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Maximizing Profits from a Vending Program

Paul Partyka |

CHICAGO — It’s always hard to find something that everyone in this industry can agree on. However, it’s pretty safe to say that every coin laundry is looking to maximize all of its profit centers, especially in this shaky economy.Vending is one extra profit center that deserves a second look. Are you satisfied with your vending revenue? Are you looking to generate a few more dollars from your venders? The good news is that there are a variety of ways to accomplish this, and some of them won’t cost you anything.We recently chatted with two vending industry veterans to get their take on the coin laundry vending scene. They offer a variety of tips.HOW DO YOU KNOW WHICH MACHINE TO BUY?Before you analyze what you’re selling and how much you’re selling, you should take a look at the vender itself and the company supplying the machine, according to Bill Fankell of All Brands Vending Resources.When searching for a vending firm, you should focus on customer support. “Owners want parts availability, service and a good warranty.” The good news is that vending machines are much simpler in terms of design than washers and dryers, making them more owner-friendly, Fankell says. “They really haven’t changed all that much in 30 or 40 years of operation.”“A good share of laundry owners use the bottler’s machines; they look at the convenience but are sacrificing profitability in the process,” Fankell says. “The bottlers are in the syrup business. The laundry owners buy soda from the bottlers and pay more than if they bought the soda at Sam’s Club. Owners think they are getting the machine for free, but they are basically buying the machine from the soda company and not taking advantage of tax depreciation on the machine. Plus, you’re locked into one product.”Fankell sees improved profits with owner-owned machines. For example, you can buy water for 17 cents a bottle and sell it for a dollar, he adds. “Warehouse clubs have become the new distributors of vending products.”Even though the venders are set up to dispense the oldest products first, there may be some concern about product freshness. To ease these worries, you can purchase venders that are refrigerated, so chocolate doesn’t melt. “We have a machine that has an intermediate refrigeration system designed to keep temperatures 15 degrees below ambient and remove the humidity. This won’t work for sandwiches, but it keeps snacks fresher. It’s popular in the laundries without air conditioning.”Are you tired of dealing with vending refunds? Fankell says one new feature gives customers their money back if the product doesn’t dispense. “Now there’s no reason to beat on machines or track the owner down for a refund.”Don’t forget laundry supplies when considering your vending needs. There are small, wall-mounted units available for this, but Fankell says owners should consider full-size, glass-front venders for these items, because a live-product display will increase sales. “You can put anything in these machines that’s not a food item. They can also be tied to card-reader systems. These machines can also take a dollar and add convenience to the purchase.”WHAT ITEMS SHOULD YOU VEND?Even with society’s current emphasis on eating healthier, Fankell says the top-selling vending items are still junk food. “The vending best-sellers change very little.”One current trend is offering multiple products in one machine. “We have a machine that has half soda and half cold food. Another model has half frozen food and half cold food. However, laundry owners usually have simpler needs than other businesses. They usually don’t want cold or frozen items. They use less coffee, and desire mostly soda and snacks.”If an owner is still unsure of what to put in the machine, he or she can always turn to vending companies for information, or simply ask the customers themselves. “We offer a list of the top-selling drinks and snacks nationally. You can also post a note on the machine asking customers what to vend. The customers can simply check off what they desire. People respond to this. We have this already printed up and it can be taped to the machine.”MAKING IT PROFITABLECompetition shouldn’t be much of a concern, Fankell says. “Neighboring stores can have some influence on your vending, but vending always has been an impulse sale. If you want a Coke while you’re waiting for your clothes to dry, you’re going to use the vender, not walk next door to stand in a line.”Vender placement shouldn’t affect sales unless you really “bury” your machine, he says. However, he strongly urges operators to avoid placing snack machines in the southern front window. “Snacks melt because the sun is beating on the window all the time.”Like any business, presentation does count. Do you want to catch the customer’s eye? Fankell says his company is doing more and more customizing, so owners can get their logo or laundry name on the machine.There is one benefit available in the form of the dollar coin, which can make it easier to vend higher-priced laundry supplies, such as towels. “If the towels are priced at $2, and someone puts in a $5 or $10 bill, the regular coin mechanism is forced to dispense change in quarters. Soon, the machine won’t take dollars because it can’t make the change. A dollar coin feature would allow the machine to take larger bills and pay back in dollar coins.”A GROWING EXTRA PROFIT CENTERIn these challenging times, operators seem to be focusing more and more on vending, Vince Hansen, Vend-Rite Co. Inc., believes.“The stores with the square footage seem to be taking advantage of vending opportunities, offering a variety of products, not just food and drink,” Hansen says. While food, drink and laundry supplies are still the basic offerings, he is starting to see a slightly different take on traditional vending — laundry supplies in larger, multi-use packages being sold over the counter.This type of sale does change things a bit. “If you sell over-the-counter items, keep in mind that your attendant will become a clerk. This is a little different than drop-off service, which has some types of checks and balances. However, on the inventory of [the larger, multi-use packages of laundry supplies], you don’t always have the control you need.”Like others, Hansen has noticed that some operators have used large stores like Costco to fill their venders. He cautions operators that these stores don’t always have a consistent supply of the products you seek.Common sense should rule in your vending program. Hansen doesn’t believe vending machine placement is essential to success, and usually placement is determined by available space. However, much like a changer, he believes one should try to keep the machine in view of the attendant.What’s hot in the vending world? Hansen has seen the popularity of bottled water and sports drinks on the rise. “Soda has always been a traditional product, and has been there in stores, but other products are starting to come in.”With a greater emphasis on a variety of vending products, Hansen now offers a drink machine, a snack machine and a combo machine with drinks and snacks. He will also be offering coffee and ice cream venders.Is ice cream a good choice for a coin laundry? “The pro of this is that ice cream is a huge profit center. The con is that the ice cream vender is a big machine, so a laundry has to have the space for it.”Hansen doesn’t believe that neighboring businesses should be a major factor in an operator’s vending decisions. “Most of the vending items are impulse items. People get in your laundry and have just gotten change. If that’s the set up, people have money in their hands. If they see a drink and desire it, they are going to purchase it regardless of what type of business is nearby. They are not going to think about saving a dime or a quarter at the convenience store. The impulse will even be stronger if you have some type of debit card setup.”In the next 5-10 years, he believes laundry owners will continue to experiment with different types of food/drinks. “We may even see the vending industry revisit history, go back to the time when you bought a can of soup and the machine heated it up before dispensing it. There may be computer or IT supplies offered in venders. Look at the laundries with tanning beds. Why shouldn’t they vend bottles of tanning lotion in venders? Some of the bottles can be $75 dollars or so. Do you really want high-priced items like that on a shelf being handled by your attendant?”If you have any questions or comments, contact Bill Fankell at 800-548-1982 or bfankell@allbrandsvending.com, or Vince Hansen at 800-777-1802 or info@vendrite.com. 

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.

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