How to Start a $10K/Month Vending Machine Business

  • by Brandon Boushy
  • 2 months ago
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How to start a vending machine business

Have you ever been super thirsty and couldn’t find a drink?  Starting a vending machine business can be a great way to help people quench their hunger and thirst without a whole lot of work. That’s why we’re going to show you how to start a vending machine business.

Ben Smith and his partner Joseph started Friendship Vending Company in 2018 and have begun making $10K per month. People have already tried to purchase their vending route from them, and they even opened Vending University to teach people the tricks of the trade. It’s not all easy though. 

Ben told us:

One time we bought a machine that was $800 and we didn’t measure it. When we got to the storage unit, it was too big. It couldn’t fit in the unit and we had to leave it outside. The next morning it was gone so we spent $800 for nothing.

We’ll cover the basics for getting your business licensed, how and where to buy vending machines, buying products, stocking the machines, maintaining your equipment, and how to market your vending business.

Let’s dig into the vending machine industry first!

Step 1. Is the vending machine business profitable?

Yes!

Ben told us:

My partner and I kept re-investing in machines. After the first year, we were able to pocket $1,000 per month each.

Check out our podcast with him below:

Vending machine operators can make a ton of money if they can land their vending machines in the right places, but you need to understand the market to play the game right. We’ll give you some background information.

Who are the major players in the vending machine business?

90w logo section

According to IBIS World, the United States vending machine industry is highly fragmented, with over 18,200 businesses sharing $9 billion in revenue. According to the same report, the largest operators are:

  1. Compass Group PLC: They had $14.4 billion in revenue in 2021 and a 5% net profit. They are the owner of Canteen and Canteen One, with more than 200 health vending locations throughout the US.
  2. Aramark Corporation: The US revenue for Aramark is $6.8 billion (page 34), with an operating income of $131.8 million (page S-53) in their annual reports.
  3. Wittern Group: They are solely focused on vending. They are privately owned, so their income isn’t public information, but Dun & Bradstreet (a 200-year-old analytics and risk management company) estimates Wittern group had $71.2 million in sales in 2021.
  4. Swyft (formerly ZoomSystems): Swyft is turning the retail industry on its head with vending machines for everything. Want to buy a computer from a vending machine? No problem! They also create lockers for packages.

Trends in the vending machine industry

The vending machine business is becoming more sophisticated. Long gone are the days of being limited to putting a couple of quarters in a machine to get your favorite soft drink. You can still do that, but vending machines accept cards, ApplePay, and maybe even crypto soon.

In addition, they have a lot of other advancements, including:

  • Automated shops
  • More than just food and drinks
  • Eco-friendly solutions
  • Field management software
  • Personalized products in vending machines

What are vending machine business profits?

Profits vary dramatically based on what you stock and how you purchase machines and inventory. At first, you’ll probably have slimmer margins because you might not qualify to work with major distributors, but as you grow, so can your margins.

If you figure a 24-pack of Coke bottles is $13 from Sams Club, and you can sell each one for $1.50 to $3.50, that’s over a 64% gross margin. That’s pretty good for checking your machines, collecting the money, and restocking. 

Ben told us:

I only spend about 10 hours a month. As long as you automate the business, you can make great money with a tiny amount of work.

He also told us:

Use the online ordering with store pickup whenever you can. It saves time.

The more vending machines you own, the better you’ll do in the vending machine business. As you add more machines, margins will increase because your route will become more efficient, and you’ll qualify for bulk discounts.

Vending machine company profits per product

eVending specifically states that their machines can be paid for by selling 7 to 10 products at a profit of $.50 per product. That is probably a good target for the minimum acceptable profit margin.

Should I Get into the Vending Machine Industry?

If you have a vehicle and a bit of extra money and are comfortable approaching business owners, go for it! It could change your life.

Sounds like a great industry, doesn’t it? 

There’s more! You can find a vending machine for anything.

Step 2. How much does a vending machine cost?

