Vending for Profit

Vending in a health club can mean more than just pocket change. It's a way for your club to set up on-site profit centers without having to establish a major retail operation, like a pro shop or smoothie bar, which most clubs don't have the expertise, time or space to do. In addition, significant retail sales usually require about half of your retail traffic to come in from outside the club, unless you have a large membership base.

Vending, however, is done internally and doesn't require outside traffic. It also eliminates many other issues involved with conventional retailing, especially staffing and theft, which means your company can sell items at a more competitive price.

Vending has become so sophisticated that you can vend, within reasonable parameters, just about anything in health clubs. Machines now can accommodate items of nontraditional sizes and shapes. In the past, soft drinks have been the product usually vended, but at our clubs, we've branched out into sales of bottled water, sports drinks and fruit juices, in addition to sodas. Other appropriate items for vending would include different types of nutrition bars, headphones, weight gloves, socks, T-shirts, vitamins/supplements and even specialty coffees. In vending you're limited only by your imagination.

Health clubs traditionally aren't set up to handle a lot of cash, and vending is also a solution to this problem. Today's vending machines are designed to accept different types of payments so you have direct control of your money with no cash registers. I'd advise getting equipment that accepts $1, $5, and $10 bills (and gives change) for purchases like water or nutrition bars. Keep your eyes on the horizon for machines that will accept credit cards as well for more expensive vended items.

Finally, I see an enormous future in the use of "smart cards." Sooner than later, we'll convert our own membership cards (which are already bar-coded) into smart cards that could be credited with up to $50 at a time. Then members won't have to bring cash with them or find change or bills to put into the machines; they'll just swipe their smart cards to make an automatic purchase. Just place vending machines as close to the front of your club as possible without blocking member traffic and let the sales begin!

The simplest way to make money through vending is to go through a vending company that counts the sales and money, and returns to you a percentage of sales, which amounts to somewhere between 10 to 25 percent of the total. You may keep as much as 60 percent of the revenue if you elect to do the labor yourself, leasing the machines and buying/stocking the inventory. Though the percentages sound low, if you've got a good flow of people and a variety of items that people want and need, vending can mean an extra $1,000 of hassle-free profit per month for your club, which is pretty significant for a lot of businesses.

In short, vending is another convenience and service you can offer to members inside your club, thereby aiding member retention; and it's also a profit center. Whatever you do, plan ahead. Think about your space requirement, what types of items your members would be tempted to purchase and how labor-intensive you want your vending arrangement to be. You can find information about vending operators through the National Automatic Merchandising Association, (312) 346-0370, www.vendline.com or simply look in your local Yellow Pages.

- Tony de Leede, a native of Sydney, Australia, is the owner and president of Atlanta-based Australian Body Works (24 locations).


What Products Does Your Club Sell to Your Members?

65% Bottled Water
65% Soft/Sports Drinks
54% Health Food/Snacks
70% Apparel With Our Logo

Source: Club Industry Magazine's 1999 Survey of Buying Power