I’ll walk you through how to start a vending machine business, from evaluating your product options and estimating profit potential to determining sourcing and staying on top of trends, technologies, and markets. Having a clear business plan and understanding the legal formalities are also important.
If you think you might be cut out for the high-stakes world of frozen treats and hot competition, read on for the steps of pursuing your piece of this multibillion-dollar industry.
Step 1: Evaluate Product Options
One of the benefits of starting a vending machine company is the vast and varied assortment of products you can sell. These traditionally include various food and snacks, cold or hot beverages, and health food items.
Some vending machines also sell nonedible products such as the following:
- CBD oil
- Personal hygiene products
- Medicines
- Paper supplies
- Electronics
- Movies
- Games
- Condoms
- Magazines
- Toys
- First-aid products
- Souvenirs
- Cosmetics
According to a Vending Market Watch report, cold beverages (27% of sales), snacks (17%), and candy (14%) were some of the most popular vending machine products in 2023.
Many of these small and basic consumer goods top out at a retail price of $1-$5. The bigger ticket items, however, yield a greater margin for vendors but represent heftier inventory investment and—if it’s food-based—strict food safety laws. It never hurts to invest in a product category you are familiar with, interested in, or passionate about. The sky’s the limit—as long as there’s a demand.
Step 2: Evaluate the Sales Channels
In deciding whether to move forward in vending, consider the market’s two dominant subcategories: vending machines and micro markets. The number of vending machines nationwide increased 7% from 2022-2023, while micro markets experienced a 41% increase, per the same Vending Market Watch report above. Both are clearly growing, but which is the best channel for you?
Vending Machines
This is what we typically think of when we think of the industry: self-contained, automated, stand-alone vending units. Owners of these units can choose to sell one, several, or many different types of products from one or many machines in one or many locations.
Micro Markets
Micro markets, sometimes called Grab-and-Go markets, emerged in the early 2000s. Like their vending machine counterparts, they have continued to grow, evolve, and thrive over time with busy, crowded, high-efficiency spaces. This model is defined by custom-designed vending markets or marts meant to provide a convenience store feel with vending options and prices.
Like vending machines, micro markets offer a variety of items: packaged snacks, cold beverages, and even frozen foods. Think of the neat little sidelines in large airports or hospital and office building cafeterias. Micro markets do especially well among captive audiences in workspaces, hence why the average micro market is at a location with 100-150 on-site employees.
Vending Machine vs. Micro Market
The main sticking point between vending and micro markets is the startup cost. Because vending machines are self-contained, automated, stand-alone units, once purchased and placed, all they require is maintenance and inventory.
Micro markets, on the other hand, are like a miniature restaurant or convenience store that require more real estate, higher inventory and build-out requirements, more advanced point-of-service purchasing technology, more food storage and display options, and sometimes even part-time or full-time employees to staff them.
Step 3: Evaluate the Investment of Time and Money
Once you identify your preferred sales channels, you’ll need to evaluate the investment of time and money associated with the options. Below are three purchasing approaches to either a vending machine or a micro market business: starting from scratch, buying a business, or investing in a franchise.
Bear in mind, however, that the startup costs listed may only sustain the business for the first 6-12 months. Ongoing expenses include inventory and supply costs, payment processing, vehicle costs (fuel and maintenance at least), and vending machine repair, equipment, and maintenance expenses.
Step 4: Estimate Profit Potential
Before you can commit to starting a vending business, determining profit potential is your next priority. Try Vending.com’s vending machine profit calculator. You can easily adjust the variables, including the number of machines, daily sales, and profit per product.
A side hustle for some (defined by 2 or 3 vending machines) and a lifestyle for others (some large vending companies have hundreds of thousands of vending machines dotting the globe), the vending machine business is extremely scalable, which adds to its appeal. Starting with the smallest numbers and scaling up to determine profit potential is the easiest way to ballpark your projections for the business plan and decide if vending is the right industry for you.
- The average vending machine generates revenue of $300-$600 per month, per Genius Vend. Some make less; some make more. In this industry, the money comes from volume.
- According to IBISWorld, Compass Group PLC exceeded $222 million in vending-specific revenue in 2024 alone.
In addition to using market data and industry standards from trade journals and other resources (we provide a list of these resources in Step 9), it’s fairly easy to stake out a desired location to evaluate foot traffic. Some businesses will even share this information with you if they’re interested in the associated rent or commission from vending sales. More on location selection in a bit.
Profit potential also depends on the same things any small business depends on—among them, a meticulous plan, capitalization, clear target market, intelligent product mix, strategic location strategy, and healthy profit margins. A weakness in this core fabric of the business model can damage the profit potential and ultimate success of any business, including a vending machine company.
