Are you considering starting or buying a vending machine business? If YES, here are 10 pros and cons of owning a vending machine business. More than half of the vending machines in the United States are either in offices or manufacturing buildings, with about 30 percent in schools.
According to Brandongaille.com, the average sales for vending machines in the United States is more than $7 billion with an estimated 56 percent of products sold from the vending machine being cold drinks.
Pros of Owning a Vending Machine Business
Table of Content
- 1. Low Start-up Cost
- 2. Steady Income
- 3. Easy to Operate and Run
- 4. Low Time Investment
- 5. You Can Sell a Wide Variety of Things with a Vending Machine
- 6. You Can Get Sales at Any Time of the Day
- 7. You Get to Be your Own Boss
- 8. Little Overhead Costs
- 9. Cash Based
- 10. You Can Easily Find Out What your Customer Want
- a. Slow Start up
- b. Restocking Schedule
- c. Vandalism
- d. Getting a Good Location
- e. Repairs
- f. Theft
- g. High Capital Cost
- h. Leasing Agreement
- i. Heavy Cash is Usually Involved
- j. Increasing Competition
1. Low Start-up Cost
One of the good things about a vending machine business is that it is cheap to start. To get started, you may need as little as $2,000 to get a single machine and to also add the inventory you need to it. You can easily take advantage of the franchise opportunity to buy products like gumballs and other sweets in bulk as opposed to going through a distributor of the product that will end up charging you higher.
2. Steady Income
Unlike a lot of businesses that you need to stay for some time before they become profitable, a vending machine business can start turning in a good amount of profit within just several months. As long as you have a lucrative location with a lot of traffic and you establish your route, you can earn a steady amount of income on a weekly basis.
Items such as chips, candy and soft drinks usually have a high profit margin and as such they can generate a lot of money for the owner of the machine. It should be noted that the more vending machines you own, the more you will earn from the business.
3. Easy to Operate and Run
Owning and managing a vending machine business is a fairly easy process. You get your machine, put it in a location with a lot of traffic, source your preferred inventory that you think will generate the most profit from a wholesaler to reduce cost, stock your machine and you are good to go.
As long as you replenish your stock on a regular basis, you will be able to make profit from your machine. Usually, if your products sell out fast, you may need to restock your inventory on a weekly basis so as to keep your products fresh. It is not like a store or shop where you have to be physically present and interact with your customers.
4. Low Time Investment
A vending machine if handled properly can be considered a passive means of generating income. This is because as the owner of the machine, it requires very little investment of your time in other to makes the business work. Your routine in respect to your vending machine business will involve driving to the location of your machine, picking up the money that it has generated, checking your remaining stock and refilling your stock if need be.
Alternatively, you can employ someone who will do this for you. Due to the fact that a vending machine does not consume a lot of your time, you can easily combine it with another work without any hassles. If you notice a reduction in the volume of your sales, you can find out what your competitors are doing differently and tow the same line.
5. You Can Sell a Wide Variety of Things with a Vending Machine
You can sell almost anything with a vending machine ranging from fresh fruits to electronics, to sweets and snacks. The possibilities are endless as long as you are willing to stock it. You can research what your location buys the most and then you can provide a vending machine that dispenses that particular product.
6. You Can Get Sales at Any Time of the Day
A vending machine has no opening or closing time; it is always available and ready to do business as long as there is a willing customer. A vending machine is always operating and as such you can make money irrespective of the time of the day. This is a sharp contrast to most retail stores that are not available continuously.
7. You Get to Be your Own Boss
A vending machine business offers a means of self-employment. With this business, you don’t have to answer to a boss; you get to set the time you want to tend to your machine and can even go on a mini-vacation without the fear of being fired. You can work as much as you want or as little as you want though it goes without saying that it will affect your income. If you are entrepreneurial in nature, then this business will suit you.
