How to Start a Vending Machine Business in 5 Steps

Cody Cromwell
Written by
Last update:

Step 1: Decide If a Vending Machine Business Is For You

The dream of having your own vending machine business can strike you at any age in your life. But before you get too excited and start dreaming of the days you could be rolling in cash from a business you’ve done on the side, it’s important to know if vending is right for you.

It’s definitely an interesting and fun industry but it can take up a lot of time to get the money back to make your money back. This will add to the pressure of working a full time job.

If you want to start a vending business, make sure it’s something you can miss a lot of due to family or work commitments. A vending machine business will keep you on your toes and the on-the-job training needed will keep your mind sharp in the workforce.

If you’re interested in vending, start by looking for someone with similar work interests who runs the machines and ask them about their experiences and the basics of the business. You can find shops that are willing to provide you with equipment and training in some areas.

Ask yourself how many hours a week you can work on vending and how familiar you are with new technology apps.

After you’ve figured out if vending is the right industry for you, move on to step 2.

Pros and Cons to Starting a Vending Machine Business

For those who love putting together intricate DIY projects, vending machines might seem like a quick and cheap way to earn some money. Once the project is up and running, you can hit the road and watch your profits come rolling in. But vending machines generally require a lot of work, capital, and revenue for the entrepreneur to make a profit. In general, vending machine businesses don’t make enough money to justify the investment, take up too much of the entrepreneur’s time, or require too much space to operate. With that said, accumulating vending machine businesses in your repertoire can be a smart investment for these savvy entrepreneurs.

Do Some Preliminary Market Research

Your first step should be to decide if you want to start a vending business or an automated solution. The number of vending machines in operation around the world is rapidly increasing. Some vending machine businesses are quickly becoming a global trend.

It’s important to know what your target market is and what they really need.

Doing a market research and analyzing your potential customers can help in making a smart business decision. This can be done by answering these questions:

  • Are you interested in stationary or mobile vending machines?
  • What kind of improvement do you want to make in your vending machine business?
  • Are you looking to start a business directly or do you plan on selling your products to local vending machine companies?
  • Do you prefer creating customized products or pre-made products?
  • What kind of machines have you used in the past?
  • What do you want to do with your business?

Once you’ve answered these questions, you can start developing a business plan.

Test Drive Selling

You need to do a lot of research to get started as a vending machine owner. There are many things to consider before setting up a machine, including the machines costs and potential revenue.

For a vending machine to be profitable, it must sell more than 5 cupcakes a day. (A cupcake is a pastry that contains one cup of flour, one egg, and one tablespoon of sugar.) Obviously, depending on the location, the quality of the snacks, and the price, these numbers will be different. However, research the average sales of different foods in your town to get a better estimate of how many cupcakes you must sell on a daily basis to break-even.

Once you have an estimate for how many cupcakes you will need to sell, that’s when you can calculate the potential vending machine revenue.

Vending machine revenue is a combination of:

Vendors Fees: These are fees to receive a permit, register your machine, update your DME and media, pay to offer your products, and countless other fees. City Fees: These are taxes, fees, or other charges levied by a government on a business. Utility Fees: These are charges to use electricity, gas, or water. Supplies: These are costs to buy the machines, register the machines, and various other supplies.

Step 2: Figure Out What Type of Vending You Want to Try First

The first step in starting a vending business is to consider what kind of vending you will try first. This will determine which customer profile and equipment you will need to start with, and will help you decide what kind of operating expenses to allow for when you are planning your budget.

There are four main types of vending machines:

  • Picnic & Concession
  • Beverage
  • Mini-Market
  • Grocery

The main difference between these machines is that one takes only a few minutes to vend, only requires one customer profile to work, only needs a small amount of cash on hand, and only needs to prepare a single order at a time.

In contrast, the mini-market and grocery type machines take longer to vend, need multi-profile customers, have more order options, and need more cash on hand. Some of the larger types even have complicated order preparation, which can be time consuming.

If you are starting your business now, you will need to limit your sales to only one type of machine (or a smaller variation). This will make it easier for you to estimate your expenses and cash flow.

Before you begin vending, you might want to consider advertising your products as samples, including them in meal plans at a nursing home, selling them on the side of the street, or selling them from a nearby establishment (such as a coffee shop).

