The vending machine industry has steadily grown as consumers seek convenient and time-saving options. Research and Markets estimate that the global vending machine market size was $21.3 billion in 2020 and is expected to grow by about 5.5% by 2027 to reach $31 billion. These numbers are driving interest in starting a vending machine business. This article will discuss some key steps to starting a vending machine business.
Why Start A Vending Machine Business?
So why go through the effort of starting a vending machine? To start, vending machines are a lucrative small business to start for several reasons for aspiring vending machine entrepreneurs.
1. Offer A High Degree of Autonomy
Vending machines are available 24/7 and can be placed in many locations to get started, from office buildings and airports to gas stations and universities. This means that consumers can access products quickly and easily, even outside of traditional business hours. They don't require additional staff on standby, and you can easily track which vending machine offerings are more popular among customers. This makes vending machines an ideal area to get started in, as the average vending machine requires little day to day maintenance and can predictably pay themselves off in a reasonable amount of time if you are placing vending machines in high traffic locations.
2. Get Involved In A Fast Growing & High Demand Industry
Self-service businesses are on the rise. In the last decade, more customer-facing businesses have shifted to allow customers to get what they need without interacting with human personnel. This trend has been supported by new technologies that make it easier for customers to get what they need faster and more accurately. The U.S. vending machine market is estimated at $5.8 billion, with a growth rate of 8.9%. This indicates that the demand is increasing, which is expected to continue in the long term.
3. Provides a Steady Stream of Passive Income
Once a vending machine is placed and stocked, it can generate revenue without needing constant attention. Vending machine operators can check on their machines periodically to restock and collect money; otherwise, the machine can generate revenue independently. This allows entrepreneurs to start new locations, focus on other aspects of their small business or even other ventures.
4. A Diverse Range of Products
From food machines and drinks to electronics and personal care items, vending machines can be stocked with various goods to appeal to a wide range of customers. This diversification of offerings can help attract a larger customer base and increase vending sales. These devices can also be placed in various locations with different target audiences, such as workplaces, schools, and airports.
This allows vending machine operators to tailor their product offerings to specific demographic groups, increasing the chances of success. Vending machine business can also be run alongside other business ventures and can be a great way to supplement income.
5. Cashless Payment
With technology advancements, vending machines have also evolved to offer cashless payment options such as credit cards, mobile payments, and even facial recognition on vending machine cameras, thus providing more convenience and flexibility for customers.
Vending machines are a lucrative small business option to get started as they offer a high degree of convenience and autonomy and require minimal overhead costs and ongoing expenses. They can be profitable with the right location, product selection, and marketing strategy.
What To Do Before Starting A Vending Machine Business
While the business structure surrounding an existing vending machine business has changed very little since the first vending machine was invented, where do you start when creating a vending machine company? While vending equipment can be a great way to generate passive income and provide a convenient service to consumers, there are a few factors to consider before investing a few thousand dollars in multiple machines or a vending machine route.
1. Find The Best Vending Locations Possible
One of the biggest challenges - especially in a startup phase - is finding the right location. Placing your vending machines in high-traffic areas with a lot of foot traffic can be difficult, but business or property owners typically are enthusiastic about vending machine placement at a location without one. High-traffic locations, such as airports and malls, can be very competitive and require a significant investment to secure a spot. Finding locations willing to host vending machines can be difficult, as many landlords and property managers may hesitate to rent space to vending machine operators, so it is important for vending machine operators to establish a clear business model first in order to secure high value locations.
2. Research Business Competition
As the vending machine business is a growing market, competition may be fierce in some areas. This can make it difficult for a small business to attract customers and increase revenue. Startups my find it challenging to start as some of the largest vending machine companies in the U.S. have thousands of locations, so it is important to perform market research within your area to see which vending machine operator will be your biggest competition. As you enter the market, you may have to contend with large players that have already established a presence in the market, so it is important to be familiar with how you can succeed.
