calculating later at home. I took the dollars out of the bill collector and only took the spare change in the overspill box. In the end I didn't worry too much about keeping track of the money since it was so tedious and you always had the unknown amount in the tubes (the tubes that spat out people's change). I simply used that notebook to calculate how much I had sold and I assumed I had that much money.

During the time I had the machine there my take (usually about every 5 days) was anywhere between $22.00 and $40.00. There were weeks when it was less and some where it was more but that's about the average.


At work (my work at the time, Target, that is) I talked to the HR guy about my business and we got to talking about how many machines it would take to live off of. We came to the number of 30. After taxes and the amount you would have to have in food assets at any one time 30 machines would afford you a decent lifestyle.


Things were going fairly well. I did start having some technical issues after a few months though. People started complaining that the machine was taking their money. I never could figure out what was happening but I always gave them their money back with a smile, got to keep them happy.

Then in January (6 months into my endeavor) this happened:



1/9/06
Today was a bad day for Happy Worker Vending. This might be the end of it all (almost). I get a call from the bank manager wanting me to move the machine into the break room at the bank, out of the lobby. I went there and first found out that it was moved so they could put some new carpet down and half of the items were messed up and scattered inside the machine. After a hard time moving it (and with some help) I made it in there. I don’t know what effect it will have on the whole thing but if worse comes to worse I can take it out. I guess I could always set it up at the flea market and sell out of it as well as try to sell it. Anyway there was no real way to tell what sold since stuff was scattered. It looked like a lot of it fell out. There was a sixty in it though, so I made something.


1/18/06
My fears were pretty much played out when I check the machine on Wednesday. It wasn’t as bad as I thought it would be, but it wasn’t good. I took in around 35 dollars only due to the sodas. Hardly any of the snacks sold at all. To add insult to injury there was a box of Gardetto’s on top of the machine for anyone to have. It’s like they are doing it on purpose. I can say with definite conviction that a good portion of my business there [the bank] was from customers. I will just have to bide my time and see what happens then think about doing the flea market thing. By the way the doughnuts sold out. I also reduced prices on the snacks to see if any more sell this next time. SUCK!


This was the beginning of the end for Happy Worker Vending. Business died almost totally. I had Miguel help me one day haul it back to my house. I never set it up at the flea market. It sat in my garage for a month or so and I eventually sold it through the newspaper at a huge loss!


It was a fun business with all the stocking and money taking and the fact that the product was all in a nice secure place. For the most part it is a part time job with almost full time benefits (if you do it right). I lost money big time on it though and I don't think I would do it (as a business plan) again. If I had some other business I'd love to put a vending machine in it, but just not a business as itself.

1 comment :

  1. You can very well manage your full time job and personal life with this vending machine business.

    ReplyDelete