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Multi-profit Centers

Cold ice, hot profits

Today's automated ice vendors attract an influx of customers and offer surprising profit potential.

August 20, 2012
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School is out and summer is in full swing. As families pile into their minivans for weeklong swimming, fishing and camping trips, what will they need more than coolers full of fresh ice? Here, carwash owners in high-traffic areas have a golden opportunity — automated ice vendors offer operators high profit margins while attracting customers with their low-prices and improved convenience.

Whether ice is needed for 5 a.m. fishing trips or 9 p.m. patio parties, an automated vendor always stands ready, willing and able to provide users pound after pound of purified ice. Owners who install a modern, stand-alone vendor can turn any dark, forgotten parking lot corner into a bustling, 24-hour ice vending area.

Profits

When it comes to profit margins, Ron Dyer with Ice & Water Vendors, LLC said their ice and cold water vending machine generally offers an operator cost of 28 cents for each 10-pound bag of ice sold. Operators can set their own price, but the typical industry price point is $1 to $2. Here, the profit margin would be 200 to 500 percent.

Carwash owners can calculate their specific retail price according to what their market can bear, according to Jeff Dyson, vice president of sales with Kooler Ice Inc. This calculation should be made based on the ice prices offered by a wash's local competition.

To maximize an owner's return on investment, an ice vendor should be purchased based on the anticipated market demand. If an owner over-purchases on the size of the vendor, it will extend the time needed for a full return on investment. "Generally speaking, a fairly successful location would normally have a payback time of three to four years," Dyson noted.

Besides pricing and sales, other factors that might affect an owner's profit margin are water and electricity costs as well as the interest rate an operator is paying on the vendor, Dyson added.

Advantages

Ice vendors offer a number of advantages over bags of ice delivered to a carwash or c-store, according to Brad Lefkowitz with Bag of Ice, Ice and Water Vending. With vendors, no employees are required, there's no wasted product from broken bags or melting, and utility costs for a vendor are a fraction of the price of traditional freezers. "In particular, the cost of making ice on-site is generally 90 to 95 percent cheaper than pre-bagged ice from a typical delivery service," he said.

Because the ice and water are made within the vendor, there will be no price fluctuations that can be common with delivered ice. Dyson said trucked-in ice often includes costs associated with paying delivery employees, delivery vehicle costs and the cost of gas. The additional cost of an attendant to monitor on-site carwash ice sales must be factored in as well.

Stand-alone vendors can turn a carwash into a destination point, Daniel Dunn, vice president of manufacturing for Ice House America, said. Especially in areas that do not already feature an ice vendor, the machine will draw more customers to a parking lot during the typical day. Many new ice customers may end up purchasing a carwash, too.

Also, properly placed on-site ice vendors offer easy accessibility for recreational boaters and commercial companies such as roofing and landscape contractors. Certain vendors sell purified ice and cold purified water, which is something that ice delivery services cannot provide to carwashes and c-stores, Dyer stated.

In addition, the vendors operate 24/7, including holidays, Dyer said. A number of payment options are accepted as well, including:

  • Currency;
  • Credit cards;
  • Debit cards;
  • Coupons; and
  • Tokens.

Convenience

Lefkowitz noted that the best lot placement for an ice vendor would be an area where it can be seen by drivers traveling by a business in either direction. Some machines can even be customized with a logo, an awning or other signage to maximize the vendor's visual impact.

Ingress and egress are other important considerations when deciding where to place an on-site ice vendor. To maximize customer usage, there needs to be easy access as well as room for boats, trailers and trucks, Dunn said.

"Just as people would rather drive up to 'Redbox,' people would rather drive up to an ice vending machine," Lefkowitz said. "They can vend their ice and only need to walk a few feet back to their vehicles rather than dragging a bag through the store." Also, customers often have the option of placing their coolers directly under a vendor's ice output.

Security

Since the machines are accessible 24 hours a day, security can be a concern for operators. Dyer said his company's machine is wrapped in stainless steel, and the access door is secured by a dual application hinge. These hinges are pinned on the interior of the building, so even if an exterior hinge were cut off, the door would remain secure.