3. Optimize Inventory Management
Vending machines can only sell a limited number of items. For instance, snack vending machines can dispense a small selection of snacks. Inventory management is crucial to the success of a business, as running out of popular products can lead to lost sales. Vending machines must be regularly restocked with products, which can be costly, time-consuming and requires a certain level of organization. These machines may also be vulnerable to theft and vandalism, which can lead to additional costs. It is important to ensure that you are setting up a method of keeping inventory organized, secure, and accessible for restocking machines. This also will help vending operators to easily evaluate vending product options in the future to adjust their product offerings accordingly.
4. Marketing and Advertising
Marketing your to potential customers can be difficult, as traditional advertising methods, such as billboards and flyers, may not be as effective when you're trying to start a vending machine businesses. Many vending machine operators rely on word-of-mouth advertising, which can be unreliable for a startup and take time to generate results.
5. Review Your Vending Machine Options
To compete with other companies, a vending machine business requires keeping up with new technologies. With the increasing popularity of cashless payments, vending machine operators may need to start upgrading their machines to accept cards, mobile payments, and even facial recognition, or replace machines that lack these features. This may require significant investment and additional training to operate and maintain the new equipment, but in order to maintain an active presence within the vending industry, you must be prepared to meet the expectations that customers have for the convivence that modern bulk machines offer.
The Top Vending Machine Companies in the U.S
Vending machines have been popular in the U.S. for many years. Initially, manufacturers used vending machines to sell their products directly to customers. Over time, individuals and larger companies joined the industry. Before starting your own vending machine business, it is important to be familiar with the big players within the industry. Some of the largest vending companies in the U.S. include:
- Crane Merchandising Systems - The company provides various vending machines and technologies, including snack and drink machines. Crane Merchandising Systems has a wide network of distributors and service partners across the U.S. Its vending machines can be found in various settings, including offices, schools, hospitals, and other public spaces. Crane generates about $200 million in annual revenues annually.
- Royal Vendors - Royal Vendors is one of 3 soda vending manufacturers certified to be used by Coke, Pepsi, and Dr. Pepper. They offer various vending machines, such as electronic, touch-screen, and smart vending machines with cashless payment options. The company has annual revenues exceeding $60 million.
- Selectivend - Selectivend is based in the United States and has been in business for over 50 years. The company manufactures and sells various vending machines for snacks, drinks, and personal care items. It is known for its innovative technologies, such as high-security and cashless payment systems.
- Canteen: A division of Compass Group, Canteen is one of the largest vending machine companies in the U.S., providing vending services to businesses, schools, and government organizations.
How Much Does It Cost Upfront To Start A New Vending Machine Business?
Starting a vending machine business can be done with minimal initial investment, with most of the expenses coming from the vending machine itself and the stock items. Simple vending machines can be purchased for as low as $2,000, while more advanced new vending machines with additional features can range from $3,000 to $10,000. The price of a refurbished machine can vary greatly depending on how you are sourcing a used vending machine, but can vary between these two price ranges depending on condition.
However, you can start on a better note by opting for used or refurbished machines, which can be found for around $1,200-$3,000. Keep in mind that vending machine supplies are typically purchased in bulk, making them relatively affordable. Other associated costs to consider when starting a vending machine business are
Inventory Costs
These include snacks for food vending machines, drinks for beverage vending machines, and other small items such as toys or personal care products for U-Turn vending machines if they are within your machine portfolio. These items can be purchased wholesale, which helps to keep costs down. The initial cost of stock can vary widely depending on the items you intend to sell, which may be a significant factor to consider before starting your business but with consistent vending machine sales from existing locations, you can expect to bring in enough revenue to maintain the cost of stock in most high traffic locations.
Potential Cost of Location
You will need to find a location to place your vending machine. Finding a location with high foot traffic is advisable, such as a mall, a busy street, or a large office building. The cost of renting a space can vary depending on the location, although you should avoid overspending on supposed "prime" locations without doing enough research.
With careful planning and budgeting, it's possible to start a successful vending machine business and get it up and running for relatively low startup costs.
How Do I Start A Vending Machine Business?
For those who have decided to get their foot in the vending machine business, we have compiled a list of steps you should take to ensure success in your new endeavor. While these steps may seem daunting, they are critical to ensure you are compliant with the law as well as provide a solid foundation for making your vending machines profitable.
