# Vending Machine Business



## KaeJS (Sep 28, 2010)

What do you guys think of owning a vending machine?

It looks like it takes (realistically) one year to break even.

Assume you spend $1,500 and can earn $25/week. It would take 60 weeks before you actually cover your costs.

However, after those 60 weeks, you've got $100/month. Double your money in just over 2 years?

I can see how they make money. I can also see how they'd fail. Ideally, I look at it as a buy and hold investment. Your only real problem will be if your machine breaks or is vandalized.

Stupid Idea? Smart Idea? Takes a long time but definitely makes money idea?

In particular, looking at this:

http://www.vending4less.ca/page4.php?view=preview&image=37&category=0


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## jcgd (Oct 30, 2011)

I thought about it myself and asked a few people who used to have machines. They said the hard part is getting locations and keeping them. The location usually wants a cut and other vendors want your spot. 

If I could by an existing route I would consider it. I'm not much of a cold caller so I'd probably have a hard time securing locations.


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## donald (Apr 18, 2011)

Seems like the margin is really low(id almost think delievering news papers are better than vending machines)also do have to stock it(im guessing yes?dealing with a all coins business might be a huge pita,do you have to get insurance in case some teenager decides to tip it over and injury someone?what about maintence cost?if the electrical button stick/dye?,theft-is there tricks of getting the product without putting coins in?(those old school coil ones,where you can shake it)doesn't seem worth it.....also it would seem like your not really realizing profit because the profits would be constantly be back re-investing in your orders.

Having said that i know a guy who works at pepsi-if you ever do get into it-the energy drinks line is apparently the product that sells the best(ie monster)he told me they sell a crap load because of the popularity and there is a good spread between supplier acct to retail.


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## leoc2 (Dec 28, 2010)

I new a guy who had several ATMs. He seemed to be wealthy.Nice house and car. He unfortunately passed away a couple of years ago.


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## dogcom (May 23, 2009)

As jcgd mentioned the hardest part is getting locations and keeping them. I had some machines in the 90's and you had to out bid other companies to get the location to start with. Then of course you have to clean and maintain them and show up every other day to stock them and make sure none of the chips and candy hang up on the coils. Saying all that it is not hard work, but after paying for the location and such it will take longer to get your money back and make a profit.


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## stephenheath (Apr 3, 2009)

Another big problem is the theft... I knew people who had vending machines at universities and the like and they were always getting broken into or stolen... especially the cashbox.

They still made money but by the time you pay for expenses, time, hassles (the #1 favorite item is sold out but the rest isn't, but they still expect you to come fill it), it's not the greatest margin according to them.


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## jamesbe (May 8, 2010)

My parents use to own a vending machine company. I think they lasted about 2 years. It was a lot of work, we had about 10 machines and were constantly restocking them. I don't think it is worth the hassle unless you have a ton of machines and do it full time.


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## KaeJS (Sep 28, 2010)

Yeah, I think the greatest hassle is going to be restocking.

I'm starting to think its too much of a long road....

You have the cost of stocking, then the cost of gas to drive there and stock it.

I think if I could get a location close by, or a location that I go to or pass by once a week, I would do it.

However, I can't see myself driving a different way to restock and collect money. I want this to be an "on the way" thing. 

I don't want it to eat up any extra time or any extra costs.

All about the location 

Thanks for all your input, CMF'ers.


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## hystat (Jun 18, 2010)

I think the biggest problem is location.
Where do you think you are going to put it? on a street corner? 

reminds me of a 30 Rock episode:
_Dennis: One word. Coffee. One problem. Where do you get it?
Liz: Anywhere. You get it anywhere.
Dennis: Wrong. You get it at my coffee vending machine. 38th and 6th in the basement of the Kmart._

I suspect it's one of those deals where you would be shocked at how little your competition is willing to work for to put you out of business.


