Do you wonder how to start a vending machine business? Are vending machines worth it?
You may ask these questions if you want to invest in vending machines.
You’ve come to the right place for answers.
I know something about starting successful businesses, so I want to share my knowledge.
I wrote this guide to share everything you need to start a vending machine business (including several vending machine business ideas).
How To Start a Vending Machine Business in 9 Steps
Decide on the type of vending machine business.
Research optimal locations.
Create a budget for your vending machine business.
Source and purchase vending machines.
Create a business plan.
Register your business.
Stock your vending machines.
Market your vending machine business.
Monitor and maintain your vending business.
I’ll explain each step in more detail.
Step 1. Decide on the Type of Vending Machine Business.
What do you need to start a vending machine business?
Deciding on the right type of vending machine business is crucial to determining the products you’ll offer and your target audience.
Let’s explore your options.
Food and Beverage Machine
Food and beverage vending machines are popular and include a wide range of options, such as:
Hot beverage vending machine: Coffee, tea, hot chocolate
Snacks: Chips, candy, granola bars
Cold beverages machines: Soda, juice, water
Consider the preferences of your potential customers and the location of your machines when choosing this category.
Bulk Vending Machines
Source: Burrito Bowls
Bulk vending machines are the best place to go if you tend to buy small things.
These vending machines sell small, inexpensive items, such as:
These machines often have a nostalgic charm and can be a great addition to places families and children frequent.
Specialty Vending Machines
Source: Christian Lue
Consider specialty vending machines that offer unique products such as:
Ice vending machines
These require more specialized knowledge and may involve higher startup costs, but they can yield excellent returns if placed strategically.
Step 2. Research Optimal Locations.
Understanding the location is key to your vending business’s success.
Choose areas with strong foot traffic and a target demographic interested in your items.
For example, vending machines selling healthy snacks and beverages are a good option for gyms, fitness centers, and office buildings.
Vending machines selling novelty toys or small candies can do well in specialty small businesses, such as gift shops and toy stores.
Here are some factors to consider when choosing locations for your new vending machines:
How many people pass by the location each day?
The more people see your vending machines, the more likely you will make sales.
Who are your ideal customers?
Consider the demographics of the people who frequent the location, such as their age, gender, and income level.
Are there any other vending machines in the area?
If there are, you must find a way to differentiate your business from the competition.
You must sign a lease agreement when you place a vending machine on someone else’s property.
This agreement will specify the terms of your placement, such as the commission you will pay to the property owner and the lease length.
When you sign a lease agreement to place a vending machine on someone else’s property, you will need to negotiate the terms of the agreement, including the following:
The commission is the percentage of your sales you will pay the property owner. Typically, it is between 10% and 25%, but it can vary depending on the location and type of vending machine.
You must agree on how often and how you will pay the property owner their commission. For example, you may pay them a weekly commission check or a percentage of your monthly sales.
Length of lease
The lease is typically between one and three years, but it can be longer or shorter, depending on the agreement.
The lease agreement may include other terms, such as the right to inspect and maintain the vending machine and the responsibility for repairs and damages.
Read and review the lease agreement carefully before signing it. Ensure the agreement is fair and you understand the terms by having an attorney evaluate it.
Follow your state’s rules and regulations on vending machines and get the necessary permits and licenses, which can differ based on where you operate and the products you sell.
Evaluate the safety and security of the chosen location for your vending machines.
Implement necessary security measures in areas prone to theft or damage.
Maintenance and Service Accessibility
Consider how accessible the location is for routine maintenance and restocking.
Locations that are challenging to reach may increase operational costs.
Consider how seasonality may affect your business.
Locations near schools, for instance, may experience changes in traffic during school breaks and holidays.
Here is a list of potential locations for your vending machines:
Offices and businesses
Schools and universities
Hospitals and medical facilities
Gyms and fitness centers
Hotels and motels
Airports and train stations
Bus stops and rest areas
Shopping malls and retail stores
Movie theaters and arcades
Museums and zoos
Parks and recreation centers
Sports arenas and stadiums
Laundromats and car washes
Casinos and resorts
Step 3. Create a Budget for Your Vending Machine Business.
Budgeting is essential for any business owner, especially for vending machine businesses.
Vending machine businesses have several startup costs, so a realistic budget before launching your business is essential.
