April 22, 2021

How to Start a Vending Machine Business in 5 Simple Steps

8 Minute Read

Whether you've run a business for years or just starting, there is no shortage of ways to raise some extra cash these days. One of the most lucrative ways to make money is to create your own vending machine business.

If you've considered having vending machine routes, there are several crucial things you need to know before you get started.

Read on to discover how to start a vending machine business in five steps so you can be on your way to making money full or part-time, depending on your goals.

1. Select a Vending Machine Plan

There are several ways you can obtain your vending machine, and each has its pros and cons. One easy step is to start the business from the ground up and purchase the machines yourself. This process is great if you have the funding to buy the machines and source them for the locations on your route.

Buying vending machines out of your pocket can cost more upfront, but it also tends to reap more substantial profit in the long run. Shop for dealers and distributors near you to find out the current vending machine prices.

Another option to start your vending machine business is to buy a used machine or buy out someone else's existing route. If someone already has a lucrative route and wants to get out of the business, it's an excellent opportunity for you to get started at a lower price. Make sure you check the current machines and read all of the person's contracts with their customers to ensure everything looks satisfactory.

And finally, you can buy a franchise if you want to start working with vending machines, which gives you a business model that's already proven effective. You will need to pay franchise fees, and the franchise owner will likely take out their cut of the profits or charge you a monthly fee.

Whichever of these scenarios appeals to you, remember to do your homework before you commit. Draft a business plan, create a budget, and research your routes to find the one that will bring you the most cash at the end of the day. Talk to local business owners to find out if there's a need for vending machines in your area.

The primary vending machine types include:

  • Food Vending Machines
  • Snacks Vending Machines
  • Drink & Coffee Vending Machines
  • Combo Vending Machines
  • Custom Vending Machines
  • Candy & Gumball Vending Machines

2. Understand Vending Machine Business Routes and Contracts

Once you've decided how to source your machines, you'll need to determine where you plan to put them. Look for locations where there is ample foot traffic and a lot of customers flowing in and out. Some examples would be shopping malls or shopping centers, office complexes, airports, and even schools.

Your best option is locations where there isn't an existing vending machine. The journey can be challenging unless you can reach the ground floor and pitch your machines to brand-new businesses and newer locations. You'll also need to consider the products in your machine - make sure you're selling items people want.

Try to avoid putting your machines in areas or locations where crime is high. Check crime reports and talk to business owners about the potential for theft or vandalism, so you're sure your machines will be safe. 

Typical locations where vending machines do well:

Contract Information

As soon as you find a few suitable routes, you'll need to establish a contract with the business owner or owners of your new location. Some deals will include a clause about using the business's electricity to operate your machines. Reimbursement is typically done by cutting a percentage of your sales to compensate for it.

The contract should also contain a few other critical things like the contract term, the type of machine and what will be sold, and a termination clause that allows you to remove your machine if it's not profitable. There should also be verbiage that mentions your right to replace, increase, or decrease the number of machines. It's always best to have a lawyer look at your contract before presenting it to your customers.

3. Buying or Leasing Equipment 

If you're buying your vending machines outright, you should know a few things before you plunk down your cash. You can choose from several options, including bulk machines, which are inexpensive but have smaller profit margins. Bulk machines contain things like gumballs and small candies and are incredibly affordable but have much lower revenue than other machines.

Mechanical machines dispense several products, and prices are much higher than bulk machines, but they also tend to produce much higher profits. Ideally, you'll want to try your hand at electronic machines since these are the newest and most popular options. These machines use touch screens and can take credit cards as payment, making them more readily available to more people.

Equipment Financing

Another option to make it easier to start the business would be financing vending equipment. Depending on where you buy the equipment, companies can offer flexible terms. 

You can purchase used vending machines at a discount, but make sure they're in good working order before buying them. Look online and check your local newspaper listings for available used machines. A vending machine dealer is another option and may give you more of a money-back guarantee if the unit does not work.

When you buy the machine, find out the parts and labor warranty, if applicable. Used equipment might only have a warranty for a few months. It's a great idea to learn about your machine so you can learn to make simple repairs yourself, which is a money and time-saver.

4. Choosing Your Products

The type of products you sell will likely depend on your location. Office buildings and Universities enjoy machines that dispense coffee and other hot beverages. Almost any location will appreciate snacks like soda, chips, candy, and water. Hot food is usually found in business environments and not in shopping areas.

You can also sell candy and toys if you have machines in malls, near parks, and in or in front of supermarkets. Another option is to sell personal items if you put your machine in restrooms or service stations. These products can include toothpaste, aspirin, or feminine hygiene products.

You don't always have to sell sugary candy or sodas, either. Try healthy options in your machine, like sugar-free gum, granola bars, nuts, baked chips, or water. You'll need to test your market to see how well items sell and then tweak things until you find the "sweet spot."

When you source your products, buy them in bulk to get the most return for your investment. Try wholesale suppliers or bulk stores like Costco. Make sure you take notes and compare prices to get the best deal on everything you sell.

5. Maintaining Your Machines and Customer Service

Even though owning a vending machine business is relatively easy, you'll still need to provide your clients with exceptional customer service. Do your best to visit your locations often so that all of your machines remain fully stocked. Talk to your business owners and find out how things are going with their machines.

Ensure all your machines are clean and in good working order. If the customer contacts you, do your best to make repairs as soon as possible. Put a sticker on your machine with your contact information so your customers can quickly get in touch with you.

Stock your machines based on the "sell by" date, putting those closest to expiration near the front so they sell first. Check the dates on your products periodically, so you're not accidentally selling expired food. Rotate them whenever you can and change up products that are not selling.

Talk to your customers and find out which items are selling well and which are not. Ask them if their employees have any special requests for products if your machine is located at a business complex. Always be available for your customers and develop a good working relationship with them.

As your relationships grow, your business should grow, too. The more people you get to know, the better the chances they will recommend you to others. Your vending machine business should flourish when you foster a good relationship and practice excellent customer service.

Setting your schedule and being your boss is a fantastic perk of having a vending machine business. Remember that you still need to practice customer service skills and keep the business relationships going for success.

Successful Vending is Possible 

Now that you know the basics of owning a vending machine business, you can look for suitable machines, locations, and products. With some diligence and practice, you can put your machines in places where you'll get a nice profit.

Remember to devise a viable business plan and create a contract before you start. Stock your machines with items people will enjoy, but also make sure you purchase them at a discount, so there's more money in your pocket at the end of the day.

Check out Vending Connection for a list of vending routes for sale, and be sure to contact us today for more information on equipment.  

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