In episode 105 of the podcast, we sit down with the founder of KarmaBox Vending A.J. MacQuarrie to discuss the business opportunity of healthy vending. KarmaBox Vending is one of the first companies that began to offer healthy snacks, beverages, and care products via vending machines.
The concept for A.J.’s business started back in his dorm room where junk food seemed to be everywhere, but healthy options were hard to come by. Later A.J. went on to create a healthy vending machine business called KarmaBox Vending to solve the problem of being able to find healthy snack options anywhere.
Today, we speak with A.J. not only about how he started his company, but also the opportunity healthy vending presents to entrepreneurs. Click the play button on the audio player above to listen to the full episode.
When evaluating any type of business opportunity one of the big questions that naturally stands out is: What’s the revenue potential of this business model? Of course, how much income you generate depends on a variety of factors like what products you decide to sell in your machines, where your vending machines are located, how much optimization you do to ensure you have the right products in the right locations, and a variety of other factors. Now that we have all the disclaimers out of the way here’s what A.J. looks for in a respectable range for a vending location:
- 10 – 25 vends per day, per vending machine.
- Net profit of about $1.00 per transaction. You price products with enough margin to make about $1.00 in net profit per transaction.
- $10 – $25 in net profit per day per location
Conservative Monthly Net Revenue Estimate (Monthly) with a single healthy vending machine: $300
Conservative Monthly Net Revenue Estimate (Monthly) with five KarmaBoxes: $1,500
Conservative Monthly Net Revenue Estimate (Monthly) with ten vending locations: $3,000
KarmaBox Vending recommends that you start out with a minimum of 5 vending machines when you’re starting a business. This gives you the opportunity to give this business a legitimate try and really gives you the sense of what operating this type of business will be like.
There are a couple reasons KarmaBox recommends starting with 5 locations minimum. First, if you only start out with a single vending machine the revenue numbers just aren’t going to be that exciting. If you’re netting $10.00 per day in profit from one machine you would be netting around $3,500 in a single year. This might not be exciting enough for some entrepreneurs and they may not put their full effort into growing the business on such a small scale. As A.J. explains during the interview, vending machines are a numbers game. The more you have out there generating sales the more income you will make.
The second reason is that you should expect to test out different locations to see where you can generate the highest number of transactions in your region. Although vending can become a largely passive business, you should view this business more of a process than a setup and forget it business model. Some of the vending machines that you setup will generate an consistent and attractive number of transactions straight away. Others you may determine need to be moved to a better location.
Cost to Get Started
Be sure to contact the folks at MyKarmaBox.com for up-to-date prices to invest in this opportunity. With that being said, at the time of this interview you could acquire ten KarmaBoxes (healthy vending machines) for around $74,000. In addition to the Made-in-America vending machines, A.J. MacQuarrie will also fly out to your location to provide hands-on training and ensure you’re ready to be a successful vending machine operator. KarmaBox Vending will also help you source and secure a location for each of your vending machines. As a first-time operator this could be an extremely valuable benefit.
If you want to start out smaller with only five KarmaBoxes the price to get started would be roughly $37,000.
Typical Day in the Life of a Healthy Vending Operator
So what will you’re day look like as a vending machine operator? As A.J. points out in the interview, if you start out with ten machines you should expect to work about 10 – 14 hours per week on the business. Your activities each week will include the following basic tasks:
Monitor Inventory – One thing that makes this business opportunity attractive is that you can track your sales and inventory from the comfort of your home. Each vending machine will send inventory and sales number directly to you the business owner each day. This allows you to track your sales without the need to go to each location. If you see that a certain location didn’t get any sales on a particular day, you can conduct an on-site visit to evaluate further. This is not your grandfather’s vending machine operation!
Restock Machines – You will want to make sure there’s plenty of healthy drinks and snacks for customers to buy from your vending machines. If you don’t keep your machine well stocked, you’ll be missing out on easy sales and not realizing the full value of your business.
Source Products – Another nice aspect of this business model is that you have flexibility to be able to stock your vending machine with any healthy product you like since this is a business opportunity and not a franchise model. Pop Chips, Terra Chips, KIND Bars, Cliff Bars, Fruit Snacks, apples, or juices could all be added based on the owners preference and the regional market’s demand. You can put at least 230 snacks or 150 drinks into each KarmaBox. The total number of snacks / beverages depends based on the specific vending machine you purchase. Some of the best places to start your search for vending products are places like Costco or Amazon.com.
Commute – You will need to drive to all your different locations to stock the snacks and beverages into your machines. If the machines are located close to your home this commute can be short and sweet. If you’re placing these machines far from the home base you will need to build that drive into your weekly hour expectations. If you live in or near just about any suburban area, you should have plenty of locations you could place a healthy vending machine.
Quotes from the Show
You’re not stuck and tied to one location. If it’s like oh this area is not working well, let’s drive down the block. – A.J. MacQuarrie on some of the advantages of a vending machine business.
I think the beauty of this business is that it is kind of a part-time business or it can be initially. You can get your feet wet with say ten KarmaBoxes, ten vending machines. And if you have ten vending machines it’s not going to take up too much of your time, maybe 10 – 14 hours per week tops. – A.J. MacQuarrie on the time commitment of this business model.
Mentioned in Today’s Episode
KarmaBox Vending – The official website of this boutique healthy vending business opportunity based out of San Diego, California.
Launchpad Nation – This is A.J. MacQuarrie’s latest venture where he teaches aspiring entrepreneurs how to start a business. Check out the website to sign up for one of his future workshops.
Franchising – Franchise versus business opportunity was discussed a lot during the show. Check out the Wikipedia article for more information about the distinctions between these two entities.
Vending Machines – Learn more about where to source vending machines in this post.