Untapped revenue market: Honor boxes

It takes 15 seconds to service an honor box account since the driver goes in with a full box and brings back the old one regardless of what’s left. This means Legler’s route drivers can do 70 or 80 stops a day versus 12 or 15 vending stops.

Legler doesn’t always separate the vending and honor box routes. Many times the route drivers will do both, whatever works best with the geography of the accounts. Most days Legler still runs a route himself.

Shrinkage factored into cost

The only real drawback to honor boxes is shrinkage, which Legler estimates to be about 18 percent. He factors that into his costs and the price he charges.

“The key to getting them to pay is a relationship with a person at the location, either the boss or the people sitting in the breakroom,” said Legler. If there’s been some theft, he will go to the person, or people, and say “There’s X amount of money missing, come on – help me out here.” According to Legler, this approach only works with someone he knows. Otherwise, the person gets defensive, and often doesn’t renew the honor box service.

“It’s harder to steal from someone you know than just some invisible route guy,” added Legler.

Legler has honor boxes in small rural areas as well as city locations and in many types of business. He does not see one place or type of location as having more or less shrinkage.

He does notice that a location with more men tends to do better. “They (men) eat more,” he said.

ONe type of service per location

There have been times a location has asked for both a vending machine and an honor box, but Legler finds this doesn’t work well. “If they have money, they spend it in the vending machine. If they don’t, they take it from the honor box,” he said. The only exception is soda machines, which tend to pair well with honor boxes.

While the vending machine side has higher revenue per account, the drawbacks are the expense and maintenance of the machines. Legler repairs the machines himself, often with the help of the manufacturer’s telephone helpline.

Unsaturated market

While Legler used to sell all the accounts himself, for the past five years he has hired an independent salesperson to help him grow his business, Harry Movsesian. Every few months, Movsesian takes prepacked boxes and heads to a city Legler has targeted for new business. He stops in and talks with the decision maker. If it’s a location V.E.N. already serves, Movsesian turns the interview into a service call. If not, he delivers an honor box and brings the business card back to Legler.

“I couldn’t have gotten to the size I am without Harry,” said Legler.

Of the new accounts, Legler estimates in the next two months, he’ll retain 75 percent. These accounts will likely stay with him a long time. “I still have most of the accounts I bought from Harold,” he said.

The other accounts will either decide they don’t want to renew the honor box or will have shrinkage rates that are too high.

Legler doesn’t offer commissions to honor box locations and only 20 percent of his vending locations get commissions. He values both halves of his business, but he sees a real benefit to honor boxes.