How to Start a Profitable Vending Machine Business

A vending machine business can be extremely lucrative if done right. With minimal startup costs, flexible hours, and recurring revenue, it’s an appealing business model for many entrepreneurs.

But vending is not as simple as just placing a few machines and watching the money roll in. Success requires an abundance mindset, sharp business acumen, and flawless execution.

Below is a comprehensive guide to launching and scaling a profitable vending operation from the ground up:

Selecting Machines and Products

The machines themselves are the foundation of your vending business. Invest in quality right from the start.

Top Vending Machine Brands

• Drinks: Vendo, Automated Merchandising Systems (AMS)
• Snacks: Automated Merchandising Systems (AMS), Seaga

Vendo and AMS have proven reputations for durability and reliability. They may cost more upfront but save headaches down the road.

Ideal Starting Setup

For your first location, go with:

• 1 glassfront snack machine
• 1 cold drink machine

This combo allows you to stock enough variety to maximize sales.

Stocking Inventory

Base your selections on what sells consistently:

• Drinks: Coca-Cola, Pepsi, Mountain Dew, bottled water
• Snacks: Hershey’s, Snickers, Lays, Doritos

Swap slower items for local favorites or seasonal best-sellers. Vary selections across locations.

Securing Profitable Accounts

Location is everything in vending. Target spots with heavy foot traffic and recurring demand.

Best Locations for Vending Machines

• Manufacturing facilities
• Warehouses
• Office buildings
• Hospitals
• Colleges
• High schools
• Rest stops
• Marinas
• Laundromats
• Apartment complexes

Avoid low-traffic spots like gas stations and car washes. Vet locations using the prospect pyramid.

Getting in the Door

Land new accounts by:

• Cold calling/door knocking potential locations
• Asking business contacts for referrals
• Running Google/Facebook ads targeting specific industries
• Attending local networking events to meet decision makers
• Joining the chamber of commerce to connect with local businesses

Provide terrific service and word-of-mouth will bring new accounts to you.

Operations and Service

The key to success and retention is keeping machines stocked and in working order. Develop excellent service routines.

• Visit each location 1-3 times per week based on sales volume. More traffic = more frequent service needed.
• Load routes efficiently to minimize drive time using the 30/30 rule.
• Restock inventory based on recent sales data. Favor top-selling items.
• Clean machines inside and out to maintain a polished look.
• Place “out of service” signs on malfunctioning machines and repair ASAP.
• Respond promptly to issues. Lack of service is the #1 reason locations switch vendors.

Pricing and Profits

Optimal vending machine pricing balances profit margins and inventory turns.

• Markup product at least 100% over wholesale cost.
• Price point examples: $1 chips, $1.50 candy, $2 drinks.
• Start on the lower end. Raise prices gradually if sales warrant.
• Track machine sales closely to identify poor performers.

Aim for 50% gross margins overall:

• 50% of sales = cost of goods
• 30% = profit
• 20% = expenses (credit card fees, maintenance, gas, insurance, etc.)

Top performers easily clear $1,000+ in monthly net profit per machine.

Financing and Cash Flow

Vending provides great cash flow with minimal startup capital needed.

• Used machines can be purchased for ~50% of new costs. Buy 2-3 used machines to start.
• Ask sellers about owner financing. Pay over 6-12 months to conserve capital.
• Some distributors offer vending machine financing programs for new equipment.
• Monthly expenses are low – biggest costs are inventory and fuel.
• Profit from first accounts can be reinvested to scale.

Many successful vending operators launch their business for less than $5,000.

Final Tips for Vending Success

Follow these best practices and you’ll be on your way to vending machine profits:

• Specialize – Focus on what you know best rather than tackling too many offerings.
• Inspect equipment before purchasing. Have a technician evaluate condition.
• Buy new bill validators and coin mechanisms to avoid collection headaches.
• Secure insurance covering theft, damage, loss.
• Understand contracts before signing. Don’t be afraid to negotiate terms.
• Hire help strategically to increase capacity, but keep fixed costs low.
• Go above and beyond on service calls to earn client loyalty.

Vending provides the perfect blend of passive revenue and flexible owner involvement. With grit and smarts, you can create a fully autonomous cash flow stream.

Now get out there and startbuilding your vending empire today! Wishing you much success.