Untapped revenue market: Honor boxes

How to serve smaller locations has always been a challenge for vending operators. The answer, according to one operator, is an old one – honor boxes. Mark Legler, owner of V.E.N. Enterprises, Remington, Ind., has a thriving vending business, half of which consists of honor boxes.

No maintenance, easy servicing and minimal upfront cost compared to vending make up for the lower revenues from honor boxes, according to Legler. He has some vending accounts, but only because certain locations have multiple shifts with too many people to remain honorable. “I’d have all honor boxes if I could,” he said.

Getting new accounts is easy because of the small number of honor box competitors, but a quarter of Legler’s new business doesn’t evolve into long-term contracts. The attrition rate means he is continuously adding new business.

’It sounded like fun’

Before his vending company, Legler worked in the trucking industry. When the company he worked for moved to another town in the fall of 2000, Legler wanted to do something else, something close to home and different. During this time he ran into Harold Gooden who operated a 100-account honor box business in the Remington, Ind. area. Gooden wanted to sell his operation and retire.

“It sounded like a fun thing to do, better than trucking,” said Legler when he decided to buy the business in September. He wasn’t thinking long term, but he knew from the start the key to success was getting more locations.

As Legler started knocking on doors trying to add honor box accounts, he discovered a vending niche for locations around 20 to 75 employees. “The factories were covered, but the smaller places in vending were not being served,” said Legler.” He decided to add vending services for these locations.

Currently, Legler has 150 vending accounts and 2,500 honor box accounts and serves a 70- to 80-mile radius around Remington. The revenue is roughly equal between honor box and full-line vending accounts.

He started out renting a portion of a friend’s garage for his warehouse, but quickly outgrew the space and rented a block building with no heat or air conditioning. “They were some cold winters,” Legler remembered.

In 2008, he bought the current building from his brother in law and sectioned off a 2,500-square-foot space for his warehouse, adding climate control. He plans to rent out the rest of the 12,000-square-foot building.

Recession: vending turns to honor boxes

One trend Legler has noticed is during the current recession, companies have been reducing staff. Some of his small vending accounts became honor box accounts because of the shrinking employee numbers. And some honor box accounts closed completely. “We have to be adding accounts constantly because they’re closing,” he said.

Legler charges two prices in his honor boxes, $.75 for snacks and a dollar for candy. “I had gone away from candy because it cost more,” said Legler, “but people argued and fussed.” He agreed to put candy back in, but at a higher price point. Customers didn’t complain. They pay the premium price. “I don’t think I could put more candy bars in than they would buy,” said Legler.

An interesting difference Legler sees between honor boxes and vending machines is what people buy. Honor box patrons are more likely to buy a granola bar, for instance. The granola bar doesn’t sell as well in the vending machine. Other items Legler sells more via honor boxes than vending machines are the cracker and cheese combos as well as certain snacks like Combos and Snackwells. Legler doesn’t have a reason for this. He guessed that it might be what customers buy after the candy bars are gone.

Legler has a retired couple come in three days a week to pack the boxes. Before them, he hired various people from the town to pack boxes, including his own kids on Friday nights when he first bought the business.

Honor box service is fast