If you’re looking to start a business that offers passive income, it doesn’t get much better than vending machines. You must buy a machine, put it in a high-traffic location, and withdraw the money regularly. While the actual process of starting a vending machine business is a bit more complex than that, the results speak for themselves.
Still, it’s always good to go into a new business with both eyes open, meaning you must consider the upsides and downsides. Let’s discuss whether investing in a vending machine business is a good (read: profitable) idea.
Vending machines have existed for centuries, with the first machine invented in ancient Rome. In modern times, vending machines are ubiquitous, as you can find them practically everywhere there are people, including shopping malls, colleges, grocery stores, hotels, and more.
Part of the reason vending machines are so common is that they’re convenient and adaptable. Modern machines can do much more than drop bags of snacks and chilled beverages. Today’s consumers can buy hair products, hot food, and even gold from different machines.
Globally, the industry is expected to grow about 16 percent by 2027, reaching over $19 Billion in total sales. In the United States, the industry has grown by about 0.1 percent year after year, and there are no signs of slowing down. While market saturation can be a problem in some areas, rapid development and shifting populations mean there is a lot of potential for both new and existing business owners.
With such high demand and consistent growth, investing in vending machines is always a good time. However, just because the market is doing well doesn’t mean each machine is a cash cow. In some areas, a single machine could make about $100 per week. You can expect to make $500 or $1,000 weekly in other locations.
So, before you jump into this exciting opportunity, let’s break down the advantages and disadvantages of vending machine ownership.
Starting a business can be an expensive proposition, especially when talking about food service. Opening a restaurant usually requires hundreds of thousands of dollars, but even a food truck or cart could easily cost five or six figures up front. While business loans can help alleviate these costs, there’s far more pressure to succeed in paying off those loans.
By comparison, many vending machine owners can purchase a single machine for several hundred bucks, depending on its type and condition. Even the high-end machine will only cost a few thousand, far less than you would spend on a single food cart.
Yes, you need to stock the machine with different products, but if you purchase these items wholesale, you can spend much less than buying them individually. You can get your business up and running for $5,000 or less.
As mentioned, some areas are very lucrative for vending machines, while others may be duds. Another obstacle is that many premium locations are often taken, meaning you must get creative about where to post your first machine.
It can also be discouraging if you set up a new machine and have low sales at first. Unlike other business models, you can’t necessarily control how many people visit your location. You cannot take out a billboard ad and promote a soda machine at a particular business.
That said, there are ways to spur more activity and mitigate slow sales periods, so you shouldn’t give up on a spot if a machine isn’t making a lot of money at first.
One of the best reasons to invest in a vending machine is the ability to purchase products wholesale so that you can mark them up accordingly. Also, if you purchase high-end products, you can increase the markup and rake in more money.
Another reason why vending machines have a decent profit margin is that they don’t require much overhead. While you must cover repairs and maintenance, you usually don’t have to pay for electricity – the property owner does. Plus, if your vending machine has 24/7 access, you could make money at all hours of the day without any staff needed.
As a rule, people respect vending machines and don’t trash them (or break into them). However, some areas may be more susceptible to crime than others, so you have to plan accordingly. Unfortunately, unless someone is watching the machine, you may not know about vandalism or theft until long after it happens, meaning you can’t necessarily recoup your losses.
Running a vending machine business rarely requires more than a few hours of work per week. On average, you must purchase more products and visit your machine to restock and withdraw any cash. Plus, if you’re already shopping at big box stores, you don’t need to make any special trips to buy more inventory.
Typically, vending machine owners rarely only have one machine in their inventory. Once you buy one, it’s much easier to buy another and another. Also, because each machine has a low cost of entry and requires minimal oversight, you can expand your business much faster than you would with other options. You could sometimes go from a single machine to dozens of them within a couple of years.
If you’re interested in making a passive income with a high-value vending machine, Vend-Co can help you get started today. We offer a wide selection of machine models to suit various interests, so browse our selection online and contact us when you’re ready to take the leap!
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