HOW DOES A VENDING MACHINE WORK?
DO VENDING MACHINES MAKE GOOD MONEY?
WHAT ARE THE BENEFITS TO INVESTING IN A VENDING MACHINE?

If you are considering buying, renting or leasing a vending machine and have some questions, let us try to answer them below. Have some more questions? Give us a call or message us online and we'll be happy to answer them for you.

A vending machine is essentially an automated shop. Products are loaded into a machine and are available to purchase, generally 24/7. Vending products are commonly; freshly made beverages, bottles, cans, snacks and fresh food. But there seems to be little limit into what can be vended nowadays. Each item in a vending machine has its own selection number or corresponding button. Customers make their payment, choose the corresponding item number or button and then wait for their chosen product to be dispensed.

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• There are a wide variety of vending machines in circulation now. They can range from freshly brewed hot drinks, cold cans and snacks, fresh filtered water, confectionary, fresh food, hot food and even non-edible items.  
• Machines can combine eye catching graphics with exciting, new products and intriguing videos and stereo sound to draw customers in.
• Vending machines are either payvend or freevend. In these modern times cashless payments are more and more popular. Customers can generally pay via card, cash or mobile payments.
• Once payment has been made customers can choose the selection number or corresponding button and wait for their chosen product to be dispensed.

Depending on which way you want to play it, you can have full control over your machine and bank its full revenue from snack/drink sales, or have a company operate the machine and you take a smaller cut of the profits. There are a few options when it comes to investing in a machine:

BUY OUTRIGHT: Pay for the whole machine and fill it, maintain it, clean it. But yield 100% of the revenue made.

RENT/LEASE: Vending companies all over the UK operate Westomatic machines and can lease them to your business or site. The operating company gathers the revenue from the machine, with a small cut to you depending on your agreement.

FREE LEASING: A less available option, but in some parts of the world still popular; a company will put a machine at your site for free but take 100% of the revenue from it. This is often a less available option with larger machines, requiring more filling/cleaning and maintenance.

How much money a vending machine makes can vary depending on numerous factors including: where the machine is placed, the products that are put into the machine and any recurring business expenses. Taking these main factors into consideration will stand you in good stead to make a healthy profit from your machine.

• Location – placing a machine in a high or low traffic area will have a high impact on sales.
• Products – Placing the right product in the right area is key to a well placed vending machine. i.e. healthy snacks and drinks or fresh filtered water in a sports centre. 
• Pricing – Offering split pricing can entice more customers. e.g. buy a drink and get a snack half price. Or offering discounts on using your own cup and do your bit for the environment.
• Expenses – Taking stock rotation and costs into consideration as well as maintenance and running costs maintenance will. Placing fresh items with a short shelf life will have a great impact on both costs and refill times.

Vending machines use a wide variety of payment methods. The most common being cash (Coins or notes), card (Credit or debit card) or cashless (Credit, debit, mobile payments). Each method requires a different system to ensure it functions correctly and payment is detected. Cash payments use a note reader or coin mechanism. Card payments use devices such as Nayax and telemetry systems. These type of systems also incorporate wireless payments such as contactless card transactions mobile payments.

Take a closer look:

• Coins – Modern machines analyse the chemical composition of coins and use optical scanning to identify and authenticate notes. A more indepth look – coins pass through two copper wires with an electrical current running through them, which creates a magnetic field. These help the machine identify the coin based on how its chemical composition disturbs the field as well as size. The final confirmation is made by how long it blocks the beam of light emitted by a pair of diodes and sensors.  
• Notes – are scanned by digital cameras to distinguish particular patterns specific to each type of bill. Depending on the type of note reader used, the security measures may include running a current through it or using an ultraviolet scanner to measure the glow emitted by its fluorescent ink. 
• Card readers/Contactless payment systems – This depends on your choice of contactless payment system. Nayax for instance have their VPOS system which utilises the latest technology to provide an all in one solution for magnetic swipe, contact and contactless purchases. 

The short answer is yes! Cards are an easy and popular way to make purchases. And with a variety of different payment systems available to you, it has never been easier. Most credit or debit cards now support contactless payments and payment systems around the world have adapted to make use of this time saving feature. Systems such as Nayax have integrated technology that allows for both swipe and contactless payment payments.

