Vending Machine Business in California: How to Get Started

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What Is a Vending Machine Business?

A vending machine business is one of the most straightforward businesses out there. It involves purchasing a vending machine, setting it up in a private business or public access space, and letting people purchase food or beverages from the machine. All you have to do is refill the machine, set your prices, and ensure that it’s in an area with good foot traffic.

While it’s not the most popular business around, millions of people generate an income with a vending machine. Plus, you can get started with a low amount of capital and just one vending machine. From there, you can watch your business grow and add more machines to your roster.

What Can You Sell in a Vending Machine?

When you think of a vending machine, you usually think about snacks and drinks; like a bag of Doritos or a Gatorade. However, food and beverages aren’t the only things that you can sell from vending machines. You can sell frozen goods, medical equipment, and much more. Some popular things to sell from vending machines in California include:

• Drinks
• Granola bars
• Sanitary products, Covid-19 tests, hand sanitizer
• Gold and other types of jewelry
• Tea and coffee
• T-shirts
• Umbrellas
• Books
• Snacks
• Full meals
• Ice cream or other types of dessert
• Laundry or cleaning products

Ultimately, if you can fit the item in a vending machine, you can sell it. Depending on the product you should consider temperature control and other factors that may impact what you can place in the machine.

Where Can You Place Vending Machines in California?

California has laws about where you can place a vending machine. You also need permission from private businesses to place them in certain locations. Therefore, it’s important to know where you can place them. While you can’t place a vending machine anywhere, there aren’t too many limitations.

Are Vending Machines Profitable in California?

Yes, a vending machine business is profitable. It might not be the most profitable business when you start, but once you have more than one machine, the profits begin to snowball.

That said, a vending machine business is what you make of it. If you place it in an area with little to no foot traffic, don’t expect a lot of profits. For this reason, planning is essential for your success, especially since there are start-up costs. Learn more about the costs related to starting a vending machine business in California below.

How Much Does It Cost to Start a Vending Machine Business?

When it comes to a vending machine business, one of the most important factors to consider is the cost. Unlike some other business types, there are tons of factors that play into the price of goods, machines, and how profitable the business can be.

How Much Does a Vending Machine Cost?

When you’re starting a vending machine business, the cost of the machine is important to understand. On average, mechanical machines cost anywhere from $2,000 to $3,000, while electronic machines cost more than $3,000, with average prices being closer to $5,000.

The good news is that used machines can lower the costs by a lot of money and you can even get some vending machines for as little as a few hundred dollars.

On the pricier end, some vending machines can cost upwards of $300,000. These are usually custom machines that can perform advanced functions, so most people won’t have to worry about getting a machine for that price. Still, it’s worth considering if you’re looking to invest in a vending machine business.

How Much Does a Vending Machine License in California Cost?

You need to purchase a vending machine license before you get started on your business. A vending machine license in California costs $50 to $100, depending on the product you’re selling in the machine. We’ll discuss permits and licenses more in-depth later so you can have a better idea of the exact cost.

How Much Does It Cost to Fill a Vending Machine?

The cost to fill a vending machine varies based on the machine and what you want to put in it. For example, filling a machine with medical supplies will cost more than filling a machine with beverages. Food is also usually more expensive than drinks if you have to preserve it.

When it comes to numbers, expect to pay between $200 and $800 to fill a vending machine. While you have to pay for the products to fill a machine, most vending machine companies won’t charge you a separate fee to fill it.

Depending on your location, you might have to fill your machine each week. This means that you can expect to pay between $800 and $3,200 per month to stock your vending machine.

Can You Purchase an Existing Vending Machine Business?

In California and anywhere else in the United States, you can buy an existing vending machine business. You can purchase a vending machine business in California for as little as $5,000 to $15,000; this is if the company decides to sell you their machines. This is a great way to already start with a supplier, product options, and working machines.

Furthermore, you can decide to enter into a franchise agreement with an existing vending machine company. Some vending machine corporations will have thousands of machines that you can use, but you’ll have to share your profits. It may also cost several thousand to have the rights to the machine.

Is a Vending Machine a Good Investment?

Yes, vending machines are a smart investment. They’re a proven concept that has been around for centuries. You can sell just about anything out of them and there are plenty of locations to place them.