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## Mall Guy (Sep 14, 2011)

KaeJS said:


> Assume you spend $1,500 and can earn $25/week. It would take 60 weeks before you actually cover your costs.
> 
> However, after those 60 weeks, you've got $100/month. Double your money in just over 2 years?


You haven't factored in the cost of product (50% of sales ?), gas and other costs to service the machine, repairs and maintenance costs, spoilage and shrinkage, bank fees (possibly credit card and internet fees), inventory, return on investment, rent/electricity, moving costs to relocate/deliver machine. 

As well, I have heard that later this year, the CDN Mint is rolling out new $1 and $2 coins, and the that many vending machines will need to be upgraded to be able to recognize the new coins.

http://www.vending-cama.com/NEWTOVENDING/PDF/Vending-A-Balancing-Act.pdf


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## hystat (Jun 18, 2010)

Need a truck with a liftgate and a welder to place them now too. (to fabricate brackets and chains etc.) They are all substantially secured.
I remember a story of a college student tipping one over in a Holiday Inn in Peterborough once (1990's ?). He was trying to steal pop and it fell on him - killed him. I forget the settlement, but I'm pretty sure the family got millions, so price your liability insurance into the operating budget.


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## Four Pillars (Apr 5, 2009)

A vending machine is basically a menial business with low barriers to entry. This is actually typical of a lot of small businesses.

In my opinion, the only way to make a real business out of it (ie not just a job) is to scale up. If you have hundreds of machines and a few employees doing the grunt work, then I think it might be a valid business, assuming it's making a profit.


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## donald (Apr 18, 2011)

What would'nt be a bad idea(and i have thought about this)is scrap the vending machine idea and load up on popular bulk @ costco or another wholesaler(energy drinks,pop,ect)mark just below retail and hit up a big construction sub-division(when there are 100s of trade guys/crews working side by side on row houses)The same crews will be there through out an entire 500 home/condo phase,maybe even buy those big tim hortons canasters and mark-up coffee....pick a day and always stick to that day and also the time-they will get to know you as "that guy"you might be able to pick up a few hundred a day if it catches on....or any place for that matter that has alot of people concentrated in one spot...like a matre-d service on wheels concept..in and out quick,few hours.(might be abit out of the box but i think it would have legs)...you could even maybe take bulk orders for a mcdonalds run/smokes ect and charge a fee for it...be a under ground biz cash biz.


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## jamesbe (May 8, 2010)

Does this not exist where you are Donald? There are companies that do that, trucks come in its a canteen on wheels.


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## mrcheap (Apr 4, 2009)

donald: That's called industrial catering and tons of people do it.

KaeJS: Years ago I read a pretty good blog post with an overview of one man's experience getting into vending machines: http://geniustypes.com/how_to_start_a_bulk_candy_vending_business_for_passive_income/#

Overall, I agree with Mike that it's a menial business with low barriers to entry and you're really just buying a part-time job.


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## londoncalling (Sep 17, 2011)

I used to work in the industrial construction industry. We did expansions to oil and gas plants and maintenance shut downs. There was often a canteen truck parked just outside the parking lot selling soup, sandwiches, pop, chips and smokes etc. The operator also ran a catering business and a small restaurant in the community. She once told me she made more in the 6 hours she spent outside the gate than she did all week with her other ventures. 2 hours prior to start of day shift, 2 hours at lunch and 2 prior to start of night shift. Looked like easy money. More importantly, the people working the jobs preferred soup and sandwiches to pulling pizza pops, subs and what not out of the vending machines on site. Looks like a win win scenario.


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## donald (Apr 18, 2011)

I know caterers do this type of service but there are "voids" and it might be easy to set something up like this for a side hussle if one was looking for a "hussle"-Low entry....you could target areas and do a "test" run and see how your recieved and if it would be worth it-an alternative to owning a vending machine.


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## Argonaut (Dec 7, 2010)

Better idea: Invest in a dividend stock. It takes a couple clicks of the mouse and you don't have to do anything after that. Paycheque every month or quarter.