Smaller machines such as Horeca table top coffee systems are sometimes limited to either cash or card but not both.

Vending machines are a booming business if you take all the factors into consideration. Think of them as automated, unmanned shops. The rewards can be great if you do your research, choose the correct machine, in the correct location, fill with the correct products and set them at the correct price.  Most vending machines can be accessed 24/7, no need to pay someone to man them, just refill and maintain them. 

You are never limited with a vending machine. You choose and change your product with the ever changing market to ensure you are always on trend.

Additional benefits include:

• Increased productivity; snack vending machines can hold sandwiches and baguettes, so employees don’t need to leave the office to grab lunch, reducing trips to the high street and increasing time spent at work
• 24/7 service; having a coffee vending machine in your place of work means staff have a refreshment option available any time of day or night. Perfect for shift work or offices that have to be open at unsociable hours (e.g. call centres)
• Employee morale; being able to grab a coffee shop standard coffee at any time of the day is a real perk and can lead to increased retention and better hiring prospects
• A new revenue stream; vending machines allow you to sell food and drink at a small mark-up, generating a new P&L Reduced costs; replacing a staffed canteen with something like a snack vending machine can represent a significant cost saving both in salaries and running costs.

If you’re a UK buyer. Check https://www.gov.uk/licence-finder to determine if you need a licence to sell what you want to stock in your machines.

If you are already a business owner, placing a vending machine in your building, then you’re unlikely to require any permits or licences. If you are not a business owner but want to operate your machine in a business capacity, then you may need one, depending on what you’re vending.

For countries outside of the UK, different regulations may apply, so please check your government’s regulations.

Dependant on the volume of human traffic passing your machine and the quantity of products purchased, you may have to stock the machine as often as every day. If you have a countertop coffee machine in a bar, it will need multiple refills per day.

Let’s say you put a milkshake Sigma Touch in a school – you may have to refill this very frequently indeed. On the other hand a staffroom vending machine for 20 staff will likely last a week before needing a visit.

Stocking a snack machine with chocolate bars, a drinks machine with Coca Cola cans, or a coffee machine with coffee beans entails overheads in the cost of the products, however the markup on the drinks/snacks vended will more than outweigh the cost.

Machine which dispenses products to customers "Pop machine" redirects here. For the soft drink liquid dispenser, see Soda fountain.

A vending machine is an automated machine that dispenses items such as snacks, beverages, cigarettes, and lottery tickets to consumers after cash, a credit card, or other forms of payment are inserted into the machine or payment is otherwise made.[1] The first modern vending machines were developed in England in the early s and dispensed postcards. Vending machines exist in many countries and, in more recent times, specialized vending machines that provide less common products compared to traditional vending machine items have been created.

History

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The earliest known reference to a vending machine is in the work of Hero of Alexandria, an engineer and mathematician in first-century Roman Egypt. His machine accepted a coin and then dispensed wine[2] or holy water.[3] When the coin was deposited, it fell upon a pan attached to a lever. The lever opened a valve which let some water flow out. The pan continued to tilt with the weight of the coin until it fell off, at which point a counterweight snapped the lever up and turned off the valve.

Coin-operated machines that dispensed tobacco were being operated as early as in the taverns of England. The machines were portable and made of brass.[4] An English bookseller, Richard Carlile, devised a newspaper dispensing machine for the dissemination of banned works in . Simon Denham was awarded British Patent no. 706 for his stamp dispensing machine in , the first fully automatic vending machine.[5]

Modern vending machines

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The first modern coin-operated vending machines were introduced in London, England, in the early s, dispensing postcards. The machine was invented by Percival Everitt in and soon became a widespread feature at railway stations and post offices, dispensing envelopes, postcards, and notepaper. The Sweetmeat Automatic Delivery Company was founded in in England as the first company to deal primarily with installing and maintaining vending machines. Also at about that time in England, Dixon Henry Davies and inventor John Mensy Tourtel patented a coin-operated reading lamp for use on trains and founded the Railway Automatic Electric Light Syndicate, Ltd. The system ran off batteries and delivered 30 minutes of light for 1d., but was not a long-term success. Tourtel also invented a similarly coin-operated gas meter.[7] In , Stollwerck, a German chocolate manufacturer, was selling its chocolate in 15,000 vending machines. It set up separate companies in various territories to manufacture vending machines to sell not just chocolate, but cigarettes, matches, chewing gum, and soap products.[8]