Step 1: Start an LLC
One of the main benefits of an LLC is that it provides personal liability protection and helps to provide protection from any legal and tax implications that may come up from running a business. If your small business is sued or incurs debt, your assets will not be at risk. Your assets, such as your house, car, and savings, will be protected from creditors and lawsuits. This makes an LLC an ideal choice for vending machine owners who want to protect their assets from the potential risks of running a business.
Another benefit of an LLC is that it can provide tax benefits. An LLC is considered a "pass-through" entity, meaning the business's income is taxed at the personal level rather than at the corporate level. This can result in significant tax savings for the business owner. Also, LLCs can be taxed as an S corporation, which may provide additional tax benefits & provide direct benefits for a business bank account.
An LLC also can raise capital, which is important for any business looking to grow and expand. An LLC can raise capital by selling ownership shares or by borrowing money. This can be done without losing control of the company, which makes it a great option for business owners who want to raise capital without giving up control of their business.
Creating an LLC is a relatively simple process, but it does require some legal paperwork and compliance with state regulations. The first step in creating an LLC is to choose a business name. Your business name should be unique, creative, and bear little to no resemblance with any existing business name.
Once you have chosen a business name, you will need to file articles of organization with the state and any necessary business licenses for your location. The articles of organization will include information about your business, such as the business name, the names of the members (or owners) of the business, and the business's registered agent. The articles of organization will need to be filed with the state's business division or secretary of state.
Building Your Website
Once you have chosen a web-hosting service, you can start building your website. Several ways to build a website include using a website builder or a content management system (CMS). A website builder is a tool that allows you to create a website without any technical knowledge. A CMS, such as WordPress, is a more advanced option that allows you to add and edit the content on your website.
Alternatively, you can pay someone to build your website for you based on an existing website that offers a similar service.
When building your website, it's important to have a clear and easy-to-navigate layout. Your website should be visually appealing and easy to navigate. It should also be optimized for search engines, so potential customers can easily find it. This can be achieved by using keywords in your website's content and meta tags and regularly creating quality content.
Your website should also include important information about your business, such as your company's name, address, phone number, and email address. You should also have information about your products and services and pricing information. Additionally, you should include a contact page so that customers can easily get in touch with you.
Hosting Service
After registering your domain name, you will choose a web hosting service. A web hosting service is a company that will provide you with the storage and technical support necessary to run your website. There are many web hosting services to choose from, so it's important to research and find one that meets your needs.
Write a Business Plan
A business plan is an important document for any business - especially a vending business looking to start its venture. It outlines the financial and operational aspects of the business startup - the information we share in this artice - as well as a guidance on how to move forward with achieving your goals.
The key components of a solid business plan to start a vending machine business include:
- Executive summary outlining the purpose of the venture
- Market analysis explaining the needs of end customers and business locations in need for vending machines
- Description of target audiences and customer segments
- Estimated budget and expected revenue flows
- Risk factors that affect the entrepreneurship
- Action plans to ensure efficient execution of key strategies
- Timeline pinpointing when different tasks need to be
- List of required business licenses
When crafting a business plan, it is also useful to research any established business model within the space to ensure you are
Step 2: Find a Business Location to Place Your Machine
Finding the best location for your business is crucial to its success - especially in the start when you're trying to break-even. In many ways, the location of a vending machine is perhaps the most important underlying factor for its success. The largest vending companies in the U.S have experienced massive growth b capitalizing on prime locations and offering products that match the needs of their customers. The right location can mean the difference between a profitable business and one struggling to meet ends. So, how do you go about finding the best location for your vending machine business, and what makes a good location?
1. High Foot Traffic
Foot traffic is one of the most important factors when choosing a location - espeically in the start. Places with high foot traffic, such as malls, busy streets, and large office buildings, are ideal for the business. These areas will ensure that your vending machines are seen by as many people as possible and increase the chances of making sales.
2. Demographic Characteristics
Another important factor to consider is the demographic of the area. For example, a location near a gym or a health food store would be ideal for a beverage machine. If you're selling toys and trinkets, a location near a children's playground or a family-friendly amusement park would be more appropriate.