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## KaeJS (Sep 28, 2010)

Yeah, but $1500 at a 5% yield will net you only $75 annually, assuming the stock price remains the same.

I think I may just stick with stocks, though. Cause unless I can drive by the location of the machine on a weekly basis, it will be too "out of my way" for the money it will produce.


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## Dmoney (Apr 28, 2011)

KaeJS said:


> Yeah, but $1500 at a 5% yield will net you only $75 annually, assuming the stock price remains the same.


But $15,000 at 5% yield will net you $750
And $150,000 at 5% yield will net you $7,500
And $1.5M at 5% yield will net you $75,000

For a vending machine business to be worthwhile, it's got to be scalable, which will end up taking as much work as a full time job. 50+ vending machines might make you a decent living, but you'll be working a couple hundred hours a month keeping them stocked, maintained, in good repair etc. 

To me the beauty of stocks is that managing $10M is no more time-consuming than managing $100K. The only difference is that instead of $10K invested in 10 stocks, I have $1M invested in 10 stocks. 

The ratios remain the same, and the income potential is infinite.

I do think the vending machine business can be done, and can make a good chunk of change, but I'd say there are much better ways to make money.


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## doctrine (Sep 30, 2011)

Do the math including your time and expenses and you'll probably find you'd be better off working part time at Tim Hortons. (I'm serious.)


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## KaeJS (Sep 28, 2010)

Dmoney said:


> To me the beauty of stocks is that managing $10M is no more time-consuming than managing $100K. The only difference is that instead of $10K invested in 10 stocks, I have $1M invested in 10 stocks.


I would hope you would split $1M over 30 stocks and not just 10.

Proper diversification plus minimization of individual security risk.

Imagine if one of those tanked?


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## Dmoney (Apr 28, 2011)

KaeJS said:


> I would hope you would split $1M over 30 stocks and not just 10.
> 
> Proper diversification plus minimization of individual security risk.
> 
> Imagine if one of those tanked?


30 would probably be the high end of diversification, 10 would be the low end. The flip side is, if you have 30 stocks and one doubles in value, you don't get too excited because it's only a 3% gain for your portfolio. 

At the moment I have less than 10 stocks, but I'm not selling any, so as I add more, my portfolio gets more diversified.


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## donald (Apr 18, 2011)

That is the problem with dividend stocks ^ when i took control of my finances and dump my mutuals/bank peddler you very quickly realize dividend stocks(from a business stand-point of mind)is actually the sh*ts(i own a fair number)creating a dividend stream(not for retirement)is $huge$ capital up front if your building a model-I know that is the way it is but when you stop and think about it a 100k base only spits out what 4k roughly on 4%(yr) on say Bns shares-then you have the physc aspect of having to wade through market cycles and it is hard to keep your head if you lose sight of the stream your building and your capital base is going through a cycle-I have a hard time with wrapping my head around the concept of dividends =easy money-sit back....far from it....extreamly high barrier....but im way off topic.Problem with dividends is you need wealth first...not a great money generator imo(fine for retirement)


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## KaeJS (Sep 28, 2010)

Yeah. There are pro's and con's to both sides.

However, I think if I had a million, I'd be more content with the smaller gains knowing that I have some safety.

If my CSC knowledge hasn't left my brain entirely yet, I believe the textbook said that after 32 securities in a portfolio, the addition of more securities actually increases risk again due to overlap and over-diversification.

As for myself, I currently only hold 8 stocks right now, so I'm not very diversified.


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## KaeJS (Sep 28, 2010)

donald said:


> Problem with dividends is you need wealth first...not a great money generator imo(fine for retirement)


That's why everyone should start investing early.

Dividends can be powerful if you compound and re-invest while adding capital out of your own income stream outside of the portfolio.

It can add up quick even if you start with $25k, add $500/month for 10 years and return 4.5% each year....

