Are you thinking to run a small business in Canada? Vending Machine Business in Canada could be your right bet when it comes to running a successful profit earning venture. Let’s get more into it!
You might have seen many vending machines around you in Canada in your day to day routine. Have you ever wondered who owns these vending machines? How much do these vending machines make daily? Can I own a vending machine business? How can I start a vending machine business ? Are any of these vending machine businesses for sale? Are you hunting for answers to these queries, then you have arrived at the correct place.
Here, we will address these questions and provide a step to step guide on how to the start a vending machine business in Canada. Also, discover the cost of owning a vending machine and profitability associated to it. So, lets dive straight in!
Vending Machine Business Canada – Upfront Investment Required
First question that comes to our mind before starting any business is, how much of an upfront investment is required to start the vending machine business in Canada.
The key components of upfront investment in case of vending machine business will include:
- The Vending Machine itself
- The Cost of Products itself
- The Rental Cost of Property on which the Vending Machine is installed
Lets dig into each of these separately:
How much does a Vending Machine cost?
Consider the type of products you plan to sell and choose machines that are designed to accommodate those items. Options include snack machines, beverage machines, combo machines (offering both snacks and beverages), and specialized machines for specific products such as coffee or ice cream.
In the modern day, you will also need to ensure that the machines are equipped with modern payment methods like mobile payment options, Apple pay etc. Also, the machines should have a good user experience and a modern look. After all, who buys from a machine that looks old.
A decent machine offering snacks and beverages combo costs anywhere between 6k – 10k in Canada.
Rental Cost of Installing A Vending Machine
Location plays a critical role in the success of your vending machine business. Look for high-traffic areas where your target customers frequent. Consider partnering with local businesses, such as offices, schools, or gyms, to place your vending machines in their premises. You will need to negotiate mutually beneficial agreements with property owners or managers to secure prime locations. Once the location has been secured, you will need to finalize the financials.
Although, real estate cost is mostly a monthly operating cost, some landlords might require you to put some upfront payment. There are two types of agreements in the market, one is a flat monthly rent for the installed machine, the other arrangement is profit sharing. Many of the locations might require you to pay a flat monthly rent while some others might agree to profit sharing as well.
In any case, 500-1K$ per month of rent depending upon the location plus two months of rent upfront (~2k per month) is the cost that you would require to budget for.
Cost of Products Sold
Most of the Vending machines in Canada sell snacks and cold drinks however some also dispense coffee. A typical 150 slot vending machine will typically need you to budget ~500-1000$ for initial stocking
Vending Machine Installation cost
If you are putting up a new machine at a new location, then you will need a technician to come in and make the machine operational for you. Some new vending machine sellers will provide you included installation but you should still budget 200-300$ for vending machine installation costs.
Total Upfront Cost to Set-up Vending Machine Canada
Adding up all the above discussed upfront cost, you are typically looking up 9k-14k CAD of upfront cost to setup a single vending machine in Canada
Operating Cost & Profitability of Vending Machine Business in Canada
Now, you might be thinking, is putting such an investment worth it? Is the vending machine business profitable or not?
Lets get down to evaluating the cost of running the vending machine business to determine its profitability.
The location rental is one of the top costs for running the vending machine business. As discussed earlier as well, this cost will come out to be around 500-1k CAD per month.
Restocking is another big costs in the vending machine business. There are two options here, either you restock the machine yourself or you outsource the restocking to some external vendor who will charge a fees for their service. If you have less than 5 machines, it might make sense to restock yourselves and save this cost. Apart from restocking service, there is an ongoing cost of the products purchased.
Vending Machines would require maintenance just like every other machinery. You should budget the cost of around ~100-200$/month
Now that we have all the inputs and outputs for the business. Lets calculate the profitability of a Vending Machine Business.
If 1K is the rent and 200 is maintenance (including cost of stock), assume that you do the restocking yourself then the running cost is 1200$/month.
