Pros and Cons of a Vending Machine Business

If you’re like me, sometimes you buy a quick snack or drink from a vending machine. I’m a full-time nurse and I work nights. Sometimes, things are so busy on the floor I can’t get to the cafeteria. Even when I can get to the cafeteria, it’s not fully staffed at night, anyway.

Yes, it would be best to take my lunch before I leave the house but, all you single moms out there know the drill. You’re thinking about kids first, giving last minute instructions to the babysitter, or tucking someone in. You’re not thinking about what you’ll eat at 3:00 a.m.

Vending machines can be life saver for someone like me. At the hospital, I grab a cold drink, coffee, sandwich, or cereal bar from multiple machines every single day. That’s about 20 visits a month.

Let’s consider the math. I spend at least a couple of dollars per visit. Over the month, I spend up to AUD 100! There are eight nurses on my floor and, after a quick poll, each one of them answers the siren song of the vending machines in the lounge. It’s easy, and the machines are always well-stocked.

The owner of the vending machines is raking it in from hospital staff. There are more vending machines for patients, too.  For a risk-averse, time-constrained person like me, vending machines could be a great business opportunity!

  • I could make money from vending machines while I’m working. If I haven’t mentioned it already, I love my job as a nurse.
  • But I could also make money from vending machines when I’m not at work. I could make money while I’m reading the kids a bedtime story.

Now, let’s kick the tires a bit.

Advantages of a Vending Machine Business

On the plus side, vending machines are relatively cheap per unit. I could buy many machines for the same price as a downpayment on a house or condo. It’s a lot more affordable than real property for me.

A simple vending machine costs about AUD 4,000.  If I want high-tech units (like those at work), I can get a refurbished unit for somewhere in the neighborhood of AUD 15,000.  If I buy a second-hand vending unit, I can save even more.

I can even diversify my risk as a vending machine owner.  To get the most bang for my buck, I should diversify by location. Hospitals are great, but shopping malls, colleges, and other high-traffic locations could yield a steady income stream.

Protecting my vending machine assets is also an important consideration. Reliable daily customers, such as staff at the location or trade customers visiting it, are important.  I’m after predictable, immediate cash.

Time Investment for Vending Machines

Next, let’s consider the effort required to make this work. There’s the matter of refilling the vending machine because a “sold out” light is annoying to the customer.

The primary task of refilling the vending machine and then collecting the money seems rather simple.

Is it?

A friend who ventured into vending machines says she tops up every two weeks to serve a 20-staff customer base. She makes about AUD 200 so, on an hourly basis, she nets about AUD 140 per hour after taxes!

Not bad!

Disadvantages of a Vending Machine Business

There are possible negatives to owning one or more vending machines, of course:

  • The location of the machine is just as important as the location of real property. It’s location, location, location! If I can’t find the right location for my vending machine, I won’t get the rewards I’m after.
  • If I can find an unoccupied space in a great location for my vending machine, I’ll need to negotiate terms regarding revenue share with owners. Keep in mind that some lucky investors don’t split revenues at all. The business owner might consider a vending machine as a great service for staff or trade customers. That’s why I was advised to offer a vending machine as a service and let the business owner bring up the matter. Be prepared to negotiate!
  • Damage to my vending machine asset can occur so I’ve got to be prepared to service the machine when/if this happens.Vandalism or even theft of the machine (or the money in it) can happen. I can’t spend everything on the purchase of the vending machine. For this reason, the location (see above) is ever important. I want the machine in a safe hospital or university lounge if I can get it. What happens if something happens to my vending machine and I can’t get to it on a timely basis? I’d need to train on-call staff, and that adds to my costs.
  • Restocking the vending machine doesn’t need to be expensive. I can purchase the items for my machine from the local market when they’re on special and keep stock at home. Of course, if you have kids that are older and likely to snack on your wares, keep them out of sight!

As I’m writing about this to all of you, there’s a naggy thought that keeps popping up in my mind. In addition to negatives above, I have a moral dilemma.

I’m a nurse and I know that bad snack food can make people who eat lots of it unhealthy. Candy and sodas and the like cause obesity and dental caries.  This idea makes me wince.  I could install a healthy snack machine but are my customers going to favour healthy foods over sugary snacky things?

Then, I realize that I’m not the best financial negotiator. If I do find an ideal location, can I get the right revenue share with the business owner?

If I get everything else right, can I make sure that my machine is stocked, that foods don’t go stale, and that customers get their change after a purchase? What happens if my vending machine is stolen or damaged?

Conclusion

What seemed like a great idea at first doesn’t seem like a great plan for me. Vending machines aren’t as hands-off as I hoped and I’m not a high touch business person.  I want my free time to remain my own. The kids are only little once and, if I lose this time, I can’t get it back.

It’s back to the drawing board, as they say. I’m going to do some more research.

What do you think? Have you invested in vending machines? What was your experience?

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