How to Start a Vending Machine Business: Vending machine businesses have always been popular and in recent years, even moreso. Not only are vending machines a great way to make extra money, but they can also be a fun and rewarding business to operate. If you’re thinking about starting your own vending machine business, these are the 5 easy steps you’ll need to follow to be start up your vending machines business and make it profitable:
- How to Start a Vending Machine Business in 5 Easy Steps
- 1. Choosing The Right Products
- Bulk Vending (Gumballs)
- Snack Vending
- Specialty Items Vending
- 2. Finding The Right Location
- 3. Buying Your First Vending Machine
- Modern Vending Machine Features
- Where To Purchase Your First Vending Machine
- 4. Form your Vending Machine Business
- 5. Stocking your Machines
- Benefits of a Running a Vending Machine Business
- Frequently Asked Questions
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 key to making it successful. 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
We’ve all used vending machines before, and they’ve become a staple of our society. They are a convenient way to grab a snack or a soda (pop) when you’re out and about. However, there are a lot of options when it comes to the products they can dispense, and you aren’t just stuck with the standard ones you know..
Japan has upped the ante in terms of vending machines, by allowing customers to get hot meals, fresh vegetables, pizzas, and even umbrellas from their machines. Now I’m not saying suggesting that you try the same things, as these types of machines are unlikely to be as popular locally as they are in Japan, 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.
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, resulting in low operation costs
- Cons: Possibly lower profits, usually only accepts coins
Tried and tested snack vending machines are always popular. They give customers easy access to chocolates, soda, and candy 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 we mentioned earlier, vending machines are not limited to simply gumballs or snacks. You may have seen machines in your local self-laundry place that contain laundry detergent and fabric softener. Or you may have come across some in your local gym that has 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? If you’ve found the need to use one, then others would have as well. By locating these prime spots, we will have a better idea of where we might want to place ours.
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. Not only will it 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 are working out or playing 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 lucrative market.
- Laundromats – Laundromats are another great location for these machines as people are always there for a long period of time and they tend to be 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 take into consideration. 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
When it comes to today’s vending machines, there are all sorts of new features that make them more convenient and user-friendly 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 checks that product reaches customer
- Flexible product capabilities
- Remote inventory tracking
Where To Purchase Your First Vending Machine
It’s recommended to start out with a used a refurbished vending machine for your initial purchase. This will help to keep your costs low when starting your new venture. 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 accommodate your 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 thing 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 purchased 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 that 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 banks 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 causes 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 we 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 a Running a Vending Machine Business
Vending machines are a great way to start your own business. They are easy to operate and can be very 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.
Frequently Asked Questions
How do modern vending machines work?
When a customer selects and pays for an item, the machine will promptly deliver it. With the latest technologies in place, as soon as the product is dispensed, the vending machine can register this sale online so the owner can remotely see their sales in real-time. They can then use this information to see which items are best sellers, and when that machine requires restocking.
Is the vending machine business profitable?
Yes, the vending machine business is profitable! In fact, it can be quite lucrative if done right.
There are a few key things to keep in mind when setting up a vending machine business: location, products and price point. Location is key – you want to make sure your machines are placed in high-traffic areas where potential customers will see them. As for products, choose items that people will actually want to buy from your machine (think snacks, drinks, etc.). And finally, make sure your prices are competitive – no one wants to overpay for a candy bar from a vending machine!
If you keep these things in mind, there’s no reason why your vending machine business can’t be successful.
What are the economics of a vending machine business?
Here are the basic economics on how to start a vending machine business:
- you must have enough money to buy a reliable machine
- you must be able to pay for transporting your machine to its location
- you must have enough to buy and restock your products
- you must have enough to pay any administration fees
What tips do you have on how to start a vending machine business?
- Learn as much as you can about the industry before starting
- Find the right location – this is vitally important
- Find the right products for your location
- Do not overextend yourself, ie. make sure you can afford this venture
- Ensure that your machine is in excellent working order
- Reinvest into your business to ensure its continued growth