How to Start a Vending Machine Business: Vending machine businesses have always been popular businesses, and in recent years, even moreso. Vending machines a great way to make extra money – almost passively. If you’re thinking about starting your own vending machine business, these are the 5 easy steps you’ll need to follow to make it profitable:
How to Start a Vending Machine Business in 5 Easy Steps
- Choosing the Right Products. Sodas and drinks are always a popular option, but your vending machine business needs to be suited to its location. In more upscale areas, you might make more sales with healthy drinks, while in other areas you may want to focus solely on beauty products.
- Finding the Right Location. Having your machine in front of lots of traffic is very important for making sales. You also need to negotiate a good deal with the property owner, as they will require some compensation.
- Buying your First Vending Machine. Most people start off with a used machine. You’ll want to follow some tips when inspected these machines to make sure they’re in good working order. If you opt for a new machine, you’ll want to make sure that it has features such as debit/credit card and NFC processing to future-proof it.
- Form your Vending Machine Business. Before starting your venture, you want to make sure that you’ve dotted all your I’s and crossed all your T’s – ie. get all the legal stuff sorted.
- Stocking your Machines and Repairs. Buying wholesale is key to being profitable. Once your machine is making regular sales, you’ll want to start buying in bulk.
1. Choosing The Right Products
There are a lot of options when it comes to the products you can put in your vending machine. You aren’t just stuck with the standard ones you know of.
Japan allows customers to get hot meals, fresh vegetables, pizzas, and even umbrellas from their machines. Now I’m not saying that you try the same thing, as these types of machines are unlikely to be as popular locally, but you do need to consider all your options before deciding on your products.
Bulk Vending (Gumballs)
Bulk vending is the sale of gumballs, toys, and those little novel items in capsules. Bulk vending isn’t as popular as snack vending but is much cheaper to run as they usually do not require any electricity, and maintenance costs are lower. These machines are also considerably cheaper to buy than larger vending machines.
You can pick up smaller tabletop gumball machines for as little as $30 on Amazon, or the larger commercial versions for around $200 on Amazon.
A gumball machine can make hundreds of dollars a month or nothing at all. It all depends on its location. According to Vending Times Magazine, the national average that a gumball machine makes daily is about $1. That means that you can make about $30 a month from a single machine.
Prices, Inventory, Pros & Cons
- Average price range: $30 to $500
- Popular inventory: Gumballs, stickers, costume jewelry, temporary tattoos, gum, peanuts
- Pros: Doesn’t require electricity or battery power, so very low operational costs
- Cons: Lower profits, usually only accepts coins
Snack Vending
Snack vending is machines that dispense chocolates, soda, and candy. These work best when there aren’t any stores nearby. You can focus your machines on only snacks, only drinks, or a combination of both. It’s best to adjust your stock according to the needs of the location.
According to Vending Market Watch, there are over 4.6 million vending machines in the US alone. With more people having less time to shop, the popularity of these machines will only rise.
Vending machine prices will vary depending on your country/state. In the US, you can pick up a used machine for between $1,200 and $3,000 dollars to get started with. Once you’ve made some profits, you can reinvest into new machines that can cost anything from $3,000 to $5,000.
Prices, Inventory, Pros & Cons
- Average price range: $1,200 to $3,000 refurbished, $3,000 to $5,000 new
- Popular inventory: Candy bars, chips, soda, water, cookies, healthy snacks
- Pros: Potential for high traffic and high profits
- Cons: Ongoing maintenance and the cost of electricity
Specialty Items Vending
As I mentioned earlier, vending machines are not limited to simply gumballs or snacks. You may have seen machines in your local self-laundromat that contain laundry detergent and fabric softener. Or you may have come across some in your local gym that have protein shakes and energy bars. If you find the right location for your machine, you can experiment with a variety of different products.
