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In this week's episode of the Niche Pursuits podcast, Mike Hoffmann of Vendingpreneurs and I discuss the fascinating world of vending machines as a side hustle and passive income opportunity.
While our podcast typically covers online businesses, this episode explores a more traditional, offline business model offering incredible profit and scalability potential. Mike shares his expertise on starting a vending machine route, from selecting the right location to managing inventory, and even scaling it to a full-fledged business with hundreds of machines nationwide.
Contents
Watch the Full Episode
Getting Started with Vending Machines
Mike's journey into the vending machine business began after an "aha moment" at the airport in 2016. As he waited for a delayed flight, he realized that a bottle of water from a vending machine cost $3, and yet the owner of the machine made money while he slept. This sparked his interest in unattended retail and led him down a path of research into vending machines.
- Location is key: Finding the right location is the first step to success. Mike's first machine was placed at an apartment complex in his college town. He learned that modern "micro markets" (luxury grab-and-go setups) were more appealing to businesses than the classic Pepsi or Coke machines.
- Finance your machines: Initially, Mike had no idea he could finance vending machines. After learning this, he was able to avoid hefty upfront costs and made his first machine more profitable than his first rental property.
How to Find the Right Locations
Mike emphasizes the importance of foot traffic in selecting the ideal spot for your machines. Whether it's an apartment complex, office building, or urgent care center, the key is to find places where people are in need of snacks and drinks throughout the day.
- Pop-ins work best: Mike's tip for securing locations is to do "pop-ins" — visiting businesses in person to pitch the idea. He finds that in-person visits have a much higher success rate than emails or cold calls.
- Understanding foot traffic: It’s essential to gauge when and how often people will interact with the machine. For example, urgent care centers can be profitable since patients often wait long periods, making them more likely to buy snacks and drinks.
Types of Machines and Products to Consider
Gone are the days of traditional vending machines. Modern machines are now equipped with advanced technology, including AI-powered inventory tracking, remote management, and even cashless payments. Mike's machines can automatically monitor inventory and provide data on what items sell best.
- Smart machines and micro markets: These machines offer more sophisticated options, like larger product offerings and more flexible pricing. For example, a machine might sell everything from protein shakes to laundry pods.
- Focus on the location's needs: To determine what products to stock, Mike recommends studying the habits of the people at each location. At one of his apartment complexes, he found that college students preferred health-conscious options like Celsius drinks and protein bars, while older residents preferred more traditional snacks.
The Potential for Profit
The income potential in vending is highly variable, depending on the location and type of machine. Mike's first machine made $600 per month, with $300 in profit. As he scaled up, some machines made significantly more. His best-performing micro market recently made over $22,000 in a single month.
- Profit margins: Vending machine businesses typically have high profit margins, especially with modern machines. The cost of goods is usually three times the price, ensuring good returns on each sale.
- Scaling to passive income: While starting a vending route requires effort, Mike emphasizes that it becomes much more passive over time, especially when you hire staff to restock machines.
Scaling Your Vending Business
Once you’ve mastered the basics, the next step is scaling. Mike’s advice is to focus on building systems—tracking inventory, revenue, and locations. As your route grows, you can hire others to manage the physical labor, such as stocking the machines.
- Buying vending routes: One shortcut to growth is purchasing established vending routes from retiring business owners. By buying routes, you can skip the process of finding new locations and start with a proven, profitable base.
- Technology makes it easier: As Mike’s business grew, he incorporated more tech solutions. He even built a platform, VendHub, to streamline the process of sourcing products and managing inventory. With technology making it easier to monitor machines remotely, scaling the business becomes much less time-consuming.
The Risks and Rewards
Like any business, vending has its risks, but Mike believes they are relatively low. The biggest challenge is the upfront work involved in setting up your machines. Once you’ve figured out the right locations and products, the process can become largely passive.
- Not a get-rich-quick scheme: While vending machines can be a great passive income source, it's important to understand that success won’t come overnight. Mike advises being prepared for some initial work and facing a few rejections before you find profitable locations.
- Risk of theft and wear and tear: Although technology has modernized the vending industry, there are still risks, such as theft or machine malfunctions. These are manageable, especially if you focus on high-quality, new machines with warranties.
Final Thoughts
Vending machines may seem like a “boring” business, but thanks to new technology, they offer an exciting opportunity for passive income and scalability. Whether you're looking for a side hustle or a full-time business, vending can be a great way to earn money while learning valuable skills in operations, marketing, and scaling.
Mike’s experience proves that with the right strategy, the vending machine business can be far from mundane—it’s a dynamic, evolving industry with the potential to scale and generate impressive returns. If you're interested in starting your own vending machine business or scaling an existing one, you can learn more by following Mike's journey through his website and YouTube channel.
Links & Resources
- All About Mr. Passive
- Learn More About Vendingpreneurs
- Mike’s X Account
- Watch Mike on YouTube
- His Instagram
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