How to Start a Vending Machine Business

Most of you reading this article have bought something from a vending machine, at some or the other point. And some of us could be using vending machines daily to get something that we need but without the bother of visiting a store.

That’s because vending machines give us the facility of buying something immediately and that too, without having to wait in queues.

It is one of the most comfortable ways of making a purchase: simply insert cash or credit card or debit card for the payment, select the stuff you want and press the right now and that stuff is dispensed within a couple of seconds.

Vending Machine Facts & Figures

There are about seven million vending machines spread across the US. This means, there’s one vending machine for every 50 Americans. They are operated by 17,148 vending machine business owners in the country.

The vending machine business is estimated to be worth $15 billion to $17 billion, depending on which source you wish to believe. On average, over 100 million people in the US, make at least one purchase from a vending machine.

Cost of Launching Vending Machine Business

So, if you’re interested in launching a vending machine business in the US, surely, you’d love to know how much money it takes. You might be surprised by my response: You can launch your own vending machine business with an investment ranging between $2,000 and $15,000 only.

However, before you grab this idea to open a vending machine business, here are some facts that you should know. Firstly, vending machines by itself don’t cost much. You can get a good preowned one for as low as $300 to $500 and a new one for about $2,000.

Other Costs to Open Vending Machine Business

Owning a vending machine is one thing and starting a business is another. To start a vending machine business, you’ll first have to register a proprietary company by registering with the local authorities.

This costs some fees. The next step is to select the location. Usually, the owner of the place where you wish to install the vending machine will ask for some rent.

Added to that are the costs of electricity necessary to operate the machine. Then comes stocks and inventory of the stuff that you’re planning to sell from the vending machine. You’ll have to sign agreements with suppliers of these products about the margin they’ll offer for selling their stuff through your vending machine.

Sometimes, there are also costs related to branding a vending machine to reflect the products that you’re selling. For example, if you’ll be selling snacks from a particular brand, your vending machine should reflect that brand with its logo, designs and other things. Sometimes, the brand owner may do this branding but at times, you might have to bear the expense.

Types of Vending Machine Business in the USA

The investment in your vending machine business will also depend on the type of products that you wish to sell. There are at least 50 different types of vending machines located across the US. I will list some of the most common types of vending machines that get the highest number of customers.

1. Beer vending machine
2. Soft drink vending machine
3. Snacks vending machine
4. Hot snacks vending machine
5. Chocolate vending machine
6. Toys vending machine
7. Confectionary vending machine
8. Donuts vending machine
9. Coffee and tea vending machine
10. Lemonade vending machine
11. Energy drinks vending machine
12. Newspapers and magazine vending machines
13. Water vending machines
14. Vitamin pills vending machine
15. Ice Cream vending machine
16. Bouquets vending machine
17. Soap and detergent vending machine
18. Books vending machine
19. Gum vending machine
20. Souvenir vending machine
21. Cigarettes and tobacco vending machine
22. Liquor vending machine
23. Cannabis vending machine
24. Mixed products vending machine
25. Skincare and cosmetics vending machine
26. Condoms and birth control products vending machines
27. Soup vending machines
28. Bread vending machines
29. Cookies vending machines
30. Ticket vending machines

You will find these vending machines in all sorts of places. These include schools and colleges, religious shrines, bus terminuses, railway stations, malls and marketplaces, parking lots, hotels and resorts, beach fronts, parking lots and even residential areas and office areas.

Usually, vending machine business owners select the spot that would attract the maximum number of customers.

Profits from a Vending Machine Business

The average profits from a vending machine business in the USA can vary widely based on factors such as location, the type of products sold, the volume of foot traffic, and the operational costs involved. Generally, the profitability of a vending machine can range from a few dollars a day to hundreds, depending on these factors.

Here's a rough breakdown:

1. Location: Prime locations with high foot traffic such as shopping malls, airports, and large office buildings can generate more sales compared to machines placed in lower-traffic areas.

2. Type of Products Sold: The profit margin on products also significantly affects earnings. For example, machines selling electronics or health products may have higher margins than those selling snacks or drinks.

3. Operational Costs: These include restocking the machines, maintenance, rent or commissions paid to the location owners, and electricity costs. Lower operational costs can lead to higher profits.

4. Volume of Sales: More sales naturally lead to higher profits. The volume of sales is influenced by the location, product selection, and pricing strategy.

5. Seasonal Sales: Some products such as soft drinks and ice cream will sell only during the warm seasons such as the spring and summer. During other months, sales will drop considerably.

On average, a single vending machine might generate anywhere from $50 to $100 per week in profit after expenses, but this can vary significantly. Some highly successful vending machines in premium locations can make much more, while those in less favourable locations might make less.

Therefore, on a monthly basis, a single vending machine could potentially earn between $200 and $400 in profit, but again, these figures can vary widely.

how to start a vending machine business?

