Vending Machines & Vending Machine Business Resources

Vending machine operators have a lot to look forward to. New advances in vending machine technology are opening up new markets and possibilities and hold the potential to boost sales significantly.

United Artists Theatre Circuit Inc., which operates 206 movie theaters throughout North America, is testing vending machines that cook frozen foods, in less than 90 seconds. French fries and chicken fingers are the top sellers, while other popular offerings include chicken sandwiches, ham and cheese pockets, cheese sandwiches, Tombstone pizza, Kraft Macaroni & Cheese, even popcorn.

One company that has taken vending to new levels is Coca-Cola Co. It has to -- vending machines are an important part of the company's business model. There are some 2.5 million Coke vending machines throughout the world, but principally in the U.S. and Japan. Roughly 10% of the company's unit volume in the U.S. comes from vending machines, compared with 45% in Japan.

Coca-Cola made headlines last year when it designed a vending machine that could raise prices when the temperature rose. Consumers didn't like that idea, but the company continues to explore other, less-controversial possibilities, including coupons, loyalty awards similar to frequent-flier programs, and prizes. The company is also exploring radio-frequency identification in which consumers in a specific workplace would use a customized key chain to swipe in front of a machine to order up a drink instead of using change. Coca-Cola also has discussed other vending possibilities, such as an option to make one's own six-pack and another to put one's picture on the can.

As reported in Vending Times, there are innovations as well in the area of data collection from vending machines. The present Vending Industry Data Transfer Standard, based on the DEX/UCS protocol, was developed to permit the portable computers carried by route distribution personnel to exchange information on the quantities and types of product delivered with the computers in the stores they served. The task of developing a standard way to do this was undertaken by the Uniform Code Council ( Columbus, OH). The result was Direct Exchange Uniform Communications System, or DEX/UCS.

Major soft drink bottlers using this system for their retail accounts wanted a way to receive the same information from their vending machines. Initially, DEX capability was approximated in packaged cold drink vending machines by adding data storage and retrieval capabilities to the vending machine coin changer.

As the potential benefits became more apparent, the National Automatic Merchandising Association Technical Standards Committee empaneled a subcommittee to define a “vending industry data transfer standard” based on DEX. This has undergone successive refinement over the past decade and, today, virtually all vending machine from major manufacturers are compliant. VIDTS allows retrieval of the information from the vending machine with a standard handheld computer (running any of several operating systems) plugged into the vending machine. The standard allows for a variety of measures, including cumulative cash in, cash out, tube cash, box cash, bills to stacker and vend count. And this information is available immediately. The fully-implemented standard also permits capture of sales data, including “line-item” detail. Thus, information about all money put into the vending machine and all merchandise dispensed from it can be collected automatically, or even transmitted to a central computer. This permits immediate cash-to-inventory reconciliation, and allows management to respond swiftly to any discrepancies that appear in the reports.

Beyond its use in settlement, line-item sales information is valuable both in analyzing vending machine sales with a view to optimizing the menu and in establishing a sales history to permit accurate forecasting. The ability to predict what a vending machine will need without requiring the driver to walk past it saves time on the route.

The vending machine can also transmit its sales record to a computer aboard the route truck over a short-range wireless connection (“curbside polling”); or the sales information can be sent to the operator’s main computer over a wide-area network. A vending machine compliant with “DEX” is the precondition for all of these capabilities.

When planning to change over to in-machine data capture, vending machine operators should ask the bottlers from whom they lease equipment to swap out any older models that don’t implement the full standard. When converting or upgrading, the payoff is best for snack vending machines. Existing equipment of recent but not current manufacture may require upgrading with the latest firmware from the manufacturer. Vending software suppliers can provide a utility program that will assess the compatibility of a vending machine with the standard.

These and other vending machine innovations are making vending machines more intelligent and high-tech. These innovations can make business run smoother for vending machine business operators. Still, innovations like these in vending machines are nothing new. In parts of the world, most notably Japan, the vending machine has been a site of novelty and innovation for decades.

There is almost nothing that is not available in a vending machine in Japan. Indeed, Japan has often been called the vending machine capital of the world.

The vending machines in Japan sell everything from beer, whiskey, boxer shorts, sausage, and rice, to life insurance, dirty movies, eggs, pearls and custom-made business cards. There is almost nothing that is not available in a vending machine in Japan.

Vending machines in Japan, which also offer $100 stuffed elephants, disposable cameras and pantyhose, are a $6.5 billion-a-year business in Japan. They are a way of life in a country that delights in gadgets - from wristwatches that double as television remote controls to toilets with control panels for seat temperatures.

Japan 's newest vending machines are the Rhodes scholars of mechanical gizmos. There is "no-bending vending" delivering cafe latte chest-high (convenient with Japan's skin-tight miniskirts), and machines planted with flowers to look as pretty as Martha Stewart's window boxes.

Some soda machines tell fortunes, and inside one of the hottest nightclubs in Tokyo, customers sidle up to a vending machine, not the bar, for a $5 brew.

Japan is only about the size of Montana, but there are nearly as many vending machines here as in the entire United States. Most Japanese vending machines are outdoors; there's even one atop snowy Mount Fuji.

The machines are among the first things visitors to Japan notice.