8. Little Overhead Costs
Vending machine business is associated with very little overhead costs. Removing the cash and stocking the machine yourself can eliminate the need for having an employee. Therefore you don’t have to pay anyone a salary or benefits. Also, you don’t really need to advertise your machine as your fully stocked machine will speak for itself. You don’t also need to rent or purchase an office space in order to run a vending machine.
9. Cash Based
Due to the fact that a vending machine accepts money before products are dispensed, it eliminates the potential hassle of having a bounced check, credit card fraud or charge backs because customers pay before they receive the goods in cash.
10. You Can Easily Find Out What your Customer Want
You can easily find out what your customers want and will pay money for by visiting some stores and offices that are located around the location you want to install the vending machine and then asking people what they will prefer to be conveniently provided for them. It could be fruits, candy, snacks or even cigarettes. Find out what people are likely to buy a lot of and stock that commodity in your vending machine.
Cons of Owning a Vending Machine Business
a. Slow Start up
When starting up a franchise vending machine business, you should note than it takes time and resources to place a vending machine in a location that would generate revenue. At the beginning the profit may be very small, and it may take some time before the situation improves. Also transporting the machine to your location of choice can be problematic as it will require you to hire a truck or a large vehicle due to their bulk.
b. Restocking Schedule
The more vending machines you have the more profit you will be able to generate, yet, having a lot of vending machines comes with its own problems. Stocking the machines that are in different locations can be burdensome and tiring.
If your machine is not properly stocked, you could end up losing your location because people expect your machine to be ready to dispense at all times. Also, depending on the product your machine dispenses, it may require more attention.
For example, a lunch and snack machine will require you to restock it daily before lunch. Also fresh fruits will need to be restocked fairly often. You can surmount this challenge by employing someone to help you tend to your various machines though this will reduce your earnings.
Vending machines are usually targets of vandalism by unscrupulous elements and disgruntled competitors especially if they are located in a site where they are not properly monitored. When you want to site your machine, it is expedient to site it in a location that is secure and within the sight of staff.
Also, if you are buying a machine from someone who has already been using it in a particular location, you may still be bound to remain in that location due to the stipulation of the contract that was signed. So you should make sure that if you are buying a vending machine from someone that it does not come along with such restrictions.
Most times, getting a suitable location for your vending machine can be quite problematic. If your machine is in a place that has very little traffic of individuals, it will definitely tell on your earnings. You can surmount this hurdle by engaging the service of an experienced professional locator, though they do not come cheap. A locator will help get the best location and the best deal should in case the store you want to site your machines wants a slice of your profit.
Due to the fact that vending machines are located in public areas where people will use and abuse it, it is usually prone to regular break down. If you have a lot of vending machine, the cost of repairs can quickly add up and escalate. You can tackle this by learning how to repair the vending machine yourself instead of hiring someone to do it for you.
Stealing of your merchandise from your vending machine by thieves is a real problem you have to face. In search of free treats, some thieves use coat hangers to pry candies and chips from the vending machines coil. Also the may build mock coins which some combo machines may not be able to differentiate from the real deal.
g. High Capital Cost
Vending machines come in a variety of sizes and prices but if you want to buy a vending machine that has decent quality and security features, you should be willing to spend not less than $3,000. If you need a cooling unit to chill your drinks, you will need to spend at least $3,600. Then you would still need to stock your machine with the merchandise you intend to sell.
h. Leasing Agreement
In some cases, the business owner who owns the location you want to site your vending machine may require you to sign a leasing agreement with them. The implication of this is that you will have to offer a percentage of your sale to him or her as a form of royalty irrespective of how much you made. This will further reduce your monthly income.
i. Heavy Cash is Usually Involved
Some newer and more sophisticated vending machines can accept credit cards as a means of payment, but to a large extent, most machines only accept cash. If the product you sell is cheap and can be purchased with pocket change, you will find out that you have a large amount of coins. Counting and depositing the kind of money to your bank account can be tiresome.
j. Increasing Competition
Due to the fact that getting into the vending machine business is fairly easily, a lot of people are opting to start the business themselves. This can result in reduction of revenue for people who are into the business.
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