Arizona has all the conditions you need to start a vending machine business. The state enjoys sunny weather for most of the year, and the seven biggest cities have populations of over 200,000 people. Phoenix, for instance, has over 300 sunny days a year and 1.625 million people. Every day, there are enough people in Arizona looking to grab ice, ice cream, or a cold drink and a snack. That's great if you're thinking to start your own vending machine business.

‍

The state guidelines for registering and operating a vending machine business are pretty straightforward. Read on to learn how you can start and operate a thriving vending machine business in The Grand Canyon State.

‍

How to Start a Vending Machine Business in Arizona

‍

Before you start a vending machine business in Arizona, you will have to get the required licenses and permits. It is essential that you set up your vending machine business properly. Below are the steps you should follow to become a vending machine operator.

‍

1. Register for an Employer Identification Number

You need an EIN as a business owner to report sales tax. When registering your business as an LLC in Arizona, you are also required to have an EIN or a federal tax id number. You can get this number for free from the IRS. Applications can be done online on the IRS website here. 

‍

2. Set up an LLC for Your Vending Machine Business

It is best to run your vending machine business under a Limited Liability Company (LLC). An LLC helps separate your personal and business finances and will help you protect your personal assets in case creditors, customers, or any other aggrieved party sues your business. 

‍

When a customer gets injured by your vending machine or its products, you likely won’t be held personally liable, except where there is gross professional negligence or malpractice.

‍

To register an LLC in Arizona, do the following:

‍

• Choose a business name. You need a business name that no other business is currently using. Search the name on Google to confirm this.
• Check with the Arizona Corporation Commission if the name is available. Once you’ve settled on a name, you can check if any corporation or LLC is using the name in Arizona. Go to the official website of the Arizona Corporation Commission to check this. Address: http://ecorp.azcc.gov/.
• Nominate a registered agent. A registered agent is an individual who will receive official communication and legal documents on behalf of your LLC. You can nominate yourself as the registered agent if you live in Arizona.
• Fill and file the Articles of Organization. When registering an LLC, you need to file Articles of Organization. It is a document of formation that details information about the vending machine business, such as its name, address, statutory agent, management structure, and the individual creating the vending machine company, etc. Once you’ve filled out the form, you can submit it online via http://ecorp.azcc.gov/. 
• Publish a Notice of Formation. For three consecutive weeks, you will be required to publish a Notice of Formation in an approved newspaper. You will do this in the county where your LLC has its principal office. If you form your LLC in Maricopa or Pima Counties, you may not be required by law to publish the notice.

‍

If Arizona Corporation Commission approves your filing, you will get a letter with additional instructions. Your LLC will now be a legal business entity, and you can get licenses and permits under its name.

‍

3. Get Necessary Permits and Licenses for the State of Arizona

You may need federal and state permits to start a business bank account and operate your vending business in Arizona, depending on the products your vending machine sells and where you plan to put the machine. If you sell snacks and drinks from national brands, you likely don’t need a food permit from the FDA or local food service license. The FDA has guidelines on when sellng different vending machine items will require a federal permit here.

‍

Different counties and cities in Arizona have different guidelines when it comes to vending business license. For the most part, you need a business license for every vending machine location you operate. Here are the guidelines for business license for those who are in Phoenix or our comprehensive guide for getting a business license in other states.

‍

When applying for a vending machine license in Arizona, you will be asked to list all the locations you plan to install the machines and what type of machine it is (coffee, fresh, frozen, ice, soda pop, water, etc). Also, you will have to provide schematics/cut sheets of the vending equipment. For water and ice vending machines, you will be required to provide water sampling results.

‍

4. Comply with ADA Requirements

Americans with Disabilities Act (ADA) has requirements that ensure vending machines are user-friendly to people living with disabilities. Most of the vending machines available for sale today are ADA-compliant. What your vending business needs to pay attention to is how it is installed.

‍

A vending machine’s usability components should be between 15” and 48” up from the floor to be ADA-compliant. The usability components are the areas where customers select products, make payments, and collect delivered products. Where you have several vending machines at one location, one of each type of vending machine (i.e. snack, drinks, etc) must be compliant.

‍

‍

Are Vending Machines in Arizona Profitable?

‍

The profitability of your vending machine business in Arizona will depend largely on the location of the machine and the products available for sale. Nationally, the average vending machine makes upwards of $400 per month. This is true for Arizona as well.

‍

You can take specific actions to increase how much you earn per vending machine location. Below are some of the actions you should consider taking.

‍

1. Find a Great Location

Finding great locations is the single biggest lever you can pull to increase the profitability of your vending machine business. You want your vending machine to be in a location with significant foot traffic. Examples of good locations are busy walkable main streets, large apartment complexes, big construction sites, gas stations, and waiting rooms of big service businesses.

‍

2. Ensure Your Machine Is Accessible

The more accessible your vending machine is, the more sales you can make. Easy accessibility also encourages impulse purchases. For ice and purified water vending machines, street-level visibility is important. You want people driving on the road to see your ice vending machine. Also, ensure there is parking space so that customers can pull up to load ice bags onto their cars.

‍

3. Offer Multiple Payment Options

Some operators of old vending machines report seeing sales double when they upgrade their machines to accept credit cards. Consumers today expect you to be able to accept the payment providers they use. Your vending machine should be able to accept cash, credit cards, and mobile wallets, such as Google Pay and Apple Pay.

