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A vending machine business can lead to lots of long-term reliable passive income. We'll walk you through the steps to start and run a vending machine business.
Vending machines are a low-maintenance business that can produce $200-$300/week on the high end and $75 -$150/week on the low end when placed well. You'll find that vending businesses are somewhat customizable, allowing you to fit into several different types of venues. We're going to walk you through how to start a vending business, how to successfully run it, and best practices of the business.
Choose Your Vending Type
Before you consider spending any of your hard-earned cash on a vending machine, there are a few decisions that need to be made. The primary decision is what products you'll want to vend. This will set the stage for other important decisions to be made later.
Food and Beverage Snack Vending
This is the vending machine you'll most commonly see. It'll have your juices and sodas or your chips, cookies, and candy bars. These make up the majority of the vending machine markets and will probably be the easiest to find a home for.
Specialty Food and Beverage
This category consists of your hot coffee and tea beverage machines, lunch sandwiches, ready-to-eat frozen or cold foods to be reheated, and frozen items (ice cream, etc.)
Health Food
This is its own category because this may require more careful planning than the other 2 categories to turn a profit. This consists of protein bars, protein shakes, and healthy snacks.
Vending machines are a low-maintenance business that can produce $200-$300/week on the high end and $75 -$150/week on the low end when placed well.
Required Purchases
While possessing the potential for incredible sustainable income, this business requires you invest some money upfront. The following are required purchases to get your business off the ground.
Vending machine
This is, of course, a requirement and can vary significantly in price depending on many different factors: Are your purchasing a new or used vending machine? What kind of products will you be selling? Will it have a credit card reader? Will your drink just fall or be carried down with an internal elevator?
A brand new vending machine can cost between $3,000 and $11,000 dependent upon all of the things I stated above and more. Purchasing a used vending machine can cost between $1200 - $3000, significantly cutting your upfront cost. We'll address the pros, cons, and our recommendations later in the article.
Vending Product
Depending on what you will be vending, this price can vary drastically. Obviously buying protein bars and shakes will shock your pockets more than bags of chips and fruit snacks. Keep in mind that wherever you decide to source these products, you should be mindful of the purchase price per unit as it's a major deciding factor on the vending price of each item. Pricing recommendations will be discussed shortly
Vending Change
You'll need about $100 -$150 for change in the machine. You want to make sure you're tracking how much this is depleted in between your machine service periods. You don't want your machine to be known for ripping people off because it's always out of change.
Credit Card Readers
While this isn't technically *required*, it's here because we strongly recommend you consider it a mandatory purchase. Sales have been shown to increase 20%-30% when there is a credit card reader on a vending machine. In a world where 55% of polled consumers were frustrated when businesses only accept cash payments, not having a credit card reader is an egregiously missed opportunity. Credit card readers come with many different features including paying with e-wallets from your phone. You can expect to pay an additional $300 - $500 for a new credit card reader.
Location, Location, Location!
Nothing is more important for deciding potential sales and income than where you put your vending machine. Doesn't matter how cheap you price your goods or how good the selection is if you don't have a location with customers, right? So, what does a good place to put your vending machine look like?
1) Locations with Plenty of Foot Traffic
The more people that pass by, and preferably, stay around your machine on a daily basis, the more opportunity you'll have for sales. Office lunchrooms or common areas of busy offices and office buildings are good spots. College campuses and dorms, hotels, and mall areas are also excellent spots.
2) Locations with Long Wait Times
Using the theory above, locations that have long lines and wait times will encourage people to spend their money to satiate hunger while they wait or just to pass the time. Places like car dealerships, mechanic shops, or in the general vicinity of public transportation will encourage purchases and bring high foot traffic
3)The More Visibility the Better
The easier it is for the foot traffic and waiting customers to see and access your machine, the higher the likelihood you'll get a sale. Making customers walk into sketchy back alleys or have to inquire about your vending machine will drastically cut your sales. Laundromats and the first floor of establishments like libraries and office buildings are always good for spots.
4)Long Hours of Operation.
You'll need to take into account the times you'll be able to service the machine and the business' schedule. The longer the establishment is open to the public and employees, the more sales potential and the more time you have to access your machines allowing flexibility in your schedule. Hospitals, airports, bus and train stations, hotels, and motels are all good spots that fill this category.
Securing a Location
You've picked your product and you have a few places you'd like to put your vending machine. Time to buy your first machine, right? Wrong! You have to secure the location first. So take a shower, put on some comfortable shoes, and break out the most charming parts of your personality...It's time to talk to people.
Meet and Greets
If you have establishments local to your base of operations where you would like to put your vending machine, we suggest dressing the part and getting out there to speak to the managers and owners of these locations. The goal is to show them what value you can give them by allowing you to have your machine on their property. Don't make your pitches to anyone but managers and owners of establishments. It's a waste of everyone's time to pitch to anyone else since they cannot make decisions.
I can already hear a great majority of you asking "But Freelance, why can't I just call these places?" It's much harder to tell someone to buzz off in person, that's why. There is nothing wrong with cold calling(we'll talk about that next), but an in-person meeting will most likely allow you to get through your pitch. A well-crafted pitch heard all the way through could make the difference between getting the spot or walking away empty-handed. On the phone, it's really easy to hang up on someone and not think twice. It's generally much harder for most people to be rude and dismissive in person than on a phone.
Cold Calling
Cold calling can be a very useful and time-saving tool. I've personally made hundreds of cold calls and there are important points that you'll need to address if you are hopeful to convert any of these calls into face to face interactions:
Have a sharp sales pitch
Your pitch should be clear, concise, and complete. You have about 5 seconds to sound appealing to your listener and make them feel like you have something to say that they want to hear.
