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How To Invest in Vending Machines and Make a Killing!

How to Invest in Vending Machines

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Vending machines provide a fantastic opportunity to diversify your income at low upfront costs. However, one discouraging characteristic is their popularity. 

If you’ve thought about this business idea before, chances are you gave up because they are everywhere, so the market is probably saturated. 

But how can you outshine your competitors and maximize your income in this venture? I believe there’s enough pie for everyone, so I’m providing you with a step-by-step guide on how to invest in vending machines.  

Whether you’re a seasoned entrepreneur or simply looking to explore the world of side hustles, let’s get right into it.

How To Invest in Vending Machines 

Starting and growing a vending machine business isn’t easy, but once you gain footing and the money starts streaming in, you’ll be glad you started. 

People are making over $7,000 monthly from vending, and there’s no reason you shouldn’t, too. 

So, how can you set up your business and make it thrive? Below is a detailed step-by-step guide.

1. Determine Your Financial Goals 

The first step to starting a business is determining the why. Are you seeking a side hustle to supplement your income, or are you hoping to turn this into a full-time gig?

Or want to develop a passive income stream that allows you to make money while you sleep

Knowing what you want can help you develop concrete strategies towards your goals. It can also help you stay focused and consistent instead of splitting your attention in different directions. 

2. Choose a Profitable Niche 

Like any other business venture, success in vending machine investment boils down to choosing the right niche. 

There are several types of vending machines, each successful depending on your target audience and location. Let’s look at them in detail:

Food and Beverage Vending 

This is by far the most common vending machine type available worldwide. Stock snacks, candy, and soft drinks in the right place and watch your revenue increase.

Have you ever taken someone to the hospital and had to sit in the waiting bay for hours? 

We had a snacks vending machine in my dorm back in college, and it came in handy when I was too lazy to cook or was in a hurry and needed a quick bite. 

But should you stock food or beverages? Which ones are likely to sell faster? Since the two complement each other, setting up a snack-drink combo is an excellent idea. 

Consider further catering to a specific target audience to maximize sales and profit. 

For instance, snack bars and sweets are good ideas if you’re targeting school kids. However, if you plan to set up near a gym, you might want to consider healthy snacks like mixed nuts.

Specialty Vending 

Have you ever been so excited about a vacation that you forgot to pack essentials like your blowdryer or phone charger? This is where specialty vending comes in.

As the name suggests, specialty vending involves machines that cater to a specific group of people. 

The best part is that specialty vending isn’t limited to food and beverage. You can stock anything relevant to your target audience, from beauty products to personal care items and electronics.

Again, the location of your vending machine plays a huge role in your success in specialty vending. 

Personal care products like towels and feminine hygiene items will likely sell well near hotels and transit stations. 

On the other hand, laundry products like fabric softener and detergent may make more sense in a dorm or apartment building. 

Bulk Vending 

Bulk vending is worth considering if you’re seeking a low-cost entry into the business. This option lets you sell low-priced items in bulk to make extra cash. 

It mainly deals with non-snack items, like:

  • Toys 
  • Stationery 
  • Stickers
  • Figurines 
  • Jewelry 

Don’t get discouraged by the low prices. These items usually sell fast in the right environment. Furthermore, since most bulk vending machines are manually operated, you can keep up to 100% of the profits. 

Franchising 

Franchising involves using a famous brand name to market your vending business instead of establishing it from scratch. 

In addition to offering its brand name, the franchisor provides guidance on operating and expanding your vending business. They also help you source inventory and get the best deals from suppliers.

But there’s a catch. Unlike other vending business options, you don’t pocket 100% of your profit in franchising since a portion goes to the franchisor. 

You’ll need to sign a binding agreement with the franchisor dictating the terms and conditions of the contract, including the payable amount. 

Ensure to research various brands and compare terms and conditions to find a deal that best aligns with your financial goals. 

3. Find a Suitable Location 

I can’t emphasize enough the importance of choosing a suitable location for your vending machine. 

Imagine traveling to the beach for the summer and realizing you forgot to pack your phone’s charger. 

You remember spotting a vending machine in the lobby, and you get excited as you rush back, hoping to find a charger.

But upon reaching the vending machine that’s supposed to save your life, you find candy instead of the one thing you badly need: a charger.

I’m not saying candies won’t sell well at a beach hotel. However, you must thoroughly research your target audience to determine the places they frequent and what they need. 

Some common places you can find vending machines are:

  • Hospitals 
  • Train stations 
  • Airports 
  • Schools 
  • Malls 
  • Parks 

Once you find a suitable location for your vending machine based on demand and your target audience, you must agree on a price with the property owner. 

This amount usually ranges between 5% and 25%. Also, remember to do your due diligence on laws that govern vending in your state to avoid legal implications in the future. 

4. Purchase Your Vending Machine  

The prices of new vending machines range between $3,000 and $10,000. I’m sure by now you’re wondering how and why I promised you a low-capital investment. 

If you can afford a new machine, go for it, but plenty of more affordable options exist. 