Here are some of the factors that vending machine operators and owners need to consider when creating a budget for your vending machine business:
|Type of Expense||Estimated Cost||Notes|
|Machine||$3,000 to $10,000||Varies by machine type|
|Inventory||$500 to $1,500||Dependent on product selection|
|Location fees||$100 to $500 monthly||Varies based on location|
|Maintenance and repairs||$50 to $250 yearly||Depend on machine usage and condition|
|Permits and Licensing||$100 to $500||Varies on local regulations and location|
|Restocking||$50 to $200 per machine monthly||Varies on product type and quantity|
|Machine Servicing||$100 to $300 per machine yearly||Can fluctuate depending on vending machine type and service provider|
|Insurance||$300 to $1,000 annually||Depend on coverage and location|
|Marketing and Advertising||$50 to $500 monthly||Costs fluctuate based on your strategies and budget|
When setting up your vending machine business, you’ll need to budget for several key components:
The cost of vending machines varies based on the type you choose.
Snack machines may range from $1,000 to $5,000, while specialty machines can cost between $3,000 and $10,000 each.
The cost of your inventory will depend on the types of products you are selling and the quantity you are selling.
For example, you must purchase various items if you sell snacks and beverages.
If you are selling specialty items, such as electronics or pet supplies, you may have fewer items to purchase, but the cost per item may be higher.
The cost of placing your vending machines in different locations will vary.
Some locations may charge a monthly fee, while others may take a commission on your sales.
Consider a budget of $20 to $200 per machine per month, depending on the location’s traffic and popularity.
Maintenance and Repairs
Vending machines require regular maintenance and repairs.
Set aside funds for regular maintenance and unforeseen repairs.
Depending on usage and condition, maintenance costs can range from $50 to $200 per machine per year.
Permits and Licensing
Check local regulations and budget for permits and licenses, which can cost between $100 and $500, depending on your location.
As your new vending machine business first operates, you’ll need to plan for recurring expenses:
You will need to restock your vending machines with products regularly.
Restocking each machine monthly may cost $50 to $200, depending on products and sales.
Regular machine maintenance is essential for a successful vending machine business.
Regular servicing can cost $100 to $300 per machine annually. Still, it can vary depending on the type of vending machine and the service provider.
Liability insurance to protect your business from financial losses in the event of a theft, vandalism, or other covered event can range from $300 to $1,000 annually.
Specific costs depend on factors like coverage limits and location.
Marketing and Advertising
Allocate a budget for marketing efforts to attract customers to your machines.
Depending on your marketing strategies, costs vary widely, from $50 to $500 monthly.
Step 4. Source and Purchase Vending Machines.
Vending machines come in different shapes, sizes, and features.
You can find machines with digital screens for interactive promotions, cashless payment options like card readers and mobile payment apps, and remote monitoring to track inventory and machine performance.
These innovations can enhance your customer’s experience and simplify the management of your vending business.
New vs. Used Vending Machines vs. Refurbished Vending Machines
|Criteria||New Machines||Used Machines||Refurbished Machines|
|Cost||High||Low to Moderate||Moderate|
|Features||Latest tech||Older tech||Updated tech|
|Maintenance||Minimal||Higher likelihood||Lower likelihood|
|Condition||Excellent||Variable||Restored to like-new|
When it comes to purchasing your own vending machines, you have three main options:
Brand-new machines come with the latest technology and are under warranty, providing peace of mind. However, they are the most expensive option.
Used machines can be significantly cheaper but may require more maintenance and lack modern features. Careful inspection is crucial to ensure they’re in good working condition.
These are middle-ground options.
A refurbished vending machine is a used machine that a professional has restored to near-new condition. It costs less than new machines but often includes warranties and updated technology.
When choosing a vending machine, there are a few things to keep in mind:
Make sure to choose a vending machine designed to sell the type of products you want to sell.
Choose a vending machine that is the right size for the location where you plan to place it.
Consider the features that are important to you, such as the type of payment system, the temperature control system, and the security system.
Where To Find Vending Machines
There are several sources where you can find vending machines for your business. Here are some common options:
Specialty retailers and online sellers
Step 5. Create a Vending Machine Business Plan.
A business plan is a roadmap for your business, guiding you to success. It lays out your goals, strategies, and financial projections.
With a well-thought-out plan, you can achieve the following objectives:
Define your business goals so you know where you’re headed.
A business plan is essential to convince investors or lenders if you need funding.
It helps you anticipate challenges and make informed choices.
A plan keeps you on track, ensuring you don’t lose sight of your objectives.
