How Does the Vending Machine Business Work?

vendor-in-manhattanThis business isn’t very complex. You solicit different businesses with sites on which to put your vending machines.

The best locations that bring in the most money are hospitals, truck terminals, manufacturing plants, schools, and any place where large numbers of people pass through. Blue collar locations are better because these folks work hard, make good money and don’t normally have time to go out to lunch. A general rule of thumb is that you’ll secure one location for every 100 locations you solicit. It isn’t as hard as it seems because the larger vending companies – the ones you think would gobble up all the business – often lose sites simply because they are so large, and aren’t able to provide the level of service many businesses want.

If I were starting a vending business from scratch today, I would decide – and promise – to give prompt, personalized service; in many instances, that’s all a business owner needs to hear. Your job, of course, is then to follow-through on your pledge.

Once you secure a location, you then buy and install the machines into the new account. Never buy machines before you secure a location, and always buy the least number of machines that you can get by with. You can always add machines if needed. Just remember your goal is the highest possible return on your investment (the vending machines) that you can get. The more profit that you make, the faster you can pay off your machines.

Next, fill the machines. I always put a note on the front of the machines that says, “Please tell me what you want placed in the machines” on installation day, with room for people to write comments. During the first week, go by the machines every day to make sure all machines are working well and are stocked. After the first week you will be able to work out a schedule in order to restock the machines, based on the volume of product sold from the vending machines. When restocking the vending machines, listen for (or even ask about) things like “We’re working overtime this week.” Of course, then it’s your job to be sure you step up the schedule to keep pace with what folks are buying.

Some locations will want commissions from their machines. Commissions are a percentage of sales that you give to higher volume locations – usually between 5-20% of gross sales. Personally, I would not pay a commission to any location with fewer than 40 employees. Set up a commission that you can live with or raise the prices of the items in the machine to cover your costs.

If the account does not bring in the amount of money that you feel satisfied with, move the machines to a new account. Every account has to pay for itself. Having friends in an account that’s not making money isn’t a good business reason for keeping the account there; your friends don’t help you pay the bills.

The key to a successful vending business is working hard, and providing prompt, courteous customer service. If you don’t mind working, a lot of people make a fine living in this business. It’s up to you to find the motivation to seek out locations for your machines, to follow-up with your customers and restock machines regularly, and to respond professionally when problems arise.

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