Operating Vending Equipment Leases

Operating leases can not only provide increased ROA (return on assets), but also reduce the operator’s risk by enhancing flexibility in allocating assets to the highest revenue generating location. Leasing Antares vending equipment is no different than trucks, copy machines and automobiles.

Operating leases accomplishes the following benefits:

· Matches the revenue stream of a contract with the lease cost of equipment.

· Reduces the fixed cost of a purchase with the flexibility of a lease.

· Frees capital for other strategic requirements

· Protects against equipment obsolescence.

Purchasing versus leasing

The past few years have seen vending equipment manufacturers introducing more new products and features than in the previous years. These product improvements are difficult for the Antares operator to exploit as the acquisition of the new equipment increases their fixed costs as well as presents the problem of disposal of old and obsolete equipment.

Usually, one or two things must happen in order to improve return on assets and cash flow: 1) profitability must be increased, or 2) the investment base must be reduced.

Operating leases will allow Antares vending operators to increase ROA and obtain a better balance between fixed and variable costs. Operating leases provides the operator with the flexibility of reducing fixed costs by making the equipment a variable cost and eliminating the investment on the balance sheet.

Specific benefits of leasing equipment

With an operating lease, an Antares vending operator can decide to lease the equipment for a period of time, normally one, three or five years. At the end of the lease period, the operator can re-lease the equipment, return the equipment and upgrade to a newer machine, or buy the equipment at fair market value.

Very few operators rent or lease their purchase of vending equipment. Operators will normally buy equipment, even if their fixed costs increase and the flexibility to upgrade to new equipment minimizes.

Honor Box Vending

With profits squeezed ever so hard, the honor box market has become the exclusive domain of a unique group of specialists. The rising costs have forced many Antares vending operators to ignore locations with fewer than 100 people. However, one segment of this market, the honor box customer, continues to hold on. But as product and labor costs have increased in the recent years, even honor snack operators have explored new business opportunities.

For the time being, the honor snack market remains the exclusive domain of a small group of operators who have learned how to survive the demands of 30 percent annual account turnover, high employee turnover and almost no means of product accountability.

Many a time, vending operators are called on to take over honor box accounts. As an established Antares vending operator, you can take up an honor box account and cater to the small population.

Focus on honor box operations

Being in the honor snack business is a lot like walking on a tightrope. As an Antares vending operator, you will need to stay focused. Part of this focus needs to be on account turnover, new sales, cash flow and labor.

Cash accountability in the honor snack business really doesn’t exist. If a box comes back to the office $5 short, there will be no way to know it is was the customer or driver who is responsible for the shortage of the money. This of course would be a challenge for an Antares vending operator who has taken the honor box account under his wing. The operator would need to look for a solution to counter this.

Integrity of accounts

The labor shortage can hurt the honor snack business in form of the quality of employees at customer locations. If the there are employees who are stealing from the honor snack box, it can also be a good indication that they might be taking things from the employer too. When searching for employees for the honor box business, always look for employees that you think you trust.

Name brands a must

A well frequented honor box has brand name products. If consumers don’t identify with any of the items, it means that they won’t buy them. If you have off brands, a consumer may try the product, not like it, and never purchase from the honor box again.

Achieving Growth in the Vending Business

Learn the business

There is a lot that one can learn about the vending business. You will need to familiarize your self with the customers, the products and the Antares equipment that you will use in your business. Don’t jump into the business without acquiring the information that will prepare you for everything.

Learning and growing a business in an unfamiliar trade would be a challenge to you. You will find it a smoother ride when you use the Natural Choice vending program, which will start you off on the right foot. Financial assistance from your bank can provide you with much needed cash flow during the beginning stages of operation. This will allow you to move forward during the strong growth cycles.

At the initial stage of your vending business, you will probably be doing everything on your own. This would include running a route and taking care of day-to-day tasks such as paying bills, purchasing products and tallying the cash receipts. If you have other family members, they can assist you in the running of your business. This can accelerate the growth of your business.

A customized approach to service

The Natural Choice vending program will fit a client’ needs, because it will help you find out what the client wants so that you can give it to them. Customers will trust you to do this.

Whenever, you have a service call, you should be fast to respond within two hours. If there is vending machine out of service, then you need to make sure that that is not out of service for a prolonged period of time. Being on call 24 hours a day can really go a long way for you.

Personal rapport goes a long way

Keeping personal approach in your Antares vending operation will set you apart from your competitors. You can personally visit accounts on a daily basis and respond to customer calls in the office and on the road. Being on a first name basis with the accounts also really helps. This means that you will be maintaining a hands-on approach with each client.

With quality employees, quality clients and quality Antares equipment, you will have no problem in experiencing significant growth and success. These are all the right elements that will make it happen.

