Hidden Struggles of Vending Machines?

[TheDillon__]

Hallo da!

What's up everyone?

I notice there's a pretty small amount of threads in this place about vending machines. Does anyone have some in their portfolio?

I'm considering getting a few hot-coffee vending machines onto my campus.

N - There is a Starbucks on campus, but they close at 7pm and they're not open on weekends. Closest cups around the dorms are a 10-minute drive away, and close around 10. No late night coffee unless you want to try to make your own.

E - Not too easy - each machine can run from $3-7000+.

C - I'm debating whether I would own the machines, and charge the Uni a monthly usage fee; or simply sell the Uni the machines at a markup.

S - Pretty scalable. Right now, as far as I've seen, the only place to find a hot-coffee vending machine is in airports or Japan. They may be scattered in a few cities, but they're not too popular.

T - 30 days from purchase complete to installed and in-service.

As for an MVP, I'm thinking of simply petitioning the students to assess the demand, and let the University know how much money they're missing out on. Possibly hanging these petitions by the other snack/soda machines and saying "There could be coffee here."

Anyone here have a vending machine? What's something I'll probably want to know about this space?

 

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[Fortune5ive]

I was always skeptical about purchasing hot foods/beverages from vending machines. I worry about it being sanitary and absent of roaches etc. I also wonder about the reliability of the machines, too. That said, ever consider selling cold Starbucks coffee beverages via vending machines?

 

[GoodluckChuck]

As someone that has one of these machines in my building there's two things that come to mind:

1. It requires daily maintenance, cleaning, and refilling. When someone goes to get coffee and there's no cups, it makes for angry customers. Perhaps you would want a cup vending machine next to it so some kids don't jack your stack of cups for beer pong. With that said the machine at my building is always empty, meaning it's probably a potentially lucrative business. Unless you hire someone to maintain it plan on having a daily or multiple times daily task to complete.

2. Second thought is renting or making a deal with the manufacturer of the machine. Offer them 25% profit on the first machine and use your share to purchase another. I'm sure university will want their cut too. I'm sure there's a way that doesn't require you having to drop 6k on a coffee maker.

 

[MJ DeMarco]

If you really think about it, the internet is one gigantic vending machine.

 

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[458]

Between customer lawsuits and employee theft, its simply not worth it. Its a cash business in an industry that is declining, best to pass on this one.

 

[Scot]

Coffee vending isn't a new thing. They're everywhere. Rest stops, airports, hospitals, office buildings.

One interesting concept that was at UF while I was there was a mobile coffee service. You ordered on your phone and a dude with a coffee backpack showed up and poured you a cup. Horrible business model, but interesting.

I don't know about your university, but the thing I miss about living in a college town is you can order food any hour of the night. Want Chinese food at 3am? Sure thing.

What about convenience shops close to campus/dorms? Sell the obvious junk food, coffee, boxed wine and kegs.

The beauty of college students is the amount of disposable income. So you never have a lack of customers.

Think about things you wish were easier during your daily life.

 

[Fortune5ive]

For college...mobile haircuts, laundry services, room cleaning services, curriculum services. Things of that nature.

 

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[Scot]

Boom.

Million dollar idea.

Hangover 911

An app that you press when you wake up at 10am hating your life. Person comes to your apartment, dorm, random park bench, frat house. Brings pedialite, ibuprofen and a McDonalds McGriddle (example of my proven hangover cure).

The LAST thing you want to do when you're hungover is move. So they come to you. Want mcdonalds breakfast to soak up all the alcohol? Driving.. that sounds worse than dying. They bring it to you.

Evolution of idea, hire RN's or LPN's (depending on state license privileges) to bring a mobile IV. If you've never had a banana bag after a long night of drinking, it's like angels taking your hangover away and being reborn.

This is how you win on college campus.

 

[Locomote]

What you really need is something like Café X.

 

[wade1mil]

I had a handful of candy vending machines and a soda machine a while back. I didn't like going around constantly filling them.

But if you created a vending machine and sold them, that would be like selling shovels to gold miners.

 

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[G-Man]

But if you created a vending machine and sold them, that would be like selling shovels to gold miners.

There's a guy in my area that buys the machines in bulk from Coke (they get replaced every 2 years, so they're still nice), then he has people scout and lockdown locations, then sells others a "turnkey business" "be your own boss" thing servicing the locations. He basically marks the machines up 2-3x. It's like the get started pack people buy when they sign up for an MLM.

How do I know this? I was gonna buy 30k worth of machines a couple years ago, and listening to this guy's pitch I realized the money is in selling the shovels, plus, like @wade1mil said, when I had a rational moment and calculated how much time it would take to service the route,.... it worked out to basically having a $20/hr job plus having a bunch of money tied up in machines that I wouldn't know how to sell if I ever decided to bail.

 

[Fortune5ive]

I had a handful of candy vending machines and a soda machine a while back. I didn't like going around constantly filling them.

But if you created a vending machine and sold them, that would be like selling shovels to gold miners.

How were the profits? Overhead?

 

[wade1mil]

How were the profits? Overhead?

It's been so long, I don't even remember. It definitely wasn't a full-time income. I do remember location being key.

 

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[TheDillon__]

There's a guy in my area that buys the machines in bulk from Coke (they get replaced every 2 years, so they're still nice), then he has people scout and lockdown locations, then sells others a "turnkey business" "be your own boss" thing servicing the locations. He basically marks the machines up 2-3x. It's like the get started pack people buy when they sign up for an MLM.

