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THE VENDING MACHINE INDUSTRY –
WHAT’S GOING ON?
History: Did you know that the first vending machine invented
was actually on the drawing board of the mathematician Hero, who
featured among other inventions, a coin-actuated mechanism that
dispensed holy water in 215 BC?
Today, vending is rapidly approaching
the 50 billion dollar industry mark, featuring
hundreds of varieties of vending and related machines. They
range from small candy machines to large sophisticated and
highly technical vending equipment. They operate with cash,
charge cards, debit cards, smart card technology and much more.
The vending industry is very
competitive and challenging, to say the least. We see
some
very exciting new entries in the market place every month. Glow
necklace vending, Camera vending, Digital film developing,
Custom post card vending, Cartoon video kiddie trains, Soft
serve ice cream vending, Dressing bears, Hydraulic gold digger
kiddie ride, DVD vending and Internet kiosks capable of many new
options. There are ATM’s at the lowest entry prices ever,
Lollipop vending, Cigarette table top vending and Alcohol alert
vending machines to name a few. Of course, there is always the
latest soda, snack, food and coffee machines that are
remarkable. One of the latest pieces of equipment drawing much
attention are the latest dollar changers that are capable of
breaking large bills such as $10, $20 $50 and $100 into smaller
bills and also coins! |
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Products: While most of you are already
familiar with the traditional “junk food” products in
vending, you may not have noticed some of the incredible
changing trends toward healthy vending choices. Baby boomers are
demanding healthier choices and we need to take a serious look
at whether this will become just another trend or a new way of
life. Some choices may include items such as pretzels, veggie
crisps, bagel chips and dried fruit. Other popular choices
include assortments of trail mixes, nutrition bars, yogurt bars
and meal replacement bars. There are more new introductions
every month than we can keep up with. Low calorie cookies and
candy bars, fruit and grain bars, baked chips with nachos, baked
black bean chips, baked chili lime and black corn chips and
similar selections will compel you to take a second look! |
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Cold food vending machines can feature
a wide variety of choices such as veggie trays,
healthy cereal, corn flakes, salads, fresh bagels, Lean Gourmet
Entrees, Lean Cuisine, Weight Watchers, combo meals, baked
potatoes, veggie burgers, veggie dogs, meatless lasagna,
specialty soups and stews, vegetarian and vegan (Strict
vegetarian) food choices and other similar meals and platters.
In fact, one school in Los Angeles is now featuring a soymilk
vending machine! 100% Juice vending machines are showing up all
over the place and it is no longer uncommon to find yogurt,
gourmet fruit and vegetable smoothies, milk in a wide variety of
flavors, energy drinks, fresh fruit in a cup, weight loss
drinks, meal replacement drinks, healthy ice cream, natural
herbal teas in exotic flavors, natural dairy creamers and so
much more. Vending machines are even offering vitamins,
minerals, trace elements and a ton of other pills and potions in
vending packs! |
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VENDING PROGRAMS: We receive hundreds
of calls from prospects every month inquiring about
vending machines. They ask about the types of vending programs
available, renting and buying options and the best sources for
products and equipment. The following is a brief explanation. |
Full Service: The vending company will
offer all the equipment, products, repair, insurance,
commissions and total service at no cost to the location. The
vendor prefers to pay very little or no commissions to the
location. Average commissions may vary between
5 to 20 % depending on the selling prices in the vending
machines. The transactions are
all negotiable. You should select an established vendor with
good references and late model equipment. Insist on 24-hour/7
day service. Co-Op Service: The vendor rents or loans the
vending equipment to the location management for a fee. The
vendor may also require the location to buy all products and
services from the vendor at a higher price than wholesale. The
location management is allowed to keep the rest of the profit
because they will use their own staff to fill and clean the
machines. Service calls are negotiable along with a few other
options. Game operators will split 50/50 on most deals. |
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Owner Operator: The location management
buys their own vending machines and products at the
most competitive prices and keeps all the profits. The location
is responsible for every aspect of the operation. They will pay
for service-call fees, parts, taxes, labor costs, product costs,
repairs, insurance and other similar related expenses. The
location keeps all the remaining profits after the expenses are
deducted. The average cost of goods is usually 50%. Be sure that
you are dealing with reliable and credible vending equipment
organizations that will offer all the educational materials and
free consultation before, during and after the purchase. Ask
about solid warranties, back up and support, immediate response
to your calls and most important, professional industry sales
and technical staff. Beware of insensitive and pushy sales
people and never make a hasty decision to buy. |
Prices: Popular products vary in prices from state to state
and location to location.
A can of 12-ounce cola may sell at a significantly higher price
in the city of NY than in Lenexa, Kansas. Most operators sell
products at approximately 50% to 100% over cost. Depending on
the overhead of an operator, a net profit of 5% to 25% may be
realized. Most people do not realize that a vendor is usually
responsible for employee salaries, taxes, insurances, vehicle
expenses, spoilage, vandalism, equipment replacement,
maintenance, repairs, commissions, theft, warehousing, marketing
and much more. |
Vending machines should be placed near the busiest spots
in a location and where it is
easy for everyone to access the equipment. They should be kept
clean, full and working at
all times. Proper signs should be on the machines to address
issues regarding malfunctions, refunds, special requests and so
on. Vending machines placed indoors will not encourage
as much vandalism and routine repairs and products will not be
exposed to extreme weather conditions. |
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Each
account has to be evaluated professionally in order
to determine the best plan of action. Should you buy new or used
vending and game equipment, seek Full Service, Co-Op, offer
healthy or junk food choices or offer ice cream and food choices
where you never did before? Where should you turn for the best
advice and the best place in the country to buy equipment and
products? How much should you pay for equipment and products?
How do you determine a budget and project an income stream?
Investigate before you buy, and educate yourself thoroughly. If
you only operate full size vending machines at the moment,
consider operating your own bulk machines and games. It is
always a good idea to diversify, regardless of the programs you
choose. |
Charles Hanna
Serving the vending industry since 1976
offering equipment sales, service, consultation, educational
materials, training and custom vending analysis. Hanna has
served on the board of directors of several corporations and
civic organizations nationally and internationally.
Author – THE VENDING INDUSTRY –
History, Trends, Secrets, Opportunities & Scams
President & CEO – The Hanna Group – Vending Equipment Sales &
Service
Lenexa, Kansas
913 894 4979 or 800-397 8363 or visit us at:
www.hanna-vending.com or email:
charles@hanna-vending.com
or Fax: 913 894 0252
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Hanna sells vending and
related equipment at factory direct wholesale
prices |
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