The first vending machine in the U.S. was built in by the Thomas Adams Gum Company,[9] selling gum on New York City train platforms. The idea of adding games to these machines as a further incentive to buy came in when the Pulver Manufacturing Company added small figures, which would move around whenever somebody bought some gum from their machines. This idea spawned a whole new type of mechanical device known as the "trade stimulators".

Growth

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The vending machine industry in the United States is a multi-billion dollar sector. In , it was estimated to be worth $18.2 billion, with approximately 3 million machines generating an average monthly revenue of $525. However, this is an average, and the industry is trending toward more sophisticated and automated vending machines, particularly in North America.

This trend is driven by the increasing demand for convenience and the development of advanced technologies. For instance, the hot food vending machine sector is valued at $4.8 billion and is seeing significant growth as robotics companies introduce automated solutions for dispensing pasta, burgers, and groceries. The broader fresh food vending segment is projected to reach $8 billion by , offering consumers more options for nutritious and convenient meals and snacks.[10]

Mechanisms

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Internal communication in vending machines is typically based on the MDB standard, supported by National Automatic Merchandising Association (NAMA) and European Vending & Coffee Service Association (EVA).

After payment has been tendered, a product may become available by:

• the machine releasing it, so that it falls in an open compartment at the bottom, or into a cup, either released first, or put in by the customer, or
• the unlocking of a door, drawer, or turning of a knob.

Some products need to be prepared to become available. For example, tickets are printed or magnetized on the spot, and coffee is freshly concocted. One of the most common forms of vending machine, the snack machine, often uses a metal coil which when ordered rotates to release the product.

The main example of a vending machine giving access to all merchandise after paying for one item is a newspaper vending machine (also called vending box) found mainly in the U.S. and Canada. It contains a pile of identical newspapers. After a sale the door automatically returns to a locked position. A customer could open the box and take all of the newspapers or, for the benefit of other customers, leave all of the newspapers outside of the box, slowly return the door to an unlatched position, or block the door from fully closing, each of which are frequently discouraged, sometimes by a security clamp. The success of such machines is predicated on the assumption that the customer will be honest (hence the nickname "honor box"), and need only one copy.

Common vending machines

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Change machine

[edit] Main article: Change machine

A change machine is a vending machine that accepts large denominations of currency and returns an equal amount of currency in smaller bills or coins. Typically these machines are used to provide coins in exchange for paper currency, in which case they are also often known as bill changers.

Cigarette vending

[edit] Main article: Cigarette machine

In the past, cigarettes were commonly sold in the United States through these machines, but this is increasingly rare due to concerns about underage buyers.[citation needed] Sometimes a pass has to be inserted in the machine to prove one's age before a purchase can be made. In the United Kingdom, legislation banning them outright came into effect on 1 October .[11] In Germany, Austria, Italy, the Czech Republic, and Japan, cigarette machines are still common.

Since , however, age verification has been mandatory in Germany and Italy – buyers must be 18 or over. The various machines installed in pubs and cafés, other publicly accessible buildings, and on the street accept one or more of the following as proof of age: the buyer's identity card, bank debit card (smart card), or European Union driver's license. In Japan, age verification has been mandatory since 1 July via the Taspo card, issued only to persons aged 20 or over. The Taspo card uses RFID, stores monetary value, and is contactless.

Birth control and condom vending machines

[edit] Main article: Condom machine

A birth control machine is a vending machine for the sale of birth control, such as condoms or emergency contraception. Condom machines are often placed in public toilets, subway stations, airports, or schools as a public health measure to promote safe sex. Many pharmacies also keep one outside, for after-hours access. Rare examples exist that dispense female condoms[12] or the morning after pill.[13]

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Food and snack vending machines

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Various types of food and snack vending machines exist in the world. Food vending machines that provide shelf-stable foods such as chips, cookies, cakes, and other such snacks are common. Some food vending machines are refrigerated or frozen, such as for chilled soft drinks and ice cream treats, and some machines provide hot food.

