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Where Are The Best Places To Put A Vending Machine?

Where Are The Best Places To Put A Vending Machine?

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Where Are The Best Places To Put A Vending Machine?

Where Are The Best Places To Put A Vending Machine?

For entrepreneurs weighing the pros and cons of starting a vending machine business, few issues command as much importance as the strategic placement of the machines. This guide will introduce you to several high-volume and potentially profitable locations for your vending machine operations. 

Related: Guide to starting a vending machine business

The Types of Locations that Make Sense for Vending Machines

As with any business, a vending machine business needs customers to generate revenue. The placement of a vending machine determines the success or failure of the business as a whole.

When identifying a location for a vending machine business, smart entrepreneurs will ask the following questions:

  • Which locations in my area have a need for vending machines on a regular basis? Manufacturing buildings? Retail stores? Elsewhere?
  • What types of products should my vending business stock? Candy, chips, and soda? Or toys? Or something else?
  • Should my machines cater to employees on short breaks or customers looking for a specialty machine? 
  • How can I identify the best place within a particular location to place my vending machines? 

Factors Influencing Vending Machine Location Profitability

The following factors will play the largest roles in determining the profitability of a particular vending machine location:

  • Accurate Identification of High-Revenue Locations: The most important ingredient of success in the vending machine business revolves around the accurate identification of high-volume areas where people spend a significant amount of time. Without customers, no vending machine business can survive beyond the short run.
  • Strategic Placement of Machines: Even if a particular location has a sizable amount of customer traffic, improper machine placement within that location can cause a business to fold quickly. Again, customers function as the lifeblood of a vending machine operation, and transaction volume must cover all fixed expenses and generate the required profit for the entrepreneur. 
  • Expert Handling of Cost Structure: Vending machines have both fixed and variable costs associated with their operation. Improper allocation or understanding of these costs poses a problem beyond just the accounting challenge. These costs can put a dent in even the most high-traffic vending machine business. 
  • Saving Money on Maintenance and Improving Reliability: Entrepreneurs should determine if they have the requisite skills or are close enough to reasonably maintain the machines themselves. If not, a reliable maintenance person will always outperform a cheap but ineffective operator. Additionally, business owners should determine if they will stock the machines themselves or hire employees to assist in the restocking process with the recognition that these employees constitute a new fixed cost.
  • Modifying Inventory to Suit Local Customer Tastes: Local customers have unique preferences. For example, an immigrant neighborhood will have unique tastes that may not exist in the typical office park. Operators must have the ability to accurately identify local customer preferences and modify inventory where each machine is located to ensure that they can meet these diverse tastes and preferences. 
  • Expanding When Appropriate: Business owners should expand their operations only when they have their immediate area saturated as operations get much more complex and costly as distances expand. Simply feeling the need to expand should not constitute the entirety of the decision. Instead, business owners must weigh both the financial and operational costs of expanding to a new location and must conduct due diligence to ensure that the prospective location can adequately accommodate a new vending machine.
  • Achieving Operational Leverage: While the need to do everything yourself can certainly help to control costs, this lack of operational leverage can also cause a business to not have the ability to scale up. If you plan to increase your operation, you will want to determine how best to achieve operational leverage, whether that includes hiring new employees, making use of contractors, or streamlining operations with new technology.

What are the Top Locations for Vending Machines?

The following locations form the backbone of any vending machine operation. However, many more locations beyond these can produce profitable results. A process of experimentation and testing can help to identify potentially underserved markets. 

Laundromats

The average customer who visits a laundromat often faces a bleak prospect: Traveling at inopportune times to the local laundromat, loading up the washer, and waiting up to 45 minutes for the completion of the wash. Next, they load up the dryer and wait an additional 45 minutes to an hour for their clothes to dry. 

During that time, laundromat customers will often want a snack or a beverage. Other types of products to vend in these locations include laundry detergent, fabric softener, and coin exchange. Other interesting items could include interactive entertainment products like arcade games. 

Offices and Commercial Properties

Every office building and commercial building in the country likely has at least one vending machine. Usually, employees will frequent these machines during breaks or lunch periods. Make sure to customize the offerings to match what the average office worker might want, such as healthy snacks and healthy beverages. Other types of commercial properties include gyms and airports, both of which have very large amounts of customer volume and foot traffic throughout the day. 

