Vending machines have become more popular than ever before in recent years. Perhaps this is due to their contact-free nature, or maybe it’s thanks to their incredible popularity overseas. Japan, for example, has one vending machine per every 23 people!
But how to start a vending machine business, and are they really a viable business over here?
Indeed, they are. The US vending machine industry is worth over $36.5 billion. It’s not as impressive as Japan’s $60 billion, but it’s still a substantial market size with plenty of room for growth.
So, stay with us to get all the details on how to start this vending business. We’ll talk about costs, locations, revenues, and even explore some quirky ideas that are sure to make your vending machines stand out from the competition.
How to Start a Vending Machine Business: Overview
While a vending machine certainly operates differently than a regular store, it’s still a business. This means you’d do well to follow all the basic steps, like doing market research, getting the paperwork in order, tracking the profits, etc.
The easiest way to start would be to look for a vending machine franchise for sale. However, this option typically requires you to pay a percentage of your earnings to the franchisor, not to mention it constitutes a much larger initial investment. For instance, HealthyYOU is one of the best franchises you can get for an accessible price — and it costs around $50,000.
The alternative is, of course, starting your business from scratch. If you go for this option, these are the most important steps that you’d have to consider:
- Come up with the concept for your vending machine. Are you planning on setting up a typical snack and soda dispenser or are you aiming for something different?
- Search for a local supplier. Would you like to sell branded or non-branded items? Who will keep your machine stocked?
- Choose a suitable location for your vending machine. Who is your target market? Where do they usually hang out?
- Learn how to get a vending machine license. What are your state’s regulations regarding vending machines?
- Do some math. How much do you need to start your business? How much does it cost to keep your vending machines up and running?
- Look for financing options. How can you get the funding you need?
- Manage your business. Which tools can help you monitor your business’ health?
Now, let’s dive deep into each of these steps so you can get a better understanding of the responsibilities involved.
Conceptualizing Your Vending Machine
Pretty much all of the following steps hinge on this one — what are you planning to sell?
When one thinks about a vending machine, what typically comes to mind is something food-related. Sodas, candy, coffee, cupcakes, protein bars, and all other types of goodies ideal for those who want to grab a quick bite, hassle-free.
But that’s not all you can sell — vending machines have a lot of potential beyond the food industry. Nowadays, there are plenty of vending machine business ideas that you could adopt. For example, there are some vending machines that sell clothing items, medicinal cannabis, pet supplies, or even flats for women whose high heel’s betrayed them.
Or you could always come up with a concept of your own. Get creative, make sure your idea is viable and set yourself apart from the competition.
Getting Your Suppliers
The secret to a healthy vending machine business is keeping your dispenser properly stocked.
Now that you know what you intend to sell, let’s start thinking about how you’ll get those products in your vending machines. First off, would you like to sell products from well-known brands or non-branded items? If the former, get in touch with the brand you’re interested in and see if you can cut a deal. If the latter, do you have prospective suppliers? Will they be able to meet the demand? Are the products perishable and, if so, how will that be handled?
Furthermore, who will be responsible for restocking the machines?
Each entrepreneur can have a different perspective on how to run a vending machine business. The truth is that there is no right or wrong way to do it. Basically, it comes down to how much time and money you want to invest in this.
Some vending machine owners prefer to stock their own dispensers. They buy the items wholesale, visit each machine, check its stock, and refill it. However, the more vending machines you have, the less efficient this method is.
Other owners prefer to hire someone to do the job, be it their own employee or a wholesale service that employs vending machine operators. These businesses help you refill your vending machines and may even offer additional services, like recording digital logs or collecting and delivering your earnings.
Choosing a Suitable Location
The best location for your vending machine will depend on your target market. While there are certainly many vending machine business opportunities to be had, you need to do a bit of research on your local area.
For example, a general snacks-focused vending machine can be popular almost anywhere, but one that sells protein bars and workout supplements would do much better in a gym. Similarly, if you want to sell products that are on the luxurious side, perhaps an airport or a shopping mall would be more suitable.
Once you have the perfect location in mind, contact the owner or manager of the place to get their permission, negotiate the costs, and make all the necessary arrangements.
Getting Your Paperwork in Order
Now, before you actually set up your vending machine, there are actually a number of licenses that you need to obtain. For instance, if you plan on selling edibles, you need to get a food service license. And if you want to offer soda or juice to go along with your snacks, a beverage license is also a must.