Now that you’re aware of the nitty-gritty of starting a vending machine business, let’s see the various steps on how to actually go about it. The procedures to get licenses and permits might vary in some states of the US. Therefore, find out about these processes through your local offices.

1. Select Your Niche

The first a foremost step to start a vending machine business is by selecting a niche. That means, deciding what stuff you will sell through the vending machine. You can sell mixed stuff too or something that’s super speciality such as Sushi or Satay, meat cuts, burgers and hotdogs. Or, you can simply stick to conventional things such as soft drinks, ice cream and snacks.

Selecting the niche is most important because that would give you a clear idea and a roadmap of sorts on which companies to approach for supplies and the location of your vending machine. This in turn would give some indication of profits that can be made from the business every week or each month. The niche is also useful for drawing a business plan.

2. Draw a Business Plan

Define all your business goals, vision, mission and efforts that you will exert to make your vending machine business successful. Include detailed research on your target market, potential locations, and competition, type of customers, their spending habits and age groups, where possible.

Furthermore, write how you intend to run your business, including buying one or more machines, restocking goods, maintenance, and the frequency of collection of earnings.

Estimate your startup costs, operating expenses, and potential revenue. Include the costs of purchasing or leasing vending machines, inventory, location fees, insurance, and any necessary licenses or permits.

3. Meet Legal Requirements

Meeting legal requirements is mandatory for every vending machine business in the US. Basically, you can register your business as a proprietary or Limited Liability Company, depending on the shareholding structure.

You will also need an Employer Identifier Number from the Internal Revenue Service. Also, find out about local taxes in your state, if any.

Insuring your vending machine business is also compulsory. That’s because it can protect you against expensive lawsuits as well as damages caused to your vending machines due to any reason.

A vending machine is your asset and hence, insuring it makes a lot of sense. Often, vending machines are targets of vandals and petty thieves who try to steal goods by hacking them.

4. Fund Your Business

Some owners fund their vending machine business with their own money.  However, you can also raise venture capital where possible, take a small business loan or look for crowdfunding, if the facility is available.

Actually, the business doesn’t require much investment and hence, you would most likely be able to fund it with some savings and possibly a small cash advance from a bank.

However, consider that the investment isn’t merely to buy or lease vending machines. You need to pay the location owner, suppliers, electricity and possibly security in some places. If you have employees, consider their payroll too.

Estimate your monthly expenses for running the vending machine business as well as setup costs. That would give a clear idea of the investment you require.

5. Sign Location Contracts

Once you’ve selected the locations and found that it’s possible to install a vending machine at the spot, the next step is to sign location contracts with the owners of that property.

Here, it’s worth remembering that some property owners might ask for more money for letting their space to you. Accept the higher offer only if you’re confident that the vending machine would make lots more profits.

Some owners will ask for a commission from your sales. This depends on you. However, if the amount is reasonable, you can pay them a commission instead of a rental fee. There could be cases where the business or premises owner demands both, rental fees and commissions.

Again, this is where your business discretion comes in and you can accept or reject the offer depending on the importance of that location for your vending machine business as well as expected profits from that site.

6. Buying or Leasing Vending Machines

Depending on your capital and other factors, decide whether you wish to buy or lease your vending machines. Both options have their pros and cons such as upfront costs and maintenance responsibilities. Therefore, your decision should be based on what your new business can realistically afford.

Also, consider vending machines with the latest technology and Smart features that allow you to control them remotely over the Internet. Try modern vending machines with cashless payment options, remote monitoring, and energy efficiency for better management of your business.

7. Stocking and Maintenance

It will take you some weeks to fully know the stocking and inventory management patterns for each of your vending machines. That’s because some stuff will sell more at one vending machine but something else could be in higher demand at another one.

Therefore, you’ll have to ensure that all your vending machines are well stocked with popular items at each location. This ensures customer satisfaction and repeat business.

Maintenance of vending machines can be a headache for all business owners. That’s because some vending machines might be vandalized or others could be in the wrong positions. If that’s the case, change the locations immediately.

At the same time, maintain regular if not daily checks on your vending machines and ensure they’re clean and working in superb condition. Wherever needed, repair immediately to reduce downtime and loss of business. Signing a contract with a maintenance company can prove valuable.

8. Marketing and Promotion

Marketing and promoting a vending machine can be quite tricky. That’s because people go to vending machines only when they need one. However, you can use an excellent resource such as Google Maps to pinpoint the locations of your vending machines.

Secondly, leverage the power of social media and word of the mouth publicity to popularize locations of your vending machines.

It’s also possible to market your vending machines by offering various kinds of promotions such as three items for the price of two or discounts on purchases over a specific amount.

For that, you will have to program the vending machine software so that it complies with the promotional offers. Alternatively, you can post an employee at a specific vending machine to let people know of the offer and help them get it.

Conclusion

There’s a huge scope for more vending machines in the US. That’s because people always wish to buy something in a hurry, on their way home or to work. Obviously, vending machines can never replace supermarkets or stores. However, they’re useful due to the convenience of shopping they offer to customers.