PV: $25k at 4.5% = $1,125/year
FV: $114,923.35 at 4.5% = $5,171.55/year

That's assuming you only receive a 4.5% dividend and no capital appreciation over 10 years. Your total input is $85k, so your profit is ~$30k plus the future earning potential.

If you socked away $1k/month instead of $500, it would have grown to:

FV: $190,737.27 at 4.5% = $8,583.18/year

Sure, $8,500 isn't a ton of money... but its a lot better than $0


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## donald (Apr 18, 2011)

I know what your saying kae.My point is more from the slant if you have 100k starting tommorow of cash(that is free to use)option a)pick 5 blue chips say-bns,enb,fts,bce & cnr 20k each and start the stream or b)invest 100k in vending machine(with a well thought out business plan).....what has the best possiable chance @ a higher cash flow?....if done right,i'm inclined to believe the vending machine business might win

Ps-I don't think vending machines are a good investment-just using it to draw a referance.


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## Four Pillars (Apr 5, 2009)

KaeJS said:


> However, I can't see myself driving a different way to restock and collect money. I want this to be an "on the way" thing.
> 
> *I don't want it to eat up any extra time or any extra costs.*


With all due respect Kae - I think those statements indicate that you are not cut out for vending machines or for that matter - any type of entrepreneurial activities.

There is no such thing as passive income - you have to be willing to work for it.


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## Mall Guy (Sep 14, 2011)

KaeJS said:


> I think I may just stick with stocks, though. Cause unless I can drive by the location of the machine on a weekly basis, it will be too "out of my way" for the money it will produce.


Perhaps it's the "new" date night with the _absolutely gorgeous healthy cereal and granola snacks lady_ "hey, grab those m&m we gotta make a stop on the way to the club, will only take a few minutes". She an entrepreneur, she'll understand.


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## sukki (Feb 14, 2012)

*New vending machine help*

I am looking to buy a snack machine and venture into this business.
I only have a good location (hotel lobby). My problem is that the owner wants me to get a Merchant 5 or 6 equipment that seems to be very expensive for an initial investment :
Merchant 4, model 180, 6 shelf, 4 wide with coin & bill validator.........$4650 plus tax
Merchant 6, model 181, 6 shelf, 4 wide with coin & bill validator.........$4900 plus tax

I have to give 10% in commissions and i have not idea of how much this machine could make per month assuming that it will sell VERY well

I need advice from someone with experience in the vending world before I make a final decision

Thanks


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## donald (Apr 18, 2011)

I'm not in the vending machine business but i do run a business myself and i can tell you that one of the first rules going in is to know your numbers.Flying by the seat of your pants is not fun.You should have everything maped out and have answer to all questions before you start.

Otherwise 2 yrs from now you will have your 4900 dollar machine either in your garage collecting dust and sending shivers down your spine everytime you look at it or the guy that knows what he is doing will have purchased it off you for 3500 dollar off kijji or whatever.

Its already a bad sign imo that a hotel owner is guiding you-think about that.


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## andrewf (Mar 1, 2010)

sukki said:


> I am looking to buy a snack machine and venture into this business.
> I only have a good location (hotel lobby). My problem is that the owner wants me to get a Merchant 5 or 6 equipment that seems to be very expensive for an initial investment :
> Merchant 4, model 180, 6 shelf, 4 wide with coin & bill validator.........$4650 plus tax
> Merchant 6, model 181, 6 shelf, 4 wide with coin & bill validator.........$4900 plus tax
> ...


Make a business plan. Amortize the equipment over three years, deduct any fixed expenses (do you pay rent? utilities?) to determine a monthly fixed cost. Let's say it is $4900*1.13 = $5,537 or $153 per month. Calculate your gross profit margin (1-(sale price/cost) - 10% commission). I expect it might be a 30% margin. So you'd have to get $450 in sales per month to break even, or about $15 a day. Is that realistic? To make any reasonable amount of money, you'd probably need to have sales double or triple that level.