It should be polished
Your pitch needs to come off smooth and relatable. If you've written a script, great. it cannot, however, sound like you are reading from a script. It should be practiced and sound unforced.
You need to be ready for rebuttals
You have to be ready for any of the manager's or owner's questions or negative statements. They'll come and having an answer to them can make all the difference in converting a seemingly negative conversation into an in-person meeting.
You'll have to practice to achieve these 3 objectives. Just remember, no matter how rudely you might get told to buzz off, stay polite and professional. You wouldn't believe how a few months later the same rude cold call can turn into one of your best clients.
Social Media
We'd be remiss if we didn't mention how useful social media can be for making connections and learning about the business. Look for vending groups on places like Facebook, and use Twitter to get the word out about your services. Leveraging social media is a pro move and can net you several spots if used correctly.
Contracts
Once you've earned yourself a face to face meeting to discuss the terms of placing your vending machine in a location, you have to have a vending agreement ready that properly spells out what they can expect you to do and what the terms are for keeping your vending machine on their property. Remember, everything should highlight what benefit they get from having you there. Nobody cares what you want... don't ever forget that.
We suggest maybe having an attorney draft you up an agreement that will keep you properly covered. Check out LegalZoom as they come highly recommended by those who've used them.
Branding
I'm a big believer in branding. You'll want to have business cards that you can leave with your potential clients. While not necessarily required right away, having a shirt or sweatshirt with your branding on it will also go far to making you look professional and established. Also, when you are servicing your machine, people will know exactly why
you're on the premises. You should also have a sticker with your company name and contact information placed on the outside of your machine so that people who might have inquiries about getting a vending machine in their establishment can contact you.
Putting it All Together
So we've laid out everything we need to get you going. So here's how we put it all into action:
First, decide on what items you will be vending. This narrows down your location choices. For example, if you are going to be vending protein shakes and bars, you'll most likely be in a gym or other location specific to health promotion. To the same point, you will probably not be pitching to a gym if your selling frozen ice creams and chips...at least probably not to most gyms(enter Planet Fitness joke here).
Next, make sure that you can source your products at a cheaper price than you can find at your local grocery store. Sourcing your products either directly from the vendor or wholesaler can help cut your price point. Sams Club, BJ's, and Costco should be your friends.
Either get on the phone and start cold calling, or get your shoes on and go shake some hands. It's time to secure a location!
Once you've gotten a location secured and a signed vending contract, it's time to buy yourself a vending machine.
Once your machine is placed, make sure you are servicing your machine accordingly. The time between services will depend on the traffic you machine is getting. First couple of weeks we suggest checking on your machine 1 time a week until you get a feel for how things are going.
FAQ and Recommendations
Should I buy a new vending machine or a refurbished?
Our suggestion is to purchase a refurbished machine which will cost between $1200 to $3000. We suggest that if you buy refurbished, you buy from a wholesaler that has vending machine technicians to look over any machine before you buy it. Buying a machine from places like Letgo or Facebook Marketplace might get you an even better deal, but you'll lose the benefit of having the machine looked over by a qualified technician first. Also, if someone is selling a vending machine that is way too good of a deal, it's probably in need of repair. You should never buy a refurbished machine without seeing it first, and self assessing.
Why shouldn't I buy a vending machine before I find a location?
Vending machines are large and heavy. If you buy the machine before you have a place to put it, you may end up having to pay for storage. If it takes you several months to find a location to place your machine, you'll have paid storage fees and lost money on your investment before you even get started. That's not even including the money you'll have to spend on movers to move your machine, twice.(Once to your holding location, then to the place of business you secured.)
What do I do if I keep getting calls from the owner/manager for complaints about people missing change.
First, make sure that you get your machine looked at by a technician or replace any parts that need replacing. Next, perhaps you can leave $25-$50 in petty cash to the owner/manager that they can use to deal with any complaining customers that didn't get their change until the machine is fixed.
The manager/owner asked me for a commission if I wanted to put my vending machine in his establishment. How much is acceptable?
First, your pitch should explain to the owners that the machine is a benefit to their business. The vending machine is a free service to the owner that will be a convenience for their customers or employees, which reflects positively on their business. If for some reason owner/manager is dead set on being paid for allowing your machine to be in their business, we don't recommend you offer or accept a request of no more than 12%. The purpose of getting into this business is to make a profit. If you are giving them away to the manager/owner while making his business look better by providing his customers and employees a convenience, why even bother placing the machine?
Should I finance my vending machine or should I buy it outright?
We don't recommend financing vending machines in general. If you finance a machine, it has to make money for you to make the venture worthwhile and to make the vending payment. At the time of writing this, there is a pandemic going on and remote work and home schooling is the current situation in a large number of cities and countries. If you placed your financed vending machine in a school or business where everyone is home, your vending machines are making basically zero dollars, and you're now stuck with making a monthly payment. Another reason we suggest purchasing a refurbished one.
How do I decide the price of my products?
What you decide to sell will vary this to some degree. However, we recommend you go for 2X to 3x your cost. For example, if you purchased a 40 pack of nacho cheese Doritos for 18.99, each bag costs you .47 cents. Your choices are either 2X = .94 cents, 3X = $1.41, or somewhere in between. You should see what is more acceptable for your area. You might have to do some experimentation to pinpoint the right price. Whatever you decide, don't overdue it. It's better to get steady purchases at 2x, than sporadic and rare purchases at 3x.
Do you have any questions that we missed? Ask in the comments
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