I wasn’t kidding when I said there’s a vending machine for anything you can imagine. Besides the standard food vending machines, you can start a vending machine business selling books, electronics, clothes––anything your mind can conjure.

Let’s look at some of the most common types of vending machine businesses and what the vending machines cost.

How much is a vending machine for food?

Food vending machines can come in a variety of styles. You can have the old school machines that hold the food with longer shelf lives. These are great for candy, chips, and cookies. 

Vending machines are commonly found for less than $1,000 used or $3,000+ for a new one (but financing is available for new ones.) We’ll discuss whether you should buy new or used later, but let’s look at some of the vending machines available on the market.

Snack Food Vending Machines 

You can sell snack food that doesn’t need to be refrigerated out of vending machines, which is the most common style. Consider these features as you research:

  • The number of snacks it can hold. Expect to spend an extra $25 to $100 for each additional snack dispensing section.
  • The type of payments it can take. Expect to spend $300 more on card readers.
  • Whether it’s refrigerated. Expect to spend an extra $400+ for a chilled vending machine,
  • The technology inside it. 

Just to give you an idea of how we came to these numbers, check out the comparison of new snack vending machines from A&M Vending Sales.

Vending machine feature comparison

What about gumball machines?

Kids love gumballs and candy machines. I know my kid used to ask for quarters for one every time we went into a store. Fortunately, you can buy these vending machines for cheap. 

They sell them on Amazon for anywhere from about $50 to $1,000. Check out some of the most popular ones:

Gumball machine amazon screenshot

I loved the spiral gumball machines when I was a kid, but Amazon doesn’t have any that have been rated more than a few times. I’d suggest looking on other sites before going with the Amazon spiral one.

These are often called bulk machines and can be used for trail mix or nuts.

How much are vending machines for healthy food?

An organic or vegan vending machine business should expect to spend on the higher end. The food will be more costly, and the machines will be refrigerated. The vending machine cost online was between $5,000 and $10,000 for this type of machine.

Healthy items will normally need refrigerated machines, and you’ll normally have higher costs and prices for inventory.

How can I buy an ice vending machine?

We’ve all seen ice vending machines. They sell big bags of ice. Some also sell water. You can check out the following sites to find ice vending machines for sale:

They don’t disclose their prices online, but other sources say these machines can cost between $20,000 and $150,000. If you can find them used, have a licensed refrigeration tech check it before buying.

Search “ice vending machine business for sale” to find used ice machines.

How much is a pop machine?

You can find used pop machines for under $1,000 and new ones for $3,000 to $7,000.

How much is a hot beverage vending machine?

If you’re brewing hot drinks like coffee, espresso, cappuccino, and hot chocolate, expect to spend $5,000 to $8,000 per new machine. They can also heat soup.

Can I sell electronics out of vending machines?

You can sell computers, phones, and other electronics in some of the higher-end machines. They can make a great profit but probably won’t be as high-frequency purchases. I suspect that you’d find some success convincing electronic stores to rent the machines to make it easier to sell some of the products quickly.

Have you considered a book vending machine?

A vending machine for kids’ books and other books makes a lot of sense in places like airports and pediatrician offices. 

Step 3. Write a vending machine business plan

Write a business plan for your vending machine business to help you stay focused and manage your vending machines and inventory. Your business plan should include:

  • The name of your vending machine business
  • Measurable goals such as:
    • What kind of machines your vending business will purchase
    • Whether you’ll buy new or used vending machines
    • What types of business or property owners you’ll want to approach
  • How you plan to purchase the machines
  • How you’ll reach your target marketing plan
  • Your financial projections
  • What funding is needed

You can learn more about most of these subjects on UpFlip Learn. I suggest starting by watching our interview with Mike about how to write a business plan. Check it out below.

A business plan is often the difference between a successful vending machine business and an unsuccessful one. In fact, if you want to get financing to start a vending machine business, you’ll have to have a business plan.

