What is a Vending Machine Business?

A vending machine business means placing a machine that is capable of selling products and receiving money from customers without the need for a seller or attendant.

It is an automated machine placed at key locations to sell products like beverages (soft drinks, water bottles, fruit drinks), snacks (wafers, cakes, chocolates), and hygiene items. Customers can purchase instantly by using cash, cards, or cashless payment options like mobile payments, digital wallets, credit or debit cards, buy now pay later, etc .

If your budget is limited, a vending machine business is a scalable and relatively easy option to consider.
Now, let’s find out how to start vending machine business in detail.

Steps to Start a Vending Machine Business

1. Research the Market

Before you start a vending machine business, thorough market research is very important. Find out if there are existing vending machines in your locality, where they are located, what products they are selling, and which location is best suited.

In this step, you need to figure out the following points:

• Target Audience: Have a clear idea of your target market and audience. For example, students, office workers, and gym-goers are different groups, and their preferences vary.
• Product Demand: List out existing vending machines and identify products that sell quickly, as well as those that remain untouched. Point out gaps or less popular categories, such as tech accessories.
• Competitor Analysis: There can be various types of vending operators. Study them and identify their strengths and weaknesses. Bring smart ideas to the table to offer a better product variety or more competitive prices.
• Location Trends: High-traffic locations are key parts of a successful vending machine business. Identify busy areas in your locality, such as schools, hospitals, shopping malls, and metro stations.

Good research is the foundation that can take your business to new heights.

2. Choose Your Niche and Products

Once the research part is complete, in the next step, you should define your niche and products. The right niche helps you easily reach your target audience.

In a vending machine business, here are the popular niches you can consider:

• Snacks & Beverages: This is the most common and easily found niche. It is perfect for schools, offices, and public places.
• Coffee & Hot Drinks: Best for corporate places, e-commerce apartments, and transit hubs.
• Healthy Foods: Gyms, hospitals, and wellness centers are best suited for this. It includes protein bars, bread & cakes, sugar-free drinks, etc.
• Personal Care & Hygiene: Perfect for malls, airports, or public restrooms. It includes masks, sanitizers, feminine products, and more.
• Electronic & Accessories: Mostly suited for tech hubs, metro, or bus stations. It includes phone chargers, USB cables, earphones, etc.

Your niche is defined, now, select the right products. Here are a few questions you must answer before selecting your product.

• Does your product match the needs of the location?
• Do you have a specified product range?
• Where do you source your products? Are they reliable and maintain quality?
• Will you consider local preferences to personalize your offerings?

Once you answer these questions, you will be able to select a product that matches your goals.
For example, your product must match the needs of the location. You can’t offer electronics and accessories near a hospital. Your vending machine should be filled with healthy foods if placed near a hospital.

Always remember, customer relevance leads to higher sales.

3. Find High-Traffic Locations

Placing vending machines at the right spot majorly decides the success rate of your business. No matter how many machines are stocked, if they aren’t located in the right place, you are most likely to face lower sales. Your goal should be to place the vending machine in foot traffic where it is visible and accessible.

Best locations for vending machines:

• Near Office Buildings and Co-working Spaces: During breaks, employees often search for quick snacks or soft drinks.
• Schools, Colleges, and Universities: Students also have snacking habits, which is why it is preferable.
• Hospitals and Clinics: Patients or their relatives always look for quick and healthy food nearby. Personal care & hygiene vending machines also work here.
• Transportation Hubs: Bus stations, train stations, and airports are always perfect for 24/7 availability.
• Gyms and Fitness Centers: Protein bars, juices, and electrolyte drinks are the most popular options here.
• Shopping Centers and Retail Stores: Walk-in places have a greater chance of impulse purchases.

A vending machine business involves finding a good location to start your business. If you do not own the place, talk to the owner and propose a revenue-sharing model to make it more appealing.

Refurbished machines also work; all you need to do is make sure the location has access to a power supply and good security.

4. Establish a Financial Plan

Okay, so by this time, you know how to research, find your niche, and have a proper idea of where to place the vending machine. Now, let’s jump over to the finance part.

Financial planning is the backbone of a successful vending machine business. Firstly, you need to create an outline of all of your costs. It includes startup costs, purchasing vending machines, stocking products, transportation, and location fees.

Then, you need to create a separate plan for ongoing expenses like maintenance, insurance, and restocking. Separating these costs will give you a clear view of how much capital you need to get started and manage operations in the initial days.

