How to Start a Vending Machine Business

To start a business, you need to understand the environment in which you are launching. To achieve this, you need to conduct market research to find out more about the customers you will aim to serve and the rival businesses you will be competing with.

This might sound complicated, but anyone can do some basic information gathering to learn more about what to expect when they launch a vending machine company. Reach out to people who already run successful vending machine operations to learn about the challenges your business might face and to get advice for starting out. 

Contact businesses that allow vending machines on their premises to find out about requirements they have for vending on their property. It might even be worth doing some research into the most popular snacks, drinks and other items to make sure your machines can provide people with what they want or need.

If customers are not interested in the contents of your vending machines, you won’t make much money. 

Every new venture needs a business plan and a budget. Vending machine businesses are no different. Spending time creating a plan and a budget will give you a realistic idea about its financial viability and clear goals to aim for. In addition, most lenders will require a business plan as part of the application process for a loan.

For a detailed guide read our article on how to write a business plan.

For vending machine businesses, some key aspects of your budget to consider include:

• Vending machines: You will need to purchase at least one machine to start your business and will likely purchase more over time to expand. The cost of buying a vending machine varies considerably. You can get your hands on a basic pre-owned machine for around £100 to £500, while more sophisticated machines purchased brand new can cost upwards of £5,000. You can also lease a vending machine for around £20 to £30 per week.
• Stock: Keeping machines stocked will likely be your main regular cost. Costs will vary depending on what kind of goods your machine offers, but make sure you shop around and use the right wholesaler for your business. 
• Transport: To make regular trips to wholesalers and to stock your machines, you will likely need a van or large car. A van could be particularly useful, as it would let you transport vending machines yourself if the need arises. Make sure you factor the price of any new vehicle, as well as insurance, fuel and maintenance costs, into your budget.
• Site commissions: To get premises to agree with your placement of a vending machine on their premises, you will likely need to offer them a cut of your revenue as a commission. This is generally between 5% and 25%. 
• Repairs: Sometimes your vending machines will break or require maintenance. These costs will vary depending on the type of machines you use and whether you can repair them yourself. 
• Payment fees: Vending machine retailer Vend Trade claims that more than 80% of the UK’s vending machine transactions use contactless card payments. This may mean less time rooting around in machines for small change, but it will mean your business faces transaction fees from your merchant services provider. These fees vary from provider to provider. 

For a detailed guide, explore our five-step guide to creating a small business budget.

A key step when starting a vending machine business is choosing a business structure and registering your business. Choose the structure that makes the most sense for your business.

As it is a relatively simple business with low start-up costs, you might want to start your vending machine business as a sole trader. However, if you plan to expand rapidly and take on more risk, a limited company could be a better option. Read our full guide to choosing a company structure to learn more and make an informed decision. 

» MORE: Should I register as a sole trader or limited company?

If your vending machines will sell food, you need to register your business with local authorities a minimum of 28 days before you start trading. This registration costs nothing and cannot be refused, but your permission to trade can be revoked if your business is found to have substandard practices. As such, you should ensure that:

• machines are hygienic and regularly cleaned
• food and drink is stored at safe temperatures
• pests cannot gain easy access to machines
• packaging contains allergen information
• food is wrapped appropriately

With a budget, business plan and registration sorted, you can seek funding. New business owners might rely on one source of funding, or combine several.

Compared to some other businesses, vending machine businesses can have relatively low start-up costs. As such, you may be able to get started with personal savings or assistance from friends and family. However there are many options available. Find out more in our guide to funding a small business. 

This is also a good time to choose a business bank account that suits your business. There are many different accounts available, each carrying different features and extras. For a vending machine business, you may want to prioritise accounts with low or free transaction fees due to the potential for high transaction volume. 

If you are a sole trader, you can use your personal bank account for business. However, limited companies and partnerships must have a business bank account. In addition, sole traders may find it easier to keep business funds and transactions in a separate business bank account.

Finding the right location for your vending machines is one of the most important steps in setting up your business. To maximise sales, try to think of high-traffic areas or locations where people might be waiting around and need a snack or drink. In addition, the location of your vending machine could influence what you stock it with. 

Here are some location ideas:

• Hospitals: With busy waiting rooms full of patients and loved ones who could be waiting for hours at a time, as well as busy staff who spend long shifts on their feet, hospitals are prime locations for vending machines. Nutritious snacks and hot drinks are great choices for vending machines in hospitals and other similar waiting rooms.
• Leisure centres and gyms: This might seem counterintuitive but remember that vending machines don’t have to exclusively offer unhealthy snacks. Protein bars, shakes and isotonic drinks could be great options here.  
• Office buildings: Anyone who has ever worked in an office will know that a snack is often needed to get through a difficult day. The convenience of on-site vending machines could be attractive to office managers too, as it will keep staff in the building when they might otherwise stray further afield to look for snacks. A mixture of nutritious snacks, sweet treats and hot beverages can play well in an office environment.

These are just some ideas to get started, but don’t be afraid to consider other locations with high foot traffic. Remember that before placing a vending machine you will need permission from relevant business or building owners. Any agreement will likely involve paying a commission of 5% to 25% on revenues from the vending machine.

In some cases, you may also need a permit from the local council if your location is in a public area. 

It is also essential to consider health and safety concerns when choosing where to place a vending machine. Make sure the machine is not in a location where it could be tipped over or cause a blockage, and consider signage that advises people not to shake the machine.