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If you're looking to start a vending machine business, there are two ways to grow it: Reaching out to businesses and convincing them to let you put machines in them, or Buying a vending machine location.
Both methods have their own advantages, but in this article we're going to cover how to buy a vending location.
Buying a vending machine location with machines already placed in them has numerous advantages over trying to secure a location of your own.
There are so many in fact that unless you’re on a tight budget or want to go through the full experience yourself, it’s your best bet at growing a successful vending machine business.
Some of these advantages include:
If you’re trying to place vending machines on your own, it’s not enough to find a good establishment for them; you also have to convince the decision makers to bring you onboard.
This is the hardest part of vending for most people. Doing sales can be uncomfortable, especially when you’re knocking on doors and doing cold calls to get them. But when you buy a location, you get to bypass this struggle and get to the fun part: serving customers and running your business.
Moving is arguably the most stressful part of the business. Vending machines are VERY heavy and VERY easy to damage during the moving process. It’s not a one-person job. Not to mention you need special equipment to effectively move them.
By buying a vending machine location though, you won’t have to go through this struggle because the machines will already be on-site and working for you.
Securing locations can be risky because you never know if the place is actually going to be profitable or not. Even with a high amount of foot traffic, you can still end up with machines that rarely get used.
At Lucky Vending, we’ve had this happen on a few occasions. In one instance, we secured an office with a headcount of over 200 people. On paper this looked to be a very profitable account for us. However, due to Covid-19 restrictions, most of the workforce opted to work from home and the machines barely got used.
But when you buy a vending machine location, there’s no guesswork involved with knowing how much money you expect to make every month because the previous owner will provide you with the details. They’ll tell you the annual revenue of the location, and you can use that information to make a decision. Just be sure to confirm the earning potential, as this part of the process is very ripe for scams and misleading claims.
Customer service and reputation is an important part of maintaining a vending machine location. You want to make sure the people buying from you trust you and are happy with your service. If you’re just starting out, this can take time to build. And in the time that it takes to build, people can abuse your machine or disrespect you.
When you’re buying a location though, you’re usually going to be doing it from a company the establishment has already grown to know and trust. If they were in good standing with the company, you’ll usually be in good standing as well by association.
In summary, there are many advantages to buying a vending location over trying to place the machines yourself.
There are generally two places you’ll find vending locations available for purchase:
There are advantages and disadvantages to both methods, and we’re going to cover them.
Sites like Facebook Marketplace are full of vending machine locations for sale. Most of the time they’ll be from individual people who got into the vending business and are looking to get out of it, although you’ll sometimes come across postings from actual vendors as well
Marketplaces can be a goldmine for cheap locations. Not just that, but you can often haggle with the owner and secure them at an even lower price. Most people selling their locations are trying to exit the business entirely, so they’re willing to accept lower offers if you show enough buyer intention.
Another advantage of buying off marketplaces is that since you’re usually dealing with individual people, there’s significantly less paperwork involved. Most of the time you won’t be buying off established businesses or companies, so you don’t have to deal with any legal formalities. In a lot of cases, you can even pay cash.
One of the biggest disadvantages of buying from online marketplaces is the lack of proper regulation. Because anybody can put up a listing, you have to exercise caution and audit locations thoroughly, as marketplaces can be ripe for scams and deception.
You can find locations that don’t make as much money as advertised, or have machines that need significant service. Sometimes, you’ll even find locations in terrible standing with management.
When we were new to the business, we bought a retail break room location off of a marketplace. Retail break rooms are typically locations you want to avoid, but this was for a clothing store with over 60 workers, so we decided to make an exception.
When we took over the location, not only did it actually make ZERO sales, but many selections didn’t work and the vendor had a reputation for putting expired product. The only reason it was even still there was because nobody tried to take over. Once we took over the location, we let the owner know it was under new management. It took a lot of work to earn the trust of the people, but we were able to make it profitable.
Outside of the lack of regulation, you’ll typically find that the locations for sale are typically small accounts. It’s rare that you’ll be finding the types of places that make for prime vending locations. Because of this, Marketplaces are usually best for people who want to try vending as a business before they really make the decision to get invested.
You can also buy vending machine locations from other vendors. Most vending machine businesses have locations they’re looking to sell. They might be selling it for a multitude of reasons, but a lot of time it’s because they can’t give the location the attention it deserves anymore.
Because you’ll be getting them from other vendors, don’t expect to find the locations on Marketplaces. You can find them by contacting vendors in your area, or by consulting directories such as Vending Connection, which offer ad placements for a price.
Buying from other Vendors has a lot of advantages.
For one, you can trust that the location will be as advertised. Because you’re dealing with an actual business, you’re more likely to be dealing with someone who’s trustworthy. Businesses can be ruined by a bad reputation, so they don’t want anyone to be able to say they were being dishonest.