Educational Institutions

Busy students will often want to purchase a product from a vending machine in their lecture halls or dormitories. Some educational institutions such as universities or high schools will have large commercial contracts with major vending machine services, but some of these organizations may work with a smaller vendor. 

Healthcare Facilities

Hospitals, hospice centers, nursing homes, and outpatient medical facilities will all have a revolving door of both practitioners and visitors. Staff and patients alike will purchase items from a nearby vending machine if given an opportunity. To maximize the likelihood of making a sale, smart entrepreneurs will position their machines in high-volume corridors such as waiting rooms and break rooms. Local hospitals may also have a willingness to work with smaller vendors in their area.

Residential Communities

Many new apartment buildings and other residential developments have substantial amounts of common areas for their residents. These common areas often include a vending machine or two, especially near recreational centers and exercise facilities. Some developments may also have a pool area or other outdoor spaces that could host a vending machine.

Retail Locations

All types of retail locations offer spaces suitable for a vending machine, including grocery stores, gas stations, liquor stores, and major markets like Walmart. Often, entrepreneurs will position these vending machines as close as possible to the exits of these businesses to attract customers who have already made their purchases and who may have spare change as a result. Malls can also offer excellent foot traffic and interesting machine locations, as can train stations and other transportation hubs. 

Strategic Vending Machine Placement

The key to placing vending machines in the most profitable locations within a particular building depends on several factors, some of which a business owner can predict and others which a business owner cannot.

Following the profitability factors indicated previously should allow for the greatest possible chance of enjoying a profit from a given machine, but other factors can contribute, including:

  • Unanticipated slowdowns in the economy: When the COVID-19 crisis occurred, many physical retail locations and other brick-and-mortar operations temporarily ceased operation, or at minimum saw a massive slowdown in customer volume on a day-to-day basis. These types of economic shocks hurt the vending machine business significantly. 
  • Business turnover or landlord changes: If a particular storefront or facility experiences a closure, the vending machine operator will have no choice but to cease their own operations. The vending machine business owner remains dependent on the actions of the host business, and any major changes in ownership or operating status can permanently cause a location to close.
  • Growth in the local market: If a neighborhood or area experiences population growth or new development, greater volumes of customers may begin to frequent the local commercial establishments. 

Getting Started

The next steps to getting started with your vending machine business should include the following:

  • Make a list of your local region, including commercial and residential properties. 
  • Visit the locations on your list to identify if they already host a vending machine, or if their property owners would have a willingness to host a new one.
  • For preferred locations, identify or estimate the total amount of daily customer volume.
  • Build a rough approximation of total demand over the course of a month, quarter, and year.
  • Estimate your expenses based on both fixed and variable costs. Fixed costs include any fees paid to the location owner, utility expenses (machines always consume a fairly constant supply of electricity), and maintenance fees. Variable costs include payment processing fees, COGS (inventory expense), and any other per-unit costs for operating the machine.
  • Conduct a break-even analysis based on the above information. 

After having scouted several great locations with significant customer volume and after having compiled a solid financial plan, your vending machine business can have an opportunity to prosper!

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Where Are The Best Places To Put A Vending Machine?

Where Are The Best Places To Put A Vending Machine?

3 Responses

  1. Hi Greg thanks for this very insightful article on the vending business. Im currently pursuing launching a vending
    service in my local area. One question Im curious about is what are the ranges of hosting fees that one can expect or look
    to negotiate?

    Thanks!

    1. I know placement fees can vary a lot. I’ve seen some operators pay fixed rates or pay a percentage of sales. I don’t have up-to-date information on this but I did some research and some operators will put up machines at no cost in offices that have over 65 employees (https://vendingproservice.com/vending-machine-placement-fees/, https://www.denvermart.com/how-much-to-put-a-vending-machine-in-a-mall/).

      Paying nothing is best, but if you have to pay,the commission model is great starting off to keep overhead low until you can assess the value of a machine in your area.

      I appreciate your question, as it lets me know that we need to add some more detail and will be getting information from vending machine owners about what they pay!

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