Some unique food vending machines exist that are specialized and less common, such as the French fry vending machine and hot pizza vending machines, such as Let's Pizza. The Beverly Hills Caviar Automated Boutique dispenses frozen caviar and other high-end foods.

Bulk candy and gumball vending

[edit] Main articles: Bulk vending and Gumball machine

The profit margins in the bulk candy business can be quite high – gumballs, for instance, can be purchased in bulk for around 2 cents per piece and sold for 25 cents in gumball machines in the U.S., and other countries. Gumballs and candy have a relatively long shelf life, enabling vending machine operators to manage many machines without too much time or cost involved. In addition, the machines are typically inexpensive compared to soft drink or snack machines, which often require power and sometimes refrigeration to work. Many operators donate a percentage of the profits to charity so that locations will allow them to place the machines for free.

Bulk vending may be a more practical choice than soft drink/snack vending for an individual who also works a full-time job, since the restaurants, retail stores, and other locations suitable for bulk vending may be more likely to be open during the evening and on weekends than venues such as offices that host soft drink and snack machines.

The Bulk vending machines of today provide many different vending choices with the use of adjustable gumball and candy wheels. Adjustable gumball wheels allow an operator to not only offer the traditional 1-inch gumball, but they can also vend larger gumballs, and non-edible items such as toy capsules and bouncy balls. Adjustable candy wheels allow an operator to offer a variety of pressed candies, jelly candy, chocolates and even nuts.

Full-line vending

[edit] Main article: Full-line vending

A full-line vending company may set up several types of vending machines that sell a wide range of products. Products may include candy, cookies, chips, fresh fruit, milk, cold food, coffee and other hot drinks, bottles and cans of soda and other drinks, and even frozen products like ice cream. These products can be sold from machines that include hot coffee, snack, cold food, and 20 US fluid ounces (590 ml) bottle machines.[14] In the United States, almost all machines accept bills with more and more machines accepting $5 bills, along with payment from traditional debit and credit cards, or a mobile payment system. This is an advantage to the vendor because it virtually eliminates the need for a bill changer. Larger corporations with cafeterias will often request full line vending to supplement their food service.

Newspaper vending machine

[edit] Main article: Newspaper vending machine

A newspaper vending machine or newspaper rack is a vending machine designed to distribute newspapers.[15][16] Newspaper vending machines are used worldwide, and they can be one of the main distribution methods for newspaper publishers. According to the Newspaper Association of America, in recent times in the United States, circulation via newspaper vending machines has dropped significantly: in , around 46% of single-sale newspapers were sold in newspaper boxes, and in , only 20% of newspapers were sold in the boxes.[17]

Photo booth

[edit] Main article: Photo booth

A photo booth is a vending machine or modern kiosk that contains an automated, usually coin-operated, camera and film processor.[18][19] Today, the vast majority of photo booths are digital.[19] Traditionally, photo booths contain a seat or bench designed to seat the one or two patrons being photographed. The seat is typically surrounded by a curtain of some sort to allow for some privacy and help avoid outside interference during the photo session. Once the payment is made, the photo booth will take a series of photographs and the customer is then provided with prints. Older photo booth vending machines used film and involved the process of developing the film using liquid chemicals.

Stamp vending machine

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A stamp vending machine is a mechanical, electrical or electro-mechanical device which can be used to automatically vend postage stamps to users in exchange for a pre-determined amount of money, normally in coin.

Ticket machines

[edit] Main article: Ticket machine

A ticket machine is a vending machine that produces tickets. For instance, ticket machines dispense train tickets at railway stations, transit tickets at metro stations and tram tickets at some tram stops and in some trams.[20][21][22] The typical transaction consists of a user using the display interface to select the type and quantity of tickets and then choosing a payment method of either cash, credit/debit card or smartcard.[22] The ticket or tickets are then printed and dispensed to the user.[22]

Specialized vending machines

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From to , the specialization of vending machines became more common. Vending extended increasingly into non-traditional areas like electronics, or even artwork[23] or short stories.[24] Machines of this new category are generally called automated retail kiosks. When using an automated retail machine, consumers select products, sometimes using a touchscreen interface, pay for purchases using a credit or debit card and then the product is dispensed, sometimes via an internal robotic arm in the machine.[25] The trend of specialization and proliferation of vending machines is perhaps most apparent in Japan where vending machines sell products from toilet paper to hot meals and pornography, and there is 1 vending machine per 23 people.