Step 5: Plan the Business
Even in our world of the one-page business plan and the business model canvas, you’ll be hard-pressed to find a banking loan officer who isn’t looking to see a full business plan. There are many great business planning methods and models if you don’t need to borrow money, but if you do, you’ll need a business plan.
Here’s the basic outline we recommend—similar to what’s in our guide on how to write a business plan—especially if you’re looking for financing:
- Executive Summary
- Including: Business Objectives, Mission Statement, and Financing Request
- Company Overview
- Including: Startup Summary, Startup Capital Summary, Location, Ownership, and Competitive Advantage
- Products & Services
- Including: Business Model, Products, Services, Fulfillment, and Future Products, and Services
- Market & Industry Analysis
- Including: Market Segmentation, Target Market, Industry Analysis, and Competitor Research
- Marketing Strategy & Implementation Summary
- Including: Marketing Strategy, Sales Strategy, Sales Forecast, Pricing Strategy, and Milestones
- Management & Organization Summary
- Including: Ownership Background, Management Team Gaps, and Personnel Plan
- Operations
- Including: Suppliers, Machine Service and Maintenance Plan, and Stocking Decisions
- Financials
- Including: Break-even Analysis, Project Profit and Loss, Projected Cash Flow, Projected Balance Sheet, and Business Ratios
- Appendix
If you follow this outline, you’ll be well on your way. If you need a little more guidance, these resources will help:
- Sample business plans (Bplans.com)
- Business plan start-up guide (SBA.gov)
- Business planning software subscription (LivePlan.com)
Step 6: Determine Sourcing & Supply
In addition to any necessary office goods like a functioning computer and phone, your key ingredients are the machine(s) and inventory.
Machines
Acquiring one or more machines is the first major investment you’ll make in your vending machine business. As with many expensive assets, you can buy new or used, finance or lease. Vending machines have become smarter and more specialized over time, offering retailers a wide variety of options to choose from, depending on their product. Check out some of the new, high-tech varieties currently being sold on Vending.com:
Snack Vending Machines
Drink & Soda Vending Machines
Combination Vending Machines
As discussed earlier, a new vending machine can range from $1,500 all the way up to $10,000, depending on the desired bells and whistles. You can buy vending machines directly from sites like OnlineVending.com and Vending.com. Depending on your needs, type of product, and other criteria, companies like Naturals2Go and eVending.com will help you finance new and used machines.
DiscountVending.com is an example of a supplier that sells new, used, and refurbished vending machines. You may even be able to locate vending machine suppliers near you so that your purchases are going back to the local economy.
Inventory
Depending on how many machines you have, there are a few options for securing initial and ongoing inventory. When purchasing vending machines, it’s kind of a one-and-done transaction. With inventory, however, good supplier relationship management is crucial for long-term success, so choose carefully and do your research.
When choosing a supplier for your product, consider the following criteria:
- Financial: Look for suppliers in your price range that offer financial incentives such as loyalty programs, discounts, and bonuses, quick delivery times, and generous terms of payment.
- Product: Seek out suppliers with a consistent supply of fresh products. See if your suppliers offer a guarantee and stand by their product. You’ll want to be assured not only that the supplier can provide the items that you want, but also that they can keep up with the quality and cadence you need.
- Relationship: Any business partnership is a relationship. Especially if you’re interfacing with sales and delivery people, evaluate the way the company regards its customers, credibility, and customer service. Read referrals, testimonials, and reviews of the suppliers you are considering, especially those given by other retailers.
As mentioned, your supplier selection will depend on the type, characteristics, and qualities of the inventory you want to stock your vending machines with. Because cold beverages represent over a quarter (27%) of vending product sales, we’ll review suppliers through that lens.
Here are some examples of suppliers of cold beverages for a startup vending machine business with only a few machines:
- Membership Clubs
- Examples: BJ’s, Costco, and Sam’s Club
- Membership clubs may make more sense for new vending businesses that don’t need pallets upon pallets of inventory for their vending machines. Plus, you can enjoy the perks of a membership club as a civilian shopper! Bear in mind that not all membership clubs are created equal.
We shopped each of three clubs for a 35-case of Classic Coca-Cola 12-oz cans and, in a perfect case study for shopping around, the prices ranged from $10.99 (or $0.31 per can) to $13.21 (or $0.38 per can). Even if you follow product pricing guidelines that suggest 100% markup and charge a mere $0.62 per can, you’d still enjoy a profit of $0.31 per can. If you round up to factor in inflation, demand, overhead costs, and comparable market pricing and price each at $0.75, your profit is now $0.44 per can, or a tidy profit margin of 58%.
- Ecommerce: Specialty Retailers, Wholesalers, and Distributors
- Examples: Vistar, Gumball, and Amazon Business
Remember that as you scale, you’ll want to consider wholesalers from whom you can buy larger quantities at a lower price per unit. This is the benefit and incentive of buying in bulk: A lower price per unit means greater profit per unit sold.
