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Every aspiring entrepreneur dreams of having a profitable and low-maintenance business. If you’re an entrepreneur or someone looking for their next side hustle, no doubt you would have been considering different business ideas.
You would be looking for the most passive and sustainable income you could generate. You should also be assessing how much capital expenditure required compare to the potential revenue this business can reap.
Have you ever stopped to consider how the humble vending machine in your lunch room is run and operated? How they make their money?
Since COVID kicked off, we have received numerous requests from such entrepreneurs across Australia asking how the vending machines business model works. More specifically, how a vending machine hire business model works and whether they are profitable. So, we’re here to detail how a vending machine business works, how much money you can expect to make and insider secrets to get you started on your vending machine hire business.
My Vending Machines Investment Story
FIrst off, you could say I know a thing or two about this subject. It wasn’t that long ago when I was looking to sack my day job to start my own business. I wasn’t sure what or how.
After many years and ideas, as i was went on my lunch break in my 9-5 job that I hated, I decided to buy a bottle of Coke from the vending machine. I inserted a $5 note and chose my drink of choice, but the machine stalled and didn’t deliver me the sweet dark nectar of life that I had been yearning for. Following about 5 minutes of internal rage and a few smacks to the vending machine, I calmed down…
….that’s when it hit me….
over the years, I recalled how many vending machines have failed me. The frustration I felt every time they somehow failed me or overcharged me. What was so wrong with the vending machine industry that they failed to innovate enough just to deliver me my delicious drink or snack?
Opportunity lies where failure precedes
Over the next month, I researched the vending machines business model and how I could remove all our frustrations with one fellow swoop. No one would ever be frustrated by a vending machine in Sydney again. Our motto for the business was “that’s the C&C difference”. C&C Vending Services was born.
What is the Vending Machines Business Model?
Let’s summarise the vending machine business model in 3 simply steps.
1. You purchase vending machines from a reputable vending machine supplier (such as C&C Vending Services).
2. You find locations/businesses that are in need of convenient drinks and snacks.
3. You provide vending machine hire to this location (free or paid).
4. You refill and maintain the machine regularly.
5. You generate revenue from the drinks and snacks sold.
Wait! We added one more step to our business model that literally changed the face of vending machine users in Sydney.
6. You provide convenience.
This final step is what makes the entire vending machine business model challenging, but when implemented correctly, you can say goodbye to frustrated customers and hello to businesses that want your vending machine on their site.
How Much Does a Vending Machine Make?
On average, a single vending machines investment can generate AUD $700 per month, making the yearly earnings AUD $8,400.
Of course the revenue that each machine generated depends on how many items are sold from the vending machine, so carefully selecting locations for your vending machines investment is the most crucial part of your business.
How to Find Vending Machine Locations?
Here is our cheat-sheet that will allow you to assess whether a vending machine location is suitable and could be profitable for you:
1. Does this location have at least 25 people in the location throughout the day?
a) Is the location ‘white-collar’? Then you Require at least 30-40 regular daily people to be present.
b) Is the location ‘blue-collar’? Then you Require at least 20-30 regular daily people to be present.
If the location has fewer than 25 people throughout the day, you may have an expensive asset sitting around not making money for you. However, consider the location and customers carefully. For example, a factory that has 20 blue collar labourers with no other food and drinks nearby is likely to generate more revenue than an office with 100 white collar workers who only pop into the office for meetings.
2. Are you able to regularly organise refilling and maintenance?
a) Budget on 2 hours per week for refilling and maintenance per machine. This depends on how busy the vending machine location is.
Pro-Tip: remember our 6th step in our business model above “You Provide Convenience” ? Budgeting for a little extra time to keep each machine fully stocked and maintained is the ‘secret sauce’ for a successful vending machine business in 2021. You can achieve this by ensuring your vending machines investment has back-to-base monitoring which will notify you when a machine is running low on stock or has a problem. Ask C&C Vending Services about vending machines with back to base monitoring.
Remember, you’re not selling food and drinks, you’re selling convenience.
3. Can you source the drinks and snacks required at this location for a cost that can return you your required profit margin?
You need to ensure that your profits are high by paying the lowest possible per-unit price on the products you purchase for each machine. Look for wholesale snacks and drink suppliers in your area. Try to create a network of wholesale suppliers that you can regularly source products from. Some vending machines sales will reap less profits than others. So depending on your required profit margins, it may not always be profitable to stock the machine with products which are hard to find and high priced.