Specialty Vending Ideas
- Disinfection Supplies – PPE masks, gloves and hand sanitizer
- Car Wash Supplies – sprays, towels and waxes
- Beach Supplies – sunscreen, floaties, goggles
- Office Supplies – pens, pencils, tape, etc
- Hot Beverages – coffee, tea and hot chocolate
- Electronic Accessories – phone chargers, earphones
- Dog Treats – biscuits, bones, toys
- Toiletries – toothbrushes, hair gels, feminine hygiene products
Prices, Inventory, Pros & Cons
- Average price range: $3,000 to $10,000
- Popular inventory: Electronics, laundry products, beauty products
- Pros: Higher sales prices, streamlined user interface
- Cons: More expensive upkeep, less versatile if you want to change what you sell
2. Finding The Right Location
One of the most important decisions you’ll make is finding the right location for your machine. There are a few things you should keep in mind when making this decision:
- Consider the foot traffic in the area. The more people who walk by your machine, the more likely you are to get customers.
- Take into account the competition. If there are already a lot of vending machines in the area, it may be tough to get customers.
- Make sure the location is safe and secure. You don’t want your machine to be vandalized or stolen.
You can also get some great ideas by locating vending machines in your area. Where do other business owners place their machines for maximum foot traffic.
Have you ever used a vending machine? Where was it? Try to find a similar place to place yours.
If you’ve found the need to use one and one wasn’t available, then others probably feel the same way. By locating these prime spots, you’ll be primed to make more sales.
Approaching Shop Owners
In order to place your vending on private property, you will need to make a contract with the owner of that establishment. But before you even meet them, you’ll need to have a plan of action prepared.
Create a proposal outlining who will be servicing your machine, how often it will be monitored and what compensation you’ll be offering to the owner of the building. The compensation is usually a percentage of the net sales – approximately 10 to 25%. This fee should cover the electricity costs, as well as leaving the business owner with additional revenue. Working with percentages is better than a flat fee, as you will still take home a profit even if the machine isn’t as profitable as you had hoped.
Once you’ve created your proposal, you can start calling or visiting businesses. Introduce yourself as a vending machine business owner and explain why your machine would be a good match for their specific business. Be sure to highlight how your machine will benefit their customers and staff.
Once you’ve reached an agreement, it’s time to type up a contract with all the terms you have both agreed on, and sign them.
Vending Machine Location Ideas
Looking for the perfect location for your new vending machines? Check out these ideas!
- Businesses – Offices, retail stores, and more can all benefit from having a vending machine on site. It will provide a convenient snack option for employees and customers.
- Recreation Centers – Gyms, pools, parks, and other recreation centers are great places to put your machines. People who work out or play sports are often in need of a quick snack or drink – so having a vending machine nearby can be a real lifesaver.
- Public Transportation Hubs – Train stations, bus depots, and airports are all high-traffic areas where people are always looking for something to eat or drink.
- Colleges and Universities – Students are always looking for a quick and convenient way to grab a bite between classes. Placing vending machines in strategic locations on campus can help you tap into this market.
- Laundromats – Laundromats are another great location for these machines as people are always there for a long period of time and might get hungry or thirsty while they wait.
- Visa Centres – any place that requires you to queue for hours are great places for snack machines, as well as pen dispensers.
3. Buying Your First Vending Machine
When you are ready to buy your first vending machine, there are a few things you need to think about – the type of machine you’ll need for your specific products, the amount of space you have at your location, and the price you are willing to pay.
Vending machines come in all shapes and sizes. You can find small tabletop machines or large floor standing models. You need to decide what type of machine is right for you and your business.
Modern Vending Machine Features
Modern vending machines have all sorts of new features that make them better than ever before. Here are just a few of the great features you can find on modern machines:
- Remotely manage prices, images and content
- Credit cards, debit cards, NFC
- Elevator so products don’t drop
- Interactive touchscreens
- Infrared tech to check that the product reaches the customer
- Flexible product capabilities
- Remote inventory tracking
Where To Purchase Your First Vending Machine
It’s recommended to start out with a used or refurbished vending machine for your first purchase. This will help to keep your costs low while starting up. This means that your machines will most likely be cash only, or limited in many modern features.