3. Existing Competition
It would be best if you also considered the competition in the area. If there are already several vending machine businesses in the area, it might be difficult for your startup to break into the market. However, it can be a great opportunity for you if there are no vending machines or very few vending machines in a particular area that shows growth potential.
4. Rental Costs
The cost of renting a space is also a crucial factor to consider when choosing a location. The cost of rent can vary depending on the location, so you'll need to do some research to determine the going rate in your area. Remember that you'll also need to consider other costs, such as electricity and maintenance, when budgeting and planning to start a vending machine business.
5. Accessibility
When you start, it's also important to consider the accessibility of the location. A location easily accessible by foot or public transportation is ideal, as it will make it easier for customers to reach your vending machines. On the other hand, if the location is difficult to reach or is in a remote area, it might be less attractive to customers.
6. Regulatory Provisions
Finally, it's important to check the regulations and laws of the area you're considering. Some areas may have specific rules and regulations regarding vending machines, so it's important to be aware before choosing a location.
Step 3: Buy a Vending Machine
If you've gotten this far, it's time to look at the vending machines that work best for your business. First, you'll need to decide what type of vending machine you want to start buying. There are many vending machines, such as snack machines, soda machines, and specialized machines selling products such as coffee or ice cream. The size and features of the machine will depend on the type of products you plan to sell and your budget, and can vary if you are in the market for a refurbished vending machine.
Where Do I Buy A Vending Machine?
When purchasing a machine, it's important to start your research and choose a reputable supplier. Be sure to read reviews, check their reputation, and ask for references. It's also important to consider the cost of operating and maintaining the machine and any warranties or guarantees that may come with the machine.
There are several places where you can buy a vending machine in the United States. While vending machine prices may vary from manufacturer to manufacturer, these companies have a strong and reliable reputation regarding their machines to help ensure confidence in their reliability. Some popular options include:
1. Direct From Manufacturers
Many manufacturers sell their machines directly to customers. This can be a good option if you're looking for a specific type of vending machine or want to customize your machine to fit your business needs. Buying direct from a manufacturer may be more expensive than getting a used machine, but going this route will guarantee of quality and warranty support. For more specific machines such as ice vending machines and toy vending machines, it is suggested to purchase these devices directly from the manufacturer as opposed to used as these machines tend to require more maintenance than standard beverage and snack machines, so the additional support will save new vending operators headaches and issues in the long term.
2. Vending Distributors
Many distributors sell a variety of vending machines from different manufacturers. This can be a good option if you're unsure what type of machine you want to buy or if you want to compare prices and features from different manufacturers.
3. Online Retailers
Several online retailers sell vending machines. This can be a convenient option, as you can browse and compare different machines from your home. You can browse through various sites and filter by cost, availability, local dealers, and other unique markers to help you make an informed decision.
4. Used Machine Dealers
You can also reach out to dealers that resell used vending machines. This can be a cost-effective way to get into the vending machine business, but it's important to ensure that the machine is in good working condition and comes with a warranty.
5. Local Classifieds
Check local classifieds such as Craigslist, Facebook marketplace, or classified websites can also be a good option, as you may find a good deal on a used vending machine.
How Much Do Various Types of Vending Machines Cost?
The costs of purchasing a vending machine can vary depending on the type of machine and the features it offers. As a startup it's crucial to know what types you're aiming for. Here are some general estimates for different types of vending machines:
- Basic device (such as gumball machines) can cost a few hundred dollars.
- A standard snack machine can cost anywhere from $1,500 to $8,500
- Specialty vending machines (such as coffee or ice cream machines or healthy vending) can cost $5,000 to $20,000 or more (specialty vending is more costly to start).
- Used or refurbished vending machines can cost anywhere from $1,200 to $3,000.
- Bulk vending machines with rates anywhere between $100 to $3,000 (bulk vending may be cheaper to start)
Additionally, ongoing costs are associated with operating machine vending, such as stocking and restocking the machines, maintenance and repair, and electricity to run the machines, as well as how many machines you have within your fleet.
Can You Put a Credit Card Reader on Any Vending Machine?