For instance, you can purchase a used one on Facebook Marketplace, eBay, or Craigslist instead of surfing Alibaba for a new modern machine.

Craigslist and Facebook Marketplace allow you to source vending machines locally to minimize shipping costs. You can also buy refurbished ones for between $1,500 and $3,000.

Here are some factors to consider when purchasing a vending machine for your business:

  • Ease of use: A customer will only return to your machine if it is easy to operate. Choose a straightforward vending machine to increase sales.
  • Size: How much space do you have available for your vending machine? You can purchase a big machine for a park, but you’ll need a mini vending machine for a small office. 
  • Convenience: Some vending machines have unique features like cashless transactions, voice or touch accessibility, or interactive screens. However, these are more expensive than conventional ones. 
  • Maintenance costs: Choose a vending machine with low maintenance costs and frequency. 

5. Organize Your Finances  

Now that you know what you want and where to sell, organizing your finances is the next step to investing in vending machines.

One significant benefit of the vending machine business is the low barriers to entry. However, this doesn’t mean you can ignore the nitty gritty. 

You still have to develop a concrete business plan that outlines your needs to the last dollar. This will be especially important if you want to purchase an expensive machine.  

So, wondering how to secure funding for your vending machine and inventory? The following options are worth considering:

Obtain a Short-Term Loan 

If you already run a business and have a paper trail that proves it, you have a good chance of securing a short-term loan from a bank or online lenders. 

Short-term loans usually range between a few days and 12 months and have higher interest rates than long-term loans, which may take years.

Ensure to compare interest rates and repayment terms when looking for a financial institution to take a loan from. 

Peer-to-peer lending is an excellent alternative to conventional borrowing because it allows greater flexibility in credit scores and repayment terms. 

Simply sign up on platforms like Prosper to connect with investors interested in vending businesses. 

Since a vending machine business requires a low capital investment, asking your friends and family for help is a fantastic way to access funding. 

A loan from a friend or family member will likely have lower interest rates. However, ensure that you have a binding agreement dictates repayment terms. 

Equipment and Inventory Financing

Equipment and inventory financing are similar, but the first involves taking a loan against your vending machine, while the latter refers to using your inventory as collateral for a loan.

You can start with equipment financing before you purchase the vending machine, and then once you stock it, use your inventory as collateral for another loan that opens the doors to expansion. 

Note that the lender will possess your machine or stock if you fail to repay the amount in time.

Franchise Funding 

As discussed earlier, a franchisor lets you use their brand to market your vending machine business. 

They also have the power to provide financial assistance or connect you with lenders. If you’re seeking an easy way to set up your business, franchising firms are better than banks. 

6. Source Inventory 

You’ve picked a location, secured the necessary funding, and purchased your vending machine. It’s time to start the business, but first, stock your machine. 

Focus on what your target audience needs, and your business will grow quickly. You can always start small and upgrade as demand increases. 

For instance, instead of filling the vending machine on the first stock, consider purchasing a few items to determine what sells fastest within the first few weeks. 

This strategy helps you determine hot-selling products that generate the most profit while avoiding losses. 

Partner with reputable suppliers to build a good reputation for your brand regarding product quality. Also, always ensure your items are in constant supply for customer satisfaction. 

7. Market Your Enterprise

I always encourage entrepreneurs to market their businesses because no one will buy your products if they don’t know they exist.

The vending business may seem too small to need marketing, but a small step in the right direction will yield significant results. 

Since the scale of the business is small, you don’t even have to spend money on marketing. So, let’s take our minds off paid ads and collabos with social media influencers for a while. 

Consider creating simple, eye-catching flyers and posters and distributing them within the location of your vending machine. 

Word-of-mouth is another effective marketing strategy you can use, given the scale of the vending business. 

The “Tell a friend to tell a friend” principle doesn’t just work for parties, you can also incorporate it into your business. 

Still seeking other out-of-the-box ways to generate buzz around your vending machine? Consider offering discounts within the first weeks to attract customers. 

You can also offer exclusive offers to repeat clients to establish loyalty. 

8. Track Performance 

Monitoring performance is essential, especially in the first few weeks, because it provides insight into sales and consumer preferences. 

Encourage your customers to give feedback and use it to strategize and maximize your income potential. 

Investing in a vending management system is an excellent idea since it helps you keep track of inventory, sales, and profits. 

The best part is you can incorporate this system into different vending machines in various locations and do the work from behind your computer. 

This way, you can generate passive income from anywhere since the VMS software automates everything. 

Pros and Cons of Starting a Vending Machines Business  

Here are some advantages and disadvantages of starting a vending machine business:

Pros: 

  • Low upfront capital 
  • Potential for passive income  
  • Many diversification options 
  • The venture is flexible 
  • Easily scalable 

Cons: 

  • Machines require regular maintenance 
  • Prone to theft 
  • Seasonal variations may affect the business
  • Returns may be low at first 
  • You must invest ample time 

Tips for Running a Successful Vending Machine Business 

Here are some tips to remember as you endeavor to grow your vending machine business:

Customer Service is Important 

If you worked in an office and had to answer to someone, I’m sure you’d always try to please them and do your work perfectly, especially if it would lead to a promotion or income increase. 

