Tips on buying candy for your vending machine
The key to buying the candy is to compare places on a price per pound basis. When you look at it this way you might be surprised on what’s a good deal. Wal-mart for instance offers those boxes of candy like you find at a movie theater for $1 each. Most of the time those are 4oz-6oz of candy so 3-4 boxes will get you 1 lb of candy. Also the fronts can make for good labels on your machine . So $3-4 a pound isn’t bad especially in a testing phase and with some of the more difficult to locate candies.
Once you figure out some candies that work you can find better deals on those candies. For instance Sam’s Club offers bigger packs of candy a much cheaper rate then $4 a lb, but can you justify the $50 yearly member ship fee for a single machine. Probably not.
Another great place is to look at Meijer. They have a bulk candy section. A lot of times if they are having a sale you can get the candy for $2.5 – 3 a lb. Chewy Sprees, Mike and Ikes, and Hot Tamales are good to buy there.
One of my big mistakes was to buy online. I bought around 30lbs of gumballs and reasoned that if each gumball was a quarter I would be making big returns on it. That’s great but if they won’t sell at your first location you won’t make anything, rather you will eat the costs, literally. I found that Wal-mart for a lot of candies is better then online when buying in small quantities. Sam’s club is better when buying in larger quantities. The Cost of shipping on the online orders significantly impacts the cost per pound of the candy.
The reason to think of your candies on a per pound basis is everywhere you go to look for candy will have the weight available. You can’t really sit and count the pieces. What you can do is as you setup the candy distribution on your machine you can run a quarter through and then weight that candy dispensed on a digital mail scale. Divide 1lb by the resulting weight from a quarter’s worth of candy and now you know about how many turns a single pound will be, also you know how much money a pound of candy will bring in. From that you can quickly estimate based off the buy price what the return will look like.
The real value of the bulk candy vending machine business is when you have more then one location. At that time you can buy candy on a bigger scale and see a lower cost per lb, also if you find a candy doesn’t sell at one location it won’t be too big of a deal as long as it sells at another location you can shift your inventory there. There is a general business term for this and it’s called economies of scale. That means as you buy more and produce more your costs go down. That’s why if you look at manufacturing, things that are in high demand are cheaper to purchase then things that aren’t because the raw materials can be purchased in higher quantity then the other products.
Since you can’t grow big overnight you will need to focus on the smaller details and the profits of a single transaction. Keep in mind that every machine has setting to determine how much candy comes out on a pull, those setting will make the difference between running a profitable business and running a charity.
We will talk more about the candy dispensing settings next week.