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. Gumballs.com has helped launch hundreds of vending machine businesses through machines, supplies and advice over the years that we have been in business. Helping entrepreneurs get their business started is one of the most rewarding parts of selling vending machines.
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 on what works to get your vending business up and running! Customers frequently ask us, "What do I need to do to start my own vending business?" If you are just starting out, we hope this resource can answer most of your questions, while providing you with some helpful tips and tricks from industry veterans. We will be adding content on a regular basis, so check back often. The topics below without links are articles that are coming soon. And, we want to hear from you! If there is a topic you would like to see covered, please let us know!
Steps to Starting a Vending Machine Business
- Decide if Vending is Right For You
- Do Your Homework
- Target Your Vending Customers and Decide What you Want to Vend
- Find & Secure Vending Locations
- Choose the Right Vending Machines, Equipment & Supplies
- Service & Maintain Your Vending Machines
- Start Small With Vending
1. Decide if Vending is Right For You
Before making any purchases, consider if you have what it takes to operate a vending machine or business; here are some things to consider:
- Do you want to make some extra money on the side?
- How will you locate placements for your machine? Are you observant to notice trafficked areas and comfortable asking managers for permission to place your machines?
- Can you dedicate a few minutes per machine for regular service?
- Can you balance the costs of the business in addition to tending and filling the machines?
- Do you know what the customers in your area like?
- If you can locate good places for your machines, know your customers, and have the wherewithal to tend machines and business, vending might be a good choice for you
2. Do Your Homework
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 realizing 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.
- Gumballs.com Tip! For a helpful formula to calculate break-even candy vends, refer to the formula at the bottom of the page here FAQ
3. Target Your Customers and Decide What to Vend
You've purchased your vending machine and identified your location. Now for the sweet stuff - help deciding what items to vend from your vending machine! To achieve maximum results, spend some time investigating different varieties of gumballs and bulk candy before loading your vending machine. Without the right product, even a vending machine set in a great location might not do well. Keep in mind that while the final decision of what to vend is yours, it's a good idea to ask the location manager about any candy or gumball preferences.
- Gumballs are the highest profit bulk candy available, and they are a great option because they have a long shelf life and are not affected by heat from the sun (Please note Gumballs.com does NOT recommend placing any gumball or candy machine in direct sunlight). If you choose to vend gumballs, be sure to check them periodically to be sure they are soft to the bite. Gumballs generally stay soft enough for chewing for 10-18 months, but can get hard over time.
- The most common sized gumball for dispensing from a commercial gumball machine is 1-inch. If you want to vend 1-inch gumballs, be sure your machine is set with a gumball dispensing wheel. The assorted varieties are best sellers, but do not overlook some of the more specialty flavors or varieties. Some ideas…if your machine is located near the beach, try Beach Ball or Beach Time gumballs. Baseball gumballs during baseball season. If you prefer not to have a logo on your gumballs, try the Bubble King Special Assorted. Try the red, white and green assortment over the holidays or red, white and blue around the 4th of July. Or, just pick your favorite flavor! Personal favorites among the gumball experts at Gumballs.com include Limeade, Kicked Up Lemonade Sour gumballs, Nerds Candy-Filled gumballs, Cry Baby Guts Sour-Filled gumballs!
- Bulk Candy! The #1 selling bulk candies are M&Ms, both plain and peanut. However, consider your location before loading your candy machine. Is the machine near a window with exposure to the sun? M&Ms, Reece's Pieces or any type of bulk candy that can melt may not be the best choice.
- Non-chocolate, top selling bulk candy options include Mike and Ikes, Skittles, Chewy Sprees and Runts. Be wary of Mike and Ikes and Hot Tamales if your machine has sun exposure. While they do not melt like chocolate candies, they can get soft when they are warm and can stick together, which can make them difficult to vend. Skittles, Chewy Sprees, Runts, Polar Mints or other hard shelled candies are great options for machines with sun exposure. The hard shell on the outside keeps the product from getting too soft.
- Bouncy Balls in the 27MM size are an alternate option for machines set with a 1;-inch gumball wheel. These are a great non-candy option and bouncy balls are always fresh!
- Vending 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, gumballs, bulk candy and more.
- If the location is appropriate for larger snacks, 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 bulk 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).
