Editor’s Note: This blog was originally published in March 2022 and has been updated for accuracy.
Are you looking to start your own vending machine business? Not sure where to begin?
There are endless opportunities when it comes to entering the vending machine industry, whether you’re a new or experienced entrepreneur. Vending machines are being used more and more around the world by busy consumers who demand more on-the-go options, and the amount of revenue generated by these machines continues to grow. In fact, the vending machine market reached $19.5 billion in 2022 and is expected to reach $26.4 billion by 2028.
Getting into the world of vending machines can be a great way for you to make additional income either as a side-hustle or as a full-time operation. However, we know that there’s a lot to consider when you plan to run your own vending machine business. From choosing your location to maximizing your product offerings to managing your day-to-day operations, here’s everything you need to know to get started.
The Benefits of Starting a Vending Machine Business
Vending machines have been a staple in consumer culture since the 1880s, when the first coin-operated vending machine was introduced in England. Since then, vending machines have continued to grow in popularity and now offer a variety of products such as healthy snacks, electronics, pharmacy items, and more.
So, why should you consider starting your own vending machine business? Let’s look at some of the advantages.
1. Low start-up costs
The initial cost of starting a vending business is relatively low. Since you won’t need many employees or office space to manage the operation, you can cut costs typically spent on payroll, employee benefits, and rent. You can invest in just a few machines and minimal equipment to get started, and once you start earning a profit, you can then start investing in more machines to scale your business.
2. Earn passive income 24/7
Once the machines are in place, you can start earning passive income without much investment or time on your end. You can even continue with other jobs on the side, as your vending machines will make the money for you. Vending machines basically advertise themselves, sell your stock, and collect money up-front on your behalf. They also operate 24/7, which allows you to generate income in your sleep. The only hands-on work you need to do is occasional repairs, restocking, and collecting cash.
(Pro tip: you can save tons of time typically spent collecting cash if you offer cashless payments at your machines.)
3. Easy to manage
No matter your background or field of expertise, it is not overly complicated to learn the basics of running a vending business. With modern management and telemetry solutions, managing your machines after initial set-up should be a breeze. They can also help you automate and simplify administrative tasks by tracking sales, monitoring inventory, and alerting you of any adverse machine events, whether you’re managing a few or hundreds of vending machines.
4. Easy to scale
You can start with just a few vending machines and easily add more or expand to new locations as your business becomes more profitable. If you use management software such as Nayax Core, formerly known as NayaxVend, to monitor your machines, you can grow your operation with ease as you continue to manage it with the same software.
Now that you know some of the benefits of starting a vending business, let’s look at the steps you’ll need to take to get started.
How to Start Your Own Vending Machine Business in 10 Simple Steps
From choosing your product offering to purchasing your machines to solidifying terms with a property owner, here’s everything you need to know to start your own vending machine business.
1. Choose the Right Type of Vending Machines for Your Business
There are many different types of vending machines found around the world today, such as snack vending machines, drink vending machines, and machines that offer technology or beauty accessories. Here are some broad categories to consider:
Typically found in arcades or in waiting areas with high foot traffic, bulk vending machines are used to sell a single product in large amounts, such as candy, gumballs, or even sanitary products. They dispense a certain amount of the products depending on how much you pay. These machines require minimal maintenance and are low-cost.
Food and beverage
These machines tend to be the most in demand, and they include snack vending machines, soda vending machines, coffee vending machines, and vending machines that serve hot, microwaveable meals. According to a report by Automatic Merchandiser, almost 85% of the vending market in the US comes from food and beverage vending machines. One specific type of vending machine that is on the rise is healthy vending machines, as people are becoming more health-conscious and there is an increasing demand for more nutritious convenience food options.
If you don’t want to limit yourself to just food and beverage items, you can consider offering specialty products in your vending machines, such as travel essentials, over-the-counter medicines, video games, laundry products, or tobacco. These machines are most profitable in large public places such as arenas, malls, and airports, where customers are in desperate need for specific products.
In general, you should choose your vending business type and product offerings based on the specific market space you plan to break into.
2. Find the Right Location for Your Vending Machines
A critical component to the success of your vending business is the location you choose to place your machines in, as not all locations will bring you the same level of profit. Some of the most popular vending machine locations include manufacturing locations, offices, retail sites, schools, and hospitals.
