Benefits of starting a vending machine business
Vending businesses are highly flexible and convenient for entrepreneurs. You can sell a range of different products in diverse areas, from airports and train stations to schools, businesses and beyond. A single, well-trafficked vending machine can bring in hundreds of dollars in profit each month, according to 2021 data from NerdWallet. You can also start a vending machine business on a limited budget, thanks to low overhead and maintenance costs. Some of the main benefits of starting a vending machine business are:
Low startup costs
Starting a vending machine business requires lower initial capital than most other types of businesses. You just need enough money to buy a vending machine and fill it with product, as well as a space to put it. You can either rent space for your vending machine monthly or pay the property owner through sales commissions.
You can start a vending machine business without physical office space or a website. Depending on your state, you may need to register your business and purchase insurance, usually for a few hundred dollars a year. Transportation expenses are another primary startup cost, but you can save money by installing your machine near your home or day job.
Passive income generation
While servicing your machines and making business deals with vendors takes time and effort, having your own vending machines can result in passive income once you streamline your process. After you install your vending machines, your products advertise themselves.
Simple scalability
If you become profitable in one location, you can expand your business by purchasing another machine in a similar space and using the same operational model. Keeping the process as simple as possible makes it easy to scale this type of small business if you expand to new locations and require workers to keep your machines running.
Cost to start a vending machine company
Fit Small Business estimates it costs between $2,000 and $10,000 on average to start a vending machine business. Your vending machine company’s actual startup costs depend on your short- and long-term business goals.
Steps to start a vending machine company
Follow these basic steps to start a vending machine business in your area.
Conduct market research
Before you buy your first machine, perform basic market research to help you decide what kind of vending machine to purchase, what kind of inventory you can sell and what locations are available. You’ll want to find an area without an existing range of options to maximize cash flow and avoid competition. Research techniques include analyzing keywords on search engines, driving to different locations and calling property owners about opportunities.
Choose your equipment
Snack and drink machines usually come to mind when people think of vending machines, but you can build a lucrative business with options beyond food and beverages.
Bulk vending
These vending machines, often found at arcades, outside retail shops and office waiting areas, store small toys and trinkets in a central chamber. They release the selected item when a customer inserts payment. Bulk vending machines usually take quarters, with standard prices ranging from 25 cents to $1 per item. These may not bring in a lot of profit at once, but they are cheap to purchase and require minimal maintenance due to their simple design.
Food and beverage
Most vending machines in the U.S. sell soda, water, snacks, energy drinks and candy. Food and beverage machines have higher operating costs than bulk vending machines but also tend to have much higher customer demand. To get started with a food and beverage machine, research what specific products appeal to your target customers.
Specialty vending
In addition to standard snack and bottled drink machines, you can buy specialty food and drink vending machines. These are usually a bit more expensive, depending on the specific type of machine. Specialty food and drink vending machines are popular in workplaces. The most common examples include ice cream, deli and coffee machines.
To increase the profit margin of your vending machine business, consider investing in a specialty machine where people can buy makeup, cell phone chargers or even over-the-counter medication. Specialty vending machines are usually more secure than other types, with advanced technology to handle payments and provide refunds for vending errors. Because each slot is usually customized to fit a certain product, they are usually more expensive.
Develop a budget
You may be able to fund your small business out of pocket, but you can also seek outside funding through a loan or equipment financing. When you pinpoint the equipment you want to purchase, make a budget and set the initial prices for your inventory. Follow these steps to create a functional budget for your vending machine business.
Calculate required profit
Once you estimate spending, you can calculate how much money you need to cover business expenses. This calculation helps determine where to set your prices to optimize revenue.
Test price points
Look at the prices of other vending machines to inform a profitable price for your products. If you sell specialty items, you might charge a higher fee, while standard snacks such as candy and chips need a lower price point.
Register the business
Many local governments require vending machine operators to get a business license. Even if it is not required by law, registering your business as a legal entity protects you in case of a lawsuit.
Scouting locations for your vending machines
The amount of foot traffic that passes by your vending machine will directly impact sales. Look for busy locations that attract your target customer.
Research how many people pass through your desired location each week and determine how many customers need to make a purchase each week to remain profitable. List potential locations and find the contact information for the property manager or owner.
Installing and stocking your machines
Load your vending machine in your truck or hire a mover to install it at your new location. Keep your machine fully stocked with your selected inventory and consider changing or rotating products to see what sells best with your target audience. When you restock, count how many units sold of each product to predict the amount you’ll sell and order the right amount of each product ahead of time.
Maintaining your machines
You’ll be leaving your machines unattended for long stretches, so it’s important to create a regular schedule to make sure they are clean, functional and well-stocked. Customers expect vending machines to be clean and organized, especially if they are purchasing food. Once every few days, wipe down your machines, remove graffiti, clean up spills and make sure all the buttons, card readers and lights are functional.
Investing in the business
You can put your profits back into your business by buying more vending machines, upgrading the user interface with a touchscreen or new software, purchasing an inventory management system, buying security cameras to monitor your machine or even hiring an employee for customer support, location scouting and stocking. If you decide to hire staff, consider administering background checks and drug tests for each new employee. Some locations may require that all of your employees meet certain standards before they agree to give you access to their property.
Frequently asked questions about vending machine businesses
How much money do vending machines make?
The amount of money a vending machine makes depends on what products it sells, where it’s located and how well it’s maintained. Most vending machines make about $75 per week. Vending machine business owners can change the placement of their machines or buy multiple machines to increase their profit stream.
Where can I install a vending machine?
You can install a vending machine almost anywhere as long as you have the property owner’s permission. You will need to place vending machines that require electricity in a location with easy access to power outlets.
