Blog

Feb 18, 2016
Screen Shot 2016-02-18 at 9.22.30 AM
Guest Perspectives

How to Start a Healthy Vending Business

Today’s Guest Perspective is brought to you by August Noble of SnackNation.

In a world with junk food around every corner, finding healthy options on the go can be nearly impossible.  Luckily,  vending machines can now offer far more variety than just unhealthy food.  Healthy vending machines make an instant impact on the communities they serve and open conversations for operators that are interested in new markets like health clubs and schools.  By providing healthier food and drink options,  operators are able to attract a whole new demographic of health aware consumers to their operation.

But why would anyone even want to start a vending business?  Many people don’t know that in the US alone, vending is an 8 billion dollar industry.  It is also an entrepreneurial opportunity that just about anyone can get involved with.  All you need to do is get a machine and find a location for it. Obviously there is a lot of work that goes into doing that, but broadly speaking, that’s it.  

Why healthy vending?  Healthy vending machines not only have a great impact on the surrounding community, but they also allow you to place machines where traditional vending machines wouldn’t be allowed.  The Smart Snacks in Schools policy issued by the USDA has set requirements for how wholesome products need to be in order to be allowed in schools.  With healthy vending, you won’t need to worry about this, as the products you carry will meet these requirements.  Also, with 88 percent of people willing to pay more for food they know is nutritious and healthy food product sales expected to reach 1 trillion by 2017, it is a great market to be in (Forbes).

Additionally, with new technologies like VendScreen (recently acquired by USA Technologies), vending operators can provide ingredients and nutritional profiles that are continuously updated in a cloud-based database of thousands of products and program the devices to showcase the healthiest choices available.

So, what’s the first step in starting a vending machine business?  Before you start thinking machines and locations, the first step is deciding if the vending business is right for you.  It sounds simple but is one of the most important steps.  You do this by making sure it aligns with your “3 why factors.”

These factors are: purpose, time, and money.

    • Purpose – Why do you want to start this business?  Is it to make money? Flexible hours? Be an entrepreneur?   Whatever it is, you need to make this decision before you get started.  It will help keep you motivated throughout the process.
    • Time – How much time do you have to invest into the business?  Are you starting this as a side business?  Knowing the amount of time you are willing to put in will help set realistic expectations.  Consider this example: you choose to buy and self-operate a 50 machine vending route because the numbers make sense and it’s a smart business decision. However, the main reason you wanted to start a business was so that you could spend more time with your family. Now you are the owner of a lucrative vending business that keeps you away from home 80 hours a week. Have you accomplished what you wanted?
    • Money – Similar to time, how much money are you willing to invest in the business?  This will also help you set expectations and decide whether to buy your machines, or become a franchisee.

Once you’ve made these decisions you will have a clear vision of why you are starting your business and what to expect from it.  The next step is to do research on the industry.  HUMAN has a guide on how to start a vending machine business which is a good place to start.  Also, try to find a mentor in the industry.  There are a lot of people in the vending business that can help you get started and learn from their experience.  NAMA (National Automatic Merchandising Association) holds events throughout the year that are a great place to network and learn more about the industry.

Now you’ve done your research and are ready to get started.  As you will learn during your research, finding locations is the most difficult, and an important part of starting a vending machine business.  This is simply because, without somewhere to put your machine, there is no way that it can make sales.

Good questions to ask include:

      • What is the location’s estimated daily foot traffic?
      • Do they currently provide vending or food service options? If so, who is their vendor?
      • Do they have a contract with their current vendor? If so, how much longer are the locked in for and how happy are they with their current service?
      • Do they currently receive a commission from vending machine sales? If so, how much are they receiving?
      • Additional services being provided by their current vendor?

When finding locations it is crucial that you know the demographic of the customers there. This will help you place the right machine, in the right location, and maximize your profits.  For example, if your location is in an office building with mostly working-class adults, chances are they prefer to use credit card.  In this situation you need to make sure that the machine you place there has the capability to accept credit.  If not, you are going to miss out on a large amount of sales.  Vending Market Watch recently found that average annual cashless sales have increased 28 percent over the last year, and that the average consumer is spending 32 percent more when they pay with credit versus cash.

In conclusion, there are three large steps in getting off to the right start with your healthy vending business:  1) know why you are starting it; 2) do your research, and 3) understand your location and the demographics for your location.  If you do those three things you will have a great foundation to build a healthy vending business.

………………………………………………………………………………………………………………………….

Guest post by August Noble of SnackNation, a B2B healthy office snack delivery service that makes healthy snacking fun, employees more productive, and offices awesome.  He is a snack connoisseur that has a passion for health, and getting better everyday.

Tags: , , , ,