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How to Make Extra Cash by Investing in a Vending Machine
You probably think of vending machines as your snack outpost of last resort when stranded in an office or airport. You probably don’t think of them as a cutting-edge, cash-producing business venture–but maybe you should. Did you know that these snack dispensers oases are often independently owned? Rather than being leased by the Coca-Cola Company, they can be lucratively run by individuals like you and me (assuming that you are not the CEO of PepsiCo).
Earlier this year, NerdWallet dug into the costs and benefits of running vending machines like a small business, offering a step-by-step guide to help you judge whether the investment makes sense for you (presumably beyond fulfilling your childhood dream of owning a candy store). Here are the major things to consider if you’re interested in becoming a vending machine tycoon in your neighborhood.
Vending machine trendiness: Are they actually lucrative?
The pandemic significantly boosted interest in the business of individuals owning and maintaining their own vending machines, especially amongst Gen Z-ers watching their peers flaunt their supposed resulting cash flow across TikTok and YouTube. Last year Vox covered how now 20-year-old YouTuber Jamie Ibanez allegedly made six figures from the practice; actually, the piece revealed, most of his income comes from his YouTube channel. Still, in that interview, Ibanez tells Vox he bought his first vending machine after watching this YouTube video of someone going around taking all this money out of their machines. Inspiring!
Let me be the first person ever to point out that TikTok and YouTube are not real life. How lucrative is this business venture really? Well, according to Vending Market Watch: very. Their latest “state of the industry” report calls 2019 a ”record-breaking” year for convenience services operators’ sales. There has yet to be a fresh report this side of the pandemic, but the general consensus online is that a return to in-person work and travel holds promise for the vending machine industry.
However, given variables like location, number of machines, and type of goods sold, it’s hard to find an accurate estimate of how much income you can actually generate from owning a machine. NerdWallet reports that the average vending machine earns $35 a week, but vending machines that are “well-stocked and placed in safe, high-traffic locations” can earn you nearly triple that amount—over $400 a month.
Low startup costs
The major costs of your vending machine business come from the initial investment in the machine, and then from stocking it with items. A new machine straight from a manufacturer can run upwards of $8,000, but used machines are on Craigslist or Facebook Marketplace for as little as $300. You want to strike a balance between a fancy, expensive machine and a piece of junk that ends up being more trouble than it’s worth. To test the waters, aim to buy a vending machine and initial inventory for under $2,000. Of course, those inventory costs will depend on what you choose to sell.
Inventory of choice
You’re not limited to snacks and soda, especially if you want to target a specific market. According to NerdWallet, it’s a good idea for new vending operators to start with a specialty—be it healthy snacks, beverages, or even fresh food—until you learn more about the industry. Aside from the usuals, here some thought-starters that might suit your business:
- Protein bars
- Hot beverages via a specialty machine
- Non-edible items, like tobacco (if legal in your state), phone chargers, or laundry products
Location, location, location
Your choice of inventory should come from what’s in demand in your area. Think about areas where you have purchased something from a vending machine. Viable spots are probably near schools, hospitals, train stations, laundromats, or anywhere else where you’re either in a hurry or stuck without other food options.
If you’ve found the perfect spot, you can’t just plop your machine down out of nowhere. You’ll need to get contact information and reach out to property owners and managers. Before that, come prepared with information about how your state licenses and governs vendors by contacting your local Chamber of Commerce or looking up your state’s small business regulations online.
In addition to startup costs, you need to think about how sustainable a vending machine business will be for you specifically.
- You need a license and a tax ID to do it legally (although this appears easy enough to achieve).
- You need to secure the vending machine’s home in a profitable area with enough recurring foot traffic.
- You need a certain level of physical fitness, as servicing the machines involves a fair amount of walking and hauling products.
With enough market research and careful decision-making, the vending machine industry is accessible to just about anyone. If you’re convinced that owning a vending machine is your next entrepreneurial venture, definitely go read NerdWallet’s full step-by-step guide. And please, for me: Stock salt and vinegar chips.
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