I would like to share with everyone, my experience as a distributor with Palm Beach Specialty Coffee. Hopefully readers will learn a lesson from my sad experience doing business with them.
Here are the things I was told when I first considered doing business with them:
1. Craig Schmoll, one of the marketing managers of the company told me when I spoke to him that they have hundreds of distributors in the USA.
2. He told me that their company will place the Model Itala Coffee Machines for you in your area and that they will only place these machines in places where they are certain will sell on average 20 to 25 capsules a day. Schmoll tells me that this is the AVERAGE their distributors sell.
3. Schmoll tells me that their machines are sturdy, reliable and heavy duty and their distributors have not had problems with the machines for years.
4. Machines have a one year warranty. You can send the machine to them for repair if it does not work.
5. You will be in business for yourself but not by yourself, Palm Beach Specialty Coffee will always be there to help and guide you.
pHow have the promises panned out ?
Here's my experience.... I started out with $20,000 which gave me 5 machines, 20 cases of coffee capsules, and a trainer who came with me to place the machines in locations they believe will provide me with the volume of sales they promised.
Palm Beach Specialty Coffee called up 30 possible locations for visitation and placement.
My profit calculations based on the 20 to 25 capsules sales average they promised indicate that I would make my initial investment back in about 18 months.
Craig Schmoll advised me to charge a mark up of $50.00 per box ( 100 capsules ) which they tell me is reasonable for my area.
It took close to a month to place these 5 machines. They were placed in 4 eateries and one deli ( their estimate was it would only take 5 days ).
Most locations we visited complained about the steep price of each capsule (0.80/capsule), that is why it took us over a month to place all 5 machines.
RESULT AFTER 6 MONTHS OF OPERATION:
1. The BEST location I get could sell on average, 5 to 7 capsules a day ( I asked them to promote the coffee, they did try ).
The rest of them sell on average 1-3 capsules a day. The Deli where they placed one of the machines could not even finish one box after 6 months !!
2. The machines started to get into trouble after 6 months. The handles that held the mechanical jaws that held the capsules were easily broken. I sometimes get calls from my best customer a few weeks apart telling me the machine isn't brewing cappuccino.
When I called Craig Schmoll up for support, I only get an answering machine and it would take him over a week to respond after I leave my message.
He would apologize by telling me that he had a health condition ( I would expect a competent business to at least have someone take his place when he is away ).
To fix a non-working machine, I would have to ship it back to Florida AT MY EXPENSE to have it fixed !!
This means that I don't do any business while waiting for the round trip.
I was fortunate to find out that there was a local affiliate of COMOBAR in my area where I can drive an hour to have the machine fixed.
The technician told me that the parts were no good and the machine was not assembled in Italy but in China. I had to pay a stiff amount to have the parts replaced and fixed.
3. When I needed new capsules to distribute, Schmoll would tell me to call COMOBAR directly and NOT Palm Beach Specialty Coffee.
So, the original complaint was right.... WHY BOTHER DEALING WITH Palm Beach Specialty Coffee when your supplier is going to be COMOBAR?
I have been doing this distribution business for 2 years and am closing down my business for good because the machines in each location are having problems and fixing them is going to cost lots of money.
I planned to be a coffee distributor, I ended up not only distributing coffee but having to worry about fixing their UNRELIABLE machines and earning the ire of some of the locations
using the machines.
I expected the machines to work well for years. It took only a few months to realize that these machines were LEMONS.
I have not recovered even a quarter of my initial investment in this distribution business. This is a sad experience I am sharing with everyone who reads this.
In the meantime, the last time I asked for support ( Craig Schmoll was not responding, so I went directly to the president of Palm Beach Specialty, Joseph Kelly ), I received an e-mail informing me that Palm Beach Specialty Coffee was NO LONGER IN BUSINESS.
A call to COMOBAR at this number : 1-888-922-0876 confirmed this. Palm Beach Specialty Coffee CLOSED DOWN.
In retrospect, I should have been very suspicious at the dubious profitablity of their business model by taking to as many of their so called distributors around the country.
When I asked Craig Schmoll to provide me with the names of at least 10 satisfied distributors in the USA, he balked and told me he could not do that because most of them were busy people. I insisted and he finally gave me the name of only one. I spoke to that one distributor in the Georgia/Alabama area and she seemed satisfied. However, having hundreds of distributors and being able to only show ONE satisfied partner and balking at giving out the names of others should have been a signal that something was not right with the business model.
I am slowly winding down my business and have 3 of the 5 UNWORKABLE machines in my garage.
I plan to junk them as soon as my other two locations wind down due to broken machines.
I HOPE READERS LEARN A LESSON FROM MY EXPERIENCE.
