People on the go can get food and drinks from vending machines. People often ask if the vending machine business is profitable because the products supplied in them are not high-ticket items (except for vehicle vending machines, of course). 

A lot of people think of a vending machine business only as a side business which is a misconception. Vending machines, in reality, can be quite profitable if a company and the business are structured properly.

The importance of unmanned retail has never been more significant than now. A vending machine business is the best way to become part of this relatively new opportunity. 

If you are looking to expand your brand and don’t want to spend an exuberant amount, then vending machines are the way to go!

 

Why is investing in a Vending Machine Business Profitable? 

For any business to grow, market size is a very important factor. With vending machines gaining popularity by the day, the market potential is enormous. The Indian market is now ready for smart vending machines and so is the world.

India has more than 65 lakh possible locations in more than 500 Indian cities where a vending machine can be installed.

With around 40K hospitals, 555K workplaces, 113k public places (Metro, Railway stations, etc.), 249k factories, 220k ATM locations, 630K residentials (apartments, PGs, hostels) it is a severely under-tapped market space.

There has been a huge surge in demand for smart, contactless vending machines all across the country and Daalchini has emerged at the forefront to fulfill this demand.

 

What is the Vending Machine business model?

A plethora of options exist for potential business owners. When people think of vending machines, they usually think of candy or snacks, but there are so many other options available.

We at Daalchini, allow the vending machines to carry healthy home-cooked meals, baked goods, and much more.

In a vending machine business, you earn money by selling various kinds of products like snacks, beverages, packaged and fresh food, stationery items, health supplements, etc. The possibilities are endless. Having a variety of options allows you to diversify and increase the average ticket size which will translate into better profits.

Our vending machines sell a lot of different products with very varied price ranges which allow you to maximize your profits. 

Price differentiation depending on the location can help you optimize your resources.

While sales margins continue to be the biggest contributor to revenue, one can earn revenue from advertisements and listing fees from new brands for their products in our vending machines.

They can also earn revenue from displaying their ads on our Vending machine and on APP and also by charging a monthly rental from the clients.

 

Low Initial Cost

Costs determine the profitability of businesses. A higher cost would lead to lesser profits and vice-versa.

A lot of different businesses are investment intensive but the vending machine business has a very low initial investment and eventual operational costs as well.

Another factor that affects businesses is the “barriers to entry”. Since the initial costs are comparatively low, this problem ceases to exist.

Depending on the type of machine one wants to set up, the cost varies. There are traditional vending machines that carry snacks, refrigerated vending machines, special purpose vending machines, combination vending machines, and many more. They can be customized according to your needs and the location where they are going to be placed.

Based on the type of vending machine, the initial investment and costs vary but we are going to talk about the latest rage in the vending machine business world, “the smart vending machine” that dispenses snacks, beverages, fresh food items, and maybe even rajma-chawal!

If you want to own food business in today’s times, a hefty amount is required whereas for a minimal investment of INR 1.5- 2 Lakhs you can own your very own smart vending machine. The profitability of the business is such that you can recoup your investment in about 18-24 months.

As the investment is low, the risk also becomes low. This allows the businesses to generate more sales, ad revenue and reach their break-even point very quickly, and eventually start generating healthy profit margins.

 

Read Also: Top 10 Types of Vending Machines in India (2023)

The revenue sources are multiple and are as follows:

Having multiple revenue sources is how a business remains profitable and a vending machine business has just that!

A Vending machine business has multiple revenue sources that put this business in the category of becoming a profitable business.

A.) Sales of goods/products: You can earn revenue by selling products, directly through your vending machines. The average margin on most of the products is 20%-25% and the margin on fresh food is in the range of 30-45%. This is the primary and one of the biggest sources of revenue from a vending machine.

B.) Monthly rental charges: You can provide your vending machines to your clients on a monthly rental basis. You can charge an average rent of around Rs.5,000 for one vending machine from corporates and manufacturing plants. 

However, rentals may not be earned at hospitals, residential areas, and other similar locations that are operational 365 days.

 

Why would someone pay monthly rent for installing a vending machine at their premises?

This is one of the most common questions we get asked and we are here to answer it for you!

You will be providing a full-fledged 24*7 service to the client. The client will get a food option for their staff or employees at a very affordable price and you will be handling the management and maintenance of the machine.

C.) Brand Tie-ups: Tie-ups with various food and beverage brands to list their new products in the vending machines is like listing fees paid by brands for their products on an e-commerce platform.

D.) Ad Income: You can run ads and campaigns for the brands, both, for food & beverages and otherwise. A vending machine has good visibility and footfall and it can be used to reach out to more people without making that additional expenditure.

You can run ads and promotions for the brands in the form of screensavers, banner ads, physical creatives on the sides of vending machines in high-footfall areas, etc.

 

What are the margins in the Vending Machine Business?

It is a low-risk business with low initial investments and higher returns which leads to very healthy profit margins. 

It is a perfect business for new as well as experienced entrepreneurs. The entire operation is pretty simple and the operational costs are also minimal.

A vending machine sells a mix of products including Snacks, beverages, ready-to-eat, fresh food, etc. The average margins in this business are around 25%.

In a world where we are becoming more environmentally conscious by the day, keeping a track of food wastage and keeping it low is extremely important. 

This is also a deciding factor when it comes to profitability. Lesser wastage would also translate into better profit margins.

We use state-of-the-art technology that minimizes these losses and gives you the boost that you need. 

• We keep the wastage of our fresh food low by using Daalchini’s ML-based tool called OFT (order for tomorrow) which predicts the next order for you based on sales and consumption patterns.
• We also consistently get insights and data from Daalchini’s smart dashboard about sales, customers’ buying behavior, peak sales time, etc.

But you can get margins up to 45% with many brands and on the sales of fresh food, bakery, and ready-to-eat food. You may need smart vending machines with software to manage fresh food for this. 

Conclusion:

The vending machine business has proven to be successful all around the world. With it just taking off in India, this is the right time to invest and become a part of what is sure to be the next best thing in the unmanned retail space.

With low investment and high returns; minimal time, effort, and hassle; the ability to expand easily and quickly, and long-term gains, the vending machine is the recipe for a profitable business.

Vending machines are a great investment opportunity to establish a steady revenue stream. And if you choose to venture further into this business industry, you will find that the vending machine business will prove to be a good fit for you.