Space for vending machine in a 24 hour shop

MrWatts

Greetings,

I have a small, floor-standing vending machine (no cash, no food, no drink) that issues and accepts cards.

I'm looking for a 24-hour location in Dublin city centre.

How long is a piece of string? (err... I mean, how much would I be looking to pay the proprietor?) €200 a month sound reasonable? The proprietor would not have to do very much (it's 100% automatic and on the 3G network. I even get notified if there's a power failure). The only thing he/she would have to do is ensure that my kiosk is plugged in. The proprietor's staff would act as an indirect deterrent against vandalism/theft (my kiosk notifies me if it's moved or kicked, etc.). It's a pretty robust kiosk and the contents are of little or no value.

I'll be burning shoe leather over the coming weeks, but thought I'd ask the community for some tips first.

srsly78

You could also suggest to split the revenue from the machine with the proprietor. This gives them more incentive to look after your machine!

I know of one company in the past that would offer several options, fixed rent, profit share etc.

antoinolachtnai

According to this, http://www.scsi.ie/SCSIAnnualPropertyReport2012 (page 11) retail space is up to €4000 per square metre. Your machine will probably take up a few square meters including the aisle space in front of it even if it is pretty small.

So when you roll in the cost of heat and light and staffing and so on, the money you are talking sounds very thin. But it really all depends on how good a location you want/need, in terms of location of the store and location within the store. The real issue is how you are going to market it and get people to go to it.If it can generate foot traffic, for example, that will make it easier to persuade people.

But the proper convenience retail people on here might be able to give you a better idea.

homeOwner

I can give you an idea of how much it costs for a vending machine in say a shopping centre. No idea how much a small shop would charge.

This is based on 2 shopping centres in Dublin and Dublin Airport back in 2009.

They were charging a once off fee per machine (a couple of hundred euro, the most expensive I was quoted was E450 per machine).
They take a % of the money that the machine collects (it was around 54%). Thats from the total take, not the profit!

They also said they wanted to see business plans to get an idea of revenue. And they would have the check (get permission?) with their current vending machine agents, because they had a contract in place with vending machine company (for coke, sweets, etc...) and they were prevented from placing competing vending machines from another company.

My vending machine was completely different, not drinks or sweets....) and I did the numbers and decided not to go ahead because it was not possible to make much profit at the price I wanted to sell the product for. I could have pushed up the price but I think it would have made it un attractive to buyers. I still think I had a good idea.....but the numbers didnt add up.

I later wondered if they quote these large numbers to small sellers like me to deter competition for the large vending machine agents. Or maybe I am too cynical

Anyway I am in a completely different field now, running my own small business, making a small bit of money and happy with it.

Hope that helps.
Good luck.

MrWatts

Hi guys,

Thanks for all the replies. Really great information here.

My vending machine does not need to be in a prime retail location (shopping centres, high street, etc.) However, the more central the better (close to bus/LUAS/DART routes). I also don't want my machine in a rough/dangerous part of the city. I've identified a couple of 24 hour internet cafes as suitable locations in D1/D2.

I would not be willing to open up my accounts to scrutiny as someone suggested. I am a sole trader for this vending machine idea -- I'll be starting with just one machine in central Dublin and if it goes well, I'll be expanding rapidly to Manchester/Liverpool/London. My supplier can step-and-repeat my high tech vending machine very quickly. I am prepared to enter into a formal agreement for a period of time, however profit sharing/account scrutiny/etc. would be a step too far. My machine is capable of generating foot-fall, but at what level, I cannot say at present.

I have a directorship in another successful company and this is going very well, so have business experience -- I know that the focus of my efforts is in getting customers to use my machine (I am offering a very compelling service).

DubTony

Generally in convenience retailing vending machines are installed on a revenue share basis. The machines of a few years ago, that dispensed phone credit typically paid the retailer 4%. However he was generally required to empty the machine and bank the takings. I assume these aren't so popular any more as they did away with the need for a customer to go to the counter resulting in reduced impulse purchases.
Chewing gum machines, teddy bear machines etc. generally operate on a revenue share basis but typically wouldn't have the cash handling costs.

As for "driving footfall"; most retailers are good enough at that themselves, and your machine would, from a retailers point of view, want to be something really special to deliver a measurable increase in footfall. The only thing I've seen do this is an ATM, and even then it was hard to measure what extra business came from it.