Consider searching locally for vending machine supply and inventory retailers, distributors, and wholesalers in addition to the many shipment-based suppliers online.
Step 7: Select a Location
It’s an art and a science to secure locations that will allow a vending machine business to thrive. Aside from product mix, location is the single most crucial aspect of a vending machine’s business strategy and potential success.
I’ve looked through several case studies and anecdotes of people who tried (or planned to try) their hand at a vending machine business, and many of the veterans had experienced the same thing: good location selection can make the difference between “decent side gig” profits and “full-time living” profits.
The good news is that if a location isn’t successful, vending machines can be picked up and moved; many other businesses cannot. Bear the following criteria in mind when evaluating locations for your machine(s):
- Who is my target customer, and where are they located?
- What is the proximity to a captive audience?
- What is the access to the location and the vending machine?
- What is the proximity to other food options?
Overwhelmingly, vending machines in the US are located at manufacturing facilities and office buildings, meaning that captive, daytime workers are the main customers of these machines. Manufacturing and office sites similarly represent the majority of micro market locations. These kinds of locations are plentiful in many parts of the country, presenting strong market opportunities for new entrants (although stiff competition is a reality as well).
If you’re still having trouble finding ideal spots, consider reading Robert Patterson’s The Secret Formula to Getting High Traffic Vending Locations, a niche book meant just for this purpose.
Also, investigate Vending Connection’s vending location list generator, VendLoco. For a few hundred dollars, you can get a custom list of hundreds of possible business locations, which may be worth the investment in the long run.
With machine placement, the process involves sales, relationship management, and mutual benefit. There are usually two plans of approach for paying for location, space lease or participation location.
- Space Lease: One option for paying the owner of your machine space is to pay a fixed monthly rate, rent, or space lease. This doesn’t change, regardless of machine revenue. The going rate depends on your geographic area and cost of living, but you can expect to pay somewhere in the ballpark of $50 a month per machine. Don’t sign a lease for longer than 6 months; the location may not be as desirable as it initially seemed, and you want the option to relocate the machine.
- Participation Location: Some vending machine operators pay the location landlord a commission on machine gross—a type of profit-share. This could mean a 60/40 split or a 10%-25% share of vending machine revenue. The landlord may already have a plan for how they approach this opportunity, but go into the conversation with your goals and outcomes in mind.
Remember that a successful partnership represents a win for both parties, so negotiate a plan of approach that benefits both partners in the deal.
Step 8: Review Formalities & Legalities
Each industry, sector, and business type comes with its own bundle of legalities to comply with. Here’s a shortlist of the formalities and legalities checklist for a vending machine business:
1. Name and Legal Entity
- Research a business name, website availability, and file your business entity, e.g., LLC vs S-corp vs C-corp, on your Secretary of State website.
- While not legally required, any business set up with formality as a business entity (like an LLC) is being set up for success. Abiding by our recommended legalities and formalities is strongly suggested and will ensure that you’re setting up legally, formally, and intelligently.
2. Taxes
- Even for a one-machine vending machine business, taxes are obligatory. After filing your business structure, register for taxes by applying for a Tax ID or EIN (Employer Identification Number) on the IRS website. An Online EIN Assistant is available to make the process go more smoothly. You can also review our in-depth guide for how to get an EIN.
- Once you have your business registration and EIN information handy, visit your state’s Department of Revenue website. Search for or select “Sales and Use Tax,” and proceed to register your business.
3. Business Bank Account and/or Credit Card
- Open a business bank account and/or get one of the best business credit cards.
- Set yourself up for success by addressing this business formality early on. Separating your business and personal finances will make business, taxes, and life easier and will also allow you to build healthy business credit.
4. Licenses & Permits
Start by downloading our Business Registrations, Licenses, and Permits Guide to get your bearings, and then tackle the below sections.
- Federal: The applicable federal licensing for a vending machine business depends heavily on what is being sold.
- Food/Beverage Service License: If your micro market or vending machine deals in food and beverages, a food service license may apply to you. See the FDA Food Business guide to review the criteria that may apply.
- ADA Compliance: Since vending machines are a physical enterprise located in public spaces, access to the machines is subject to compliance with the Americans with Disabilities Act, or ADA. The ADA guide is a bit of a bear, but skim the ADA Small Business Primer to familiarize yourself with the basics.
- State: The applicable state licensing for a vending machine business depends on where it is operating. Visit the CandyMachine.com Vending Regulations by State guide to get started.
- Local: Your county or city government may require a vendor’s license, local food service license, a resale license/permit, vending location license fee, or more to operate vending machines; check with your county and city to find out what applies to you, as well as the local health department.