Low Cost, Low Margin Options

If you’re thinking about launching your own vending business, you’ve probably already come up with a number of great ideas. Unfortunately, you may not know how to go from concept to launch as opposed to starting a small business from scratch.

Regardless of your current skill set and experience, you can start a new vending business. And it doesn’t require thousands invested or years of experience.

Here are some ways to get started with a vending business that are within your budget and with a reasonable return.

Higher Cost, Higher Margin Products

With today’s tough economic times, it’s hard to make money out of things that cost you nothing. However, something that costs you nothing can result in high profits. However, before you invest your money into starting a vending machine business, you’ll need to understand how to make money with a vending machine business.

The trick lies in understanding the vending machine market. It’s easy to consider vending machines as simple press levers that dispense your snacks, drinks, or other products. However, this is not the case, because aside from the actual product, the cost of selling a product in a vending machine is pretty high as well.

A product’s shelf life is a matter of concern, which is why a product has to pass inspections before it can be put into a vending machine. This makes it hard to get your product to the shelves of vending machines. But then again, most vending machines are used for low margin products, which means that there’s a lot of competition.

Trending Vending Businesses

Although vending machines are fairly common in most shopping malls today, there are some that are still using a candy machine, coffee trailer or newspaper stand. Interest in these vending machines grew out of the nostalgia of these machines.

If you feel like you don’t have the necessary skills or the time to build a vending machine business, you have a number of options. This post focuses on the positives of these businesses and the paths to follow. It also has some discussion about when you’d be better choosing to start a new vending machine business over resale.

First on our list are several vending machine businesses that are fairly easy to get started. You can buy any sort of vending machine equipment you need as you purchase the machines.

Second are several vending machine businesses that will let you purchase a franchise as you buy the equipment. Typically, you’ll need to purchase a franchise license and have a training portal for prospective owners. This can be a particularly inexpensive way for someone who thinks about starting a vending machine business to get started.

Third we’ll be discussing the machine prices for the equipment required. These machine prices vary, but are generally fairly low for vending machines, parts, machines, paper and so on.

Fourth, we’ll discuss the expenses of being a vending machine business owner.

Step 3: Pick Your Products

Step 4: Get Your Machines

You’ve asked for vending machines and you’ve been given some money. Now what?

It can take some effort to find vending machines to buy, so you might decided to place an advertisement in local papers or ads on Craigslist. There are many considerations when choosing a location for vending.

For one, consider how dense your location is. The less likely you are to sell a snack or drink solution when you drop off your machine. There are also things like rent costs and taxes that will be considered. Ask yourself what you really need to improve the area, and think of how you can create a unique business in that location.

To sell your items, you’ll need to decide whether to go it alone or do it in partnership. If you want to do it on your own, you’ll need to consider how much room you have for your goodies. There are several service vendors that can help you with the initial setup of your vending machines. Serious businesses would normally prefer to place their own machines, but some entrepreneurs look to buy older machines on the cheap and refurbish them. This could be a great way to start out.

Size and Configuration

Typically, vending machines are housed in a space of about 3 feet by 8 feet with a counter that may range from 6 feet to 12 feet. Your initial costs will be high so make sure you understand your target market well when starting out.

Signage, the exterior of the machine, and interior design should all be considered. For example, if you’re trying to target families with young children, you may decide to blend in and not give your customers any exterior options. You might also decide to install a flashing sign to draw attention to your vending machines.

If you’re in a high traffic area, you might place your machines out of the way. It’s important to consider the element of surprise and how consumers will react to your products.

Refrigerated Or Not

Depending on the type of product you plan on vending, you may want to consider whether you’d want your unit to be cold or just cool. If you’re vending a dairy, fruit, or other similar product that will need to be stored in the cold, then you’ll definitely want the unit to be refrigerated. And that’s a good reason to use a vending machine supplier that sells refrigerated vending machines.

If you decide to go with the non refrigerated version, then you’ll still have to contend with the options of drawing out the product, as with hot machines, or using a cooling coil to keep your product cool. You should also remember that proper ventilation is necessary for a hot or non-refrigerated unit.