A card reader can increase sales by allowing customers to make purchases with credit or debit cards. You might want to seriously consider adding it to your business vending from the start. There are several credit card readers, such as cantaloupe or nayax, so it's important to research and choose one that is compatible with your vending machine and meets your needs.
Depending on the type of credit card reader you choose, installation may be as simple as plugging it into an existing port on your vending machine or may require some additional hardware and software installation.
The card reader will need to be connected to a payment processor, such as PayPal or Square, to process credit and debit card transactions. This is usually done through an internet connection or a cellular network.
Before accepting payments, test the credit card reader to ensure that it works properly and that all transactions are processed correctly.
Step 4: Placing Your Vending Machines At A Location
Once your machine is ready, it's time to get it to its new business location. Using a professional moving company to transport a vending machine to a location is a good idea because they have the experience and equipment necessary to safely move the heavy and bulky machine, but it comes at an additional cost. Common machines such as a standard beverage vending machine or an ice vending machine can weigh upwards of 1,500 pounds, so for those inexperienced with moving heavy machinery it may be the safer choice to go with an established moving service.
For vending machine operators in it for the long term, it is suggested to invest in the proper equipment for moving your own vending machines if you plan on expanding your operation past a few vending machines, as the cost of a professional moving company will quickly eat into your profits.
Professional movers offer the following advantages if you choose to go this route:
- Safety - Professional movers have the experience and equipment to safely move heavy and bulky items.
- Efficiency - They know how to navigate obstacles and comply with regulations that may be in place, which ensures that the machine will be transported to its new location as quickly and smoothly as possible.
- Insurance - A professional moving company will typically be licensed and insured, which means that you are protected against any damages or accidents that may occur during transport.
- Reliability - Professional movers are experienced in handling and moving sensitive equipment, which means that your vending machine is less likely to be damaged or malfunction after the move.
Step 5: Buying Stock For Your Vending Machine Business
A vending machine is only as good as the stock contained within it. One of the most challenging aspects of managing a vending operation is maintaining a supply of food and beverages for your machines. Having either a warehouse location or a personal storage solution is recommended as you will want to buy stock in bulk to increase your sales margin on items.
You can purchase bulk stock for vending machines from the following sources.
- Wholesale Distributors - Many wholesale distributors sell vending machine supplies in bulk at discounted prices.
- Online Retailers - Many online retailers specialize in supplies. You can find a variety of products and compare prices easily.
- Local Convenience Stores - Some convenience stores sell vending machine supplies, which can be a good option if you need to restock quickly.
- Directly From Manufacturers- Some manufacturers sell supplies directly to the public. This can be a good option if you want high-quality products at a competitive price.
Step 6: Set Vending Product Prices
Setting prices can be tricky, especially if you don't have a background in accounting or cost management. However, it is crucial to the success of your own vending machine business. Your prices will determine how much revenue your vending machines generate and how competitive your business is in the market.
What is the typical markup in vending machines?
The standard rule of thumb for setting prices for a vending machine is to take the base cost of a given item, and double that for its sell price. This is a very straight forward approach, but does not always apply depending on the item stocked and the quantities you are selling of a specific item.
Step 7: Restocking Your Vending Machines
Setting up a restocking schedule for your business is important for maintaining inventory levels, reducing waste, and ensuring customer satisfaction. Some strategies to consider when creating a restocking schedule include the following:
1. Monitoring Business Sales Data
Use data from your vending machines to track which products are selling quickly and which are not. This will help you identify which items need to be restocked more frequently. Monitoring sales data involves tracking and analyzing information related to the sales of a company or product. This can include the number of units sold, revenue, and customer demographics. This information can be used to identify trends, make business decisions, and measure the effectiveness of marketing and sales efforts. There are various tools and software available to help with monitoring sales data.
2. Scheduling Regular Restocking Visits
Set a regular schedule for restocking your vending machines, such as daily, weekly, or bi-weekly. This will help ensure that inventory levels are always sufficient. Scheduling regular restocking involves creating a plan for replenishing products promptly and efficiently. This can help to ensure that products are always available for customers, reduce the risk of stockouts, and minimize the cost of holding excess inventory.
