This Burbank area vending route is comprised of 10 fully automated vending machines that accept currency, credit cards as well as Apple and Google Pay. Each combination food and beverage unite is connected to the internet and may be monitored remotely, while customer service, refunds and even trouble shooting can also be administered from offsite. The indoor machines are located in break rooms, so they enjoy a captive audience. The unit inventories are replenished weekly. The average product mark-up is 100% though some have a 400% markup. With a 50% overall cost of goods, the unit’s products represent the company’s largest cost while 6% merchant fees represent the second largest expense. At least $0.50 profit is made on each item purchased.
Each of the vending units was purchased new in 2015 for $7,500. Two have an attachment that allows them to sell lunchables. The 14 inch attachments cost $1,250 each, for a total new equipment value of $77,500. They are estimated to be worth $30,000 in their current condition. Except in two instances, each location has only 1 vending machine. The machines come with a lifetime warranty that covers 50% of parts. They are reported to be easy to repair as the primary components include the motherboard and refrigeration unit. The touchscreen screens assist in with troubleshooting, but also facilitate customer service through emails, refunds and credits issuance or email correspondence. No locations have contracts.
Due to the nature of the locations, limited direct competition exits. In only 1 instance does a competing vending firm have machines in the same room.
New operators can add the 14 inch attachments which allow them to sell noodles, soups and other lunchables to the 8 units without them. The attachments do well in the machines that have them; particularly in the colder months as noodle are purchased for $0.25 and sell for $1.00. They may also consider the addition of more equipment in the same locations, a more varied or more profitable product offering, or expansion into additional locations. Products are purchased at Costco and Sam’s Club, but vendor oriented discount clubs may provide lower prices – particularly if products are purchased in bulk. They are currently purchased from nearby stores and inventory is stored in a convenient owner-operated location.
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