Finding and Landing a Good Vending Machine Location
By Joe Nichols
What is a good location? This question is relative, based on your company's size and
goals. A national vending concern considers a good account to have gross sales over
$240,000 per year ($20,000 per month), whereas a small vendor working out of his garage
might consider an account with sales of $6,000 per year ($500 per month) to be a good
account. Start with your goals. What kind of vending machine business do you want? How
much capital do you have? What are your operational plans? Is this a full time venture for
you or a part time income?
For example, a vending machine account that generates $20,000 per month probably will
have at least six vending machines (three sets, snack⁄soda). These vending machines
would need to be late model or new, an investment of at least $15,000 in equipment. To
service an account of this nature, a vending machine operator would require:
• $2,000 in parts for immediate repair - Customers like this expect
service calls to be completed within 4 hours of the initial call.
• A running daily inventory of $5,000 in vending machine product
• Service two -three times a day
• Fully insured - liability, workers compensation, etc.
• Paying a commission
• Driving a late model vending truck ($40,000)
• Extremely professional demeanor
• $62,000 in initial capital investment, plus ongoing expenses (telephone,
office expense etc.), before the first dollar is generated
As you can imagine, this type of account is very rare, could require even more
equipment than we discussed here, and is highly desirable.
A vending machine account that generates $500 per month can have as little as a single
vending machine, which could be older and might even have been free. Servicing this
account is much easier, requiring 2 route stops per month, service calls handled in a
reasonable amount of time (within 5 days), could be run out of a car or pickup truck,
would not be a commission account (unless you are crazy), and would have little ongoing
expense. These accounts are much more plentiful and, therefore, less desirable.
Each type of account appeals to different levels of business expertise, and the rules
of economies of scale do apply. Large organizations lose money in smaller accounts because
of larger overhead costs. Smaller businesses can make money in smaller accounts by keeping
overhead low. Where do you want to be? What is your skill level? How much capital do you have?
Now it is time for the market analysis. Once you have determined your goals, study the
marketplace. Look for accounts that can generate the amount of money you desire within the
framework of your investment - both time and money. Find out which operators service those
types of accounts and study their operations. Analyze what you perceive to be their
profitability. Are they making money in these types of accounts? Keep in mind that just
having a vending machine account doesn't mean they are profitable. Be conservative with
your estimates and include all costs. Do not forget to include wages - your time is not
free. If you can't make more than your current hourly wage, do not enter the business.
So there it is, XYZ account, and your analysis determines that you can be profitable in
the account. How do you get the XYZ account? ABC Vending has the account now and you have
studied ABC's operations. You have advantages over ABC and you know you can get the
account. What do you do now? Go selling.
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