Great business ideas remain relevant because they provide value to society, adapt to consumer needs, embrace modern technology, and allow for affordable brand expansion.
Starting a vending machine business ticks all those boxes.
The earliest dates to the first century, dispensing holy water. Jump to the mid 18 century: stamps, postcards, and newspapers. And in 1888, Tutti-Frutti gum hit the New York subways.
Today you can buy pizza, wasabi beef, Norwegian salmon, fries, medical prescriptions, and marijuana using an app.
Add low startup and running costs, high-profit margins, and a hungry global audience, and it’s easy to see why starting a vending machine business is a great idea!
But, as with all business ideas, you must know your market to succeed. Like which products to sell, where to get them, and how to find prime locations.
In this post, you’ll learn how to start a vending machine business that stands the test of time.
A million-dollar question that conjures exciting answers.
Vending machines suit anyone looking to start an independent business with minimal effort.
For instance, it’s low risk as you invest after securing locations. Startup costs are negotiable, running costs are minimal, and profit margins are high.
You can start as a side hustle with one machine and expand with demand. Choose your hours and earn a passive income.
And best of all, experience is optional.
The numbers are tasty too!
The global vending machine business is growing fast.
Want to learn more and capitalize on this lucrative opportunity? Great, next, we’ll look at how to start a vending machine business:
To create a successful vending machine business, you must know 2 things.
Then you can choose vending machines that suit your target audience and provide the highest profits. And land your vending location deals with property managers before you invest a cent.
But first, you’ve some research to do and decisions to make.
I’ll walk you through it next:
The 1st rule of vending machine entrepreneurialism is to start with your products and ensure they`re relative to your locations.
Guess what the 2nd rule is?
It makes sense; after all, who needs ice cubes in Alaska?
And the days of awful coffee and expired candy are long gone; now, you can sell pretty much anything.
Let’s start with the most popular:
Coca-Cola was the first to use vending machines to sell bottled beverages back in 1928; as the saying goes, the rest is history.
Since then, food and beverage (especially soda) machines have been the most popular with consumers on the go, accounting for almost one-third of US annual vending sales.
But with recent innovations, options have grown from soda, snacks, and limp sandwiches. Now you can sell fries, vacuum-sealed wasabi beef, Norwegian salmon, flavored milk, and pizza slices.
Rome recently got its first automated pizza vending machine. Hey, if that works in Italy, it’ll work anywhere!
The only negative with food and beverage vending is price, as it’s at the top of the food chain and can cost between $3000 to $10,000, depending on the model.
Fortunately, a global trend in specialty vending is emerging.
Specialty vending machines are the New Kids on the Block. Meeting unique consumer needs by providing a wide range of premium products, from electronics to ice cream, tech accessories, fake eyelashes, perfumes, and pharmacy items.
Other trends include “Hydration Stations,” where a hover button can refill your bottle with triple-filtered chilled juices (another COVID influence). And healthy snack options with less than 5% fat and 0.2 grams of salt are gaining popularity.
California now has marijuana vending machines offering access to medically prescribed marijuana. Marijuana vending machines are standard in Europe; there’s even one in my remote Italian village.
No wonder everyone’s so happy. La dolce vita!
Specialty vending machines suit areas with diverse clientele, like airports, arenas, and malls. And while food and juice dispensers are still expensive, you can buy a merchandise vending machine for around $1500 to $3000.
The simplest and cheapest vending machines are mechanical bulk models that hold and dispense large quantities of a specific product, like gumballs, toys, and trinkets.
Mechanical bulk vending machines are cheap to buy and maintain as they don’t need electricity. Sure, profits are less than soda, but you find them in every restroom (dispensing sanitary products) and stores throughout the USA.
If restrooms don’t excite you, next I’ll tell you how to choose a better location:
You have 2 choices with vending machines and location.
You can place different product machines in one location or sell one product in multiple.
In 2002, Charles Ejogo, founder of “Umbrolly”, chose option B.
Charles lost his job, took the tube (London subway) home, and got caught in torrential rain.
It never rains but pours!
But Charles had a brainwave and created “Umbrolly,” an umbrella vending machine, gained Dragons’ Den (Shark Tank) investment, and won Entrepreneur of the Year.
His vending machines have been a welcome sight throughout the London underground since.
Inspiring, right?
You can do it too.
How to choose a profitable vending machine location
Charles hit upon an untapped need, and you can do the same by offering a specific product to location-driven consumers.
