Are you an entrepreneur looking for a business venture that has low-start up costs? What about an instant demand? And how about the ability to earn you money 24 hours a day?
Sound too good to be true? Maybe, but it’s actually describing the business model of a vending machine business.
In our daily lives, we walk past vending machines everywhere and barely think twice about them. We can find them in public transport hubs like airports and train stations, and in leisure centres and sports grounds. They’re a staple of college or office canteens and break rooms, and they can even be found waiting to comfort us in hospital corridors.
If we think a little harder about those examples, we can also notice that they all have something in common. They’re placed directly where there are copious amounts of foot traffic.
The vending machine business is a lucrative one, and it’s one that is often overlooked when it shouldn’t be.
By the end of 2025, it’s estimated that the vending machine industry will reach over $94.6 billion in revenue as it continues to expand.
Whereas before only unhealthy offerings were on offer like chocolate bars and fizzy drinks, the vending machine industry has expanded its options. Vending machine choices can now include mandatory healthy options like fresh fruit and protein bars, as well as gourmet pizzas, cold, fresh-pressed drinks, and in Beverly Hills, bottarga, caviar and escargot!
If this is all sounding like an entrepreneurial option you want to press the button on, we’ve summarised how to get started in the vending machine industry below.
What are the pros and cons of a vending machine business?
Before we get started it’s always good to summarise the advantages and disadvantages of any business model.
The advantages of a vending machine business model are as follows:
- Low Start Up Costs: A vending machine business only needs 3 things: Vending machines, items to go in the vending machines, and a vehicle to restock the machines. There are no office cost overheads to worry about, nor do you need business space. Vending machines themselves can be financed, and if you create good relationships with wholesalers, the bulk cost of buying supplies can be minimised too. Whilst it’s better to have a vehicle, if you can reach your machine locations on foot or by public transport, even a vehicle is unnecessary when just starting out.
- Quickly scalable: Because the vending machines are able to be financed, as your business starts to grow, you can quickly add more machines, across more locations and so the very profitable cycle continues.
- No accounting costs: Most vending machines are either cash or credit card to purchase. This means there are no accounts receivable, as you’re solely receiving the cash from the machine at the end of the day, or you’re collecting what you’re owed from the credit card companies.
- It’s simple & flexible: Once you’ve bought the machines and got them going, your only responsibility is to reservice the machines, or call out maintenance services on them if they malfunction. The business model is not complicated, and therefore friends or even family members can be easily drafted in to help with purchasing or restocking.
Whilst the cons of a vending machine business can be:
- A competitive market: Think of the places we listed in the introduction. Most of those spots instantly conjure up already existing vending machines. This makes it harder to get your slice of the market, unless your vending machine is offering something entirely unique to the competitors. Be aware that some larger vending machine corporations don’t take kindly to new, independent businesses appearing on their patch and could also have your property legally removed.
- Trial and error: Once you’ve worked out a location and put your vending machine there, you may find it doesn’t return half as much as you were expecting despite the area being populated with footfall. This can be for a number of reasons including high prices, or irrelevant goods on offer. For example, a vending machine business offering unhealthy snacks is unlikely to be popular in a leisure complex where there’s a gym or other health facility. Sometimes this means experiencing losses before profits as you tweak prices, offerings, and placements.
- Hidden expenses: Most leisure complexes and other desired vending machine locations have become wise to business owners wanting a share of their traffic. Therefore to capitalise on this themselves, there may be a ground rent fee to pay. If the area is highly desired, expect the price to reflect that. Those prices could be too high for brand new businesses to achieve, putting them at a significant disadvantage before they’ve even begun.
- Long or unsociable hours: Whilst the business is mostly hands off, depending on how quickly you can scale your business you may find yourself working either long or unsociable hours. If you have plenty of machines that need to be stocked in advance for the morning rush, you’ll need to be ahead of the peak commute times to make sure you can get to them all. Alongside machines that need to be ready for commute times, if you have machines that reach their peak at midday, you could find yourself up early and on your feet throughout the day and long into the night restocking.