A comprehensive business plan typically consists of these key components:
An executive summary is a one-page overview of your business plan. It should include your business goals, target market, and competitive advantage.
The company description provides more detailed information about your business, such as your products or services, business model, and management team.
The market analysis section gives an overview of your target market and your competition.
The organization and management section provides details about your team and their roles.
The financial projections section includes your projected revenue, expenses, and cash flow.
The operations plan describes how you will operate your business, including your supply chain, staffing, and equipment needs.
Step 6. Register Your Business.
Registering your business is an important step in starting a vending machine business. Doing so will give your business legitimacy and make it easier to open bank accounts, obtain credit, and secure contracts.
Choose a Business Name.
Selecting the right business name is essential. It should be memorable, relevant to your vending machine offerings, and unique.
Here are some tips for a suitable business name:
Keep it short and easy to remember.
Ensure it’s not already in use by another business in your area.
Make it reflect your vending machine products or brand.
Check for available domain names if you plan to establish an online presence.
Choose a Business Structure.
Before registering your business, you must decide on its legal structure. Here’s a summarized comparison of common business structures:
|Sole Proprietorship||– Easy to start|
– Full control
– Simple taxes
|– Personal liability|
– Limited capital
|LLC||– Limited Liability|
– Tax flexibility
|– Costs money to set up|
– More paperwork
|Partnership||– More resources|
– Shared responsibility
|– Joint Liability|
– Potential for conflict
|Corporation||– Limited Liability|
– Easier to raise capital
|– Complex regulations|
– Double taxation
Secure Your Licenses and Permits.
In the vending machine business, you may need various licenses and permits, including but not limited to:
Food Handling License (if applicable)
Business Operation Permit
Health Department Permits (for food and drink machines)
Local Business Permits
Compliance with the Americans with Disabilities Act (ADA) in some locations
Ensure you research the specific requirements in your area and comply with them to operate legally.
Register for Taxes.
Registering for taxes is essential to meet your tax obligations. You’ll need to register for taxes at the federal, state, and possibly local government levels.
The type of taxes you pay will depend on your business structure.
For example, sole proprietors and partners pay income taxes on their personal tax returns, while corporations pay income taxes on their corporate tax returns.
Consult with a tax professional for guidance.
Vending machine businesses benefit from insurance to protect against unforeseen events. Here are some types of insurance to consider:
Liability Insurance – Protects against legal claims due to injuries or property damage.
Business Property Insurance – Covers equipment and inventory in case of theft or damage.
Product Liability Insurance – Guards against product-related lawsuits.
Business Interruption Insurance – Provides coverage in case your business is temporarily unable to operate.
Commercial Auto Insurance – Covers physical damage on the vehicles you own or lease for business use.
Workers’ Compensation Insurance – Covers medical expenses and lost wages for employees who get injured while performing job-related duties.
Each type of insurance serves as a safety net for your vending machine business, shielding it from financial risks.
Step 7. Stock Your Vending Machines.
Once you have registered your business and obtained the necessary licenses and permits, it is time to stock your vending machines.
This is an important step, as you must choose the right products and stock them in the right quantities.
How Often Do You Need To Restock?
The frequency of your restocking will depend on some factors, including the type of products you are selling, the volume of sales, and the location of your vending machines.
Here are some tips for determining how often to restock:
Track your sales.
Track your sales data to see how quickly your products sell. This will help you to determine how often you need to restock.
Consider the type of products you sell.
Drinks and snacks require constant replacement more often than others.
Consider your machine’s capacity.
Be aware of your machine’s capacity. Smaller machines may require frequent restocking, while larger ones can hold more products.
Consider foot traffic.
High-traffic areas may need restocking more often, especially if your products sell well.
Consider the location of your vending machines.
Restocking vending machines in high-traffic locations is necessary.
Set a Schedule.
Create a restocking schedule based on your machine’s needs and the location’s hours of operation.
Where To Get Products To Fill Your Vending Machine
You can get products to fill your vending machine in many places. Some common options include:
Wholesale suppliers sell products in bulk at discounted prices.
Distributors sell products to retailers and other businesses.
Some manufacturers sell products directly to businesses.
When choosing a supplier, it is important to consider the following factors:
Step 8. Market Your Vending Machine Business.
There are some different marketing channels that you can use to reach your target audience and increase your vending machine sales. Some common marketing channels include:
Create social media accounts for your business and use them to share information about your products, promotions, and locations.
Place ads in local newspapers and magazines or on local radio and television stations.
