Vending Machine Business Owners? 4 Important Questions for New Owners
Those thinking of becoming vending machine business owners probably have a lot of questions. Since Nayax has hundreds of operators, from mom and pop operations, to large scale operations, we have garnered lots of tips for vending machine business opportunities. We’re happy to answer common queries new business owners have in this blog post.
1. When starting a vending machine business, should I buy or rent a vending machine?
This is the biggest question those thinking of starting a vending machine business will consider. Since new machines typically cost US$3,000 and up, for those who don’t have a lot of outlay for purchasing multiple machines buying a machine can be an expensive risk. If you want to test the demand, renting or leasing might be a good option for you. Leasing often gives you the option to pay in to buy the machine at the end of your contract.
Buying a machine ensures you don’t have monthly expenses, and is more profitable in the long run, however you are in charge of all the maintenance costs. With renting or leasing, suppliers often offer maintenance services and cover delivery and removal charges.
2. How often do vending machines need to be refilled?
Refilling the machine depends on you, the operator. If you neglect filling the machine and products sell out, you are missing out on revenue earning opportunities. New vending machine business owners might consider a reporting or telemetry system because it gives you the ability to see what is going on with your machines’ capacity and connectivity.
It can help you determine how often to refill your machine and allow you to see exactly what is missing in real time. This is especially helpful if you are located far from your vending machine’s location, as it can save you on an unnecessary onsite visit and fuel costs.
With Nayax’s telemetry system for example, operators also receive smart alerts, informing you in real time when an item is close to selling out. Additionally, these alerts can be set up to inform you about operational malfunctions like if the machine has become unplugged, or the door is left open, or the temperature rises too much.
3. How much does electricity cost when running a vending machine?
Vending machines run on electricity 24/7, 365 days a year so this is an important question for new vending machine business owners. Energy consumption depends on the size of the machine and whether it is located indoors or outdoors. Signage, lighting, refrigeration and heating add on energy usage. When you are choosing a machine, even if they drive up the price of the machine, consider features like fan motors, timers for lights, compressors and occupancy sensors, as these lower energy usages.
Typically, machines consume 3,000 to 4,000 kilowatt-hours (kWh) of energy per year. In the US, a kWh (kilowatt hour) costs US$0.21, costing you US$630 – US$840 annually. You can calculate the cost of a machine in your country by multiplying the annual kWh usage by these electricity rates. In the UK, for example, electricity will cost an operator US$720-960 (approximately £550-£730) per machine annually.
There is good news for American vending operators: energy consumption standards set by the Department of Energy for beverage vending machines are due to change in 2019, reducing energy usage by 5-55%.
4. Is it worth adding cashless payments to my vending machine?
Yes! Cash is going out of fashion and more and more people don’t even carry cash. Most people have a credit card or a mobile phone. If operators want to appeal to as many consumers as possible it’s in your interest to give consumers payment options they prefer, otherwise you are missing out on selling opportunities. Methods like credit cards, NFC and BLE payments, or QR codes that are all safe, quick and convenient.
It’s a win-win situation. Offering consumers cashless payments reduces cash sales, while driving up overall sales. With less cash transactions you’ll spend less time on cash handling activities like counting, refilling coin tubes, and going to the bank.
Another benefit of adding more cashless payment methods is that it can help reduce vandalism and theft. Without cash to steal, vandals are less motivated to damage your machines. Cashless payments also reduce the chances of fraud, as payment with EMV chip cards can prevent fraud and subsequent chargeback claims from occurring.
It’s important to do your homework before you start and develop a vending machine business plan. There’s a lot of other factors to consider. Look into the local competition, as well as regional and national laws like whether you need a vending machine license in your country. Find out about vending associations and purchasing groups. Finally, it’s also important to remember that every business is different, and you need to create an operation that helps you build a successful business.