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## donald (Apr 18, 2011)

Id also think about products,what is the demographic in the hotel?place items that fit this(ie-super 8-lower class/middle maybe more sugar/salt items)If it's more upscale family/corporate id look @ maybe more jucies over pop/healthier potato chips,less salt ect.What are popular items,energy drinks?does your rep share his information with you on what products are trending the best?Can you make a few stalls on the most popular item.....I know it is just a vending machine but these types of thing could make a difference.....also where are you buying your product?wholesaler/retail or off actual reps for your products?

What is the reason the hotel owner wants a certian machine over others?There is so much to look into after numbers.


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## sukki (Feb 14, 2012)

Thank you Robert and Andrew. I do agree with you both that looking into the numbers would be my number one step on this or any other business.
This is what I trying to do now, but the fact that i don't have information on how much one of this machines could produce in a high traffic location is what make it more difficult


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## sukki (Feb 14, 2012)

Robert the owner is looking to replace an existing machine whose operator do not take proper care of it. These type of machines are high tech and match with the hotel decoration


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## andrewf (Mar 1, 2010)

One wonders why he doesn't operate it himself. He's on the premises anyway. It's not exactly a huge capital investment.


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## sukki (Feb 14, 2012)

lol its all good guys. he already operates all the drinks machines in the building and is giving me the chance to have the snack if i want.
I am not worry about this part


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## donald (Apr 18, 2011)

He is already operating the drinks,but not the snacks?So your cornered into snacks only?I would worry,and that would give me pause.Sounds like he is not giving you a chance....Pretend your the hotel owner,why does he not want the snacks?sounds more like he wants to get rid of a problem.(if the snack machine made money like the drinks do why would he be only looking to give you the snacks?)The old owner of the snack machine bailed...why?Id walk away.


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## Four Pillars (Apr 5, 2009)

I'm thinking that at snack machine might involve more work to keep the products fresh. Probably more spoilage as well.

Drinks would be easier.


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## donald (Apr 18, 2011)

^That could be,but if this is a realitively large hotel with alot of traffic like the op says than it is obvious the hotel owner is going to have staff and chances are high that one day a week or whatever that would be part of the tasks for his wage earners?I doubt the hotel owner is doing anything,the work of the vending machines is most likely built into wages he pays out anyways-and id bet the "coke" guy comes anyways once a week to drop off the products-im just guessing......It would make me think if i was the op.


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## Mall Guy (Sep 14, 2011)

sukki said:


> I only have a good location (hotel lobby). . . and i have no idea of how much this machine could make per month assuming that it will sell VERY well


So how do you know it's a good location? Has the owner mentioned what his beverage machine sales are ? He wants the better machine, because he needs to offer the service to his guests, but what other opportunities exist, either in the hotel or across the street. As others have mentioned, if it made money he would keep it for himself. Anyway you can track down the owner of the current machine, sounds like he wasn't making any money, and stop worrying about it. Ofter to buy his machine, and give it a good overhaul (it can't be that bad if its still in the lobby).

Perhaps you suggest to the owner that you walk before you run . . . smaller machine to see how it goes, upgrade later, and move small machine to another location. From what I understand, one machine is not worthwhile.


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## Mall Guy (Sep 14, 2011)

donald said:


> ^That could be,but if this is a relatively large hotel with alot of traffic like the op says than it is obvious the hotel owner is going to have staff and chances are high that one day a week or whatever that would be part of the tasks for his wage earners?I doubt the hotel owner is doing anything,the work of the vending machines is most likely built into wages he pays out anyways-and id bet the "coke" guy comes anyways once a week to drop off the products-im just guessing......It would make me think if i was the op.


Donald - all of that is absolutely true, even in a small Super 8, there is staff to restock the machine, and yes coke delivers. All the owner/manager would do is collect the coin (separate lock box) once a week.


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