Are you considering investing in a vending machine but wondering if it will be worth the cost? Understanding the return on investment (ROI) of a vending machine can help you make an informed decision. By analyzing factors such as initial investment, ongoing expenses, and potential profits, you can determine whether a vending machine is a smart investment for your business or organization. In this article, we'll explore how to calculate ROI for vending machines and discuss some of the benefits and drawbacks of owning one.
Why Vending Machines?
Vending machines can offer numerous benefits for businesses. We know it may seem like a sunk cost on the surface – what if you don’t sell your products? How will you manage the maintenance? What you probably don’t know is that overall, vending machines actually rent the space they occupy, and national vending service providers handle all the details for you when you choose the right provider.
Vending machines provide a convenient and accessible way for customers or employees to purchase snacks, drinks, or other items without the need for staff assistance. This can help reduce lines and wait times at a traditional checkout counter, improving customer satisfaction and employee productivity.
Vending machines can generate additional revenue for businesses. By offering products at a higher markup compared to wholesale prices, vending machines can be a profitable source of income. They also operate 24/7 with very little maintenance, meaning your space can earn even after office hours.
Finally, vending machines can also be used as a marketing tool by featuring branded products or promotions. This can increase brand awareness and loyalty among customers or employees who use the machine regularly.
Improving Productivity and Making People Happy
Food makes people happy. That’s just a fact. We celebrate with food, experiment with food, and sometimes even just play with our food. Food brings people together and symbolizes a good time. It boosts our mood and depending on what we eat, can definitely increase our productivity. While it may seem like time spent at the water cooler is wasted, it can actually be a great opportunity to exchange ideas and socialize with coworkers leading to innovation and an overall positive feeling at work. There’s your first return on investment with your vending machine. People will like it!
Besides associating the office with great snacks, your vending machine will fuel your employees. There is nothing worse than showing up at the office, getting slammed with unplanned back-to-back meetings, and realizing you forgot your lunch. The vending machine is your best friend on days like that. If you can’t escape and grab something outside, you’re really in a pinch. Plus, your concentration will certainly wane if you can’t eat or drink anything as you scramble from meeting to meeting. Another return on investment: employees with options for those busy days.
We’ve already given two examples of how investing in a vending machine will bring your business returns. In case you’re just starting out, let’s get a better understanding of what return on investment (ROI) really means.
Definition of ROI
According to Investopedia, ROI is a profitability metric used to measure how well an investment has performed. It is a measure of profitability. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
Why it is important to calculate ROI for vending machines
By calculating ROI, you can evaluate the performance of your vending machines and make informed decisions about how to improve your business operations. ROI takes into account the initial investment in purchasing or leasing vending machines, as well as ongoing costs such as restocking and maintenance. It also considers the revenue generated from sales through vending machines. By comparing these costs and revenues over a set period of time, you can determine if your vending machine business is profitable or if changes need to be made.
Different factors that affect vending machine ROI
There are a number of factors to consider when you invest in vending machines to ensure maximum ROI. First, location, location, location. Where your vending machine sits is going to be critical to how much you can sell. Where is there the most foot traffic in your building? Is there a kitchen or break room? Think carefully about where your vending machine will live and how many people will have access to it.
Then, consider your products. What kind of snacks or drinks do you want to make available, what do you think will sell the most, and do you want to make any specific dietary options? You should choose products that are popular, have a long shelf life, and fit the needs of your target market. Conduct market research to determine what products are in demand in your chosen location.
Consider vending machine type. There are different types of vending machines available such as snack machines, beverage machines, and combination machines that offer both snacks and beverages. Choose a machine that aligns with your product selection and target audience.
Consider the initial cost of purchasing or leasing the vending machine you decide on, as well as ongoing costs such as restocking and maintenance fees. Again, these tend to be minimal since most vending machines are managed through professional vending service providers. When you partner with a service provider, remember that they can come and evaluate your space to give you suggestions on where you can BOTH get the most ROI.
Finally, decide on the payment methods you want to offer (we think the more the merrier), and check to see if there are any specific regulations in your area regarding permits or licenses for vending machines.
By considering these factors when investing in a vending machine, you can increase your chances of success and profitability in the vending machine business. It’s truly a win-win-win: your business will earn commissions based on the snacks that you sell, your vending service provider will get a little back, and your employees will be more productive, but more importantly, happy!
Are you considering a vending machine but now sure where to start? Contact us now to get the ball rolling!