I've never had a "fixed fee" vending machine in a store, and would only have considered it after calculating what the space would be worth if I was using it to sell product from. If you're willing to reveal what type of product you're vending I could probably give better advice.

jimmii

As long as the internet cafe has the space vacant at the moment it seems a good idea for them I would have thought that these days even they are already trying to make the most of every space they have. I have a shop in D1 and certainly wouldn't give up circa 1sqm for €200 a month and I'm definitely not in a high footfall spot.

MrWatts

DubTony wrote: »

Generally in convenience retailing vending machines are installed on a revenue share basis. The machines of a few years ago, that dispensed phone credit typically paid the retailer 4%. However he was generally required to empty the machine and bank the takings. I assume these aren't so popular any more as they did away with the need for a customer to go to the counter resulting in reduced impulse purchases.
Chewing gum machines, teddy bear machines etc. generally operate on a revenue share basis but typically wouldn't have the cash handling costs.

As for "driving footfall"; most retailers are good enough at that themselves, and your machine would, from a retailers point of view, want to be something really special to deliver a measurable increase in footfall. The only thing I've seen do this is an ATM, and even then it was hard to measure what extra business came from it.

I've never had a "fixed fee" vending machine in a store, and would only have considered it after calculating what the space would be worth if I was using it to sell product from. If you're willing to reveal what type of product you're vending I could probably give better advice.

Hi DubTony,

Thank you for your insight.

I have no problem paying the full economic cost of the square footage + sweetener. While not totally closed to the idea of a profit share, I am reluctant to open up my accounts to third parties I don't know (unless they're professionally bound -- e.g. tax man, my accountant, my banking relationship manager).

I could draw up a one-year agreement with my solicitor where I would agree to, for example, three months rent up-front plus a one-year commitment; but I would prefer to come to a mutual arrangement with a proprietor/business owner as opposed to going down the formal legal route with a faceless representative from a property management company.

I saw this:

http://www.rte.ie/news/business/2013/1001/477603-asking-prices-daft/

€4,000 per square meter on Grafton Street is quoted.

I don't need Grafton Street space. I would have a preference for 24-hour access in a tech-orientated space (such as an internet cafe) -- this is where my customers would be.

I'm not willing to disclose the full details of my vending machine at this point of the service's development. However I will be very open about how my business works in the coming weeks.

jimmii

MrWatts wrote: »

€4,000 per square meter on Grafton Street is quoted.

€4k is how much the retailer would pay from that 1sqm they would be looking to make bring in at least €10k/sqm.

DesperateDan

How about contacting Connolly Station or Bus Arás for a quotation on price - probably not Grafton St. prices but still very busy locations in central Dublin. I sure am interested in the product though!

jimmii

The stations would be a good idea I would imagine that is where you would encounter problems with existing vending machine contracts though. They definitely have good footfall and plenty of space though.

MrWatts

jimmii wrote: »

€4k is how much the retailer would pay from that 1sqm they would be looking to make bring in at least €10k/sqm.

I am confident that I can find a proprietor in Dublin who will facilitate me for far less than this €10k per annum prime retail figure that you speak of.

My vending machine has a footprint of a 350mm x 200mm and requires a very small amount of electricity.

That said, if it's Grafton Street and close to the front door, it would probably make it on to my top-10 preference list.

jimmii

MrWatts wrote: »

I am confident that I can find a proprietor in Dublin who will facilitate me for far less than this €10k per annum prime retail figure that you speak of.

My vending machine has a footprint of a 350mm x 200mm and requires a very small amount of electricity.

That said, if it's Grafton Street and close to the front door, it would probably make it on to my top-10 preference list.

I'm sure you will but i'm just pointing out that you aren't going to find someone who is going to give up the space at the same rate that they are paying. I would imagine at €350+VAT a month you would have some people interested.

Shadowless

I bet it's a Bitcoin ATM.

Graham

Shadowless wrote: »

I bet it's a Bitcoin ATM.

Exactly what I was thinking.

MrWatts

Shadowless wrote: »

I bet it's a Bitcoin ATM.

Nope. My vending machine stores no cash.

Once my machine is installed, I'll update you all.

jimmii

MrWatts wrote: »

Nope. My vending machine stores no cash.

Once my machine is installed, I'll update you all.

A bitcoin ATM wouldn't have any cash. It would definitely be something that would compliment an Internet cafe too!

Interested to hear what it is hope it goes well for you!