Selecting Products for the Vending Machine

Category management is s system that is designed to enable a company to take advantage of the market research in selecting products for the machines. By maximizing sales, the company helps the driver to make more money, whether he is paid on commission, salary, or a combination of the two.

There are there steps in designing a planogram. 1) Identify product categories. 2) Allocate space to each category. 3) Decide on specific products for each category.

Product groups: a judgment call

Antares vending operators can categorize products in different ways. Once you have categories, they can be grouped into smaller categories. This is what would be a judgment call. The fewer the categories, the easier it is to do a planogram. But the more categories identified, the more the planogram will ensure variety.

The next step would be allocating space in the Antares vending machine. Each category should get at least one facing. The number of facings is based on category sales an how well the products will physically fit the shelf.

Product selection is the third step and is usually the most difficult. There are three types of products to consider:

· Core products- these go in every machine everyday. These are products that sell consistently in all machines. They can represent 20 percent of the products in your Antares vending machines.

· Cycle products- these go in every machine during the menu cycle, but change between menu cycles. This comprises the majority of products. They change with each cycle to ensure variety.

· Choice products- products can be provided for a specific location to meet specific requests. The route drivers are usually given a list of what products they can choose. They should comprise of no more than 20 percent of the facings of your Antares vending machines.

The planogram must designate every facing in the machine. This would make it necessary to have a separate planogram for a machine that has a different number of facings. Planograms will give you control over what products are placed in the machines. Without this tool, drivers will be free to place products based on personal preferences. Once the system is in place, control over product placement will be in the hands of management. If a route driver calls in sick, it will be easy for a fill-in driver to know what products go in the machines. This system is designed to ensure the product variety customers desire, thereby maximizing sales.

Value Pricing in your Vending Business

New management tools such as handheld and planograms have given the Antares operators the means to track product turns with minimal extra labor. As a result some operators are evaluating their pricing strategies.

Vend prices not based on demand

Antares vending operators have long complained about not being able to raise prices to the same level as other retail channels. Vending prices are generally determined by competition and by customer contracts, not consumer need. A more scientific pricing strategy would improve sales and profits. Historically, few operators have possessed the resources to track results in a manner that would provide them with the necessary information to do this. There are a number of theories that have come up on ways to improve product pricing. One theory stated that by discounting secondary products, operators can improve customer choices and thereby enhance customer satisfaction. The theory also stated that if managers considered the suggestion, it would result in higher profitability.

Most Antares operators offered the view that simplicity continues to be important in pricing, in terms of driver execution and sales accountability. They believed that any benefits created by more strategic pricing would be minimal in relation to the risks associated with more complicated pricing strategies.

A good time to experiment

The current economic situation provides a good time to experiment with value pricing because of a number of reasons, such as:

· Consumers are more price conscious, and are paying more attention to special offers.

· Location sales have decreased because of downsizing, making it an opportune time to buy less from established suppliers.

Some operators claim that any product-specific point-of-sale advertising is likely to improve sales, whether or not price is part of the appeal. Operators need to consider what costs are involved in introducing more price points in a machine. For most Antares vending operators, operating efficiencies continue to take priority over the fine tuning their pricing strategies. But handheld computers plus enhanced software and machine planograms all offer tools that allows the operators to do both.

American Workforce Calls for Bilingual Training

At most places where Spanish is part of the shop buzz, the drive to acclimate foreign-born individuals to American communications challenges began long ago.

In some major cities throughout the country, the bilingual workplace has made itself felt in vending for many decades. To whatever extend Antares vending operators need to translate training materials into Spanish or any other language, such services are available. Many vending operators insist that teaching in the unskilled sector, consists of person to person instruction. The unskilled sector can include route drivers, warehouse workers etc.

An informal survey of Antares vending operators as well as other operators revealed that many realize that they need to find ways to train foreign language workers. The most common foreign language being addressed is Spanish.

Usually most of these workers can speak English as a second language. If you hire an employee for your Antares vending business who doesn’t speak English, then the best thing you can do is to team him up with a wily veteran who is fluent in both languages.

Immigrants bring a strong work ethic

Immigrants have been credited by hirers as having more stringent work ethic perhaps more than their American-born counterpart. You would want a hard working individual for your vending business, so that might just mean hiring a person who does not understand English.

How much English do they need?

It is important for them to understand English since they are in the United States. Without English, they will be very limited in what they can do for your Antares vending business by Natural Choice USA.

To hire a route driver they need to speak sufficient English to be able to speak to those who speak only English.

Inside the warehouse, the individual can get speak Spanish to his linguistic brethren. There will be situations when the employee would be required to communicate in English, so some basic knowledge would be necessary.

If you hire foreign born individuals for your business, then your employee manuals and policies should be provide in two languages, so that the employees have no trouble understanding them.