Buying Used/Refurbished Vending Machines
There are lots of used vending machines on eBay and Craigslist. You’ll simply need to search for one that can hold your type of product, and check that it is not too far away to collect. I would definitely recommend viewing the machine in person before buying. You’ll want to make sure it’s in good working order before purchasing.
Some things you should check before buying:
- Check if the machine is designed for indoor or outdoor use
- Check the condition of the compressor and fan for cooled machines
- Turn it on to ensure that it cools well
- Order from each dispenser to ensure that they all work
- Test the coin and bill slots
- Test the card reader (if it has one)
- Look for signs of mold, bugs or rodents
- Look for frayed wires, or other damage
Buying New Vending Machines
New machines can be easily bought from online vendors. These vendors will vary depending on your country/state, and they can easily be found with a Google search. These suppliers will have the widest selection of machines for sale – with the latest technologies. Most suppliers will also offer delivery services, as well as repair services and training.
Bulk (gumball) vending machines can usually be bought from these same suppliers or from Amazon.
4. Form your Vending Machine Business
To run your vending machine business without complication, it’s important that you make sure it is running completely legally. More often than not, your machines will be located on someone else’s property, so you’ll want to make sure that you have the following in place:
- An LLC or Corporation
- State, county, and city business licensing
- Business bank account
- Business insurance
- Any food handling requirements
LLC/Corporation – The reason you want an LLC (Limited Liability Company) or a Corporation as your legal entity, is because a sole proprietor would be personally liable if someone gets food poisoning, or harmed, by one of your machines.
Business Licenses – To run a business legally in the US, you will need to get a business license from your local Small Business Administration office. You can search for your local office here.
Business Bank Account – Business bank accounts are required when running a small business. They help you to simplify your financials and save you time on paying taxes and doing your bookkeeping. You can also use your business bank account to help you apply for loans.
Business Insurance – you will need insurance for your vending machine business in case of the following:
- your vending machine gets damaged or stolen
- your vending machine injures a customer/staff member
- your vending machine injures a repair person
- your food/snacks cause food poisoning
Food Handling Requirements – if you sell food, you may be required to get a special license from the health department.
Individual situations will vary and the above requirements may have legal and tax implications, so I strongly recommend you talk to your local Small Business Administration office or a lawyer to make sure everything is covered before getting started.
5. Stocking your Machines
When working with food vending machines, some states mandate that you have a certain percentage of healthy options in your vending machines. If this is a requirement in your state, then ensure that you can source these snacks along with your regular stock.
Most people will rely on stores like Costco or Sam’s Club to buy their products in bulk. You can save a lot of money by buying wholesale, although this becomes a lot more important when you have multiple vending machines.
When you first start out, you don’t want to buy too much stock upfront. You will be in the testing phase for a bit while you see what products sell best. You especially don’t want to stock up on perishable items that might reach their expiration date before being sold.
Benefits of Running a Vending Machine Business
Vending machines are a fairly easy business to start up, and they can be pretty profitable. Here are some of the benefits of running a vending machine business:
1. Vending machines are a great way to generate income. With a vending machine, you can make money 24 hours a day, 7 days a week. All you need is a good location and enough customers.
2. Vending machines are relatively low maintenance. Once you have your machine set up, there is not much you need to do to keep it running smoothly. This means you can focus on other aspects of your business.
3. Vending machines can be very flexible. You can choose what products to sell and where to place your machines. This gives you the opportunity to customize your business to fit your needs and goals.
How to Start a Vending Machine Business
By now you should have a very solid idea on how to start a vending machine business. It’s now time to start brainstorming the type of products you’d like to sell. Spend some time checking out areas in your city to see where people gather often. Talk to friends and family and see which areas they think could make good use of a vending machine. There are other vending businesses out there, so you’ll want to strike first when you find the right spot.
