The Vend-pire Strikes Back

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It’s The Vend of the World As We Know It

As we continue to prioritize speed and convenience to fuel our retail purchases, vending machines are not just the only option to get a soda and stale honey bun while sitting in an ER waiting room, but a great investment to bring in passive income.

What could be more enticing than a 24-hour business with no payroll or monthly lease? This business could mean “the vend” of your financial struggles.

Let’s explore your options with this potential side hustle.

V for Vend-etta

TLDR:  Vending machines are a great opportunity for those who have no business running a business.  A bag of Cool Ranch Doritos in an ER waiting room can be your key to financial freedom.

Dollars and Cents

• A vending machine empire can be started with a small business loan and an initial investment as low as $2000

• 4 types of vending machines - food and beverage, bulk vending, specialty (hot beverages, retail goods, tobacco) and franchise

• Location, location, location - you can put them anywhere - schools, hospitals, malls, laundromats, in your master bedroom.  The possibilities are ENDLESS!

• Vending machines can generate around $300 a month or easily double that in a high-traffic location

The Vend-a Boys are Coming.  Vending machines are the business equivalent of selling candy bars in front of the supermarket - something most can do with some inventory and decent foot traffic.  In this day and age of digital payments and inventory-tracking technology, you can have a nice stable of machines running in different locations and easily manage them without investing too much time.

Vend for Yourself

 In the subreddit r/smallbusiness, on YouTube, and even on TikTok, there is a lot of really great talk about how to set up and start a successful vending machine business.

Like a customer trying to decide between the Famous Amos cookies or the pack of Oreos, every potential vending entrepreneur is met with decisions to make immediately. Asking yourself the following questions will help you make actionable decisions about your new business.

What type of machine do I purchase?

Based on my research, for a new startup, it would be best to choose a cheaper used machine as a proof-of-concept since you will be recouping your investment of $1 at a time. Used machines average around $2000, while newer, more technology-heavy machines can cost over $8,000. Starting with a used machine can help you test if your business is viable before scaling it to a larger area.

Getting many machines out into viable locations is necessary because you need to maximize the amount of potential customers and buying opportunities. This is also where location comes into play.

Where do I put them?

The Top 5 highest grossing locations are: schools, hotels, warehouses, large offices and airports, or better known as the first 5 of the 7 layers of Hell. Essentially, any location you are forced to be in longer than you would hope and would stress-eat is great for a vending machine.

When approaching a business owner about placing one of your machines on their property, don’t ask questions - just leave the machine there, it is heavy and they won’t be able to move it without your help.

Instead of asking questions, tell them the value your machine can bring to their establishment by keeping their customers from leaving while they are there. If they are interested, negotiate a variable rate to account for month-to-month fluctuations in sales.

What do I stock it with?

Popular snack items like name-brand chips and cookies move quickly and offer variety, so they will have high sales but lower profits. You can add location-specific high-cost items like hygiene products, PPE, soaps and detergents. These non-perishable packaged goods are superior as they aren’t prone to spoilage or waste like food products. Novelty and unusual offerings can bring more attention to your machine. Who wouldn’t want a fidget toy vending machine?

Each location will vary based on the needs of the actual customer, and testing out new products can help you to gain valuable insight into what will work.

What are some of the additional costs of the business?

As with any business, vending machines contain hidden costs that should be considered before starting. Besides the expected costs of inventory, maintenance, and repair, you can expect some fairly substantial administrative costs.

General liability insurance can go up to $1000 a year whenever you machine tries to crush potential thieves, locations can charge variable rates of about 15% of revenue and credit card transactions can cost 2-3% each. You also have to consider fuel and vehicle maintenance for your trips to stock and maintain your machines. 

These are just some answers to a few questions when considering this business. Vending can be a “set it and forget it” type of business, but as with any other, it needs to be run properly to turn a steady profit.

Chart of the Week

This graph demonstrates what we all know - retail’s final form is the vending machine. Technology, convenience, and not having to interact with another human being will continue to drive sales towards these munchie machines.

Buy Your Vend-ship

Starting your own business from scratch might have been fun back when people had a home phone line. However, in our age of instant gratification, buying your way into an established and successful vending machine business is much preferred. Who wants to spend their own time doing the actual work when other people have already done that for you?

By simply searching “vending” on BusinessesForSale.com, I was able to find 403 active vending machine businesses for sale in the United States, already filled with sugary soda and greasy chips, softly humming with an electric current in the alcove of an animal hospital.

You can buy in as cheap as $85,000 for a vending business with an annual revenue of $7,681 and cash flow of $34,041 to a vending business empire in Utah asking $875,000 with annual revenue topping out at $477,954 with a cash flow of $310,521. Whatever your budget or location, you can acquire an army of automatic money-makers. We don’t buy products here; we buy entire businesses.

 “I want to get a vending machine, with fun sized candy bars, and the glass in front is a magnifying glass. You'll be mad, but it will be too late.”

-Mitch Hedberg

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Quick Bits

Walmart’s fulfillment centers are essentially giant vending machines using 80 miles of tracks and thousands of robots to serve 95% of the US and help it achieve 20% year-over-year growth

Health and Safety supplies are being supplied by a vending machine at the Laredo Public Health Center in Texas instead of unhealthy snacks like most other machine

The Giving Machine is a “reverse vending machine” providing the ability for people to donate to local charities and provide items like clothing, educational supplies, and even livestock

‘Merica Machine American Rounds has created the true American nightmare by installing four ammo-dispensing vending machines to make bullets as easy to buy as Bugles

Money Talks

If you were starting a vending machine business, where would you put your machine, and what would you stock it with?

Let us know your answers so we can feature them in a future newsletter!

May the cash flow always be in your favor,

Andrew and Lou - the Funny Money team