Business Spotlight: The Snack Supplier

In 2008, Shane Rudminat and his wife had collected $1,500 they could either save or use to buy three vending machines and start a business venture.

Taking an entrepreneurial leap, Rudminat purchased the three machines, and Grace Vending LLC – named for the couple’s daughter – was launched.

After acquiring RNL Vending in 2009 and Davidson Vending last year, Grace Vending now owns 180 machines and manages 70 accounts in the Springfield and northern Arkansas areas. In 2011, the company posted revenues of $254,000, more than double the prior year’s sales, Rudminat says.

The rapid growth during the past four years was a bit overwhelming at first, says Rudminat, who originally was Grace Vending’s sole employee and was known to work 16-hour days.

“I was doing all the work and didn’t want to turn any clients away. My wife Billie was a very big help and part of building the business,” he says, adding that she handles the marketing and branding for the company – from building the Facebook page to putting logos on the company’s vehicles.

Grace Vending installs, stocks and maintains its vending machines at client sites in exchange for collecting the sales within each machine. Rudminat says clients have the opportunity to charge more than his price for products, and most machines are installed in break room areas for employee use. Other clients make the vending items accessible by their customers.

Sodas and snacks
Vending products range from sodas to sandwiches to snack foods, and Rudminat says sales vary widely, from $50 to $700 at each machine any given week.

To supply the beverage machines, Grace works with Sam’s Club for Pepsi and Coca-Cola products and Crown Distributing – where Rudminat worked as a supervisor for eight years – for such beverages as Sunkist, 7Up and A&W. He orders about 300 cases, or $2,200 worth, of beverages each week, he says, and the two vendors together fill roughly 60 percent of Grace Vending’s machines, Rudminat says.

“I’ll install a drink machine anywhere because with a snack machine, the product will go bad and you can lose money if people don’t buy enough of it,” he says, noting he buys a majority of the snack products in bulk from Sam’s Club.

In the past two years, Rudminat has hired three employees who maintain and stock vending machines weekly at 14 Springfield-area Wal-Mart stores, Ozarks Technical Community College, Target and other accounts, such as Foster Manufacturing, which had one of the original three vending machines Rudminat purchased in 2008.

Foster Manufacturing Controller Teresa Thompson says the company initially installed beverage and snack vending machines to provide food options for its 30 employees.

“They don’t have to worry if they forget their lunch,” she says, noting the 85-cent chocolate icing Zingers is currently the most popular item.

Grace Vending stocks the machines weekly and handles service calls on a regular basis, Thompson says.

“If there’s ever a problem with the vending machines not giving change, I can give (Rudminat) a call,” she says. “It’s totally hands-off for me, which is good because I don’t need anything more to do.”

Rudminat gave Foster Manufacturing the option to receive a commission on items in the vending machines if they raised prices on the items, but the company declined, Thompson says. “We’d rather have the employees have the lower prices and not even worry about getting any money back,” she says.

Rudminat says Wal-Mart, OTC and 18 other accounts are set up to receive commission, often 10 percent, from their vending machines.

High-tech vending
On the maintenance side, Grace Vending employees handle everything from removing quarters that have strings attached to them with the intent to pull them back out to finding gold-painted quarters used in hopes of tricking the machine into thinking they are gold dollars instead.

“We do get some interesting maintenance calls and lots of ‘Your machine ate my dollar!’” he says.

To minimize complaints and provide a smoother vending process, Rudminat says he is purchasing machines with iVend technology developed by Des Moines, Iowa-based Wittern Group Inc.

“IVend is a sensor that detects if the product is dropped off of the tray and into the bin,” says Tom Papich, a Wittern Group sales representative. “If the product doesn’t, (the machine) knows to go ahead and turn the coil a certain degree so the product will break free of the coil and drop. After that second attempt, if the product did not dispense, it will give you credit to make another selection or to get your money back.”

The iVend sensor is typically used in vending machines with glass fronts. Originally, these machines were only used for dispensing snacks, but they’re now used for drinks, too, Papich says.

The iVend technology is built into vending machines during the manufacturing process, and he says prices on machines from Wittern Group have base ranges of $2,200 to $4,500.

Rudminat says he’s purchased used machines for about $1,000 and new machines for $3,000 to $4,000.

If 2012 goes as expected – he’s projecting revenues of $400,000 – Rudminat says he’d consider entering other markets, such as Joplin, and hire additional staff.