How to Start a Vending Machine Business or Route
Owning and Operating a Vending Machine Business – The Basics
Welcome! Interested in starting a vending machine business? Great decision! According to Forbes Magazine, operating a vending route is one of the easiest businesses to start. And, the best part, this virtually recession-proof business has the potential to earn a return on investment the instant you set up your first vending machine.
Since 1993, Gumballs.com has supplied vending route operators nationwide with vending machines and supplies. Before diving in, thinking through a few basics will help you build a strong foundation for vending business success. Read on for some more tips from Gumballs.com or visit the Vending 101 section of our blog for additional vending tips and tricks!
Location, Location, Location
Identifying and securing the right locations for your vending machines is KEY to building a successful vending business.
- Identify high traffic locations in your area. Areas with a lot of foot traffic will likely generate the most sales (and profit!) for your vending machines. Great locations include (but are not limited to):
- Shopping centers and malls
- Movie theaters
- Car dealerships and repair shops
- Community centers
- Hotel and Bank lobbies
- Hospitals/Medical Centers
- Office complex/manufacturing facility break rooms and common areas
- Public farms or petting zoos; gumball machines set with a candy wheel can dispense animal feed
- Schools, particularly if you vend healthier items
- Be creative! Seek out new venue opportunities while carrying on with other daily activities. Do you notice locations with heavy foot traffic with no vending machines?
- Network. Create a list of people you know with access to new locations and gauge their interest in placing a vending machine. People to try could include:
- Business owners or managers
- Groups or organizations you are affiliated with, charities, etc.
- Family and friends
- Found a promising location for a vending machine? Approach a manager to ask about placing a vending machine. Be prepared to offer a commission and create a written document that outlines your agreement with the location.
- Gumballs.com Tip! Offer the location manager a percentage of earnings from the vending machine versus a flat fee. You do not know how much money your machine will generate until it is operational and a percentage will avoid giving all your earnings to the location manager should your machine not perform.
- Gumballs.com is not a vending location service.
- One last thing to keep in mind is that you will need to be visiting every one of your locations regularly, be sure not to spread yourself too thin.
Before setting up your vending machines, determine the cost of business and analyze the location. Some things to consider:
- Find a reputable supplier of commercial quality vending machines (like Gumballs.com!).
- How many potential customers might purchase an item from the vending machine? If your vending machine is in a public location, observe the foot traffic. If your vending machine is placed in break room, know the number of employees that will have access to the machine.
- Determine your cost of business by adding together all the overhead costs, including the cost of the vending equipment, vending supplies, transportation (vehicle and fuel), etc. How much will you need to price your vending items to turn a profit? Remember that vending machines are a one-time cost and that the vending machines will need to be up and running for some time before recognizing a profit.
- Numbers will fluctuate depending on if you purchase cases of gumballs, bulk candy or toy capsules, etc., in bulk where you might get a discounted rate OR if you decide to sell a product that costs more. The beauty of a vending business is that it can be tweaked along the way to see what works and what doesn’t, while maximizing your profits.
Target Your Customers
Once your locations are secured, place machines and vending products that appeal to the customer.
- Vending machines that dispense temporary tattoos, stickers or toy capsules filled with items that are currently “hot” with kids and teens are great in areas that attract a young crowd. Gumballs.com offers the latest vending supplies targeted toward the younger population including bouncy balls, toy capsules, tattoos, stickers, gumballs, bulk candy and more.
- If the location attracts older individuals, a soda and snack machine (just be sure you have access to an electrical outlet) is a great choice, or stock your vending machines with chiclet gum, mints or nuts.
- If placing your vending machine in a break room, ask your business contact what type of snacks and soft drinks the employees would like.
- Before setting up any vending machines, be sure that you have adequate space for your machine as well access to an electrical outlet (if needed).
- Remember that as the owner of your vending machines, you are responsible for keeping them filled and working properly.
- Gumballs.com Tip! If your machines do not have bill acceptors, be sure that potential customers have a convenient way to get change. Gumballs.com offers a huge selection of the highest quality change machines!
Once you’ve secured some locations, it’s time to purchase the machines and get them up and running! New to the vending business? Try starting with smaller machines that require a minimal upfront investment, such as gumball machines or triple-head candy machines. Maintenance on these machines is minimal when checked on a regular basis. Plus, no electrical hook-up is required.