‍

4. Reduce Your Cost of Goods Sold

Profit is a function of your selling price and the cost of goods sold. If you maintain your selling price but lower the total cost of sourcing your products, your profit margins will increase. You can source products for less if you buy them in bulk and take advantage of bulk discounts. Further, working with a broker based in Arizona who sources products for several local vending machines may also help. Brokers source products in bulk and pass the savings to vendors.

‍

5. Price Your Products Competitively

If you are in an area in Arizona where there are lots of vending machines, you want to price your products competitively. Most vendors mark up their products by 100% to 200%. In major cities, such as Phoenix, you may see up to 3.5X markups. If customers are buying at these prices, don’t be afraid to experiment with such high markups. At the same time, do not make your products more expensive than those of competitors.

‍

6. Negotiate a Friendly Commission with the Location Owner

The location owner will likely demand a percentage of gross sales as a commission. As this is one of the biggest recurring expenses you will incur monthly, you want to get a good deal. Commission due to a location owner will generally range from 5% to 20% of sales. For most of Arizona, you want to shoot for 15% or lower.

‍

7. Keep a Good Record of Your Costs and Expenses

You can deduct all operating expenses from your business income to reduce sales tax liability. This way, you will have a higher profit after sales tax. You should keep a good record of these expenses, including receipts and bank statements. Keeping these records will also give you a better business insurance and a better picture of where your money is going so you can keep costs under control.

‍

8. Add New Locations to Scale the Vending Machine Business

The only way to scale a vending machine business is by adding new locations. If you are profiting $400 per location and operate vending machines at 10 locations, that adds up to $4,000 in monthly profit. With modern vending machines, you can add new locations without stretching yourself too thin. Modern vending machines have remote management capabilities where you can manage and keep abreast of all your vending locations wherever there’s an internet connection.

‍

Adding new locations will also help you figure out the places in Arizona with the highest demand for vending products. You will see something close to the Pareto Principle where a few vending locations will account for most of your revenue.

‍

9. Establish a Restocking and Maintenance Schedule

You want to limit avoidable losses resulting from stock outs or the machine being out of service because of lack of maintenance. Even with remote management, where you can always see your stock levels and the state of the machine, it still helps to maintain a restocking and maintenance schedule. This is a great habit to develop as it will help your vending business in the long run as you grow and complexity increases.

‍

‍

What Are the Most Profitable Vending Machines in Arizona?

‍

Arizona is a fertile soil for vending machine industry and most vending machines will do well there. Vending machines aren’t just about snacks and drinks. You can sell ice, purified water, ice cream, cigarettes, coffee, meals, cosmetics, and home supplies. 

‍

The following are some of the vending machines that are profitable in Arizona.

‍

• Drinks vending machines. Soda pop, energy drinks, and bottled cold brew coffee do well in Arizona.
• Snacks vending machines. It helps to sell drinks alongside snacks. You can put two vending machines at the same location or just run one combo vending machine.
• Ice cream vending machines. Ice cream vending machines are becoming increasingly popular across the United States, including Arizona.
• Ice vending machines. Arizona has consistent demand for bagged ice throughout the year. The sunny weather and desert conditions will help your sales.

‍

Before you buy a vending machine, do research to ascertain if there is demand for the product where you are in Arizona. If people are buying the product in local grocery stores and convenience stores, you will likely not have any problems vending it. In case your vending machines sell candy, potato chips, and soda pop, it helps to stick to national brands that people already know and trust.

‍

‍

The Best Vending Machines Locations in Arizona

‍

The best vending locations get a lot of foot traffic every day. When placing vending machines it's crucial to know that a vending location can make or break your vending business. Especially if you slack through the process or miss to negotiate vending location license fee. Vending machines tend to do well in the following locations

‍

• Gas stations. Gas stations have a captive audience throughout the year. The best vending machines for gas stations are those that sell snacks and drinks, including energy drinks. It is likely that your local gas stations already have vending machines. Most of them are old, though. A great way to land these locations is to pitch a new modern vending machine as a replacement.
• Apartment complexes. In an apartment community with lots of residents, you can turn a decent profit selling drinks, snacks, feminine hygiene products, home cleaning supplies, and candy. Put the vending machine along main paths or in communal areas.
• Airports. Arizona has some busy airports that may be willing to accept an extra vending machine. You can reach out to Phoenix Sky Harbor International Airport, Tucson International Airport, Phoenix-Mesa Gateway Airport, and Flagstaff Pulliam Airport.
• Walkable main streets. Streets that attract a lot of foot traffic will generally be good for vending machines. Talk to the store owners along the street and ask if you can put a vending machine outside their premises.
• Service businesses/facilities. Facilities with waiting lounges, such as hospitals and local government agencies, have a captive audience that will gladly buy snacks and drinks as they wait to be served. 

‍

Other great locations for vending machine businesses worth exploring include:

‍

• Long-term care facilities e.g. nursing homes
• Construction sites
• Car dealerships
• Schools and colleges
• Gyms and fitness studios
• Manufacturing complexes
• Shopping centers.

‍

For a list of potential vending locations in your town/city in Arizona plus their contact information, use our Vending Locator list-building service.

‍

‍

Wrapping Up

‍

You now have all the information you need to start a vending business in Arizona. Local governments in Arizona are business-friendly and support small business and that includes vending machine businesses. It is unlikely that you will have any trouble starting a vending machine business in this state. Take the first step today and start the process of registering your limited liability company. When ready to find great vending locations, consider using our reliable location data.