When it comes to other types of vending machines, like the hot or snack (non-dairy) versions, you can either take the refrigerated route or stick to traditional vending. It’s also a good idea to consider the area where the vending machine will be placed. If your business will be in a high traffic area, then you will need to decide between the hot or snack version, with the hot option being better for such locations.

Customer Payment Options

What payment options should you accept when running a vending machine business? There are various vending machines and snack machines that are currently available in any supermarket and shopping center. Most people like to know what options their customers accept when using their machine.

You can accept payment forms such as coins, public bills (also known as fliks, e-money, credit cards, gift cards and many more) or cell phones. When choosing the machine payment option, you should consider the cost and convenience vs. the number of machine used or pieces sold.

For example:

  • Coins: It is more cost-effective. However, it is not a place where customers have their mobile phones with them all the time. Some vending machines can only accept coins and there will be some machines does not accept change.
  • Credit Cards/Gift Cards: For small businesses, this is the option that gives them the most security since credit or gift cards are secured with a confidential pin number. Besides, it is convenient and easy to use. For more convenience, these machines may use an embedded credit card terminal which allows the users to both buy and sell the goods. They also deliver an online receipt for the customers.

Examples

Whether you’re opening a small office or a chain of nationwide franchises, profit margins are usually your top priority when choosing a sure-fire vending product. Check out our comparisons of some of the most popular products in the vending industry, and learn why your chosen product should be among them.

Lemonade

When it comes to vending lemonade, look no further than high-profile global market leader and longtime industry leader Coca-Cola. If you’re looking for a product to serve at a concession barbeque, in your office break room or at your kid’s school, Coca-Cola Lemonade is it. Equally popular and a major player in the beverage segment, Coke’s 12% profit margin earns it a top spot in the vending industry.

Sparkling Water

What do the major soda makers do better than anyone else? Make fizzy drinks. If you’re thinking about vending fizzy water, you’ll want to take a look at 15-year industry leader Pepsi. Above all, its 15% profit margin remains the envy of all its competitors.

Step 5: Acquire & Maintain Locations

Once you’ve built up your capital and set up your machine, the next step is to locate and acquire locations to install your machine. In the world of vending, it’s better to go through a broker or find qualified locations on your own.

Most reputable brokers charge a fee for their services and will also require a ten day listing agreement. While five day listing agreements are becoming more popular, they still are not the norm.

It’s always best to speak with local grocery stores, schools, and universities to see if they’d be interested in installing a vending machine in their building. Doing a bit of networking and research ahead of time will help you more easily find locations for your business.

After you’re set up with a location, it’s important to stay committed to the location and never stop attending to your customer base. The only way to keep your machine running is by developing a relationship with your patrons. Keep your eyes and ears wide open and make sure you know what’s going on in your location at all times.

Look For Certain Location Characteristics

The best places to start a vending business tend to be local businesses, big employers like hospitals, universities and offices and anywhere else you can set up on private property. Check out locations beforehand and see what sacrifices each location is going to require of your business … such as the minimum amount of space you must have available and in which direction you must have patrons flow to maximize profits.

One thing to keep in mind while looking for your vending location is that you need to be able to keep an eye on at least half of your business. If you are working on anything involving electricity, such as a refreshment machine, you need to consider whether you will be able to afford to be that close to your business space.

Choose a central location as your vending location.

Serving customers from one location will allow you to focus your efforts and increase efficiency. Check for access to electricity and water beforehand so that you can get your business up and running quickly.

You’ll also have the option of expanding your business to other locations later on, without having to move physical machines or deal with unnecessary overhead expenses.

Common Location Types

There are many types of businesses that involve food and beverage dispense. From ice cream vans to smoothie carts to traditional brick and mortar restaurants, the market for food carts and vending machines is quite diverse. The products you sell and the location of your business is the first step in your vending machine business.

There are many possible locations for your business to sell your products. The best business venues are those places where customers are most likely to be found. Vending machines can be found in airports, schools, hospitals, parks, retail stores, highway rest stops, and in front of public buildings such as libraries and municipal office buildings.

Another popular location you could consider is on the roofs of parking garages. Parking garages offer a great opportunity for vending machine businesses since there is a 24/7 access to plenty of customers who will be in a hurry to reach their destination. The vending machines on the roof of garages have the advantage of being closer to the people and thus a welcome relief at the end of a long day. However, there are limitations to operating on a roof, such as a lack of foot due to the restricted visibility on the ground and safety concerns due to the lack of adequate lighting.