Step 4. Form your vending machine business

If you want your own vending machine business, you’ll need to do everything to run it legally. Given your vending equipment will likely be on other property owners’ locations, you’ll want to make sure you have the following:

  • An LLC or Corporation
  • State, county, and city business licensing
  • Business insurance
  • Any food handling requirements

All of these have legal and tax implications, so I’d highly recommend talking with your local Small Business Administration office or a lawyer before starting a vending machine company. 

If all this sounds intimidating, you might want to check to see if you can buy an existing vending machine business. Check the following sites:

Be aware that you’ll need vending machines with credit card or analytics software to protect against fraud if you buy a vending machine business outside of your area. Given many machines are cash businesses, it would be easy for employees or subcontractors to steal from the machines.

Keep reading for more on how to become a vending machine business owner. 

Business Structure

Limited liability company writing on paper

Normally, I would tell you that you can have other forms of business structure, but you really need a Limited Liability Company or a Corporation as your legal entity for vending sales as a small business owner.

I suggest this because you’ll most likely be selling food products on somebody else’s property. That means a sole proprietor would be personally liable if someone gets food poisoning or is harmed by the machine. That’s too much risk for the money made per vending machine.

Check out our blog about how to register a business. We go through the process of business registration as an LLC and getting your Employer Identification Number (EIN) from the Internal Revenue Service.

Business Licenses

Get the necessary business licenses for starting a vending machine business. These will vary based on your location. Start with a quick search about business licensing in your area, or talk to your local Small Business Administration office.

Business Bank Account

You’ll need a bank account for your small business because it is required to keep personal and small business funds and expenses separate to avoid personal liability. For more information, read our blog about business bank accounts.

Business Insurance

If you start a vending machine business, you’ll need insurance to protect the company if someone is injured. I’d recommend having general liability at a minimum and potentially restaurant insurance if you plan on placing vending machines all over the city.

You may also want to offer to put the property owner on the insurance so that their own business isn’t at risk if your vending machine has a lawsuit. They’ll appreciate it, and if you are working with more prominent companies or governments, they’ll require you to add them to the insurance.

I usually recommend starting by getting a bid from Hiscox.

Food Handling Requirements

Many cities will require food handling licenses if you work selling food. If you are starting a vending machine business, check if you need special licensing from the health department. Just search “health codes near me,” and it should bring up your local health codes for a business entity in your location.

Keep reading for information on buying a vending machine.

Step 5. How to buy a vending machine

Two-person standing at the sides of vending machine

When buying a vending machine, you’ll want to evaluate vending product options to establish which vending machine is suitable for you. Then, you’ll want to inspect used and refurbished machines. Let’s look at where to buy vending machines

Where to find vending machines for sale

I’ve separated the following places to purchase vending machines based on if you want:

  • A new vending machine 
  • Used vending machine offerings 
  • Custom vending machines
  • Refurbished vending machines
  • Bulk vending machines

Where can I buy a vending machine new?

If you want to buy a new vending machine, you might be in luck because there are plenty. Most of them will offer to finance as well. You’ll want to compare the vending machine price and features before deciding where to buy one, but some of the places you can buy machines include:

  • Vending.com has the largest variety of machines, including specialty vending. The only option that isn’t on their list is ice machines. I would probably start by looking at Vending.com.
  • Sam’s Club has 12 Vending Machines for snacks, beverage vending machines, combo, and single brew coffee (coffee maker not included). Based on the product listings, they don’t sell chilled, refrigerated, or freezer vending machines, though.
  • Swyft has two main vending products and lockers. These are high-tech, specialty vending machines with analytics, inventory management, and multiple cameras. They are meant for locations doing $36K in business or more. Swyft also offers placement assistance and maintenance services.
  • eVending.com has hot and cold beverage machine options, plus food and beverage machine, and specialty machines called a Sani-Center that offers masks, gloves, and sanitation wipes. They have diverse offerings based on the ten sites that were reviewed for this blog.

Alibaba also sells vending machines and they are way less expensive, but that’s before shipping from China. I would only suggest using Alibaba if ordering in bulk.