You should aim to set up your machine in a location that receives a lot of daily foot traffic, and you should also consider locations in which the local audience may feel motivated to purchase from your specific vending machine. For example, vending machines that offer hot meals may do well in places where people don’t have tons of time to cook, such as offices, hospitals, or universities, and vending machines that sell tech accessories may be great for transit stations or airports.
Once you’ve decided on the ideal locations for your vending machines, reach out to the proprietor to get a better understanding of the local demand so you can finalize the product mix with the target audience in mind and work out a deal.
3. Purchase Your Vending Machines
You are probably wondering how to actually purchase your vending machines. The good news is that you have multiple ways of breaking into the industry.
Start Your Own Vending Business
If you plan on starting your own vending machine business from scratch, you should purchase machines from manufacturers, wholesalers, or online sellers, and source locations to place them yourself. While this option involves the most work, it will also provide you with the most freedom to build your vending machine business exactly how you’d like.
Buy an Existing Vending Business
Another option is to buy an existing business that already has machines, inventory, customer accounts, and contracts in place. Before doing so, it’s important to understand why the business owner plans to sell their vending machines in the first place. Are they in good condition? Is there a problem with their chosen locations? You may also consider looking into companies that specialize in vending machine rentals if you’re not yet ready to commit to buying them.
Buy a Vending Machine Franchise
Working with an established vending machine company such as a franchise owner is also an easy way to get your business up and running. These companies already have established operating procedures, have a proven business model, and can provide dedicated training and support. However, keep in mind that buying a franchise can be more expensive than going solo because, in addition to the franchise fee, you may be required to pay a percentage of the profits to the franchisor. Some top vending machine franchise opportunities include Clothing Bin, IceBorn, Naturals2Go, Pharmabox, and Power Drop Shop.
How Much Does a Vending Machine Cost?
The cost of a vending machine will depend on many factors including the type of equipment you purchase, whether the machines are mechanical or electric, and so on.
New vending machines can cost anywhere between $3,000 and $10,000. To cut costs, you can consider buying used or refurbished machines, which typically cost between $1200 and $3000. Some online stores where you can find refurbished vending machines include UsedVending.com, Amazon, eBay, and Craigslist.
You can also consider purchasing equipment using various financing options such as secured or unsecured personal loans, short-term business loans, and equipment financing loans. In addition, you can opt for inventory financing options if you need capital to stock the machines.
Even if you don’t find the most advanced vending equipment up front, you can retrofit advanced solutions onto your machines to modernize them and attract more customers. This includes enabling cashless payments and remote machine management.
4. Determine the Right Product Mix
Do you plan on selling drinks? Food? A mix of both?
As you start to brainstorm the specific products you would like to offer, it’s important to consider your vending machine’s location so that you can cater your offerings according to the target market. For example, if you plan on placing your vending machines in office spaces, a variety of coffee products may be best. Or, if you plan on placing your vending machines in a high-traffic shopping mall, a mix of drink refreshments and snacks may bring you the most profit.
Your product selection will also be governed by the customer profile at the chosen location. While millennials tend to gravitate toward energy drinks, boomers may still prefer classic sodas. Similarly, if your target market is school students, you may want to stock up on healthy snacks.
5. Stock Your Vending Machines
Once you’ve determined your site-specific and audience-specific needs, it’s time to purchase inventory for your machine.
If you’re new to the business, one easy option to get started is to purchase packaged vending snacks in bulk quantities from wholesale suppliers. But in the long run, your goal should be to seek out specific suppliers that can provide your desired inventory so that you can build a long-term partnership and gain benefits such as becoming part of a loyalty program or receiving substantial discounts. This can help you improve your vending machine business’ bottom line in the long run.
When you have decided on the perfect product mix, you can start stocking your machines. And if you use a Vending Management and Inventory System such as with Nayax’s VMS, you can track vending machine sales and inventory levels to help you continuously optimize how you stock your vending machines.
6. Obtain Any Necessary Business Licenses and Permits
Like any business, the vending industry also comes with its own bundles of regulations and compliances. It’s likely you will need to apply for a business permit or license at your city council to operate a vending machine.
The laws vary by state and different rules apply to different types of vending machines. So, look these up online and contact your local Chamber of Commerce to understand how vendors are governed in your state.
7. Sign Contracts with Property Owners
You will need to draw up a contract with the property owner, clearly stating your agreed rate of commission (which typically ranges from 10% to 25% of your revenue), contract length, and other terms you have with the proprietor (such as an obligation to provide electricity.)
8. Simplify Payment Options for Consumers
Consumers don’t carry coins around as much as they used to. Due to advancements in technology, you can and should now accept cashless payments at your machines if you want to build a successful vending business.