How do I know this? I was gonna buy 30k worth of machines a couple years ago, and listening to this guy's pitch I realized the money is in selling the shovels, plus, like @wade1mil said, when I had a rational moment and calculated how much time it would take to service the route,.... it worked out to basically having a $20/hr job plus having a bunch of money tied up in machines that I wouldn't know how to sell if I ever decided to bail.

Now this, this I really like.

Though, I don't understand the cash-flow here.

He sells off the vending machines to these guys once - then it's a done deal? Or if he gets some cut off the sales, what's to keep me as a "business owner" from fudging the numbers?

 

[MJ DeMarco]

Evolution of idea, hire RN's or LPN's (depending on state license privileges) to bring a mobile IV.

You watch Showtime's Billions?

 

[G-Man]

Now this, this I really like.

Though, I don't understand the cash-flow here.

He sells off the vending machines to these guys once - then it's a done deal? Or if he gets some cut off the sales, what's to keep me as a "business owner" from fudging the numbers?

You buy it from him up front, already placed in a location. "All you have to do is service it". He puts this "return table" in front of you showing how much you'll generate every month (based of course on an aggressive number of daily vends) then get's you to "invest". You've basically just bought yourself a job.

The problem is that it's unscaleable because it's all cash (something he totes as a huge benefit), which means you can't really hire other people to service machines for you. It would probably be a decent business if you could make it truly passive.

 

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[TheDillon__]

You buy it from him up front, already placed in a location. "All you have to do is service it". He puts this "return table" in front of you showing how much you'll generate every month (based of course on an aggressive number of daily vends) then get's you to "invest". You've basically just bought yourself a job.

The problem is that it's unscaleable because it's all cash (something he totes as a huge benefit), which means you can't really hire other people to service machines for you. It would probably be a decent business if you could make it truly passive.

I think there's a real estate-esque play possible here.

Pardon the entrepreneurial masturbation - I don't have the cash on hand to buy a vending machine as it stands, so I'm just playing with the idea here.

Could I throw a vending machine in a mall or shop somewhere, then sell "business owners" the rights to whatever profits they make for, say, $400/mo.?

 

[G-Man]

I think there's a real estate-esque play possible here.

Pardon the entrepreneurial masturbation - I don't have the cash on hand to buy a vending machine as it stands, so I'm just playing with the idea here.

Could I throw a vending machine in a mall or shop somewhere, then sell "business owners" the rights to whatever profits they make for, say, $400/mo.?

It's just lead gen, and I'm sure that's how this guy gets his locations. He probably just buys them from people that scout these places out as a side gig. I think it's unlikely that it's monthly. Probably just pays up front.

 

[Scot]

You watch Showtime's Billions?

I don't. I'm guessing they do a mobile IV in it? I know that in Vegas they have "Hangover Bus" which has the IV rehydration thing going on.


@G-Man this conceot sounds very similar to what a friend of mine was looking into for doing ATMs. The ATM business (the kind you see in gas stations and at the fair) is very similar. The real key is location which is a lot harder than you think.

You can't just go to a Simons Mall and expect after one conversation with a manager to let you drop 6 Coke machines in their location.

Same with universities. Take University of Florida for example. They have an exclusive deal with Pepsi. You literally cannot serve Coke at a club meeting because it violates their terms. So little things like this are unknown and hidden roadblocks. Universities are extremely complex to navigate with businesses.

For all you know, you want a vending machine that serves M&M's but the school has a contract where they can't have any Mars Candy on premises.

 

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[G-Man]

They have an exclusive deal with Pepsi.

This exactly. The dude claims it's difficult to get any major commercial locations. He focuses on getting the machines inside businesses with 100 employees or less. The ones I was looking to buy were in govt buildings

 

[TheDillon__]

@G-Man @Scot

Very good points, I hadn't considered that! My Uni has a deal with Coke, so I don't imagine that going down too smoothly.

I like the idea of targeting small-midsize businesses though!

On a side note - would landing govt. deals not be astronomically more difficult? Or are you going for those bonus Entry points?

 

[Choate]

You could have 1 vending machine or 50 vending machines - either way, you are restricted by how many people walk by those vending machines, which is out of your control no matter how much you scale up.

Vending machines are like the kiddie pool you splashed around in your backyard as a child. High maintenance, liable to break, and can only serve 1 customer / kiddie at a time - whereas there are literally oceans of customers waiting to be served via other means (like how @MJ DeMarco said the internet is one gigantic vending machine).

Since you haven't polled students to assess demand, it sounds like this is chasing money instead of luring the cat.

Maybe instead, you could find a way to offer shovels to the money chasers, the old slowlaners out there who buy up vending machines trying to turn a profit. How many vending machines are just full of garbage that nobody would eat/drink?

A quick search showed me there are no prominent "vendor machine consultants" that I could go to if I was having vendor machine struggles. I can't think of the last time I saw a vending machine that felt like it was made for 2017 - its all the same Nabisco garbage, and with an ever health-conscious society it benefits no one. With the acceptance of debit/credit cards, people might actually pay more for things like almonds, pistachios, 80%+ dark chocolate, green tea packets (with a hot water dispenser activated after purchasing), or who knows what else.

If you could help address existing vendors of why their machine offerings suck, and could help them see bigger profits in just 1 month - you would be selling shovels during the gold rush. Whether this idea is viable or not is up for debate, but at least you would be swimming in the ocean, with a solution to someone's problem, and not in a kiddie pool where there are no customers.

 

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