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Copyright © 2008 Lou Gubitosa
According to Automatic Merchandiser Magazine, the vending industry generated $23 billion in sales in 2007. There are many factors influencing future growth in this industry: new products, new payment systems, and growing economic markets.
Vending Product Lines
The vending industry got its start in 1926 with the cigarette vending machine. In the 1970's, parents could still send their kids into the grocery store to buy a pack of cigarettes and cigarette vending machines were available everywhere. With the laws passed in the 1980's limiting the sale of cigarettes to minors, cigarette vending machines began to disappear, except in bars and casinos.
These days, nearly any product you can imagine is being sold in a vending machine somewhere: soft drinks, hot drinks, milk, water, energy drinks, candy bars, gum balls, snacks, sandwiches, energy foods, newspapers, stamps, pre-paid calling cards and more.
The only limit to what vending machine operator's can supply is the ability of a vendor to obtain products. So long as the vendor can get the product on a regular basis, a vendor will be making that product available somewhere.
Payment Systems
The coin-operated vending machines have been a staple of the industry since its inception.
In the last couple decades, manufacturers have perfected the bill-changing technology. Early bill-readers were touchy and very picky about the bills they would accept. Over the last decade, the technology has improved to the point where any denomination bill can be read, even if the bills are put into the machine backwards.
As more consumers are making the move to credit and debit cards, some vendors are beginning to offer cashless technologies on their machines. While the vending industry is starting to upgrade their machines to work with the cashless technology, it is a slower area of development, as only 2% of vendors added this technology in 2007.
Growing Economic Markets
In states like California, Nevada, Arizona, Florida, Texas and New York, the economies are growing at staggering rates. This growth, while dampened by recent economic problems, is enabling vendors to locate new vending machines in newly developed neighborhoods and suburbs.
In areas of rapid growth, new apartment complexes and shopping centers have created an opportunity for new vending machine equipment to be placed. But, in other areas of the country, growth in the vending market is driven more by new products that can be added to locations that are already served by other vendors.
Think about the lunchrooms at local manufacturing facilities. If the facility currently only has snack machines and soft drink machines, then the facility is ripe for the placement of hot drink machines, sandwich machines, and vending machines for some of the hot new products in the energy foods segment.
Starting From Scratch
Sandwiches were the single largest segment of the vending industry in 2007, accounting for just over 30% of industry revenues. Cold drinks accounted for the second largest segment of revenue in the vending industry, and it only generated about 29% of industry revenues. But all of the biggest players in this industry are pretty well entrenched in the market with their soft drink and sandwich vending machines. It will be difficult to get new sandwich and soft drink machines placed anywhere.
For the new small business owner, who is getting into the vending industry, the business owner may not be situated to offer a full-line of products in existing locations. If another company has beaten you into a location, then the best angle for entrance into that market is to offer alternative products in those locations.
As with any new business, the challenge is to get up and running, and to get the cash flow moving into the business in order to facilitate long-term growth.
If one was to get into the soft drink and sandwich vending, the size of the machines will absolutely require the business owner to have a larger truck in order to be able to move equipment around when necessary.
But with some of the new products and vending machines available, a vending operator can run their business out of a van or SUV. Some machines are small enough that the vendor might be able to move their equipment with a small car.
For example, with the Buzz Bites(r) Chocolate Energy Chews, the vending machines are designed to sit on a counter top and look very similar to the old-fashioned bubble gum machine.
Startup Costs
Most companies require new vendors to buy their machines in advance. Few companies in this market offer direct financing for equipment, but fortunately, the startup cost is within reach of most small business owners.
Compared to the cost of buying a franchise business that will require additional financial considerations for staff, the cost of starting a vending business is minimal.
Whereas a franchise might cost $100,000 to get the front door opened, the same amount of money could very well get the small business owner on the road to nice profits in very short order.
As with any other business, growth will be measured by the number of customers one is able to reach with products that consumers want to buy. So, the more vending machines a vendor possesses, the more income a vendor could expect to generate.
Soft drink machines range in price from $1200 to $5500 each, depending on the design. But with a niche vending machine like the machines used to dispense the Buzz Bites(r) Chocolate Energy Chews, one could buy three machines for the cost of a cheap soft drink machine, when purchased in minimum volumes.
About the Author:
Lou Gubitosa is the owner of Vending Systems. If you seek to Work At Home and Make Money with a lucrative home business opportunity, then you owe it to yourself to look into a Vending Machines business. Buzz Bites(r) Vending routes are available all over the United States, for those interested in getting involved with this proven business model. For a FREE INFORMATION KIT on this HOT NEW business opportunity, visit Lou's website at http://www.VendingSystems.com or call us at: 1-800-779-0025
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