For example:
Whichever you choose, look for a high-footfall location without inconvenient product options and after-hours access.
Here are some popular vending machine locations to inspire your search:
And visit your chosen locations at different times throughout the week to assess the footfall and ensure similar machines aren’t already in place.
After choosing your vending machine locations, you must contact business owners and building managers through cold-calling.
Sure, this approach can send a shiver through you, but the best way to clinch a deal is in person.
For the best results, present yourself professionally by wearing a branded uniform and have your business cards, website, and business email address and phone number ready.
Then drop by each location and ask the property manager about placing your vending machine on their premises. Focus on how your business benefits them, and negotiate a beneficial percentage agreement.
Pro tip:
Before buying your vending machine or installing an existing one, take measurements to ensure it fits. And consider any doorways or entrances you may need to navigate during installation.
Careful planning helps streamline the process and avoid any embarrassing logistical challenges.
You’ve 3 options for buying your vending machines, manufacturers and wholesalers, secondhand resellers, and leasing.
Pro tips:
At this stage, you should know what products suit your machine and location to cater to local needs and demands.
Your next step is to buy them at an affordable price. And you’ve several options:
It’s also important to be moderate when ordering stock to ensure you don’t over-order and adjust products to meet local demand.
Maintenance
Most vending machines need little maintenance. But things can go wrong, like a jammed product or malfunctioning card reader.
To minimize losses and maximize sales, put your business contact details on the machine and ensure the building manager knows to call you ASAP.
VMS software enables you to track inventory, monitor revenue, and control maintenance issues from any device with an internet connection.
Many new vending machines come with management software, allowing you to control your business with just a few clicks. Essential for vending machine owners with multiple machines.
All businesses have pros and cons, but vending machines have certain benefits, making them a perfect business model for people looking to start independent businesses with minimal effort.
For example, you could start with one vending machine or run hundreds throughout your state using the right VMS software and locations. And as you only buy machines and stock when you confirm the demand and secure a spot, it’s a low-risk business model.
Starting a vending machine business has many pros, and each makes it an appealing option:
With these advantages, starting a vending machine business provides an opportunity for low-cost entry, minimal overheads, flexibility, and growth potential few other business ideas can match.
However, there are some disadvantages to starting a vending machine business, such as:
Vending machine laws and regulations vary between states, so you must research locally to ensure compliance.
That said, here are some general steps you’ll need to take:
Understand and comply with your state`s vending laws
Each state, county, and city has its regulations for vending machines. You can find what they are by contacting your local Chamber of Commerce or consulting your state’s small business regulations online.
Vending machines in public spaces must comply with the ADA (Americans with Disabilities Act) to ensure accessibility for all individuals.
Property owners demand a cut of the profits, and commissions range from 10% to 25% of your machine’s revenue.
To avoid disputes, create a contract outlining the agreed percentage cut and length. Include provisions for breach of contract, servicing and restocking expectations, vandalism or theft, and potential unprofitability.
And it’s wise to have a lawyer review the agreement before signing.
They sure can be. Statistics show the average profit margins for soda range between 40% and 60%.
Yes, most states charge a sales tax on products sold. As a self-employed business owner, you may need to pay federal, state, and municipal taxes.
Your choice of vending machine options ranges from:
And the list grows every year, so you’ll always have product expansion opportunities.
You can place vending machines in most commercial spaces, such as offices, retail shops, bowling alleys, airports, malls, and even outdoors.
Yes and no!
Say you own a commercial property like a cinema or a hair salon. You could buy and install a vending machine on your property.
But to place it on someone else’s, you must sign a contract with the property owner first.
Locations with easy access, a lack of amenities, and high footfall are the best places to put a vending machine.
Examples would be ice vending machines at a Texas motel. Protein drinks and filtered water vending machines in a gym. Healthy meals and snacks in offices.
Or my favorite idea, pizza vending machines in all college dorms!
Yes, you’ll pay the building owner a commission on your profits. The amount depends on the location’s popularity, but it’s between 5% and 20% on average.
You’ve plenty of options on where to buy vending machines. Some sources include:
And that’s how to start a vending machine business.
Remember to research your area to find locations that suit vending machines and determine what products would sell best.
But whichever vending machine type you choose, start with one or two machines focusing on a specific market niche to discover which products your location’s audiences want most and can adjust your stock to maximize your sales and profits.
Go door to door, put your best foot forward, dress to impress, meet with property owners, secure your first deals, buy and stock your machines, and arrange delivery.
And begin building your vending machine empire.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.
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