Ammunition vending machine

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In , a company called American Rounds began operating vending machines that sell firearm ammunition in grocery stores in the U.S. states of Alabama, Texas, Oklahoma, and Colorado. The machines use age-verification technology and facial recognition technology to make sure that buyers are at least 21 years old.[26][27] Another company, called Master Ammo, operates similar machines that lack age-verification systems in gun clubs and gun ranges that have age requirements for entering.[27]

Automobile vending machine

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In November , online auto retailer Carvana opened the first car vending machine in the U.S., located in Atlanta dispensing various models of used cars.[28]

In late , Autobahn Motors, a car dealership in Singapore, opened a 15-story-tall luxury car vending machine containing 60 cars, dispensing Ferrari and Lamborghini vehicles.[29]

Bait vending machine

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A bait machine is a vending machine that dispenses live fishing bait, such as worms and crickets, for fishing.[30][31]

Book vending machine

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Book vending machines dispense books, which may be full-sized.[32] Some libraries use book vending machines.[33] GoLibrary is a book lending vending machine used by libraries in Sweden and the U.S. state of California.[34] The Biblio-Mat is a random antiquarian book vending machine located at The Monkey's Paw bookstore in Toronto, Canada.[35]

Burger vending machine

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In RoboBurger introduced a machine to cook and vend a fresh hamburger.[36]

Cotton candy vending machine

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The cotton candy vending machine is a vending machine that dispenses freshly spun cotton candy.[37][38]

French fry vending machine

[edit] Main article: French fry vending machine

A French fry vending machine is a vending machine that dispenses hot French fries,[39][40][41] also known as chips. The first known french fry vending machine was developed circa by the defunct Precision Fry Foods Pty Ltd. in Australia.[42] A few companies have developed and manufactured French fry vending machines and prototypes. Furthermore, a prototype machine was also developed at Wageningen University in the Netherlands.[39][40]

Pizza vending machine

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Let's Pizza is the name of a vending machine that makes fresh pizza from scratch.[43] It was developed in by Italian company Sitos srl.[43][44] The machine combines water, flour, tomato sauce, and fresh ingredients to make a pizza in approximately three minutes.[43] It includes windows so customers can watch the pizza as it is made.[45] The pizza is cooked in an infrared oven. The device was invented by Claudio Torghele, an entrepreneur in Rovereto, Italy.[46] The vending machine began in Italy and is now spreading into the United Kingdom and becoming popular there.[47]

Life insurance

[edit] See also: Travel insurance

From the s until the s, vending machines were used at American airports to sell life insurance policies covering death, in case the buyer's flight crashed.[48] However, this practice gradually disappeared due to the tendency of American courts to strictly construe such policies against their sellers, such as the Fidelity and Casualty Company of New York (which later became part of CNA Financial).[49]

Marijuana vending machine

[edit] Main article: Marijuana vending machine

The marijuana vending machine originally found a niche market for selling or dispensing cannabis. In the early 21st century with legalization of cannabis in many countries, marijuana vending machines became widespread, selling products such as marijuana, hemp and CBD based products and smoke paraphernalia.[50] The first experiments in distributing marijuana through vending machines started in the early s, when they were already in use in the United States[51] and Canada.[52][53] The primary challenge faced in selling restricted or controlled merchandise like cannabis[54] is to verify the identity of the buyer, which is overcome by the application of biometrics and smart vending software technology, the same technology used to verify the buyer's age in the automatic sales of tobacco.

Mold-A-Rama

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The Mold-A-Rama is a brand name for a type of vending machine that makes blow-molded plastic figurines. Mold-A-Rama machines debuted in late [55][56] and grew in prominence at the New York World's Fair.[57] The machines can still be found operating in dozens of museums and zoos.[58][59]

Fresh-squeezed orange juice

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This type of machine contains fresh oranges and a mechanism to cut and squeeze them in order to produce fresh juice.