Another advantage is that it will typically be a location of higher quality. Professional vendors are able to secure more profitable locations, so you can expect to see a decent cashflow from the locations you buy from them. You can expect fully functioning machines and a good relationship with the owner of the establishment. And if there isn’t for any reason, the vendor will usually notify you upfront.
If you’re lucky, some vendors will also have guarantees on their machines that you’ll take over should you choose to buy the location from them. This guarantee can include free service calls, and even machine replacements.
Hands down the biggest disadvantage of buying a location from another vendor is going to be the price. Many of their locations are priced to profit and because you’re dealing with someone with more experience, you can’t expect the type of firesales you can find on online marketplaces.
If you can figure out the profit margins of the locations they’re trying to sell though, you can often negotiate for a better price where both you and the vendor can walk away happy.
Another disadvantage of buying from other vendors is that they won’t advertise every location they have for sale to you. They understand that their reputation can be at stake even after exiting, so they won’t give them up to just anyone. Oftentimes they’ll also be selling to multiple businesses, so they can have a preference in terms of who to sell to. This can work in your favor though, as if a vendor exercises this type of caution, you can expect the locations they offer to be solid.
Buying from a marketplace and buying from a vendor both have significant advantages and whichever you choose is going to depend on your budget and your risk tolerance. If you have a small budget of less than $5000, your best bet will often be marketplaces. If you have a budget of more than $5000 and don’t want to take risks, your best move will be to build a relationship with a vendor and buy a location from them.
Buying a vending machine location is fairly straightforward and follows the same process whether you’re buying it from a vendor or an individual. You want to inquire about the location, discuss payment, and buy.
Whether it’s a vendor or a marketplace posting, you want to reach out and ask about the location.
In particular, you want to know:
If the location and price is of interest to you, the next step would be to meet up and have a look at the location.
If the location and price of the vending machine location looks okay to you, you’ll want to have a look at the location in person.
Arrange for a time to meet with the owner and visit the location. If the owner has been in vending for a while, they will probably want you to give them a small deposit beforehand. Don’t worry, this deposit is 100% refundable. Vendors do this just to ensure you’re actually interested in buying the location and not a tire kicker.
When you visit the location, make sure you take note of the building and the machines.
In particular, you want to know:
It’s especially important to make sure the location & machines are as advertised. You don’t want to run into a situation where you end up taking on a location only to find out the machines are malfunctioning the headcount is lower than the owner said.
If everything seems in order to you, the next is to discuss payment.
If the location looks like a winner to you, the next step in the process is to make a deal.
In particular, you want to discuss:
Buying locations for the advertised price and keeping all of the equipment is standard.
Locations are usually priced at 12x the monthly gross profit. For example if a place is making $2k/month, you can expect the owner to ask for about $24k.
We’re gonna let you in on a price negotiation secret though:
Most vendors operate on a 50% margin. So if a location is advertised at $24k like in the example above, they’re most likely netting about $12k a year from the location. Vendors are usually willing to go lower than the gross revenue, but not the net revenue. If you make an offer between those two numbers, you can potentially walk away with a location at a solid discount.
After successfully negotiating a deal with the owner of the location, the next step is to go through the process of taking it over.
The first thing you want to do is sign an agreement with the owner. This is very important. You want to make sure you get the acquisition in writing. Most vendors will already have contracts ready for you, but if the owner doesn’t, a simple paper signed by both parties outlining the details of the transaction will do. Make sure you have receipts of any and all payments you carry out as well.
The next step is to meet with the vendor and have them take all the money out of the machines. This includes money from any sales and the change from the coin mechs. You will then be filling the coin mechs with your own change. The reason for this step is to ensure the true value is being transferred, and to avoid any potential legal problems associated with buying and selling money.
If any equipment/product is not included in the deal, the next step would be to remove them with the vendor. You would then be replacing them with yours.
The final step is to take the keys to the machines. If there are any keys associated with the location (ie. FOB keys to get in after hours), make sure you get them too.
Congratulations, you are now the new owner of a vending location!
A vending machine route is basically a group of vending machine locations. They can be all along the same road, or in the same general area. Routes are typically sold by vendors looking to exit the business or size down.
Buying a route can be a great way to get started full time in the vending business. You wouldn’t just be servicing a machine or two on your downtime - you would have a whole fleet of them making money for you. It’s a good way to grow your business overnight.
The buying and selling process is similar to buying an individual location, except now you would be buying more than one for the advertised price. So instead of looking at one location, you would now be looking at and paying for however many are advertised.
Some vendors are also open to only selling parts of their location. In this case, you would only be paying for the locations you and the vendor agree on.
Either way, buying a vending route is another great way to grow your business.
We hope you found this extensive guide on buying vending machine locations useful!
For more guides and tips on the vending machine business, visit our Vending Blog.
If you’re a business in Toronto and the surrounding areas looking for quality vending services, click here to contact us.
Till next time, good luck!