Assume you sell 600 items per month (20 items per day), which were purchased at 1$ per month, then cost of products = 400$ and per item overhead = 1200/600 = 2$
Total Operating Cost = 1200 + 600 = 1800$ per month
To breakeven the above setup, you will need the ability to sell sell each item at 1800/600 = 3$ a piece.
In general, 500$-1000$ per month is considered to be a good profit for a vending machine business. This means that either you need to command more than 3$ per item to make profit or you chose a selection which reduces overhead cost per item to make headroom for profit !
Put together, in general profit = (Total Sales – (overhead cost + product cost))
This is just a back of the envelope collection, but can act as a good framework to evaluate vending machine business of your liking.
Starting A Vending Machine Business Canada – Important Tips
You must consider few crucial points while starting a new vending machine business in Canada.
1. Conduct Market Research on Location and Products
Conduct thorough market research. Evaluate the demand for vending machine services in your target area, including high-traffic locations such as office buildings, schools, shopping malls, hospitals, and transportation hubs. Identify the types of products that are in demand and understand the preferences of your potential customers. Through this, you can make informed decisions about the products you offer and the locations where you place your vending machines. Location and products can make or break your business.
2. Develop a Business Plan
A well-structured business plan is essential for the success of your vending machine business. Outline your goals, target market, pricing strategy, and marketing plans. Make sure you understand the initial investment required to purchase vending machines, stock inventory, and cover other operational expenses. Consider factors such as machine maintenance, restocking, and marketing campaigns.
3. Source Products and Suppliers
Finding reliable suppliers for your vending machine products is key to maintaining a consistent inventory. Research wholesalers, distributors, and local suppliers who can provide you with quality products at competitive prices. Costco is a good enough vendor to start with in Canada.
However, if you grow to multiple vending machine locations you can partner directly with retailers like Coke, Pepsi etc. Consider the shelf life, popularity, and profitability of the products you choose. It is also essential to establish good relationships with suppliers to ensure timely deliveries and negotiate favorable terms. Regularly review your product offerings to keep up with changing consumer trends and preferences.
4. Secure Permits and Licenses
Operating a vending machine business in Canada might requires obtaining the necessary permits and licenses depending upon the products you sell. Contact your local municipal or city authorities to understand the regulations and legal requirements specific to your area. Some municipalities may have restrictions on the types of products or locations where vending machines are allowed.
Compliance with health and safety regulations is crucial to protect both your customers and your business. Ensure that you have the required permits and comply with all applicable laws before deploying your vending machines.
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5. Maintain Your Vending Machine in Good Working Condition
Conduct periodic assessments to evaluate the performance of each machine and make adjustments as needed. Monitoring foot traffic, consumer behavior, and competitor activity will help you optimize your locations for maximum profitability. Also, operating a reliable vending machine will help develop reputation. No one wants to touch a machine that doesn’t work most of the time !
6. Implement Effective Marketing Strategies
To stand out from competitors and attract customers to your vending machines, implement effective marketing strategies. Leverage both online and offline channels to create awareness about your business. Utilize social media platforms to showcase your product offerings, engage with potential customers, and run targeted advertising campaigns. Distribute flyers or place posters in strategic locations to grab the attention of passersby. Consider offering promotions, discounts, or loyalty programs to incentivize repeat business.
Remember, a well-executed marketing strategy will drive customer engagement and increase the visibility of your vending machine business.
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Vending Machine Business Canada – Is it worth it?
Starting a vending machine business in Canada can be a very profitable and rewarding venture. By conducting thorough market research and building a solid business plan, you can start earning a decent amount of money. Choosing the right vending machines, sourcing best quality products and following effective marketing strategies, you can position your business for success.
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Monitor the market trends, adapt to the changing consumer preferences, and continuously innovate to stay ahead in this competitive industry.
All you need is dedication, strategic planning, a small investment and a customer-centric approach! Implement the right strategy and your vending machine business in Canada can thrive and generate sustainable income for years to come. Are you ready to get into the Vending Machine Business in Canada? Feel free to ask for any queries!