Create flyers and brochures that you can distribute in your local area.
Offer promotions and discounts.
Offering promotions and discounts is a great way to attract customers and increase sales. Some common promotions include:
Buy one, get one free
This classic promotion is always popular with customers.
Offer punch cards to customers who purchase your products multiple times. Once they have filled out their punch card, they can receive a free product or discount.
Reward your loyal customers with a loyalty program. Customers can earn points for every purchase they make, which they can redeem for discounts or free products.
Partner with local businesses.
You can partner with local businesses to promote your products and services.
For example, you could partner with a local gym to offer free snacks to gym members or partner with a local office building to offer free coffee to employees.
Step 9. Monitor and Maintain Your Vending Business.
Once your vending machine business is up and running, it is important to monitor and maintain it.
This will help you identify and address problems early on and ensure your business runs smoothly.
Ongoing monitoring is important for some reasons. It can help you to:
Identify problems early on and take corrective action.
Track your sales and inventory levels.
Identify trends and opportunities.
Make informed decisions about your business.
Let me introduce valuable tools and practices to keep your vending machines running smoothly:
Vending Management System (VMS)
A Vending Management System (VMS) like Parlevel Systems is software that lets you track and manage your vending machines efficiently.
It provides real-time sales, inventory, and machine performance data, allowing you to make informed decisions. With a VMS, you can:
Monitor sales and product popularity.
Track inventory levels to avoid stockouts and wastage.
Receive machine status alerts, like maintenance or payment issues.
Plan efficient restocking routes.
Regularly monitor your inventory to ensure the right products are available to meet customer demand. Implement a robust inventory tracking system to:
Minimize overstocking and reduce product wastage.
Keep popular items in stock and remove slow-moving products.
Plan your restocking based on actual sales data.
Machine Maintenance Schedule
Set a maintenance schedule for optimal vending machine condition and a positive customer experience.
Maintenance tasks may include:
Cleaning and sanitizing machines.
Checking and calibrating payment systems.
Testing refrigeration systems (if applicable).
Inspecting for any signs of wear or damage.
Analyze your sales data regularly to gain insights into product performance and customer preferences. Use this data to:
Adjust product offerings to cater to customer tastes.
Identify peak sales times and locations for targeted restocking.
Evaluate the effectiveness of marketing and promotional efforts.
Collecting money is an important part of running your own vending machine business. There are a few different ways to collect money:
You can manually collect money by opening the vending machines and removing the cash drawers.
A VMS can automatically help you collect money from your vending machines. It can track sales and generate reports to help you identify when to collect money.
You can hire a third-party cash collection service to collect money from your vending machines regularly.
The best way to collect money from your vending machines will depend on the size of your business and your budget.
You may want to collect money manually if you have a small business.
If you have a larger business, you may want to consider using a VMS or a third-party cash collection service.
Maintaining Your Machines
Maintaining your vending machines is important for ensuring they are always in good working order. There are a few things you can do to maintain your vending machines:
Clean your vending machines regularly to prevent the growth of bacteria and make your vending machines look more professional.
Inspect your vending machines; if you find any damage, repair it immediately.
Lubricate your vending machines regularly to keep them running smoothly.
Test your vending machines to ensure that they are dispensing products correctly.
You may also want to consider having your vending machines serviced by a professional regularly. This will help to identify and address any potential problems early on.
Are Vending Machines Profitable? How Much Can You Make?
Vending machines can be a profitable business, but the amount of money you can make depends on the location of your vending machines, the type of products you sell, and the competition in the area.
Factors that affect the profitability of vending machines:
Vending machines in high-traffic areas, such as office buildings, schools, and hospitals, are more likely to generate sales.
The type of products you sell also affects your profitability. Food vending machines, such as snacks and beverages, are more popular than others.
Consider selling unique products unavailable from other local vending machines.
The amount of competition in the area can also affect your profitability.
According to a recent National Automatic Merchandising Association, the average vending machine in the United States generates $76 in weekly revenue.
The average vending machine could generate over $3,900 in revenue annually.
Suppose you have a vending machine in a high-traffic area and sell various popular products in a low level of competition.
Assuming that your vending machine generates $75 in weekly revenue and you have ten vending machines, your total revenue would be $750 per week.
If your expenses are $500 per week, your profit would be $250.
You could generate over $13,000 yearly profit from your vending machine business.
It is important to note that these are just averages. Your actual profits may vary depending on the factors mentioned above.