Pro-Tip: Your profit margin for a vending machine location should be 55% or more. Do the math before deciding to take on a new location.
Are vending machines a good investment in 2021?
Over the years, vending machines sales across Australia and indeed worldwide have continued to increase. 2021 is a little different. Due to COVID, the need for COVID-safe ways to feed people has become a key factor in workplaces, schools, gyms and public places. Restaurants have had to endure lockdowns and closures.
2021 is the year where cashless vending machines will really take off
Vending Machines Business Investment Stats:
- Vending machines investment offers a quick Return On Investment. The profitability rate is good, and you have high chances of recovering your initial investment within 12-18 months — enabling you to add more machines to your collection.
- A vending machines business is highly passive income. You don’t have to commit 5 or 6 days a week to your business.
- Global vending machines sales were over $23 billion in 2018 alone.
So, Yes, a vending machines investment in 2021 is a smart move. In fact, vending machines business can expect to increase their revenue in 2021 more than any other year due to this COVID era and are ongoing heavy reliance on contactless COVID-safe ways of living.
Which vending machine is most profitable?
There is no right or wrong answer for this one. It really depends on your customer at the location. Selecting the right vending machine for each site is crucial.
For example, for a large office with 1000 regular people in attendance, it wouldn’t make sense to install a small vending machine that only stocked drinks. It makes much more sense to install a large combination vending machine (combo vending machine) that stocks both drinks and snacks. This means less maintenance and refilling.
However, generally speaking, one key rule of thumb is that by providing vending machines that have multiple methods of payment including cashless payment is the key to maximising your profit for a location. All of C&C Vending Services vending machines offer cashless payment options such as credit card, Tap n Go, Paywave and smartphone (NFC) payment.
Which vending machine products are profitable?
This is where most new vending machines investments go wrong. You may assume a certain location would want certain types of snacks and drinks. DON’T! Do not assume anything. Have your vending machine product list ready and accessible to the customer at all times so they can pick and choose what they want.
For example, do not assume that a white collar environment would prefer healthy options. Healthy options only make up a tiny percentage of all vending machines sales; less than 5% to be specific:
Pro-Tip: Do not fill the machine with items YOU would like the customer to consume. Fill the machine with what the customers at that location want. For example, Don’t put meat pie’s in a gym vending machine. Meat pie’s would work well in a labourers factory.
Pro-Tip 2: Build a relationship with the site manager. That way, they feel comfortable telling you to change the items in the machine to suit the customers as required.
Better relationship = more vending machines sales
How to start a vending machine business
OK, so you’ve done the math. You’ve decided that a vending machine business can be profitable for you and you’ve even drafted some initial locations you can target that would have high vending machines sales.
What’s Next? Where do you start?
1. Buy your first vending machines(s)
a) Find a vending machine supplier such as C&C Vending Services. Build a relationship with the supplier to strike a good deal. Generally speaking, the more machines you buy, the cheaper the price per unit.
2. Create your initial product list that you believe you can generate the most vending machines sales while also being popular choice.
Pro-Tip: Here is our own product list.
3. Secure your assets to run your vending machines business
a) Website: find a reputable website designer and digital marketing agency to build your website and perform the necessary digital marketing for your vending machines business such as running Google Ads and working on your SEO. Don’t skip this step. No marketing means your potential customers can’t find you.
b) Transport: you will need some sort of truck or ute (utility vehicle) to transport the vending machine to and from sites. To refill the machines, you should have a large car at very least to fit substantial stock (again depending on how many machines you need to service in 1 day).
c) Staff to refill/maintain machines: You will start your vending machines business with very few sites so you shouldn’t need to hire additional staff yet. However, once you reach a certain amount of vending machines, you will need to hire staff to refill and maintain them.
How often do vending machines get refilled?
In short, most machines get refilled once per week.
How Long Does It Take to Refill a Vending Machine?
Including refilling and travel time, as suggested above, budget 2 hours to refill each machine.
How much do vending machines cost?
Depending on the make/model of the machine, its size and whether they offer cashless vending machines sales, you can expect to pay $4000 – $7000 AUD for a new vending machine.
We would love to hear from you in the comments section. Have you been considering creating a passive income with vending machine sales and a vending machine business? How has your current vending machines investment gone for you?
As always, we are happy to answer questions or queries you may have about your potential vending machines investment.