How to start a vending machine business:
Once you’ve weighed up the pros and cons, if you’ve decided to go forward here are the steps you need to take to launch your vending machine business.
You’ll need to do your market research to determine which type of vending machine business to start.
Options could include:
- Starting from Scratch: In this business plan, you’ll need to purchase or finance vending machines yourself, plus search for locations and suppliers. This is the most low-cost option, and the most flexible, but involves a lot of work.
- Purchasing an existing vending machine business: This option gives you instantaneous profit and access to a plethora of machines and locations. However, the cost of purchasing is unlikely to be cheap. In addition, it’s best to ascertain why the business is being sold in the first place so dive into the accounts and turnover, as well as examine the machine and their offerings.
- Entering a franchise: Becoming part of a franchise grants you a successful business model and access to profitable machines. The drawback to this is that as well as a startup fee, the franchise owner will take a proportion of all profits made. Plus you’ll be restricted to only using franchise owned machines, in certain locations, and adorned with franchise branding.
- Get a Business Account: This may seem obvious, but you will want all your business income and expenses to go through a separate business account. This way it will be easier for you to separate your personal finances from your business venture. We recently welcomed ANNA Money to our partnership platform. ANNA Money has a really useful business current account that comes with a debit card, expense tracking, accounting and invoice management. We welcomed ANNA Money because they have a very high Trustpilot rating.
Depending on which option you choose will depend on your next step. Those purchasing an existing business or franchise opportunity can leap straight into writing a business plan. Those starting from scratch will need to market research the feasibility of their business idea, which includes evaluating places, locations and the types of customer likely to buy. Once this is completed, they’ll then need to write a business plan.
Find out how to write a one page business plan in our blog.
- Identify locations and negotiate contracts
Just like in real estate, location is everything in the vending machine world too. You’ll need to search for locations that have good levels of footfall and ideally have very few competitors around. A good location with 5 or so competitors isn’t likely to be a profitable choice, so look for 3 or under.
Locations to look for could include:
- Workplace canteens or break rooms
- Apartment blocks
- Community centres or clubhouses
- Educational areas like schools, colleges and universities
- Gyms, leisure complexes and sports grounds
- Plazas or town or city centres
- Retail complexes
- Shopping centres
As these places are desirable for any vending machine business owner, it is likely that you’ll need to negotiate and sign a contract that states your machines are allowed to operate on the premises.
It is worth noting that some contracts will be more expensive than others. For example a leisure complex is likely to be more expensive than a community centre. In addition, contracts may also include limitations on what can be sold. Town centres for example may want to promote healthy living, and therefore may only state that fresh, healthy snacks can be sold.
You must take these factors into account when agreeing contracts. If you are a startup firm with little capital, spending a proportion of your funds on a contract could negatively impact the type of machine you are likely to purchase. Likewise, if your business model specialises in gourmet cooked foods, but a location only wants freshly pressed juices, you may have to weigh up whether you can afford the additional supplier costs of making juices alongside your current offerings.
Ensure therefore that any contracts specify:
- The type of vending machine types (cash, credit)
- The products sold
- How long the contract will run for
- Any termination clauses (i.e, unprofitability, contract breaches)
- Any exclusivity rights
- Any rights to increase or decrease the number of machines, as well as replace them.
It is wise to have the contract either written or reviewed by a lawyer.
You will also need to compensate business owners, property owners or town or city councils for the use of electricity when using their premises or grounds. This is typically negotiated as a percentage of your vending machine business profits.
On average the commission business or property owners take is around 7%, but this number could fluctuate depending on the number and type of machines. As the business owner, you must provide a statement of sales and commissions to the person whose premises you are using at regular intervals.
- Purchase or finance equipment
If you are going to start your vending machine business from scratch, you’ll need to acquire vending machines.