Should You Start a Vending Machine Business? Pros and Cons
Starting a vending machine company can be appealing, but like any business, it has advantages and disadvantages.
To help you decide, I’ve created a comprehensive table highlighting the pros and cons of entering the vending machine industry.
|Passive Income||Initial Investment|
|Diverse Products||Location Dependency|
|Cash and Cashless Payments||Competition|
|Minimal Staffing||Profit Margins|
|Steady Demand||Product Shelf Life|
Pros of Investing in Vending Machines
Passive Income Potential
Multiple machines can generate passive income 24/7 and do not require constant supervision.
Vending machine businesses are highly scalable. You can start with a single machine and gradually add more as your business grows.
Vending machine businesses are also very flexible. Investors can choose their hours, work as much or as little as they want, and choose the locations where they place their machines.
Minimal Operational Hassles
A vending machine business typically involves minimal overhead costs, as you don’t need a physical storefront.
Cons of Investing in Vending Machines
Vending machine cost varies depending on type, features, and condition. Some upfront costs are still involved, such as the cost of the machines themselves, inventory, licensing, and insurance.
You might require a vending machine operator for regular maintenance, such as cleaning, restocking, and repairs. This can take time and money.
You need to place your machines in high-traffic areas where people will likely buy products. However, good locations may be difficult to find and require you to pay a fee to the property owner.
Product Shelf Life
Managing inventory is crucial. Products with shorter shelf lives may lead to wastage if not sold promptly.
Changing Consumer Preferences
Consumer preferences evolve. Staying up-to-date with current trends and adjusting your product offerings can be a challenge.
A few vending machines can be targets for vandalism and theft, which may result in damage and loss of income.
Frequently Asked Questions (FAQs)
How To Start a Vending Machine Business for Free?
Starting a vending machine business for free is challenging. You’ll typically need to invest in machines, stock, and location fees. However, some companies offer free placement of their machines in exchange for a share of the profits.
Is a Vending Machine Business Considered Passive Income?
Yes. Vending machines are passive income. Once set up, the machines generate cash without much effort.
How Do Vending Machines Make Money?
Vending machines make money by selling products to customers. They accept cash or cashless payments for snacks, beverages, or other items like toy vending machines, and the revenue generated is the profit.
Can You Buy a Vending Machine and Put It Anywhere?
You can buy a vending machine but can’t place it anywhere. Location is crucial for success. You need permission to place your machine in a specific location, and you’ll often pay a fee or commission to the location owner.
How Does Vending Machine Business Work?
In a vending machine business, you purchase machines, select products to sell, place them in strategic locations, and maintain and restock them regularly. Customers make selections and pay for products, generating income for your business.
How Profitable Is Owning a Vending Machine?
The profitability of owning a vending machine business varies. It offers a profit margin of 10% to 30% on average. Success depends on factors like location, product selection, and maintenance.
How To Place Vending Machine?
To place a vending machine effectively, follow these steps:
Identify High-Traffic Areas
Contact Property Owners
Secure a Contract
Position the Machine
Maintain and Restock
What Is the Most Profitable Vending Business?
The most profitable vending business depends on factors like location and product choice. Snack and beverage vending machines are popular, but specialty vending machines can yield higher profit margins.
How Much To Buy a Vending Machine?
Buying a vending machine can range from a few hundred to several thousand dollars, depending on the type and features. New machines are more expensive, while used or refurbished ones may be more affordable.
How Much Does It Cost To Start a Vending Machine Business?
The cost of starting a vending machine business can vary widely. On average, expect to invest between $2,000 to $10,000 per machine, including the machine’s cost, initial inventory, and location fees. Your total startup costs will depend on the number of machines and their types.
How To Start a Vending Machine Business in California?
Starting a vending machine business in California follows a similar process if you want to know how to start a vending machine business in Texas and other locations. You’ll need to:
Create a business plan.
Choose your vending machine type and products.
Register your business and obtain any necessary permits or licenses.
Find high-traffic locations for your machines.
Purchase and install your machines.
Implement a restocking and maintenance schedule.
Market your business to attract customers.
Ensure you comply with your state’s regulations and obtain any required permits or licenses for your vending machines, as these may vary by location and product type.
The Bottom Line
Starting a vending machine business offers passive income, scalability, and flexibility.
I hope you understand that success in vending machine business requires strategic location, product choice, frequent maintenance, and adapting to consumer preferences.
If you want to start a business with a different type of machine, consider learning how to start an ATM business.