Tim (of Seriously Home Business) originally posted this as a comment on Give Them Sandwiches, but after a quick chat we thought it would make an interesting post. Here’s what Tim had to say:
Two guys in a car or van, each has a large portable cool box. Between the hours of 8am-2pm they visit around 10 office blocks/industrial estates/factories.
They’re selling individual plastic pots of fruit salad freshly made from tropical and standard fruits (they have a variety of choices)and possibly a few other products, fruit smoothies etc. Each fruit salad pot has a max cost of £1.00 and sells for £2.00 - £2.50/.
Each coolbox carries 30 pots - the guys restock the coolboxes from the van and then each guy trawls the offices/workplaces at each site, until they exhaust their coolbox stock. Each guy sells an average of between 150 - 200 (175)pots/day.
Van total average pots sold per day = 300-400(350)
Van total average daily t/o = £700-£875
Van total average daily profit (before other costs)
= £350-£525(£437.50)
Van total average weekly profit ( 5 day week )
= £ 2187.50
The guys are both entrepreneurial and decide to ’scale up’, they lease 4 other vans, hire 2 sellers for each van (paying £6-£7 basic plus a small % on ‘pots sold’ to each seller- £390 basic/week/van standing wage costs), expand their ops. to cover 4 other southern uk towns/cities and think up a memorable name for the business.
With the same levels in achieved daily sales numbers, the business now generates:
5 Vans total average weekly profit = £10937.50
ie. £547k+ /year
Now obviously, the guys total costs include: a place to prepare the fruit/the van expenses/wages and commissions/insurance etc. so say a ballpark costs figure around £170k/year (£78000 basic wage costs, £50,000 premises(5x £10,000/year), 5 vans lease costs £12000/year,
other c.o.s £20,000). So the guys make £377k/ pa.
The guys have bigger ideas though:
They lease a further 5 vans, apply the memorable name and venture into supplying fresh fruit catering for kids and adults parties, they lease highstreet shop premises, from which they supply their products to passing trade and save costs by preparing the van delivery products from a commissary based on the shop premises. With ten profitable van routes running,the guys now decide to franchise the busines model. The guys are targeting a 7 seven figure yearly profit and the nation’s office workers are getting their 5 a day!
What do you think? Do me a favour and pull this one apart, I’d love some feedback?
Anyone fancy giving this a try in the Bournemouth/Poole area, I’m open to offers.
John’s thoughts
I think it sounds like a good idea. There’s also potential to expand it and cover local events as I suggested in Fast Food For Runners. But what do you the reader think? I look forward to seeing you pull this idea apart for Tim and if you’re interested in giving it a go with him, the you can contact him through his blog Seriously Home Business.
This blog is about business opportunities and ideas that I spot, think of or hear about and think are useful and interesting. It is intended to provide ideas and inspriation for you to help you find the right business idea for you to then grow it into a successful business.
I think it’s a good idea, the masses are keen on having their “five a day”. What would the setup costs be for a franchisee?
To make it successful as a franchise business, you will need to provide help and ideas for the new franchises, to ensure that they can be up and running and making money from the beginning. Maybe that can be as simple as tying up firms that you’ve had success with at the outset, and getting an introduction to their sister offices in the new areas that the franchisee’s will be operating in.
Another thing to think about is how the economy will affect business, £2.50 a day for a fruit salad is great when times are good, but when times are bad (which is where they are heading), you may find that the volumes drop off somewhat. Ithe model worked on 50% of the volume being done, then that should give a potential franchisee the confidence that the business model is robust enough to handle a recession.
Van total average daily profit (before other costs)
= £350-£525(£437.50)
This is your cost of sale (Gross Profit).
Now take out cost of pots, fuel, wages, insurance, van maintenance.
Each man gets 2187.50 / 2 per week, less above costs would still give a reasonable wage.
Competition is strong here, lots of sandwich vans already visit office, they could easily adapt to offer the same, so need a USP to gain an edge.
But an easy start up business to get going.
Tristan,
‘Another thing to think about is how the economy will affect business, £2.50 a day for a fruit salad is great when times are good, but when times are bad (which is where they are heading), you may find that the volumes drop off somewhat. Ithe model worked on 50% of the volume being done, then that should give a potential franchisee the confidence that the business model is robust enough to handle a recession.’
Yep, cheers Tristan, I think you have a good point here. There’s no doubt the economic climate is heading towards (if not already in) a period where luxury sales are going to be hit hard. Testing the idea at ‘half sales’ is a good measure but I think it also needs some thought as to how the product can be made to appear ‘good value’ with offers and commitment deals etc. Thanks for you input.
Magic,
‘Van total average daily profit (before other costs)
= £350-£525(£437.50)
This is your cost of sale (Gross Profit).
Now take out cost of pots, fuel, wages, insurance, van maintenance.’
Thanks for your advice. Yep you’re right the above figures are not net profit, they represent the take after direct product cost (ie. fruit and pots are included in the £1.00 cost). The fuel, insurance and other van costs would be based on just 1 van at this stage in the figures. There are no other wages at this stage- the guys make a judgement as to what to draw from the ‘net’ profit (before wage costs, based on their circumstances and how much they can afford to leave within the business, giving the best chance in the early days.
It would be a hard slog for the guys to get it established but then what business doesn’t take 100% commitment.
There is a strong USP, which for obvious reasons I didn’t mention but there’s a valuable IP element presenting a degree of protection. There would be nothing stopping your average sandwich delivery guy adding fruit salad products to his rounds, but there is a barrier to a direct copy of the offering. I think it’s possible this would offer enough of an edge to provide a competitve advantage.
Cheers for taking the time to add you advice. Much appreciated.
A great idea in theory but all food business in the UK involve a great deal of red tape and licences etc.
To comply with the regulations and obtain all the necessary licences can involve a great deal of investment This has to be taken into consideration.
you might want to think about setting up small stores at train/metro stations in the UK. Great footfall for your business as a lot of people use rail travel to commute to work.
I’m going to do my best, as requested, to pull this one apart.
I think the sales targets of 150-200 units per van per day are massively optimistic and that’s where this whole idea falls apart. Let’s give a generous estimate and say that you’ll sell to 1 in 10 blue collar workers you can approach, and 1 in 5 white collar workers. On that basis you’ll be selling to 3 in every 20 people, so would need to be able to reach around 1000 people a day to sell 150 units.
Factor in the time of travel between business, and the time for customers to actually leave the premises, or for you to enter their premises. You’ll be hopping along from warehouse to warehouse, business to business. Factor in a travel/waiting time of 15 minutes in every hour (although I think it would be closer to 30 mins). As you’d need to average 25 pots an hour to sell 150 in a day, you would need to make a sale every 30 seconds that the van was stationary.
I don’t think 150 sales a day is realistic. Even if you were stationary and factored out the travel time, I don’t think 25 people will come by every hour to buy fruit salad.
I reckon if you could average more than 30 sales a day you’d be doing extremely well.
Seems to me, as someone who works in offices, that there are only 1 or 2 such food van businesses that visit each office complex. Perhaps there is some form of tendering process. My point is that it might not be as easy as simply turing up with your van.