A vending machine business can be a lucrative entrepreneurial opportunity, whether as a side hustle or a full-time venture.
This allows owners to jump in with low initial costs and promising profit potential. According to Grand View Research, the global retail vending machine market was valued at $51.91 billion in 2021 and is expected to grow by 10.7% annually over the next eight years, reaching $129.4 billion by 2030 .
After all, when people are hungry and in a hurry, vending machines provide a quick and convenient solution. Consumer demand for vending machine staples like potato chips, candy, and soda remains strong, and advances in technology have expanded the range of products people can get from vending machines, including fresh fruit, yogurt, and juice smoothies. From cake slices to pizza to hot dogs.
In addition to food, vending machines are also stocked with other items such as toiletries, cosmetics, laundry supplies, electronics, and in some states, cigarettes.
Many companies start with a small number of machines, or just one machine, to test the water. The main advantage of a vending machine business is that it usually does not require office space and therefore has low overhead costs. Additionally, if the owner plans to operate the business alone, there may be no need to hire employees. Profits vary by product and location, but if you manage multiple vending machines, the revenue generated by the average vending machine can quickly add up.
Running a successful vending machine business requires careful strategic planning. Here's his five-step guide to get started. This also includes the most important step: finding the best products to place in the right places.
1. Register your business.
To register your vending machine business, first obtain a free Employee Identification Number (EIN) from the Internal Revenue Service (IRS). This number can be used for state and federal tax filings. Typically, forming a business as a limited liability company (LLC) or other type of corporation rather than conducting business in one's own name to protect the owner's personal assets in the event of injury or damage is reasonable. To form a business, many states require owners to register and/or pay fees. The owner can then set up a bank account to handle all business-related transactions, such as purchasing machinery and inventory.
To check state requirements for licenses and permits, including beverage and health department licenses, business owners can refer to the business directory on the IRS website. This directory includes links to detailed guidance for each state. Owners should also check with the city or county in which they operate to find out about any required local licenses or permits.
2. Select your product.
Choosing the right product for the right location is key to the success of your vending machine venture. Do research to scout different high-traffic locations, think about what customers want in those locations, and decide what products to sell where.
Starting a vending machine company can be an attractive entrepreneurial opportunity, especially since it does not require many of the operating costs that other businesses require.
For example, snacks and drinks are appropriate for an office park, while microwaveable meals may be more appropriate for a hospital. Health foods are popular at gyms, and personal care products such as shampoo and shaving cream may become popular at airports. According to Grand View Research, beverages accounted for the majority of vending machine business in 2021, accounting for more than 43% of global revenue. It points out that hotels are hotspots for beverage vending machines.
To maximize profits, vendors may want to contact various wholesale suppliers to identify items with the lowest possible cost per unit.
3. Secure your property.
Once you have found the perfect location to install the machine, you will need to enlist the help of the property owner. That means connecting with local business owners and developing proposals to install machinery on their premises.
Most vendors will draw up a contract that outlines the products they will sell, where the machines will be located, and how long they will operate them on your premises. The contract may also stipulate that the property owner will not allow competing vendors to locate machinery in the same location.
The rent you pay to occupy the space is also usually specified. This is typically a sales commission of 5% to 25% of product sales.
4. Purchase from a vending machine.
There are different options for machines depending on the type of product you sell. Machine prices range from a few hundred dollars to $10,000 depending on features, with more sophisticated machines offering additions such as interactive screens, voice accessibility, and remote monitoring software that sends alerts when stocks are low. It's equipped with features.
Machine types include:
- bulk. These machines supply one product at the same price, such as rubber balls, gumballs, and hard candy. Bulk machines usually accept coins, so the returns are minimal, but they are also smaller and lower cost than other machines.
- Mechanical. They carry several items of varying price points and can accept dollar bills and coins. Remember the old-fashioned snack and soda machine?
- electronic. Electronic vending machines accept credit or debit cards in addition to or instead of cash, and often have a touchscreen interface. These machines are becoming increasingly popular to accommodate customers who don't have cash on hand.
- Specialty. For example, some products require specialized machines, such as keeping coffee hot or ice cream cold. Additionally, products such as electronics and personal care products may require specialized machinery.
To reduce costs, especially at the start, vendors may consider purchasing used or refurbished machines or renting machines.
5. Monitor your machines.
Once you set up your machine, you can plan a route to regularly monitor each location and replenish supplies, remove expired food, and empty cash from the machine. At the same time, you can check whether the equipment is working properly. There is usually no on-site staff monitoring vending machines, which can make them vulnerable to theft or vandalism, so finding a safe location is important.
You should also take care to ensure that your machine continues to comply with federal, state, and local regulations. Some cities may restrict the contents of machines in certain areas, such as banning the use of carbonated beverages in school buildings. In addition, vending machines must meet Americans with Disabilities Act guidelines to ensure vending machines are easily accessible to people with disabilities. Owners of 20 or more vending machines must comply with U.S. Food and Drug Administration (FDA) requirements to disclose calorie information on the foods they sell.
Take-out
Starting a vending machine company can be an attractive start-up opportunity, especially since it does not require many of the operational costs associated with other businesses, such as renting office space or hiring permanent staff. Vending machine companies can be highly profitable if vendors can do their research, decide on the best products to sell, and secure contracts with property owners.
Photo: Getty Images
