HOW DOES A VENDING MACHINE WORK?
DO VENDING MACHINES MAKE GOOD MONEY?
WHAT ARE THE BENEFITS TO INVESTING IN A VENDING MACHINE?
If you are considering buying, renting or leasing a vending machine and have some questions, let us try to answer them below. Have some more questions? Give us a call or message us online and we'll be happy to answer them for you.
A vending machine is essentially an automated shop. Products are loaded into a machine and are available to purchase, generally 24/7. Vending products are commonly; freshly made beverages, bottles, cans, snacks and fresh food. But there seems to be little limit into what can be vended nowadays. Each item in a vending machine has its own selection number or corresponding button. Customers make their payment, choose the corresponding item number or button and then wait for their chosen product to be dispensed.
- There are a wide variety of vending machines in circulation now. They can range from freshly brewed hot drinks, cold cans and snacks, fresh filtered water, confectionary, fresh food, hot food and even non-edible items.
- Machines can combine eye catching graphics with exciting, new products and intriguing videos and stereo sound to draw customers in.
- Vending machines are either payvend or freevend. In these modern times cashless payments are more and more popular. Customers can generally pay via card, cash or mobile payments.
- Once payment has been made customers can choose the selection number or corresponding button and wait for their chosen product to be dispensed.
Depending on which way you want to play it, you can have full control over your machine and bank its full revenue from snack/drink sales, or have a company operate the machine and you take a smaller cut of the profits. There are a few options when it comes to investing in a machine:
BUY OUTRIGHT: Pay for the whole machine and fill it, maintain it, clean it. But yield 100% of the revenue made.
RENT/LEASE: Vending companies all over the UK operate Westomatic machines and can lease them to your business or site. The operating company gathers the revenue from the machine, with a small cut to you depending on your agreement.
FREE LEASING: A less available option, but in some parts of the world still popular; a company will put a machine at your site for free but take 100% of the revenue from it. This is often a less available option with larger machines, requiring more filling/cleaning and maintenance.
How much money a vending machine makes can vary depending on numerous factors including: where the machine is placed, the products that are put into the machine and any recurring business expenses. Taking these main factors into consideration will stand you in good stead to make a healthy profit from your machine.
- Location – placing a machine in a high or low traffic area will have a high impact on sales.
- Products – Placing the right product in the right area is key to a well placed vending machine. i.e. healthy snacks and drinks or fresh filtered water in a sports centre.
- Pricing – Offering split pricing can entice more customers. e.g. buy a drink and get a snack half price. Or offering discounts on using your own cup and do your bit for the environment.
- Expenses – Taking stock rotation and costs into consideration as well as maintenance and running costs maintenance will. Placing fresh items with a short shelf life will have a great impact on both costs and refill times.
Vending machines use a wide variety of payment methods. The most common being cash (Coins or notes), card (Credit or debit card) or cashless (Credit, debit, mobile phone payments). Each method requires a different system to ensure it functions correctly and payment is detected. Cash payments use a note reader or coin mechanism. Card payments use devices such as Nayax and telemetry systems. These type of systems also incorporate wireless payments such as contactless card transactions mobile payments.
Take a closer look:
- Coins – Modern machines analyse the chemical composition of coins and use optical scanning to identify and authenticate notes. A more indepth look – coins pass through two copper wires with an electrical current running through them, which creates a magnetic field. These help the machine identify the coin based on how its chemical composition disturbs the field as well as size. The final confirmation is made by how long it blocks the beam of light emitted by a pair of diodes and sensors.
- Notes – are scanned by digital cameras to distinguish particular patterns specific to each type of bill. Depending on the type of note reader used, the security measures may include running a current through it or using an ultraviolet scanner to measure the glow emitted by its fluorescent ink.
- Card readers/Contactless payment systems – This depends on your choice of contactless payment system. Nayax for instance have their VPOS system which utilises the latest technology to provide an all in one solution for magnetic swipe, contact and contactless purchases.
The short answer is yes! Cards are an easy and popular way to make purchases. And with a variety of different payment systems available to you, it has never been easier. Most credit or debit cards now support contactless payments and payment systems around the world have adapted to make use of this time saving feature. Systems such as Nayax have integrated technology that allows for both swipe and contactless payment payments.
Smaller machines such as Horeca table top coffee systems are sometimes limited to either cash or card but not both.
Vending machines are a booming business if you take all the factors into consideration. Think of them as automated, unmanned shops. The rewards can be great if you do your research, choose the correct machine, in the correct location, fill with the correct products and set them at the correct price. Most vending machines can be accessed 24/7, no need to pay someone to man them, just refill and maintain them.
You are never limited with a vending machine. You choose and change your product with the ever changing market to ensure you are always on trend.
Additional benefits include:
- Increased productivity; snack vending machines can hold sandwiches and baguettes, so employees don’t need to leave the office to grab lunch, reducing trips to the high street and increasing time spent at work
- 24/7 service; having a coffee vending machine in your place of work means staff have a refreshment option available any time of day or night. Perfect for shift work or offices that have to be open at unsociable hours (e.g. call centres)
- Employee morale; being able to grab a coffee shop standard coffee at any time of the day is a real perk and can lead to increased retention and better hiring prospects
- A new revenue stream; vending machines allow you to sell food and drink at a small mark-up, generating a new P&L Reduced costs; replacing a staffed canteen with something like a snack vending machine can represent a significant cost saving both in salaries and running costs.
If you’re a UK buyer. Check https://www.gov.uk/licence-finder to determine if you need a licence to sell what you want to stock in your machines.
If you are already a business owner, placing a vending machine in your building, then you’re unlikely to require any permits or licences. If you are not a business owner but want to operate your machine in a business capacity, then you may need one, depending on what you’re vending.
For countries outside of the UK, different regulations may apply, so please check your government’s regulations.
Dependant on the volume of human traffic passing your machine and the quantity of products purchased, you may have to stock the machine as often as every day. If you have a countertop coffee machine in a bar, it will need multiple refills per day.
Let’s say you put a milkshake Sigma Touch in a school – you may have to refill this very frequently indeed. On the other hand a staffroom vending machine for 20 staff will likely last a week before needing a visit.
Stocking a snack machine with chocolate bars, a drinks machine with Coca Cola cans, or a coffee machine with coffee beans entails overheads in the cost of the products, however the markup on the drinks/snacks vended will more than outweigh the cost.