Next, you need to calculate your revenue potential by estimating sales per machine based on location. Then, compare these with projected expenses to identify any missing parts. Financial planning also involves being prepared for unexpected costs like sudden machine failure or seasonal dips.

Here are the costs involved in starting vending machine businesses:

5. Register Your Business

Now that your investment is ready, it’s time to legitimize your business. To legally operate in the vending machine industry, you need to register your business and obtain the necessary licenses and permits.

Choose a Business Structure:

You can choose from a sole proprietorship, an LLC, or a corporation as your business structure. If you deal with property owners, suppliers, or service providers, going with an LLC is ideal as it shows credibility.
Plus, it comes with added benefits, including flexibility in taxation and personal liability protection.

Register Your Business:

• File your LLC with your state’s Secretary of State.
• Apply for an EIN (Employer Identification Number) from the IRS. This is mandatory for taxation and hiring purposes.
• Open a business bank account so that your vending machine income and expenses are separated from personal finances.
• Consider licensing your business and getting the necessary permits to operate legally.

From a beginner to a responsible businessman, with time, your journey in the new vending machine business will evolve from a few vending machines to a bulk vending machine business. When you operate in bulk, compliance becomes a critical aspect of your business.

6. Purchase or Lease Vending Machines

Now comes the core part of your vending business, i.e., purchasing or leasing vending machines. Whether you want to purchase or lease depends on the budget you have, future goals, and the type of products you are planning to sell.

Purchasing a Vending Machine:

When you purchase, you take full ownership of the machine, which allows you to customize it on your own. A brand-new machine with advanced features (like remote monitoring, touchscreen, cashless payments) falls in the “higher vending machine cost” category. The price range of these vending machines starts at $3,000 to $7,000 per unit. (in the U.S.)

Owning vending machines is possible even if your budget is limited. You can look for used vending machines, which is a smart way to get started. They are priced cheaper than the new ones. The price range of used vending machines generally starts from $1,200 to $3,000 (the repair cost may add up).

Leasing a Vending Machine:

Leasing will reduce the upfront cost but will add maintenance costs. Leasing is ideal if you are new to the business and need a temporary setup.

Here’s what you need to check before leasing:

• Compare vending machine options based on features, size, and payment options
• Prioritize energy-efficient and ADA-compliant models (For the U.S. set up)
• If combo machines (snacks + drinks) work, consider it rather than one specific type.

Still wondering how to own vending machines? You can consider the options mentioned above and get started.

7. Stock Your Machine with the Right Products

You have clarity on whether to purchase or lease a vending machine. Now, let’s move forward to decide what to stock in your vending machine.

You can operate a snack machine, a beverage vending unit, or a combination of both, but the location and customer preferences must align at the end of the day. Otherwise, it could be a waste of money.

Diversify When Needed:

Suppose you are managing multiple machines in different parts of the city. In such cases, you can customize the stock for each one instead of sticking to one specific type. For example, a mall location could feature personal care items such as beauty products, while a gym or nearby stadium location could offer snacks, beverages, and water bottles.

Explore Specialty Vending:

The term “specialty vending” could be new for beginners; let’s simplify it. Specialty vending is another niche that offers a range of products, including organic snacks, cosmetics, electronics, and even mini personal care kits. A bit of mixed niche, isn’t it?

This type of vending machine works particularly well in extremely heavy-traffic locations, such as metro stations.

8. Set up Payment System

Running a successful vending machine is not possible in today’s world without a payment system of the highest order. Flexible and modern payment systems are a must-have that simplifies the payment process for customers. Vending machines are designed for quick access to food items or other products, and not having flexible payment options can frustrate customers.

So, what should you do to have a reliable payment system?

You can consider investing in software like Moon Invoice that helps you integrate multiple payment options and takes away all of your invoicing hassles with a paperless invoicing solution.

With Moon Invoice in use, you will be able to offer over 20+ payment options, such as Stripe, Apple Pay, PayPal, and more. In high-traffic areas where quick access is needed, these options make it perfect for users.

For vending machine owners, cashless payments work incredibly well and reduce the need to collect and deposit cash. Vending machine business owners can optimize pricing and promotions by setting up cashless payment options.

If you are running your own business and want to keep operating costs under control, consider offering cashless payment.

9. Conduct Regular Machine Checkups

Owning vending machines is only part of the journey; maintaining them regularly and making sure they perform at their best is what makes starting your own vending machine business successful. A fully maintained machine is reliable, attractive, and customer-friendly. It directly impacts vending machine sales.

