Gum balls are a great profit margin. You’re going to spend maybe 3 – 4 cents at most on a really good gum ball and you’re turning around and selling it for 25 cents. If you sell three gum balls a day at a 22 cent profit that’s 66 cents a day. In a month that’s $19.80. For a year that’s $237.60. That’s on a minimal scale on a low producing location. If you had a location that did 20 gum balls a day… That’s $132 per month. – Tonya Brynie on the profit margin and scalability of a gum ball business.
Ever wonder how much money those gumball machines you find in restaurants and break rooms actually make? In today’s podcast we speak with Tonya Brynie, Executive Account Manager at CandyMachines.com, a distributor of high-quality bulk candy and vending machines about how to start this type of business. While you’re already aware of the vending machine business model, you might be surprised to learn how well vending machines scale and how complimentary they are to running a food truck.
This interview is more like a crash course on starting a vending machine business. Fortunately, food truck entrepreneurs have a major leg up with vending when just getting started. First, as a mobile food vendor you already have established connections with other business owners around town. You can use these existing relationships to propose putting candy machines into places like break rooms, waiting rooms, or just about anywhere else people gather, hang out, or need to wait for a certain period of time. Then you can build a vending route into your regular food truck route. This can work extremely well if you have a route serving corporate offices. Listen to episode 63 for more insights into building your own candy empire one gum ball at a time!
Want To Start Your Own Vending Machine Business? Check Out The Vending Machine Empire Execution Guide Below from FoodTruckEmpire.com.
What It’s Like to Operate a Vending Machine Business
As Tonya explains, the operations of a vending machine business are pretty simple. Unless your business grows very large (a terrific problem to have!), you won’t need to hire any employees.
The primary work: 1.) Identifying profitable locations to position vending machines. 2.) Keeping your machines full of gum balls, candy or in some cases temporary tattoos. The time commitment to operating this business is extremely flexible too. Depending on how busy your locations are, you will need to refill the machines with product once or twice a month.
The barrier of entry to this business it quite low. You could get a few good machines and plenty of candy in stock for a few thousand dollars in investment. If you’re really tight on cash you could start this type of business for under $1,000, although your candy machine would be small. You will also need to invest in product to put in the machine. Once again, bulk candy is very low-cost and can be bought at around $5 per pound depending on what you order.
Location, Location, Location
When it comes to running a vending machine business, location matters. Busy locations with more people will generally earn more money. Locations with less people will usually earn less. Pretty straight forward.
According to Tonya, an average gum ball location will earn between $15 – $20 monthly. Of course in reality, as you add more and more locations you’ll have some spots that earn less and some that sell much more. Part of the process of being successful is testing and identifying new locations to place your machines. Tonya recommends finding locations that people need to wait. Consider places like oil change or repair shops where people are forced to wait for a long period of time. If you are a food truck owner, building a machine into your mobile food unit can provide a way to generate more revenue while folks wait.
Pitching Your Product
Being decent at sales or having the gift of gab is going to help you out here. To be successful you will need to be able to not just find profitable locations, but be able to successfully pitch the owners to position your machines in their store or office. There are a few proven strategies you can use to accomplish this.
One simple way to get your machine into another business is to offer a revenue split. Since the margins of a candy business are so great it’s easy to split 10% of the profits with the owner. Since there’s no additional work for the owner this can an easy way for the proprietor to make some extra money and get your foot in the door. An important tip Tonya stressed during the interview was counting the money in front of the owner each time you refill the machine and take out the money. This will help avoid any potential issues with the owner that may question the revenue your machine is making.
Another popular way to encourage the owner to allow your gum ball machine in is to donate a certain percentage of the income to charity. This can work especially well if the owner has a preference towards a certain charitable organization or cause. Discover a person’s passion and you may find a compelling reason to get your product into their establishment.
Mentioned During the Show
CandyMachines.com – Distributor of bulk candy and candy machines to customers around the world. They have been in business for over 40 years. We really appreciate them taking the time to speak with us and share their insider knowledge about the vending industry.
Triple Machines – Looking for an entry point into the candy business? You can get five of these machines for under $1,000 making this a low-risk way to start a business.
Why Vending? – Want to learn more about the income generating possibilities of a candy business? Check out this nice little spreadsheet that outlines how much net income you could produce with a gum ball machine of the course of one year.
Mik Mart Ice Cream – Previous guest on the program that started with an ice cream truck and moved into vending machines a more well-rounded and consistent income.