5. Contracts
Contracts that apply to each individual vending machine business will vary, but a few contracts you’re likely to encounter include:
- Rental Agreement: If a business owner opts to rent or lease their vending machines, or if a business owner is paying rent for vending machine placement, a rental agreement should be instituted to protect both involved parties.
- Service Agreement: A service agreement outlines the terms of a given service between a service provider and customer. This is a valuable document to secure with suppliers, clients, and any business partners.
- Certificate of Occupancy: Depending on the nature of your business’ and machine’s occupancy, some type of certificate of occupancy (CO) is likely relevant. This document confirms that all building codes, zoning laws, and government regulations have been met by all parties.
For $35 a month, a business owner can opt to join LawDepot.com, which offers unlimited access to customized contract templates, including rental agreements, and service agreements.
6. Insurance
At the very least, every business should invest in liability insurance (we’ve put together a list of the cheapest general liability insurance companies). Depending on what you sell, consider consulting with your insurance company or visiting online providers to protect your business and personal interests. To get you started, we’ve compiled a list of the best small business insurance companies.
Step 9: Tap In
Some industries are flush with industry support, resources, news, publications, and trade associations and organizations. Vending is one of them. In such a rapidly changing market, it’s important to stay on top of trends, technologies, and markets.
Here are a few must-see resources for anyone considering opening or sustaining a vending machine business:
- Vending Market Watch: This is a leading source for vending, micro market, office coffee service, and convenience services industry information.
- National Automatic Merchandising Association: Trade association of the convenience services industry, including vending, micro markets, office coffee service, and foodservice management. Membership includes access to publications, industry data, trade shows, an app, and more.
- VendSoft: In addition to its proprietary Vending Management Software, VendSoft is a great resource for industry data, resources, articles, and more.
- Vending Times: This trade publication covers the US Vending and convenience services industry.
- Vending Connection: This resource provides vending news and a Vending Resource Directory.
Pros and Cons of Owning a Vending Machine Business
Every industry has its pros and cons. Consider it all and decide if, for you, the pros outweigh the cons in the industry, the business, and the everyday operations. IBISWorld lays out some of the primary advantages and disadvantages of the vending machine industry.
Pros
- Low concentration
Because 6% of the vending industry is dominated by the top four operators, the industry is otherwise highly fragmented and divided up among nonemployers and small companies.
- Relatively low startup costs and low overhead
After starting, the main ongoing expenses in this industry are inventory, vehicle fuel and maintenance, and machine maintenance. Not to mention that anyone can start in this industry with less than $5,000, which is very low for any business.
- Positive growth outlook
With a projected compound annual growth rate of 2.6% through the end of 2024, this industry is expecting mild but positive growth in the coming years.
- Low threat from globalization
Many industries, sectors, and businesses are endangered because of globalization and external competition. The vending machine industry, however, is not exposed to international trade.
- Scalable
One of the vending machine industry’s best features is that it’s easy to start small, operate successfully, and scale up accordingly. One can start a vending machine company with a handful of machines and eventually operate hundreds of machines.
Cons
- Lifecycle in decline
Even though industry revenue is expected to grow modestly in the coming years, the number of operators is expected to decline modestly as well. Consumer behavior has also changed, and buyers are less willing to pay premium prices for food and beverages from vending machines.
- Industry assistance
This industry has no applicable, industry-specific assistance.
- High technology change
Tech-savvy industry operators don’t necessarily see rapid technology change as a disadvantage, but it does pose a threat to more traditional business owners. It forces many owners to change their strategies and operations to keep up with industry change and market demand for convenience.
- High competition
This industry faces a medium-high threat not only from new entrants and increased competition but also from the automation implemented by external operators like convenience stores, drug stores, and grocers, which remain open late and offer automatic checkout for speed and convenience.
Vending Machine Business Frequently Asked Questions (FAQs)
It can be—and how profitable depends on many factors, such as how much you pay for machines, space, inventory, and how much people buy from your machines. Many are able to make good money from a vending machine business, even earning a full-time living in some cases.
The average vending machine generates revenue of $300-$600 per month, which depends on location, items for sale, and buyer behavior. You’ll also need to account for the costs of maintenance and inventory restocking.
Yes. Once you have a vending machine, you’ll have to pay for the space to install it in your chosen location. You can rent and pay a monthly fixed rate, or you can pay the location owner a commission on machine earnings.
Bottom Line
As with any business, vending machines can be very profitable if you’re willing to put in the research, effort, time, and money. However, they depend on quantity for greater profit, so for a vending machine business to self-sustain, it needs a scaled-up fleet of machines rather than just a few. Aim for wins on location, customer access, a healthy profit margin, product variety, and machine volume, and you could be the next kingpin of the vending industry.