Furthermore, each state has different rules regarding who can own and operate a vending machine in a commercial location. It’s worth seeking out this information on a state-by-state basis to learn how to start your own vending machine business without getting into trouble.
For example, Florida requires you to get a vending machine license with the appropriate agency (depending on what you’re planning to sell), whereas California only requires you to have a seller’s permit, which will be good for any and all the machines you want to set up (with a few exceptions).
Of course, you’ll also need to get a sales tax number so you can do your finances properly.
Calculating How Much Money You Need
Let’s get down to the nitty-gritty: how much to start a vending machine business?
Vending machines can be fairly expensive, especially if you’re purchasing a new model from a reputable retailer. A single vending machine can cost you anywhere from $1,500–$10,000, depending on the type of product it’s designed for (e.g., candy, gadgets, sodas, etc.). However, you could save a lot of money if you buy one that’s already been used — especially if it’s in need of repairs. Paying for new parts and manual labor might be cheaper than getting one that’s brand new.
That said, this isn’t just about starting a vending machine business — it’s about keeping it running and making it as profitable as possible.
So, we recommend you don’t sacrifice quality for a low price tag when choosing your equipment. A new vending machine will always be the more expensive alternative, but the extra money could be worth it. A dispenser that has cashless payment options, touch-screen, and a user-friendly interface is more likely to attract customers than a vending machine from the 90’s that doesn’t even let you see the product you’re getting before you pay for it.
Furthermore, make sure to consider the maintenance costs associated with the machines. If you have a knack for DIY projects and the engineering know-how for fixing broken devices, you could take care of your vending machines’ maintenance yourself and save a couple of bucks. But if this isn’t the route you want to take, then you’ll need to enlist a vending machine service to help you keep your dispensers in good condition.
Lastly, how much does it cost to stock a vending machine?
Typically, you should set aside a third of your vending machine’s net profit for restocking and maintenance. Thus, if you make $300 a month, expect to pay a monthly $100+ to keep your business up and running.
Looking for Financing Options
Unless you belong to the 42% of millennials who boast an account balance of over $5,000 (and probably even then), you’ll need to secure funding before starting your business.
The cost of a vending machine business can be fairly low, given that they don’t occupy as much space as a regular store would nor do they require as much (if any) personnel. This means that most of your financing will be targeted at the purchase or rental of a vending machine and its stock.
Lucky for you, there are various financial options available for a vending machine business. For example, you could look for equipment financing options, get a good credit card for your startup, or apply for a short-term loan. The latter is a good option since you probably don’t need to borrow a lot of money, and vending machines tend to have a fairly short payback period.
For example, let’s say you bought a vending machine for $3,000 and that it’s generating an average of $300 a month. If you take away the 30% we mentioned above for restocking, then you get a $200 net profit per month. That means you’ll get your investment back in a little over a year.
Managing Your Vending Machines
Learning how to run a vending machine business is much easier if you use a Vending Management System (VMS). This software helps you monitor your inventory, record the amount of money that comes in, and get a timeline of when the machine is being used. In short, it gives you all the data you need to evaluate your dispenser’s performance. Furthermore, it can notify you as soon as an item runs out of stock or whenever the machine has a coin shortage.
This type of software typically comes pre-installed in newer models, but it can always be added to an older machine. No matter if you opted for a brand new or a refurbished dispenser, we’d say it’s worth the investment.
We hope this article has given you some insights on how to get into the vending machine business. If you’re able to secure quality vending machines for a reasonable price, and you have suitable locations in mind to place them, then it could be a low-cost and relatively low-effort idea for earning some extra money.
Do vending machines make good money?
There is definitely some good potential for earning money via vending machines as they are part of a $36.5 billion industry in the US. A typical vending machine can be bought and set up for a relatively low price (under $2,000 in some cases) and can offer profits of around $400 per month. Take these numbers with a grain of salt, though, as it heavily depends on the products you’re selling and the area your vending machine is in.
Can you put a vending machine anywhere?
You cannot place a vending machine just wherever you wish. Some states will require you to have a vending machine license and private properties will ask you to see permission first. If you can strike a deal with a location with high foot traffic, then it can be a fantastic option for your first vending machine.
Are vending machines profitable in 2022?
Yes, vending machines are still quite profitable. When learning how to start a vending machine business, you’ll quickly realize that vending machines have a very small startup cost and great potential for high returns depending on where it is located and the products you offer.