Sweet Success in Candy Land
Through hundreds of self-serve kiosks, Detroit-based Sweet City is racking up profits one quarter at a time.
Fifteen years ago, Leonard Daitch, a veteran of the retail candy business, helped a friend install giant gum ball machines at three malls. It was a disappointing but learning experience. The giant gum ball machine, Daitch says, was not very unique or different and Daitch realized the “only way to maintain a position in the mall and grow, is to be different.”
That early venture inspired and challenged Daitch. Soon, he was designing and producing his own upscale vending kiosks that not only looked sharp but offered consumers a unique selection of brand-name candies and novelty items—including toys and costume jewelry—at a reasonable, impulse-buy price.
Known as Sweet City, Daitch’s Detroit-based business is targeted toward everyone—mall visitors between the ages of 4 and 80. Products are merchandised in self-service vending machines in kiosks located at 58 shopping centers scattered across the country.
“We are the Bentley, Mercedes Benz and Porsche of the temporary tenant vending business,” Daitch says of his now 4,500 vending machines. “We’re highly dedicated to doing a great job of design and function.”
The vending machines are designed to accept either one, two, three or four quarters in exchange for a product. No single item costs more than $1. Some kiosks offer change-making machines so customers can turn their dollar bills into quarters.
“Our products are really fun,” Daitch says referring to Zoo Mania, with its squishy animal toys and acrylic costume rings. “When I make a presentation and bring in samples, everyone smiles.”
Mixing it up
Daitch is well aware that today’s smiles can be tomorrow’s ho-hum, so he keeps the product mix engaging in order to generate repeat visits. He attends national candy shows searching for the latest items and works closely with brokers who supply him with the hottest merchandise from Europe.
Only two items—assorted gum and large gumballs—are kiosk staples. Approximately 30 percent of the products are retired every year. “We’re true retailers,” he says. “We work to find better merchandise and better ways to display it.”
The kiosks are not manned, but Sweet City has a team of representatives that visits each site regularly. At every location, staff members go through a mandated checklist of chores, ensuring that the vending machines are filled and clean and that the kiosk looks inviting. They email detailed reports and digital photos of the mini-shops to Daitch for his review.
When a vending machine begins to show signs of wear, it is replaced with a newer piece; the old one is shipped to Detroit or Oklahoma for refurbishing. No equipment currently in use is more than four years old.
Gains and growth
Daitch anticipates Sweet City’s future growth rate to be between 25 and 33 percent annually, but he has no plans to franchise the vending kiosk concept. “It’s an operationally sound business,” he says. “And every unit has my name on it.”
Currently, Sweet City kiosks can be found at malls in Michigan, Illinois, Indiana, Texas, Arkansas, Missouri, Oklahoma, Wisconsin, Pennsylvania, Connecticut, Massachusetts, New York, Ohio, Colorado, Kansas, Georgia, Alabama, Tennessee and Virginia. A new location will open in New Mexico soon. Daitch has worked with mall operators and leasing agents since 1973 and finds new kiosk locations by networking among those professionals. He adds that state laws impacting his business vary from state to state, “but they’re not that complicated.”
Love at first bite
In April, Daitch received special recognition from his peers when he was named “Operator of the Year” for 2010 by the National Bulk Vendors Association at the organization’s annual meeting in Orlando, FL. He shared that award with the company Service Vending based in Aurora, MO. “To be recognized for the hard work, that’s phenomenal to me,” he says. “It’s like receiving an Academy Award.”
But it is equally thrilling for Daitch when he visits one of the Sweet City kiosks and sees people waiting in line to buy products. Once a customer with a hand full of quarters told him, “We drove to the mall today just so we could shop here.”
“We’re becoming a destination,” says Daitch. “Everybody loves the merchandise. There’s such a wide scope that there is something that appeals to everybody.”