- Gumball and candy machines are set with either a gumball dispensing wheel or a candy dispensing wheel. Or, your machine may come with both dispensing wheels, and it's up to you to decide which one you will use based on what you choose to vend. The difference between a gumball and a candy dispensing wheel is the shape of the holes. Gumball dispensing wheels and candy dispensing wheels are interchangeable.
- A gumball dispensing wheel has round holes, intended to dispense a 1-inch item, such as a 1-inch gumball, 27MM bouncy ball or 1-inch toy capsule.
- A candy dispensing wheel has holes in the shape of a pizza slice that are adjustable to dispense more or less product. Use this wheel if you are dispensing bulk candy, smaller gumballs (.62-inch; or smaller), chiclet gum, nuts, chocolate covered espresso beans, etc.
- 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!
4. Find & Secure Vending Locations
Identifying and securing the right locations for your vending machines is KEY to building a successful vending business. Following are some tips on identifying new locations, places to look and approaching business owners/managers.
- From now on, wherever you go, keep your eyes peeled for busy locations. Any location with a lot of foot traffic is a good location for a vending machine.
- Certain types of businesses have repeatedly been successful locations. These include shopping centers, laundromats, restaurants, skating rinks, bowling alleys, shopping malls, Boys and Girls Clubs, high schools, movie theaters, colleges, markets, coffee shops, banks, automotive centers, taverns, and apartment complexes. Some surprisingly successful locations that we have come across include auction facilities, airports, casinos, bingo halls and horseback riding facilities. Remember, any place with steady foot traffic is a good location for a vending machine. Always keep your eyes peeled for more obscure locations that could prove to be really favorable.
- Approach the location owner and propose to set up your gumball machine, candy machine or other vending machine within their store, explaining to them that you will completely service the machine yourself. Let them know that the machine takes up less than two square feet of floor space, does not need any electricity, and will provide their customers with a great service. Best of all, they will earn a percentage of the gross sales (anywhere from 15% to 33%, its up to you).
- Be prepared to offer a commission and create a written document that outlines your agreement with the location. Or, you could offer a percentage of proceeds to a charity that is supported by the business. 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. Offering a percentage will avoid giving all your earnings to the location manager should your machine not perform.
- Set up your machine and start making money! Once you set up the first machine, find another location and start the entire process over again.
- Finally, there are vending machine location services available, and if you are short on time or having trouble identifying locations on your own, you might consider working with one. Keep in mind that these services do charge a premium for their service, which will cut into your bottom line. We have found that one of the most effective ways to identify a location is to take notice of where you don't see vending machines as you are carrying out the business of your day. Would adding a vending machine make sense? What is the foot traffic like? Good luck!
- Gumballs.com Tip! Remember that as the owner of your vending machines, you are responsible for keeping them filled and working properly.
5. Choose the Right Vending Machines, Equipment & Supplies
Which machine should I choose? What product should I vend? Below you will find information that will help you as you build your vending route and establish your business. Check out our blog to see the articles!
- Selecting Product To Vend
- Selecting Machines to Buy
- Gumballs.com Tip! Note your key code in a secure location in case you ever lose the key and need to replace it.
6. Service & Maintain Your Vending Machines
Your vending route is only as strong as your machines, so servicing and maintaining the vending machines in your route is essential. We've compiled a full set of articles on vending machine instructions and maintenance on our Blog & Articles page including:
- Adjusting or changing your Dispensing Wheel
- How to Attach a Gumball Machine to a Stand
- Replacing a Gumball Machine Lock
- Servicing your Machine
- Changing a Coin Mechanism
- Taking your Gumball Machine Apart (and putting it back together)
7. Start Small with Vending
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 $190.98, plus shipping ($139.26 for a basic gumball vending machine with a stand and $44.12 for one case of Zed 1-inch 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 $21.52. 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 $234.02!
- As you continue, the profit margin will grow because now that you own the vending machines, you usually only need product to fill them, along with occasional parts. If you purchase another case of 850 assorted one-inch gumballs (starting at $39.99 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 $168.38!
- 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.
The above are just a few pointers to help get you started. Gumballs.com offers the most competitive prices on vending machines and vending supplies including gumballs, bulk candy, toy capsules, bouncy balls, stickers, temporary tattoos, mints and chocolate-covered espresso beans. Gumball machines are a great business in that you can start with one machine and use the profits from that first case of gumballs to roll back into the business and it will pay for itself as you grow the number of vending locations that you offer.
Please also see our Blog & Articles and Vending Business FAQs. Thanks for visiting Gumballs.com!