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Follow on TwitterTim (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.
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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.
It sound good and quite realistic.But food business is unpredictable and some time you wont be able to sell a single fruit pot,leave along 150.The best Idea with fruits is sell it as smoothies or Ice lollies or Ice cream.it last longer and remember British children hates fresh fruit.
Your plan is fatally flawed in that cool boxed foods will not pass environmental health standards for a safe food storage system. Any firm which allowed you in to sell to their staff is leaving itself wide open to being sued if a food poinoning outbreak were to occur.
Aisla,
I don’t think that’s a fatal flaw, just a possible issue to be ironed out in implementing the idea.
I don’t think the idea is fatally flawed.
OK so there is some red tape to get through. It is really not difficult and I’m sure most people, with a bit of investment and the correct training, could get through it. The idea of having a cool box is not great but there are plenty of new and used chilled vans on the market for sale. If you don’t believe me just do a quick Google check.
Here are some more figures to compare:
I work in a business park which is located at least 10 minutes car drive away from any shopping facilities. So i guess this would be your ideal customer situation. Let’s say there are 60 people working there during lunch hour. There is a sandwich lady dropping in each day in her car. On average, she sells to 10 to 15 people, mostly sandwiches, crisps, cakes and drinks. The price for such lunch is usually below £3.00. The sandwich lady spends about 20 minutes in this business park.
You need to include the alternatives in your calculation, i.e. if your customers spend £3.00 (or more) on sandwich and crisps, will they then spend £3.00 on a fruit salad?
Hope this helps.
what about the people who make the fruit where do you buy that from.also who would prepare all the fruit daily thats a lot of work in itself you would be up very early evey morning making fruit salads up,Then finish at 2pm after a 12 hour shift.If you expand you would end up needing a factory to maintain the amount of salads you would be using thats more cost for premises & workers,Sounds good in theory but not in practice.
putting it out there how about getting an existing business to make the stuff for you and you can concentrate on making the sales , would remove some legal liability aswell !
I like the idea. The advice above is right on but also consider the “shelf life” of fresh fruit. Especially fruit that is already cut up in a fruit salad.
The smoothie/frozen fruit idea is great to give you more time to move your products especially in the beginning.
I think that this could work but turning the kind of profits mentioned in the article may be unrealistic.
If I were running a business of this type I would try and focus on selling people packages, or Lunch plans to build regular customers. Sell them on the idea of a Healthy lunch plan, with no thought involved! Offer them a discount for getting fruit 3 times a week and issue them a “Health Club” punch card at a discounted rate.
Also you could build a strong relationship within your community by donating anything leftover at the end of the day to the needy. Advertising that any fruit not sold that day is donated to feed the needy would be perfect because it would build trust that your product is fresh and people will support you because you stand for something good and doing something good for yourself.
Best of luck! Please let us know how it goes.
You asked for input and more specifically, people to “pull the idea apart”…so here goes –
1. Fruit Pots have an amzingly short shelf life.
You will be buying fruit by the box. Fruit is expensive. Without some very detailed and accurate projections and ‘trial runs’ the unused fruit will very quickly eat into the profit margin.
2. Sales Staff
Finding outgoing, confident, self motivated, sales driven staff to work for minimum wage (plus small %) is going to be nigh on impossible. If they were good salespeople, they would be working for far more than minimum wage.
3. Preparation Time
I think you may have underestimated just how long this is going to take. Fruit is a natural product. Its going to have imperfections, bruises, mis-shapen, odd sizes, discoloured, unuseable items and all manner of things to contend with, in every. single. box.
This will all need to be sorted and graded by hand. We havent even touched on preparing the fruit yet! Or indeed time to arange the fruit pots (they will need to be appetising and appealing)
Tesco, Waitrose and the like have invested untold millions into farms to get just the product they want in a format and size they can use and have locked down their suppliers. You will be buying fruit off the market (that was rejected by the Big Four). Your product will not look or taste like a Tesco fruit pot. You need to be aware of this.
4. Acces to Offices
Gaining access to offices on a ‘cold call’ is almost impoosible these days. Just think about how many unsolicited phone calls you get at home and how annoying that is. Now increase that 20 fold and you’re getting somewhere near what the average office manager has to deal with. Trust me, I know!
Everything and anything from office cleaning services, sandwich rounds, coffee rounds, office furniture, office supplies, window cleaning, charity collectors…the list goes on!
Unless the fruit has been ‘pre-ordered’ and you’re just dropping it off, you will find it very difficult to access their staff. Managers want staff working. They give them a lunch break and tea break to go out and buy their meals.
5. Selling Time
In all likelyhood, you’re going to have a VERY short window to sell. People dont want to buy a fruit pot at 9:00am or 4:00pm. They want it for their lunch/snack. They want it “fresh”. We know its been sitting in Tesco’s chiller since 6:00am but the perception is it is “fresh” when you buy it at 12:30 for your lunch.
EXAMPLE – have you ever bought a sandwich at 9:00am to eat at 12:30pm?
6. Red Tape
A fairly big hurdle actually. Eviromental Health will want to view your prep areas before you sell item 1. You normally need to be registered with your local council and all staff will need Food Handling certificates (at the very least!). They will want te see your controls and working practices….can be quite detailed and time consuming follwing their rules.
7. Lots of chiller/burger vans for sale on eBay
For very good reason!
Its not easy establishing a pitch or round. Many many people fail. Hence LOTS of vans for sale on eBay. The best pitches/rounds were secured many years ago and those operators pay the council a lot of money for their sites.
Thats just a quick handful off the top of my head. I wish you all the best.