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FOOD PRICES: A LOCAL LOOK
Tough times chip away at snack salesThe Atlanta Journal-Constitution
Published on: 07/15/08
Jennifer Evans thinks 80 cents for a Snickers bar is excessive, but that hasn't changed her buying habits.
With a late lunch schedule and a job that won't let her leave her workplace, Evans usually sates her hunger with candy or a bag of chips out of a vending machine.
Marcus Yam/myam@ajc.com | ||
| In addition to restocking, there have been plenty of price increases to keep drivers on vending routes busy. One company says candy prices are up 20 percent in two years. | ||
Marcus Yam/myam@ajc.com | ||
| Nam No of Eagle Vending in Marietta restocks his supply cart at a car dealership in Duluth. More than wholesale costs go into a vending machine snack price: Vendors have to pay for gasoline, too. | ||
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"When you're hungry, you have to pay what you have to pay," said Evans, a service adviser at Gwinnett Place Honda in Duluth. "Kind of like with gas."
Not all vending machine regulars have been as faithful as Evans.
Even Famous Amos and Dolly Madison have not eluded the clutches of the slowing economy; vending machine operators say sales are down by as much as 25 percent from last year.
Perhaps consumers are holding on to every last quarter. Or it's a reaction to rising prices. Or both. You might not have noticed — Evans hadn't — but vending machine snacks and drinks, like many other foods, have taken a recent price spike. Evans' favored Snickers bar, for instance, went from 70 cents to 80 cents earlier this year.
"When somebody has got a choice between a bag of Fritos and a gas tank, I think the gas tank's winning," said Geoff Paul, president of Atlanta Vending in Norcross. "Who can blame them?"
Preston Humphries, owner of Captain Vending Services in Marietta, said that with prices rising, sales falling and fuel costs escalating, his profits have gotten so thin that he's requiring employees to turn in old pens if they want new ones.
Vendors that in good years might make a profit of four cents on a 75-cent candy bar are struggling. "There'll be several vending companies that go belly up this year," Humphries predicted.
Vending machine companies generally operate in one of two ways.
At private sites such as offices and warehouses, vendors set up and manage machines free in return for the revenue taken in by the machines. At public sites such as schools and hotels, vendors split the profits with the host, which is why the cost of drinks and candy is generally higher.
Vendors have plenty of theories for the slower sales: More people out of work or working from home means fewer people in the workplace to buy snacks. Higher gas prices leave less disposable income for a soda. Fewer people traveling leads to fewer hotel vending machine purchases.
Humphries said snack and drink producers have raised prices on different items 200 times this year. Some items have had multiple price hikes.
Jimmy Bryan, owner of Eagle Vending in Marietta, said the increases have ranged from 2 cents for chips and pastries to 7 cents for chocolate candy. In the past two years, candy prices have gone up 20 percent, Bryan said.
Chocolate maker Hershey cited increasing costs of ingredients such as milk and cocoa and higher transportation costs for its 13 percent price hike in January. It and other chocolate companies are facing a class-action lawsuit alleging price fixing and also a U.S. Department of Justice investigation into alleged anti-competitive practices.
"Candy's gone up more in the last five years than it had in the previous 20," Bryan said. "I think it's borderline gouging."
Rising fuel prices are swallowing profits, too.
Trucks loaded with snacks and drinks traverse metro Atlanta every day to restock thousands of vending machines. Bryan said his company's monthly fuel costs are 35 percent higher than they were a year ago.
Rising supply costs have led to their own round of price increases, mostly a nickel or dime per item, vendors said.
Paul, of Atlanta Vending, said that his company has raised prices for candy such as M&Ms from 75 cents to 85 cents; a bag of chips from 60 to 70 cents; and a can of Coca-Cola from $1 to $1.25.
"We're a consumer at the same time that we're a supplier," Paul said. "We feel everybody's pain. We're trying to do our best."
Vendors anticipate that more price increases are to come. Providing snacks and drinks to the hungry and thirsty may have never been less satisfying. Said Humphries: "Not a fun time."
SNACKING COSTS RISE
Early 2007
- Canned soft drinks: up 5 cents
- Bottled soft drinks: up 15 cents
- Candy: up 5 cents
Early 2008
- Candy: up 10 cents
- Pastry and large cookies: up 5 cents
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