In addition, vandalism and theft from urban "metal miners" has been combated by placing the actual ice machines inside the kiosk, Dyer continued. Rooftop ice condensers are further secured with steel, powder-coated grates.

Dunn stated that secured money areas inside the machines are common, and lighting can be used to help keep the vendors secure. While the vending panel is built heavy-duty like an ATM, a monitoring system is included that offers security features, electronic troubleshooting and revenue assistance. One security feature monitoring systems add is a text alert that will be sent to an owner or manager each and every time the vendor's door is open.

Further, full-sized kiosk entry doors can be equipped with a 180-degree, military-grade view screen to the exterior as well as dual dead-bolt locks to maintain security for any carwash personnel, Dyer explained.

Installation and upkeep

The list of the needed utilities on a carwash site for ice vendor installation is a short one. Most simply require a good, quality water source, proper drainage and single phase power, according to Lefkowitz.

Maintenance on most machines is comprised of simple tasks like replenishing ice bags and removing the cash. Dyson said in most instances, these tasks are very straightforward. For all machines, regular cleaning, service and inspection will keep the vendors operating reliably and efficiently.

Weekly maintenance Dyer recommended included cleaning the machine's exterior and refilling the water softener brine tank with salt. Also, water and ice vending windows should be cleaned twice a week. Less frequent tasks include replacement of a sediment pre-filter about every 30 days, and ultraviolet lamps in each water vend station should be replaced annually.

Some machines may also require less maintenance if they use purified, ozone-treated or sanitized water. This eliminates chlorine and particulate scale in the ice machine, Dyer stated. De-scaling the equipment monthly is a process that can typically consume an entire day, and many owners do not want to keep up with this type of maintenance task.

Lefkowitz noted that maintenance of a vendor is as simple or as complicated as the machine that is chosen. "If you choose a less complicated machine, you would only have to replace your water filters quarterly and clean your ice maker every six months," he said.

Marketing

"Most owners have used the expected signage and banners to let consumers know that they have a new, convenient service available to them," Dyson said. In addition to enticing existing customers, signage will bring in new potential customers to a carwash.

One unique promotion that many carwashes have offered includes free ice coupons that are distributed on-site or by mail. Other effective promotions are free ice giveaways on certain days or during certain events. "This creates a customer's buying habits and keeps the owner's vending machine in … mind for the next time the customer needs ice or water," Lefkowitz said.

Free ice coupons can also be used to develop a "customer rewards" type program. A "free bag of ice with a deluxe carwash" promotion could bring in new customers, and it could encourage existing customers to increase their spending. The best part is the only true cost to an owner would be a fraction of the ice's retail price, according to Dyson.

Another competitive edge ice vendors offer that is marketable is their "green" aspect. Ice vendors are created to operate efficiently and occupy the smallest footprint possible. Thus, many consumers will appreciate the "green" aspects of the product if these points are promoted, Dyson explained.

The "best and most economical" marketing for an ice vendor is word of mouth, according to Dunn. Here, free coupons will entice new customers to use the machine. In turn, they will tell their friends and neighbors about it. Typically, ice vendor usage spikes quickly when users spread the word around town.

New advances

Ice vendors are a young technology, but there are still improvements and updates being made to the machines regularly. Today, the newest systems offer hands-free bagging as well as a "gourmet" ice product made from reverse osmosis (RO) water. Other additions include the ability to sell cold, purified drinking water as well as ice, Dyer said.

Another improvement is the ability of certain ice vendors to offer different bag sizes. Now, some machines can sell bags of ice in 10-pound, 16-pound and 20-pound sizes, all at different price points, Lefkowitz said.

For vendor owners, manufacturers have continued to develop the monitoring systems for their machines that provide valuable feedback, Dyson stated. The monitoring system provides users access to a web portal that tracks sales and other vital functions. They can tell an operator how many bags are in the machine, how much ice is available, if there is a problem with the bill validator or coin exchanger, or whether there is a problem with the ice maker itself. Also, some manufacturers have even developed an iPhone or smartphone app for off-site monitoring.

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