Some places also suggest Vending World, but I am hesitant about websites where the pictures don’t load on a computer. It may be a temporary issue, but I can’t recommend it for that reason.

Ben discourages buying new ones because they are more expensive.

If you only need a few vending machines, I would go with one of these providers, but if you are looking for bulk vending machines.

Purchase vending machine used

Vending machine

You can buy a used vending machine or even full routes. Places to buy a used vending machine include:

Ben told us:

When you’re just starting off, you might want to use the used route. It will save you a lot of money when you startup. Make sure to test everything and negotiate prices based on repairs.

Make sure to inspect the machines very thoroughly when buying used machines. Business owners are notorious for poorly maintained machines. I actually have a story about this.

UpFlip Cautionary Tale

When I was working in HVAC, part of the job was working on ice vending machines for motels, schools, universities, hospitals, and other locations. Business owners wanted to keep their profit margins as high as possible, which meant they didn’t regularly sanitize their ice vending machines.

That’s great for maintaining your overhead costs, but it can (and does) allow mold to grow. Mold remediation is far more costly than routine maintenance by a few thousand dollars. 

The moral of the story is to maintain your machines to provide top-notch customer service. 

Make sure you check the vending machines before you buy them. Test:

  • Each dispenser
  • The coin and bill acceptor
  • The credit card reader (if there is one)
  • Compressor and fan for cooled machines
  • If the unit is meant for indoors or outdoors
  • If the machine feels cool (You can’t have candy and coke machines in the heat without a cooling system.)
  • Dates on the packaging
  • Look for frayed wires
  • Look for mold, signs of bugs, or rodents

Used healthy snacks and drink machines have refrigeration units to check. Be careful when buying them second-hand. If you aren’t mechanically inclined, bring someone who is when you look at the machines. Used machines will typically be purchased as-is.

Most of the companies that sell new ones also sell used machines. If you’re concerned about buying used vending machines, consider refurbished machines.

Find a Refurbished vending machine for sale

Buying refurbished is an established business model where companies accept damaged products, fix them, and then resell them. If you’ve ever gotten a replacement phone with your warranty, it was most likely refurbished.

Buying a refurbished vending machine is the best of both worlds. You have low startup costs, but a warranty is typically half as long as buying a new vending machine. Anywhere you can buy new vending machines will often have refurbished options, but it will probably be much slimmer pickings.

Custom vending machine options

If you need custom machines, your best options are Swyft, Vending.com, or reach out to one of the manufacturers on ThomasNet. Lead times are longer for custom vending machines, and you’ll be paying more. If you want to develop brand recognition, it may be the way to go.

Can I get financing for a vending machine business?

Yes, the majority of vending machine suppliers offer financing options. Their terms vary, but many give estimates of the cash flow or profit that will cover the price of the machine.

Step 6. How much does a vending machine make?

It’s hard to give a solid answer as to how much a vending machine makes, but Swyft states that their machines require $36,000 a year to break even and that their typical machines make between $70,000 and $250,000 a year in high foot traffic machine locations like airports.

In slower locations, you might only make a few hundred dollars a month. That’s still not too bad for a couple of hours per machine.

Ben told us:

Our slowest machine makes about $600 per month and our best one is about $2,000.

How much do vending machines make?

It should be noted that owning multiple machines comes with significant benefits. 

A single machine might only make a few hundred dollars per month at a low-traffic location. Meanwhile, a high-traffic location can be up to $250K per year. In addition,  your passive income can skyrocket as your vending machine business grows.

Let’s look at revenue and profits for different numbers of machines.

Revenue and profits

As you can see, your revenue and profits can vary dramatically depending on how you run your business and where your machines are located.

Step 7. Where to get products to fill your vending machine

Man refilling beverages in vending machine

Part of how to start a vending machine business is buying the products to sell. Most people will buy their products from places like Sam’s Club or Costco, but depending on how many machines you have, you may qualify to work with a distributor.

Ben told us:

Check on a daily or weekly basis to see who has the best prices… Don’t forget to check wholesale restaurant warehouses and your local store promotions.