Before you do this, you’ll need to decide which type of products you want to sell as these will depend entirely on the type of vending machine you buy. The main types of vending machine are:
- Bulk machines: Bulk machines are typically small and dispense bitesize handfuls of snack products like bubble gum balls, nuts, or chocolate snacks like M&M’s. Costs vary from £50–£200 depending on the age and condition of the machine. These are often the lowest cost machines to get started with, but require higher numbers of machines to begin generating substantial revenue.
- Mechanical machines: These are the typical type of vending machines that we are often used to seeing. They are tall, with the ability to dispense multiple products. Due to this, their upfront cost is much more expensive than bulk machines. Prices start at anywhere from £2,000, however, the profit margins are naturally much higher when compared to bulk machines.
- Electronic machines: Electronic machines are the most modern form of a vending machine. These often come equipped with touch screens and modern forms of payment like contactless payment options, as well as credit cards. Electronic machines have the largest upfront costs at around £3,000 per machine. However, electronic machines are more reliable, with larger capacities and the availability to hold different types of foods like freshly cooked sandwiches or pizzas. In addition, easier forms of payment like contactless and credit cards can easily double or triple the profit the machine makes due to user convenience.
Another option to keep startup costs low is to use second hand vending machines. Places to look for these could include:
- UsedVending.com: A website dedicated to the sale of used vending machines in good conditions.
- Amazon or eBay: Seller sites often come with reviews and the ability to ask questions of the seller including the reason for sale and type of condition the machine is in.
- Reliable vending machine dealers: Plenty are out there, so research trusted dealers.
It is worth taking into consideration that whilst new vending machines will come with at least a one or two year parts warranty, used equipment may come with significantly less of a warranty, if at all.
Therefore if considering a used machine, work out whether your business would be able to cover the price of any repair technicians in its initial period if you are not mechanically minded to be able to fix the machines yourself.
- Choose and source the right products
When you first sign contracts with the premises owners, it’s worth enquiring what type of products they think would be best suited for your machine. Whilst some contracts may stipulate the type of products they want offered, others may be able to offer useful tips as to what would sell best.
For example, vending machines selling hot drinks, chocolate bars, bottles of water and snacks such as crisps may do well in locations like town centres. However around business environments like industrial estates or office complexes, vending machines offering hot food options and sandwiches are likely to do better than hot drinks as workers seek sustenance.
Away from food, vending machines selling toys and games may suit retail complexes, community centres and supermarkets better as they’re more geared for families.
Once you have decided which products would suit your area best, it’s time to source them. In order to source your products, build relationships with wholesalers. Wholesalers will be able to give you good prices for buying in bulk, keeping the cost of sourcing products as low as possible.
Related reading: How to Price Your Product
- Provide regular maintenance and good customer service
As with any business, a good service is what keeps customers happy and reusing your services. Though you may not be front facing, your vending machine is so it’s vital to:
- Regularly visit your locations to keep an eye on stock levels, and provide restocks if necessary.
- Regularly clean your machines clean and make quick repairs. Badly maintained and dirty looking vending machines will dissuade customers.
- Leave contact information like an email address or phone number on the machines so customers and premises owners can report any issues.
- When you restock your machines, regularly rotate products by their sell-by dates so that older products sell first. No customer wants to receive a product months out of date.
- Take the time to analyse your sales and consult with premises owners as to which types of products seem the most desirable to customers. Don’t be afraid to change your supplies according to your information, if you can afford it.
- Build and maintain a good relationship with premises owners. Not only will this help with negotiating any future contracts, but they may also have to receive complaints on your behalf, or issue refunds in the event of a machine malfunctioning.
Vending machines are great business opportunities because they have few entry barriers, and can be started on a relatively low budget.
However, they are not get rich quick schemes. Just like any business, hard work and determination will ultimately decide how quickly the business scales and how many machines you own.
Provided there are enough machines and they are profitable, a vending machine business will guarantee you a steady monthly income.
If you’re looking for a low cost way to register your new business, look no further than our app. In just a few clicks you can have your business formed, registered and a bank account opened in its name.
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