Prize vending machine

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This type of machine sells a container that may contain a prize. Some such machines advertise the possible prizes that may be won. Examples include smart phones, holiday packages, and toys.

Social-networked vending machine

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With the rise of the social networks, vending machine has been integrated to social media in order to proliferate the interaction of the vending machine with the users from the physical machine to the social networks. The common application of social-networked vending machine is that the user can connect their social account to a specific social media designated by the vending machine, the user will be getting some rewards in return, normally in the form of free gift dispensed from the vending machine.[citation needed]

Make-Up vending machines

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Vending machines are also being used by entrepreneurs to sell cosmetics to those on the go as an easy convenience.[60]

Giving Machine

[edit] Main article: Giving Machine

A Giving Machine is a specialized "reverse vending machine" that allows people to purchase donations for various nonprofits. They are placed in various public areas by the Church of Jesus Christ of Latter-day Saints during the Christmas and holiday season.[61]

Popularity in Japan

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Vending machines are a common sight in Japan, and are considerably popular. There are more than 5.5 million machines installed throughout the nation, and Japan holds the highest ratio of machines per person for any country with one machine for every twenty-three people.[62][63][64]

Regarding the development of advanced technology, Japanese vending machines provide more services by selling different kinds of products. Food, smartphones, SIM cards, and even clothing can be found in these machines. Apart from the most popular drink vending machines, Japanese vending machines also offer certain products depending on the demand and need for different locations. For example, products like sanitary napkins and tampons can be found in vending machines in female restrooms, while machines selling condoms are usually located in male restrooms.[65][66]

Convenience, low cost of running, security, and stability seem to be the main reasons for Japan to invest in vending machines.[67]

A patent for an "automatic goods vending machine" was filed in in Japan; early surviving vending machines from around the s include one that dispenses stamps and postcards, and one that dispenses sake. Confectionery vending machines became widespread in the s, and juice vending machines became popular in the late s and s.[68] By , the number of vending machines in Japan had grown to 5.6 million. However, from around the early s, the number of vending machines in Japan decreased slightly to 5.03 million, and the sales amount also decreased gradually, in part due to the rise of digital technology and market competition.[69] In recent years, attention has been drawn towards older machines, such as the collection of vintage vending machines installed at the Sagamihara Vending Machine Park.[70]

In , it was reported that a sizeable portion of the vending machines in Japan would require updates to their acceptors in order to accept the new designs for the Japanese yen banknotes that were due to be released that year.[71]

• A vending machine with wooden cladding at Iwami Ginzan Silver Mine in Ōda, Shimane, Japan
• A vending machine of retort pouched curries at Asakusa, Japan
• A line of vintage vending machines at the Sagamihara Vending Machine Park, Kanagawa, Japan

Smart vending machines

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Similar to the development of traditional mobile phones into smartphones, vending machines have also progressively, though at a much slower pace, evolved into smart vending machines. Newer technologies at a lower cost of adoption, such as the large digital touch display, internet connectivity, deep learning and machine learning technologies,[72] cameras and various types of sensors, more cost-effective embedded computing power, digital signage, various advanced payment systems, and a wide range of identification technology (NFC, RFID, etc.) have contributed to this development. These smart vending machines enable a more interactive user experience, and reduce operating costs while improving the efficiency of the vending operations through remote manageability and intelligent back-end analytic. Integrated sensors and cameras also represent a source of such data as customer demographics, purchase trends, and other locality-specific information. It also enables better customer-engagement for the brands through interactive multimedia and social media connectivity. Smart vending machines were No.79 by JWT Intelligence on its list of 100 Things to Watch in .[73] According to market research by Frost & Sullivan, global shipments of smart vending machines are forecasted to reach around 2 million units by ,[73] and further to 3.6 million units by with penetration rate of 20.3 percent.[74]

• Beer vending machines at a Japanese Onsen
• A Swiss roll vending machine in an MRT station in Taipei. The Swiss rolls are kept at 7 °C, orders are entered on a touchscreen, and payments are made through various contactless payment cards.

See also

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References

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Further reading

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