3. Coordinating Business With Suppliers
A smooth working relationship with suppliers is vital to a successful business. It allows you to make long-term plans and stay informed in case of product shortages and gives you access to offers and discounts. Work closely with your suppliers to ensure they can regularly deliver the products you need. It establishes a smooth and reliable system for restocking vending machines. It is important to select suppliers who deliver products on time and in good condition. Businesses can use delivery time, product quality, and pricing factors to evaluate potential suppliers.
It is also important to have a backup plan in place if the primary supplier cannot fulfill an order. This could include having a list of backup suppliers or having a sufficient inventory buffer to handle unexpected disruptions in the supply chain.
4. Keeping Track of Inventory
You can use software or a manual system to keep track of inventory levels in your vending machines. This will help you identify when it's time to restock. Inventory tracking also helps you determine the average time it takes to run out of the different products in the machine. You can use this information to time your product orders o your vending machines are stocked throughout the week.
5. Monitoring the Weather and Other External Events
Keep an eye on the forecast for extreme weather events, as this may impact business - in particular, sales and restocking needs. Other factors like traffic, logistics, and delays in shipment may affect your stock levels if you source these items yourself, so it's always good to be prepared.
6. Implementing a Notification System
Use a phone or email-based notification system to remind the stocking staff when to restock the machine. Such systems can be bought or rented from service providers at an affordable cost, and they offer owners a timely platform to monitor and replenish stock levels.
By implementing a restocking schedule, you can ensure that your vending machines are always well-stocked with popular products, which will help increase sales and keep customers satisfied.
Step 8: Repeat & Scale Your Operations
Once you have established a successful vending machine business, you can replicate your model and expand your operations by adding more vending machines in new locations. This will help you increase revenue and grow your business.
Some strategies to consider when scaling your operations include:
1. Start by Identifying New Vending Locations
Look for new locations with high foot traffic, such as malls, airports, or busy street corners. Research different areas and demographics to identify potential high-traffic locations. Look for areas with a high concentration of people, such as malls, airports, train stations, bus stations, and office buildings.
2. Liaising With Property Owners and Managers
Once you have identified potential business locations, reach out to the property owners or managers to secure contracts to place your vending machines in their locations. Use online tools such as Google Maps or Yelp to identify high-traffic areas and find potential locations.
You can also network with other operators and property owners to learn about potential locations. Secure contracts with property owners or managers to place your vending machines in their locations.
Keep track of the performance of each vending machine, and adjust your strategy as needed. Keep up with the latest technology to improve efficiency and increase sales. Use data-driven insights and analytics to understand customer behavior and identify potential locations.
As you expand your operations, consider hiring and training additional staff to manage your vending machines. Continuously evaluate the performance of your vending machine franchise, and make adjustments as needed to improve efficiency and increase revenue.
The Vending Machine Industry Is Here To Stay
If you're considering starting a vending business, there has never been a better time. With new technologies that allow smart inventory monitoring and convenient payment options, vending machines are on the verge and offers a seamless experience for customers.
FAQs on Vending Machine Business
How Much Does a Vending Machine Business Make?
The amount of money vending machines can make can vary widely depending on several factors, such as location, product offerings, and traffic.
On average, vending machines can earn anywhere from $300 to $1,500 per month. However, it's not uncommon for vending machines in high-traffic locations to earn much more.
Where Is the Best Place to Put a Vending Machine?
High-traffic areas: Start thinking about locations with a high concentration of people, such as malls, airports, train stations, bus stations, and office buildings. These areas will have a steady stream of potential customers who will likely use the machine.
Can You Buy a Vending Machine and Put It Anywhere?
Yes, you can buy a vending machine and put it in most locations. However, it's important to consider factors such as foot traffic, accessibility, and local regulations before placing a vending machine. Additionally, operators often enter into agreements with business property owners to place their machines on the property in exchange for a percentage of the vending machine's revenue.
How Much Does a Vending Machine Cost?
You can get a basic vending machine for about $2,000, while more advanced machines with additional features can range from $3,000 to $10,000.
