How profitable is it to own a vending machine? How does the vending machine business model work? Read this blog for detailed information….
If you’ve ever loved picking out a food item from a well-organized display in front of you, researching the vending machine industry may be for you. Today, vending machines sell more than just French fries and soda; they also sell things like electronics or prescription drugs. It can be a full-time business or a highly successful side business. Over the past ten years, the vending machine industry has developed and expanded substantially. Vending machine owners have many opportunities as consumers’ lives become busier and they are looking for solutions that save them time and convenience when traveling.
Research and Markets assessed the size of the global vending machine market at $21.3 billion in 2020, and it is projected to grow to $31 billion by 2027. Both novice business owners and experienced entrepreneurs find the vending machine sector an attractive alternative. In addition to its unexpected profitability, owning and operating a vending machine business offers a lot of flexibility. It could be an excellent weekend side business, a low-investment venture or an intriguing new approach to diversify your holdings.
Are you ready to get rich selling food and beverages to go? Here’s all the information you need to find out how the vending machine business works!
How to buy a vending machine and start a business?
You should purchase your own equipment and look for locations on your own if you want as much freedom as possible when setting up your business. This is the best way to start if you are ready to use contacts in commercial buildings and locations for vending machines. Another option is to purchase an existing fleet of vending machines. Before doing this, make an effort to learn as much as you can about why the owner wants to sell their vending route. This is ideal if they wish to retire as a reason. However, you’ll want to be aware of any issues with the areas they choose.
If you invest in a franchise, you will start with an established business and fewer decisions to make. However, the franchisor receives a portion of the franchisee’s sales.
Vending machines are vulnerable to theft and vandalism because they are located in public areas. Although frustrating, you can build this into your business plan. Your vending machines still need frequent checks even if you bought them new instead of used. Your vending machine will lose money for any downtime. Also, scheduling routine machine maintenance will improve your overall profits.
Cost to start a vending machine business
According to Fit Small Business, the typical cost to start a vending machine business is between $2,000 and $10,000. The actual costs to launch your vending machine business will depend on your short- and long-term business goals.
Marketing the vending machine
There are possibly more vending machine options available than there are machines. Low-calorie snacks, local delicacies, coffees and soft drinks are available. The products are supplied by vending machine companies, which buy them from wholesalers and profit from selling the products at retail prices.
A company may make frequent changes to what is provided. It may be better to opt for healthier options if the organization hosting the machine, for example, is in the health sector. In addition, it can be tailored to some extent to the needs of the company’s staff. It is easier to identify which products sell better than others over time and how to adjust selections as needed as the machine is restocked.
Testing and troubleshooting
Once the machine has been stocked, it’s time to test it by inserting cash to make sure it recognizes coins, bills and, in some machines, credit cards accurately. Lasers are used to scan bills, which allows the machine’s internal computer to determine the value of the bill. Similarly, the machine measures the diameter and thickness of each coin to calculate the total. Newer vending machines typically accept credit or debit cards, which function similarly to how they do in any retail establishment.
The functionality of the machine should also be tested – are the spiral coils loaded correctly to allow dispensing? The console board receives an electronic signal from the user when they press the code that corresponds to the product they have selected, and then the console board tells the coil to spin and release the product.
Compiling sales revenue
Each vending machine vendor has a predetermined schedule for when the machines will be reloaded. They also split the money they have collected with the company that houses their vending machine at this time. It is usually not necessary for anyone other than a representative of the vending machine company to collect the proceeds, although that company usually has a specific password that can be used to access the inside of the machine (if a product jams).
After deducting the cost of products sold, the cash in the machine is distributed according to the contract between the vending machine company and the owners.
Proceeds from credit card transactions are frequently mailed in the form of checks or, if the amount is known at the time, cash. There are several vending machine businesses in almost every area. Finding the best company to complete the job usually only requires a few phone calls if a company wants to install vending machines.
How does having a vending machine work?
Step 1: Think about your potential products
While food vending machines are common and straightforward, there are additional possibilities for specialty or wholesale vending machines.
You can decide on a theme for your vending machines if you are starting a food vending business. Schools strive to provide students with proper nutrition, so offering healthy snacks in schools can be a smart step in that direction. Generally speaking, you can tailor your offerings to the niche market you want to enter.
Step 2: Find the right location
You can start looking for space in commercial establishments and plan a route based on the type of machinery you have. Since you or a staff member will be restocking and servicing the machines, you will probably want to have them close by at first. You can begin to cover more ground as your business grows and additional staff is added.
When installing vending machines in neighborhood establishments, you will need to start networking with the owners there and promoting your offerings. Contact a regional manager or whoever handles larger-scale location management projects if you are looking to contract with a school system or a company that has multiple locations.
Step 3: Select the best machine for your business.
Machines come in three types: mechanical, electric and bulk. Bulk dispensers dispense a predetermined amount for twenty-five cents or a dollar while holding a single bulk product. This is common in restrooms, where sanitary products, for example, are dispensed. These can start between $50 and $200.
Traditional break room vending machines are mechanical. They have a range of products that start at about $2,000 each. However, they make more money than bulk machines. The most advanced type is a vending machine that uses electronics. These machines can easily accept credit card payments, cost at least $3,000 each and often include touch screens. The cost of the machine increases with the amount of beverages and food served. As fewer and fewer people carry cash and coins, the option of using a credit card often generates a lot of business. Just be careful to choose a payment gateway that does not impose excessive costs.
Step 4: Locate the right market
The location of your vending machine should be ideal for the type of customers you want to attract. For example, vending machines that sell microwaveable food and other meal-like options are popular in environments where people spend a lot of time but lack the means to prepare meals, such as offices, hospitals and universities.
Offices benefit greatly from having snack vending machines. However, if you are interested in developing those relationships, vending machines that dispense novelty items or small candy can be successful in small, specialized businesses. Finally, airports, rest stops along the highway and train stations are excellent locations for vending machines for electronics or medications. Since these items are necessary for travelers, these devices can have a huge profit margin.
Step 5: Supply of goods
Some states require that a specific proportion of healthy options be present in food vending machines. If this is the situation in your area, make sure you have access to healthy snack sources.
You should establish contacts with wholesale suppliers when considering food storage in general to obtain the lowest cost per unit. Saving money on initial food prices can allow you to increase your vending machine profits over time.
Invest correctly in a vending machine business.
When deciding how much time you can realistically devote to traveling to locations, it is crucial to keep in mind that a full-size vending machine may require you to collect money on a weekly basis. Operating a vending machine business requires you to spend time researching sales patterns, new items or locations, talking to your peers, as well as the time it takes to purchase inventory, visit locations and reload.
For non-perishable items such as candy or stickers, the normal service cycle for bulk vending is four to eight weeks. As a result, bulk vending can be a fantastic option for entering the vending industry without having to make too many time sacrifices if you find it difficult to take time off from your full-time responsibilities. Now that you know how the vending machine works, you are fully capable of starting a vending machine business and turning a profit with only a few thousand dollars to invest, a vehicle and perseverance. Although you can sell fun and games in your machine, starting a vending machine business is not all fun and games. There are advantages and disadvantages to consider, as with any new venture.