Maintenance Tips for Vending Machines:

• Clean and inspect weekly
• Check payment systems
• Monitor inventory levels
• Address repairs ASAP

Optimization Strategies:

• Find out the top-selling and less-selling items through sales data.
• Pricing should be adjusted based on demand and location.
• Offer products based on seasonal trends. It keeps your vending machine on demand.
• Keep polishing your vending machine business plan for a profitable outcome.

10. Start Branding to Scale Up

Once your vending machines start generating good sales and a consistent income, it is time to start branding and scale up. It will increase your revenue potential and market presence as well.

Here’s what you need to do to expand your business:

• Add More Locations: Identify similar, traffic-heavy locations to expand your business with additional machines.
• Diversify Products: After a successful run in one category, invest in other categories too.
• Invest in Advanced Machines: Start with smaller and mid-level machines, and then, as you grow, invest in advanced machines for a better user experience.

Create a Brand Identity:

Brand identity levels up your customer loyalty. Always remember a brand is not about doing all things great, it is about connecting with customers and leaving a personal touch.

To build your brand for your vending machine business, you can consider:

• Consistent product presentation across all machines
• A unique greeting note or coupon for purchasing above a certain amount.
• Use of branded payment interfaces and a liquid-smooth system without any lag.

Build Partnerships:

Collaborate with event organizers and corporate offices for quick sales and growth in the user base.
If you follow the steps mentioned above, you can start your vending machine business and later scale up as well.

How Much Does a Vending Machine Cost?

The cost of a new vending machine starts from $3,000 (basic) to $7,000 (most advanced). Within this range, the cost will vary based on whether you want to purchase a new one or look for a refurbished one.

If you go for refurbished vending machines, they are less expensive than new ones. Their cost starts from $1,200 to $3,000. Although refurbished vending machines are priced lower than new machines, they require constant monitoring and maintenance.

Challenges Involved in the Vending Machine Business

A vending machine business comes with a lot of challenges.

Let’s explore them:

• Location competition: High-traffic locations are challenging to find, as established operators often already occupy them. It requires high-rent or revenue-sharing agreements.
• Machine breakdowns: The vending machine may experience lost sales due to technical malfunctions, refrigeration issues, or payment errors. These issues lead to dissatisfied customers if not fixed quickly.
• Product spoilage: In the case of food and beverage vending, if stocks are not sold on time, they will expire, and you will need to replace them. This results in reduced profit margins.
• Theft and vandalism: Some vending machines are targeted for cash theft and product pilferage, particularly when located in unsafe/less populated areas.
• Fluctuating demand: Based on seasonal shifts and festive events, demand fluctuates. This unpredictable sales pattern requires strategy adjustments.

How Moon Invoice Helps You Manage Administrative Work?

Running a vending business is more than just stocking products in the machine. Here, another factor comes into play: handling your backend operations efficiently and without errors.

To keep everything organized and manage your finances effectively, you can select Moon Invoice.

Here are some of the standout Moon Invoice features that help you manage your vending machine business.

• Create and manage supplier invoices: For every new product delivered, repair, or equipment upgrade, you can create an invoice, send it to the supplier, and store it.
• Track recurring expenses: Whether it’s monthly machine servicing or paying location rent, you can easily track them.
• Monitor income from each machine/location: The monthly sales report lets you know which machine has the highest sales or which locations are high-performing.
• Generate financial reports: Create financial reports for tax filing, audits, or performance reviews.
• Cloud sync: Allows cloud sync, so that you can store important information in cloud for easy accessibility.

A vending machine is a type of business where you need a constant eye on your sales data, vendors, expenses, profits & loss margins, and many other aspects. They can all be managed if you introduce a software solution, Moon Invoice, into your business.

Wrapping Up

Starting a vending machine business is more than just purchasing a machine and placing it in a high-traffic area. It sounds simple, but in reality, there are many hard yards to cover. Before planning, you need to spend a lot of time in each location where you want to place your vending machine.

Check how big the traffic is, what the nearby places are all about, are there any hospitals and office buildings in the same area, what you can do differently, can you merge two categories? Answer these questions first before finalizing your vending machines business.

If you have already made up your mind to start a vending machine business, you will require a software solution that can handle all your finances. You can consider Moon Invoice as the solution to your financial hassles.

Sign up for free today and explore more opportunities to grow your vending machine business with Moon Invoice.

FAQs on Vending Machine Business