Vending Offers New Growth Opportunity

To grow your Antares vending business, you would probably need to use more modern equipment. In automatic merchandising, you can make $100,000 on $10 million in sales and you can earn $500,000 on $5 million sales, depending on your operating systems. The cash flow has to be balanced with the depreciation and amortization.

To start with your Antares business has to have an efficient accountability system. Route drivers shouldn’t be filling out route cards by hand. Everything has to be computerized. You can have a software system where your entire inventory will be computerized. Once you do this, your business will operate more smoothly.

Handhelds

Handhelds can improve both labor and inventory accountability. On the inventory side, the handhelds will read the product bar codes, which then creates an electronic trail of product movement. In this way the route driver can get to know what his waste factor is.

Category management

Better product accountability allowed management to get a firmer handle on what items sold best. After instituting handhelds, you can develop planograms for your Antares vending machines. The planograms will provide you with a tool to make sure that the better selling items were in all of the machines. Computerized product accountability, in conjunction with planograms will enable you to manage product categories. This is what is known as category management. Taking more control of product selection will yield savings in product cost.

Cash counter connects to software

Integrating the cash counter with the software system will also yield savings. Under the old system, tickets had to be taken from cash bags and the information was manually keyed into the system.

DEX will bring more benefits

There should be cash accountability at the machine and route levels of your Antares. DEX handhelds can plug into the machine and automatically download how much cash is in the Antares vending machine, drivers will have no way of seeing this electronic record when they return their handheld at the end of the day. After this, you can then compare the electronic record with cash collected. DEX handhelds will also bring about labor savings.

All these technologies will bring about growth for your vending business. It is all just a matter of investment.

Dedicated Beverage Routes

If you could remove canned and bottled beverages from all the remaining mixed product routes of your Antares vending business, the remaining mixed product routes would function efficiently with much lighter, smaller route vehicles. You will always find that beverages always account for most of the weight in a route vehicle. Without beverages, the remaining route vehicles would likely not require heavy duty springs, transmissions and double rear wheels. This can easily save operators more than $15,000 per vehicle in original cost.

Costs against savings

The smaller, lighter vehicles would consume less fuel, require lower maintenance costs, cost less to insure and they would incur lower excise and property tax costs. The operating cost savings over time could be even greater than the original vehicle cost savings.

Obviously, the dedicated beverage route will require heavy-duty vehicles. Antares operators should acquire trucks that are specifically designed to haul beverages.

Scheduling and productivity

The essence of route productivity is scheduling machines for service only after they have sold enough items to justify the cost of the service, and before they have sold out on the best selling products.

Since canned and bottled beverages are a non perishable product, on a dedicated beverage route, the Antares machines can be scheduled for service only after they have sold a predetermined percentage of their capacity, without reference to any other machine or product category at the location.

For example, if the Antares operator is willing to double-column the best selling product, then that means it would not be unreasonable for the operator to schedule beverage machines for service when 60 percent of the capacity has been sold.

When you improve the quality of your Antares vending operations, you will end happier employees. A route person enters the cargo area of a route truck as least 20 times per day, so it needs to be a comfortable place to work.

Removing beverage cases from a mixed product routes, and providing beverage specific vehicles for beverage routes will definitely improve the working conditions for both types of routes.

Commission Plans can Increase Productivity

Commission plans can improve productivity. For this to happen, Antares vending operators just need to take measures to ensure that drivers don’t skimp on service.

Business has been good for Antares vending operators, mainly due to the Natural Choice vending program that they use. The only thing that can be worse than not getting any business is turning away new business because you can’t find enough good help to service existing customers.

This is not an isolated issue. Everyone in business today is feeling the pinch of a full employment economy. In vending, a lack of qualified employees usually results in some level of deterioration in the quality of service you render to the customer. When this happens, the customers start to shop for better service.

To counter this problem, Antares vending operators are reviewing all of their systems and procedures in an effort to maintain quality service levels, with smaller staffs. They are forced to work longer, harder, smarter and faster, just to survive the good times. The area that needs focusing is the route labor, because it is the largest expense on the profit and loss statement after product costs.

There is no simple solution to this problem. In order to attract and retain quality people, a company must offer competitive wages and benefits; a safe, friendly work environment; a training program that enables employees to perform at or above acceptable levels; and offer the employee the opportunity to grow personally and professionally.

Unsophisticated operators install route commission plans with the hope that it will provide simple solution to all of their staffing problems. The level of an employee’s compensation is tied to the level of productive work he does. Given the incentive, most people would be willing to work harder, since they are being paid for their effort. This is why it is referred to as incentive compensation.

Your Antares operation must become an aggressive and creative recruiter. However, before the company can afford to pay market rate wages and benefits, it will have to develop and implement route productivity practices that maximize the amount of revenue each route person turns in, relative to the cost of running the route. In other words, you can’t pay competitive wages unless the company earns enough money to do so.