Gumball and candy machines are small, but they offer mighty profit margins. Here’s a basic breakdown (prices subject to change):
- Purchase one gumball machine with a stand and a case of 850 assorted one-inch gumballs for a total first-time investment of around $112.98, plus shipping ($84.99 for a basic gumball vending machine with a stand and $27.99 for one case of Dubble Bubble 1” assorted gumballs).
- Assuming your gumball machine is equipped with a $0.25 coin mechanism, you will make $212.50 once all 850 gumballs are sold. The initial profit before shipping costs is $99.52, or 88% for each gumball machine you own. If you have a $0.50 coin mechanism on your gumball machine, you will make $425.00 once all the gumballs are sold, which increases your profit to $312.02, or 314%!
- As you continue, the profit margin will grow because now that you own the vending machines, you only need product to fill them. If you purchase another case of 850 assorted one-inch gumballs (starting at $27.99 plus shipping at Gumballs.com) and place them in gumball machines with $0.25 coin mechanisms, your profit once all 850 gumballs are sold increases to $184.51 (before shipping costs), or more than 650% for each gumball machine you own!
- Gumballs.com Tip! If purchasing more than one gumball or candy machine of the same type, ask to have them keyed the same so one key can open all of your machines. Most gumball machines come with one key for each lock, so if multiple machines are keyed the same, you will have extra keys in case you lose one.
Frequently asked questions regarding the vending machine business:
How much will my vending machine business make?
The success of your vending business will be dependent upon location, location, and location. The busier the location, the better your vending machine business will do.
Do I have to offer the store owner a percentage of my vending sales?
This depends on the approach that you take. If you approach the owner as a vending machine business owner strictly interested in expanding your vending route, then it would be proper to offer them a percentage of the sales. Do not forget that offering a percentage is an incentive for the owner to allow you the space in their business. We recommend offering anywhere from 15% to 33%, depending on the location. Another approach that you could take is through charity. There are many charitable organizations that will supply you with stickers to put on your vending machines in exchange for a nominal monthly fee. Most store owners will allow you space in their stores for free when you are associated with a charitable organization.
Should I use a locating service to locate my vending machines?
Keep in mind that a location service charges to place machines, which will cut into your profits. If you have the time to scout, securing quality locations for your vending machine business yourself will maximize your profit.
What are good locations for vending machines?
In our experience, certain businesses have consistently proven to be successful locations. These include restaurants, bowling alleys, skating rinks, shopping malls, Boys and Girls Clubs, laundromats, movie theaters, academic institutions (high schools, colleges), supermarkets, coffee shops, banks, automotive centers, taverns, and apartment complexes. Always be on the look out for more obscure locations that could prove to be really favorable. Some surprisingly successful locations that we have come across include auction facilities, casinos, bingo halls, horseback riding facilities, and airports. Remember, any place with steady foot traffic is a good location for a vending machine.
Do I need a business license or insurance to operate a vending machine business?
You should consult with your local licensing department to find out the specific rules and regulations pertaining to the vending business in your state.
Once I place a machine, should I have the location owner sign some sort of contract?
This is up to you, but it’s never a bad idea to have a business agreement in writing.
Is theft and/or vandalism a big issue in the vending business?
Because bulk vending machines are typically placed in high visibility and high traffic locations where there are people or employees at all times, theft and vandalism is uncommon. If you are locating your machine in a questionable location, a simple and cost-effective solution would be to wrap a chain around the base of the machine and chain it to a fixture within the store. This simple solution would prevent any would-be thieves from attempting to steal your equipment. If you are purchasing a change machine, many models can be equipped with an alarm for an upgrade fee.
How often will I need to service my vending machine business and how long does it take to service?
We recommend that you check on your vending machines at least once a month. Servicing a vending machine business, which includes collecting the money and refilling the machine, takes about three minutes per machine. A vending business consisting of 100 machines could take as little as 6 hours a week or two weekends a month to fully service.
Do I need a truck or van to run a vending machine business?
No. Our spiral gumball machines, bulk vending machines, and triple-vend machines easily fit within a standard vehicle.
Can I operate my vending machine business from my home?
Absolutely! There is absolutely no need for an expensive office or warehouse.
Thanks for visiting Gumballs.com!