Bulk Vending: A Case Study

By Peter Nevland | Feb 22, 2010

When the Seven Star Laundry Center finally opens in a mostly Jamaican community in Brooklyn, it won't be making money on only its washers and dryers. First-time laundry owner and real estate investor, Yafai, has multiple revenue streams planned.

"You have to have extra income and get as many as you can," he explained.

But before your mind begins wandering to late-night poker games and Depression-era speakeasies, understand that his first additional revenue stream is perfectly legal – and it’s in the form of coin-operated gumball machines.

"I saw a bank of them in the entryway at Best Buy, and they caught my eye,” he said. “They were very colorful, and I liked that."

So Yafai started doing his homework. He began asking other laundry owners about their alternate sources of revenue, where to put them in his store and which machines worked best. He ended up getting four triple-decker towers.

"Seven-feet is incredibly more attractive than a four-foot machine," Yafai said. "I wanted many colors to capture people's attention. So, I looked around for weeks on the Internet and studied other Laundromats.

"He wanted yellow, green and black – the colors of the Jamaican flag – to appeal to the Jamaican community where he's located,” said Heidi Schwarzli, sales manager for Beaver Machine Corp., where he eventually purchased his bulk vending machines. “He's a prime example of catering to your demographics.

"That's the most common problem I see," Schwarzli continued. "People get a generic setup for each location, instead of thinking about how to serve the different customers at each location over the long term."

Yafai's setup was anything but generic, Heidi said.

“Usually, we see a single stand with two machines or, at the most, five machines,” she explained. “Those start at $200 and go up to $800, with all of the options and add-ons. What Yafai did was really smart with the towers, because they maximize his income per square foot of retail space used."

According to Schwarzli, each of the four towers the new laundry owner purchased cost him roughly $1,300, giving him a total of 12 vendible products and an initial investment of $5,200.

"It may take him a little longer to pay back the initial investment, but in the long run, he's going to outsell everyone else," she predicted.

With his attractive Jamaican colors, Yafai can't wait for the city to finalize his business permits so that he can open his doors and start reaping the rewards of his research.

"You need a variety of products – from M&Ms to gumballs to toy capsules – to make them the most colorful and eye-catching,” Yafai said. “I want to have soda vending machines and a crane machine, but they take up more space and cost much more than the bulk vending machines. The towers only take up four feet right by the door where everyone can see them."

Schwarzli thinks that Yafai is headed for success.

"He's doing what everyone should be doing by catering to his customers' wants and needs,” she said. “That shouldn't be too hard for a coin laundry, because a successful laundry owner should already know his or her customers."

Finding out what his customers wanted was only the start of what Yafai did.

"It wasn't an impulse buy,” he insisted. “Weeks of research will ensure that you find the right combination of machines, location and price."

That's true no matter what kind of additional revenue streams you install in your location. Now, if only obtaining city permits worked the same way.