He also suggested using the online order functionality and just pick it up when you’re ready. 

If you want to sell Coca-Cola products, go to the Coke Solutions website to get registered to purchase from distributors. PepsiCo Partners website is the link for Pepsi. 

Other providers go to ThomasNet.com.

The next step in starting a vending machine business is finding places to put your machines.

Step 8. Where can I put a vending machine?

You can put a vending machine anywhere a property owner will give you permission. Common locations for a vending machine include:

  • Buildings with office space
  • Grocery stores
  • Malls
  • Hotels
  • Hookah lounges
  • Hair salons
  • Gas stations
  • Fitness centers
  • Barbershops
  • Apartments
  • Airports
  • Hospitals
  • Concert venues

Ben told us:

Start by asking friends and family. Then just go talk to the management of places that have a lot of people.

He also told us:

We look for locations that make $2,000 a month.

You also want to look for locations that have:

  • Fifty to 100 people walking by
  • Forty or more employees
  • No competition preferably within two miles (grocery stores, gas stations, and restaurants)

Almost anywhere with lots of people is a great place to put a vending machine. That’s good to know, but how can you find places that need a vending machine?

How should I market a vending machine business?

Marketing is a big part of how to start a vending machine business. You’ll have to find property owners willing to let you put your vending machine on their property. That means you’ll need some common marketing tools!

  • A website: Learn how to build a website in our easy-to-follow guide.
  • Vending machine business cards: You need to have professional business cards to hand to business owners.
  • Social media: Sign up for social media business accounts and market to business owners.
  • Car decals: Once you have vending machines, car decals can help you get new clients because you’ll be driving around and parking at places with lots of traffic. You never know when someone will see it and need your services.
  • Google Paid Ads: Successful businesses use them very often.
  • Product brochures: Have a pamphlet to tell business owners what you offer.
  • Walk-Ins: You can ask to speak to a business owner in person, but it’s lower success and higher cost than other ways of marketing.

Ben suggests using marketing that says:

Get a free vending machine in your business.

Make sure to sign contracts

You’ll need a contract to protect your machine, outline the responsibilities of each party, and commission. One video I reviewed said 10% was normal to pay to have a vending machine at a property, but don’t volunteer it. You might be able just to offer the service and not have to pay for it.

Check out LawDepot for quick, easy contracts tailored to your business.

Step 9. Where should I store the products for vending machines?

In a YouTube video about how to buy vending machine products, the business owner suggested just keeping them at your house in a container that can be locked. If you don’t lock the products up, expect your family to eat them.

He was quite entertaining! Check out his YouTube below:

Ben suggests using a storage facility to store your snacks, drinks, and extra vending machines.

Step 10. How do I maintain vending machines?

When you start a vending business, you’ll need to maintain your machines. You can either learn to do this yourself or pay subcontractors to monitor them. Join National Automatic Merchandising Association and take some of their certification courses to learn about:

  • Level 1: Job fundamentals
  • Level 2: Refrigeration
  • Level 3: Electronics

They also have selling and business courses.

Ben also told us:

You’ll also need a dolly, a trailer, and straps to secure it down while traveling. Make sure not to put it on its side. They need to travel standing up.

Step 11. How often should I check the vending machines and empty the money collected?

It depends on how busy the locations are. Most locations will need to be done weekly or every other week. If it’s a busy location, you may need to check them even more frequently.

Ben says:

Give the store owner your phone number and be responsive. Stores change vendors if you aren’t responsive. That and don’t bother them. They are busy.

Ben also told us:

We have one machine we have to replace every three days.

He also said:

We integrate our card readers with analytics so we know when we need to refill. We also integrate it with QuickBooks to make accounting easy. Also, set alerts and keep it above 60% full and never let the favorites be easy.

Definitely use automation to help you improve your profit margins.

Go forth and make some moolah

After you get your first location, start putting the revenue into more machines, and you’ll scale in no time. If you enjoyed this article, share it and leave a comment. 

What kind of vending machine company are you thinking about starting?

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