This principle applies even in the vending business. The customer is your boss, so you should do everything in your power to satisfy them and establish loyalty. 

But how can you do that? Here are some practical ideas:

  • Offer high-quality products 
  • Restock frequently to avoid shortages 
  • Arrange your items in a visually appealing manner 
  • Offer discounts and promotional offers 
  • Ensure your vending machines are accessible 
  • Offer diverse payment options convenient to all 

Another effective way to keep customers happy is by offering responsive customer service channels like a phone number or email they can use to provide feedback. 

Respond promptly to queries and concerns to make the customer feel appreciated. Another tip: remember that the customer is always right. 

Also, remember to seek customer feedback consistently to find ways to improve your services. You can do this by conducting online questionnaires or providing suggestion boxes. 

Scale Your Business

We already established that the returns from a single vending machine can be low, primarily if it only caters to a minority group.

But let’s not forget that people make thousands of dollars monthly from this business. So, how do they do that?

The secret is to diversify your offerings. I’m not speaking about offering over 50 different products in one vending machine. That wouldn’t make sense. 

Consider establishing different vending machines offering various products in different locations. 

A snack vending machine works better at a school, while an electronic one will fetch more sales at an airport. So, what’s stopping you from owning both machines in these distinct places?

Before you give reasons like financial constraints and the logistics of managing inventory in different places, have you considered applying for loans and investing in a vending management system? 

You can also partner with reputable suppliers who make deliveries as part of their customer service. This way, you don’t have to be there for the bsusiness to run. 

Invest Significant Time and Effort 

Like any new venture, you must invest significant time and effort in your vending machine business, especially in the first few months. 

There’ll be lots to do around research, so you must be vigilant to find the best products, locations, franchisors, and suppliers. 

After setting up, you’ll need to collect money from your machine, monitor sales, and refill when inventory gets depleted. 

Why not hire someone to do it as you cater to your full-time engagements? While this is a good idea, it may not make sense initially. 

Returns may be low before you establish your business. So, it doesn’t make sense to outsource these duties while only making $50 or less per day. 

If you have other important commitments that take up much time, consider setting up a bulk vending machine with non-perishables like stickers.

Don’t Overlook Marketing 

Finding the right product and location are recipes for success in a vending machine business, but effective marketing is the secret ingredient.

Based on this idea, imagine this scenario: setting up a snack vending machine in a park is excellent because you’ll cater to the large audience visiting the park daily. 

But why limit yourself to that number when you can expand your reach to cater to people from adjacent buildings who don’t visit the park at all? 

The vending machine can be a new lunch spot for these people because it’s near the office and affordable. But how will they know that, considering they don’t visit the park?

This is why marketing is essential. Focus on utilizing cost-effective marketing strategies to avoid unnecessary expenses. 

That said, simply focus on local advertisements like flyers and posters. You can also join community groups on social media platforms like Facebook and advertise your vending machine for free. 

Frequently Asked Questions 

Are Vending Machines a Good Investment?

Vending machines are generally a good investment, but you must be strategic to profit from them. 

Factors like location, target audience, and products play a huge role in the success of a vending machine business.

You must invest time and effort in research and proper planning to lay a strong foundation for your vending machine business. 

On average, vending machines generate about $300-$500 monthly. However, you can make more by placing them in strategic locations. 

What Are the Best Vending Machines to Invest In?

The best vending machine idea depends on your location and target audience. Food and beverage vending machines are popular because most people like to snack.

However, venturing into fast-moving perishable goods may be challenging if you have other full-time commitments. These items need constant restocking, which may disrupt your schedule. 

The best way to find the best thing for you is to evaluate your financial goals and needs and compare them to available options.  

Also, employing the right marketing strategies for your vending machine can help attract more customers and increase overall sales. 

How Much Does It Cost To Stock a Vending Machine?

The cost of stocking a vending machine can range from a few hundred to thousands of dollars, depending on your product offerings and the machine size. 

Is It Hard To Start a Vending Machine Business?

Starting a vending machine business isn’t particularly hard. However, it has a few challenges. 

You need to carefully examine your financial goals and available options to find something that works for you. 

You also need to research your target audience and different locations extensively to find hot spots for your products. 

Additionally, you must invest significant time monitoring performance and restocking your vending machines. 

This may seem challenging, but you can grow your vending machine business with proper planning and strategies. 

Final Thoughts 

Investing in vending machines is profitable if you approach it strategically. I hope this guide helps you determine the right direction for your venture. 

Always do your due diligence, especially when determining what to sell, where, and acquiring funding. 

Setting up may seem challenging because of the nitty-gritty involved. Still, if you implement effective business and marketing strategies right from the start, your business will gain footing quickly. 

Looking for other money-making ideas? Check out these posts:

Lydia is a personal finance expert and the founder of Sproutinue, a personal finance site helping you find legit ways to make money, save money, and achieve financial freedom. She has been featured on various major financial publications, including Investopedia, Business Insider, GoBankingRates, and more.

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