Still, vending machine technology is taking a whole new turn for the new millennium. Used to be, a consumer would pop a few coins into a vending machine and get a cup of generic soda, a day-old sandwich or a bag of pretzels. But now, you can grind your own gourmet coffee, use a cellphone to buy a Coke, even purchase hot macaroni and cheese at the movie theater.

Vending machines have matured rapidly, growing from stale metal boxes that sometimes worked and usually dispensed questionable foods, to veritable billboards with hip, flashy graphics; quality branded goods; and unmatched convenience.

Over the last 25 years, vending has evolved from utilitarian to an instrument of marketing. Twenty years ago, you vended a can or bottle and a minimum number of products. Now, vending machines are used as a merchandising tool. Manufacturers, he says, can sell a full range of products, offering consumers the chance to sample an item for, say, 70 cents, then buy it in a larger quantity at the supermarket or convenience store.

The vending machines of the future will be "cashless" and operated with credit and debit cards. In addition, an increasing variety of foods, drinks and other items will be available to consumers through vending machines in coming years. Candies, cookies, popcorn, pastries, juices, vitamins and granola bars in enough variety for the most discerning snacker will be available via machines. There will be vending machines that will rent movie cassettes, cook and deliver a cup of French fries and supply a microwave-ready pizza.

Because Americans are the biggest snackers in the world, the U.S. has a growing array of vending machines. And the variety and technological daring of vending machine manufacturers continues to grow.

Vending Business

If you’re thinking of opening your own vending business, here are some issues you should consider before making an initial investment. First, be aware of the licensing laws in your state. Nearly every state and many foreign countries and cities license, regulate and/or tax vending machines. Some of these vending business regulations are intended to protect the health, safety and welfare of the consumers, while others attempt to raise revenues to pay for government costs. It’s very important that you determine the licensing requirements in your geographical area before you invest in a vending business since licensing fees in some areas can eat into your vending business profits.

Another factor you ought to consider when planning your own vending business is liability insurance. Liability insurance is a prudent investment for any business owner, including vending business operators. Although its rare for customers in the vending business to sustain any really serious injuries, in those few instances when something unfortunate does happen, being well insured could be vital to the survival of your vending business. You might be able to save on liability insurance for your vending business if you package that insurance with other insurance coverage. You should check with you insurance agent for details.

Next, it is vital that you investigate your options before you make an initial investment in your vending business. Unfortunately, the vending business industry is crowded with unscrupulous promoters, of whom you will have to be wary and steer clear. Many promoters want to trick you into spending gobs of money on their vending business packages, which include machines, locator services, and more. There have been cases of fraud where investors have been conned out of a lot of money, so be careful. If you are thinking of starting a bulk vending business, we highly recommend www.gumballs.com. The owners of this website are impeccable and scrupulous people. They have been in the vending business for many years, have operated their own vending routes, understand the ins and outs of the vending business extremely well, and offer a wide selection of vending machines and gumball machines in packages suited to potential vending business operators. Their vending machine business is based on honesty and excellent customer service. We cannot recommend them enough.

If you are approached by a vending business promoter, be aware of some of their tactics. O bviously you should check out as carefully as you can the information furnished from a promoter. Ask to speak to other vending business operators. Both the honorable and the unscrupulous promoters will usually have selected names for reference purposes. The problem is that some of the unscrupulous promoters give names of people who will answer all of your questions exactly the way the promoter wants them answered, even if the answers are not true. Some of these "references" are not even in the vending business. Try to be a prudent investor and check out a variety of sources to get a perspective on the industry. In any event, do not allow yourself to be pressured by the salesmen who invariably push for an immediate decision which leaves you little or no opportunity to do your research before you begin your vending business.

Several manufacturers, suppliers and vending machine distributors advertise regularly in Vending Times and Automatic Merchandiser, vending business trade journals which service the entire vending industry. The phone number of Vending Times is (212) 302-4700 and the phone number of Automatic Merchandiser is (414) 563-1619. You will find a wonderful selection of vending machines at Gumballs.com.

Should you operate your vending business part time or full-time? That is entirely up to you. Bear in mind that you must have the time during the week to meet your vending business’ needs, such as refilling your vending machines and buying supplies. Obviously, the more machines you have, the more time this will take. If you do decide to operate your vending business on a part-time basis, don’t fall into the trap that many part-time vending business operators fall into – that is, don’t get discouraged and quit shortly after you get started. If you make the right decisions for vending business and find good locations, your investment will eventually pay off. So don’t give up prematurely.

And remember, finding good locations is critical to the success of any vending business. There is an old saying in the real estate business that the three most important rules for successful real estate are location, location and location. The same thing is true in the vending business. In the right location, practically any vending machine can generate good revenue. The trick is to get enough of your machines in the right locations and then to service those machines with the right sort of merchandising.

Finding good locations for your vending business is easier said than done, however. You’ll need to compete with existing operators who often have more experience than you do, and the competition for the best locations will be fierce. You may be compelled to rely on a professional locator to get your vending business off the ground. If you do rely on a professional locator, remember that the locator wants to get paid a long time before you know whether or not the location is good and before your vending business is profitable. Some locations are worse than others. That’s why it’s best to try to pay the locator only a little up front and pay the balance after you can verify the location is successful. Ask the locator to find another location if the one selected does not work well. You should know within 30-60 days if a site is good for your vending business.

For more information, visit Vending Machine Source