It’s a Sales Process

Maintain Relationships

It’s important to maintain positive relationships with your vendors. Vendors’ cooperation and collaboration with you is essential to your success. You can gain valuable insights from vendors on where you can improve your service. If you make them feel appreciated and motivated, they will look forward to your next order, work with you through production and shipment, and most importantly, be more forgiving when there are supply chain disruptions.

At the same time, vendors are your most intimate business partners. They are the ones who tell you what they really want or need. They are better informed and know more about their customers than you can. They can also help you bring out your best unique selling point and win over your customers’ love and trust. You need to be associated with vendors and form strong relationship with them.

Step 5: Stock & Maintain Your Machines

You’ve paid a lot of money for your beautiful new vending machines in terms of both capital and opportunity cost … now it’s time to start making a little money!

First things first, you’re going to want to make sure to properly stock each machine in your establishment with snacks, beverages, and other items your customers want. Create your own menu and price list consisting of your vending machines… the more closely they match what your customers want, the more money they’ll bring in.

Next, check in on your machines every so often to make sure your products haven’t expired. Once you’ve got your inventory straight, you can start creating your business-savvy vending machine maintenance and repair checklist.

Keep The Machines Well-Stocked

Vending machines have been around for decades. They originated at the beginning of the 20th century to dispense coal, gasoline, and other goods to drivers of cars, motorbikes, and other vehicles. Hotels and restaurants have used them to sell water, coffee, and other drinkable items. More recently, they began to dispense snack foods, soft drinks, and other food items, too.

While the historical origins of coin-operated machines have long since vanished, those who run these machines are still subject to the same types of rules and regulations that have always been in place for vending machines.

One such rule is that the machines must be maintained in a clean condition. All surfaces and areas must be wiped, cleaned, and wiped again.

In addition, the interior of the machines must be kept clean to avoid food or moisture discoloration.

Finally, the floors, edges, and the openings to the machines must be kept clean to avoid foreign substances that could damage the mechanism, or risk a customer’s safety.

Keep The Machines Clean

One of the most important things you need to keep in mind when you are setting up a vending machine business is how you are going to keep the machines clean. You need to observe whether the technology that is being used by your machine is manageable and also if it is going to be able to withstand volatile and strong substances used to maintain the machines.

Also, the machines should be clean because irrespective of the fact how hard you work to maintain them, you will still come across a situation where they are impeding to clean. One of the most important components that you need to consider when it comes to cleaning the machines is the need to clean them regularly. You should also bear in mind that the parts that are assembled near the machines should be easy to access without affecting the performance of the machines.

Keep Your Machines Functional

The first step to starting your own vending business is to keep your machines functional.

Always make sure that your machines are in working, clean order. This ensures that your customers are more likely to enjoy their experience and more likely to return to you in the future.

And it’s important to use your vending machines frequently. Some people may want to fix the machines, but that should be a last resort.

If you’re not in a rush, cleaning and keeping the machines functional could take you days, weeks, or months depending on their condition. However, if you start using your vending machines frequently, you should clean them on a weekly or even daily basis.

Even if your machines are running smoothly, you still want to ensure that you have your machine’s annual maintenance completed to keep your supply fresh.

You need to keep your machines functioning at a reliable level. Not only will making sure that your machines function at a high-level increase the chances that your products will be sold and useful, but it will also increase your business’s overall health.

Bottom Line: Easy Start, Work to Build

A Profitable Business, Tons of Fun!

The profit potential is greater than in any other business I know, and better than any job you can get with a diploma.

Vending is one of the most profitable businesses I have ever started. I earn enough money to pay all of my bills. I have cars, motorcycles, several boats, two houses, and I send my kids to college.

Nearly all vending machines make good money. I make this my goal. I do not look for a few vending machines to make a few dollars. I look for 25. I look for 100.

The work can be tedious, but the money is wonderful.My vending machines make enough money that I can stop working.

Here’s a vending machine company that a few of my readers recommended to me, called Enterprising Systems. Not only do they have the step by step guide in this link, but they are also his link to a ton of free information and video on starting and running an automated profitable vending machine business. You can find the link in the show notes below to the audio version of my interview with Chris.