Retrofitting an old-school vending machine with a device that accepts cashless payment solutions will help you make more sales and boost customer satisfaction.
Offering cashless payment methods enables your customers to purchase products using credit or debit cards, mobile wallet apps, or QR codes. Cashless payments are more convenient, enable quicker transactions, and are more secure. By accepting cashless payments, you can also reduce the amount of time you would typically spend visiting your machines to collect cash and enables you to dedicate more time to other business matters. At the end of the day, you can greatly increase your bottom line with cashless payments.
9. Invest in a Vending Management Solution (VMS)
When you only manage a couple machines, it may be easy to handle operational issues or track inventory manually. However, once you have several units set up at multiple locations, your business’ growth will depend on how efficiently you can manage them. This is where an advanced vending management solution can help you stay on top of your inventory remotely and manage your entire operation more efficiently.
A modern vending management solution will give you detailed insights into which products are purchased and when, which can help you optimize your product mix to increase your sales. VMS software will also provide real-time machine alerts to let you know if your machine has an urgent issue that needs your attention.
You can also easily install a mobile management app on your smartphone to receive on-the-go, real-time machine alerts that can help you address issues and manage day-to-day operations wherever you are.
With a VMS, you can also take advantage of consumer engagement tools such as with Monyx Wallet to introduce loyalty programs and discounts and create customized promotions for your customers. This can help you boost customer loyalty and drive repeat business.
10. Continue to Restock and Service Your Vending Machiners
To increase your vending machine sales and attract more customers, follow best practices such as keeping the machines clean, well-maintained, functioning, and always stocked.
Restocking becomes easier and faster when you know the exact amount and types of products missing from each machine. The good news is, with a vending management app such as Moma 2.0, you can manage your inventory via a picklist. You can generate this list for each machine to help you understand in advance exactly which products you need to refill. This allows you to operate your vending machines more efficiently and saves you tons of time and money.
Regular routine machine maintenance is also a must, and repairs should be prioritized. With vending telemetry solutions that monitor machines in real-time, you can receive constant up-to-date information regarding all aspects of your vending machines including machine health and any issues that need to be urgently addressed.
Frequently Asked Questions
1. How Profitable Is Owning a Vending Machine?
Owning a vending machine can be very profitable. In the vending retail market, money comes from volume. Industry research from IBISWorld estimates there are some 5 million vending machines in the US, ranking $7.4 billion in annual revenue. On a per-capita basis, Americans spend about $27 per year on vending machine items, with an average transaction clocking in around $1.75.
However, profits vary from machine to machine. For example, expected revenue for a gumball machine is only $1 per machine per day, while a vending machine in the food and beverage segment can be expected to bring in at least $75 each week and well over $300 per month.
Remember: machines placed at strategic locations with an optimal product mix for the target market may generate large profits, and you can multiply your profit stream by investing in multiple machines at other favorable locations.
2. Is it Hard to Start a Vending Machine Business?
No, it’s not hard to start a vending machine business, and there is limited barrier to entry. With the low start-up cost, you can start your own vending machine business with just one or a few machines, which will only cost a few thousand dollars. Once you start yielding an initial profit, you can invest that money into expanding the business with additional machines in new locations.
3. Can I Put a Vending Machine Anywhere?
You can place a vending machine anywhere that is permitted by a property owner. This can include places such as offices, retail shops, arcades, and more. To gain approval to place your vending machine in a certain location, you can approach the property owner and see if you can get and sign a contract.
4. How Can I Prevent Vending Machine Theft and Vandalism?
Since vending machines are placed in public places, they can be easy targets for theft and vandalism. You can minimize these risks by placing them in safe and secure areas, such as in areas with low crime rates, with video monitoring, and by conducting inspections often.
One way you can reduce risk of theft and vandalism is to offer cashless payment options to customers, because if there no cash in the machines, the risk of theft is automatically minimized.
You can also have a provision for protection and insurance against theft and vandalism in your contract with the proprietor.
The Bottom Line
No matter your professional background, starting a vending machine business can be very profitable. You can break into the market with as little as $1,000 and start expanding your operations as your revenue grows. With the right product offerings in vending machines in the right locations, you can be well on your way to receiving a passive, steady stream of income with minimal time or investment required.
At Nayax, you can find comprehensive solutions to help you with everything you’ll need to run, manage, and scale your vending business. To learn how Nayax can help you on this journey, contact us here.