Ultimately, there is plenty of opportunity and the investment cost isn’t as high as some other business models. Learn more about why a vending machine business is a smart investment below.

Low Initial Investment

You know how you’re supposed to buy low and sell high? Well, vending machines are extremely cheap to buy if you start with used or older machines. This can help you keep the starting cost to less than $10,000.

From there, you can expand or even sell the houses for more when you grow to a certain point. Ultimately, you can turn a single vending machine into a profit powerhouse at a low cost.

The main costs associated with a vending machine business are maintaining the machine and filling the machine. While these costs can add up you don’t have to worry about them unless your business is having success. This further brings down the risk of starting a vending machine business.

Proven Concept

Did you know that vending machines have been around since the 1600s? The first ever vending machine was invented in 1615, and while it looked different, it was dispensing items for paying customers. Since then, vending machines have only improved, so it’s no surprise that it’s still a viable option today.

Unlike many other businesses, you have a proven concept that you can work with, so there’s no need to reinvent the wheel.

Depending on where you want to put the vending machine, you can also get creative and use ones that are small and mechanical. This can help you test the market to see if people in that area use the vending machine.

Growth and Scalability

Growth and scalability are some other factors that make vending machines a good investment. First and foremost, you can expect the industry to grow as more items are introduced into vending machines.

For example, some vending machines now dispense medical supplies, school supplies, and anything else you may need. In fact, some Japanese vending machines are dispensing full-course meals, alcoholic beverages, and much more. This leaves the potential for limitless growth.

You can also scale a vending machine business with ease. As you make more money, you can work with large distributors and continue to improve your product and volume.

Set Your Own Hours

This benefit isn’t exactly financial, but you can set your own schedule. Ultimately, when food or products are changed is up to you. Plus, you don’t even have to be there to collect anything if you hire a company to do it for you.

What’s more, you can change the product any time you want if you have a machine that can sell multiple items. For example, if a specific snack isn’t selling often, you can replace it with a different snack that generates more sales. Therefore, you don’t have to wait for suppliers or other people to make these decisions for you.

How to Start a Vending Machine Business in California

California doesn’t make it hard to start a business, but if you want to start a vending machine business, you need to follow a few key rules and regulations. You also need to follow several of the traditional steps to start a business in California. We cover all of these steps below.

Step 1: Research and Plan Your Vending Machine Business

The first step to starting a business is coming up with a plan. However, before writing a complex business plan, we encourage you to make some connections first.

First and foremost, you need to meet with local government officials if you want to place your vending machine in public. Or, visit local business owners if you want to display your machines in a business.

This is a critical first step because it determines if starting this type of business is even viable for you. If you get a bunch of ‘no’s or notice other vending machines where you want to place yours, it’s not a good idea to start there.

You also need to consider what you’re selling from a vending machine. For example, some locations may be suitable for drinks but not food. Additionally, you might want to sell medical supplies or other items from your vending machine, depending on where it’s located.

Thankfully, there is always room for opportunities. If you’re having trouble getting a vending machine established in your area, try going to a different city or town. There are plenty of places in California to start a vending machine business, so don’t get discouraged.

Step 2: Put Your Plan in Writing

The next step is to put your business plan in writing. It helps to view your plan as you begin to grow your business but it’s also something you need to submit when you file your paperwork with the city you plan on starting in. Therefore, you need to write a concrete business plan that summarizes its activities. In this business plan, you need to include the following information:

• The name of the company
• What goods or services you plan on selling; for vending machines, you would include the specific foods or drinks you plan on selling
• The structure of the business; who owns it, employees, and managers
• The type of legal entity that you’re creating (LLC, sole proprietorship, partnership, corporation)
• Executive summary

Ultimately, your business plan summarizes what your company does, which can help the town approve your company.

Step 3: Name Your Vending Machine Business

Coming up with a name for your vending machine business can make or break it. The name can stick with people and cause them to come back, or they might dislike it and not want to come back. Therefore, take some time to think about a good name and a logo for your vending machine business.

Once you have a good name, register the name with the Secretary of State. This can be done online, but you should also register any online domains associated with the name to avoid any problems. Trademarks and other protections should also be put into place to avoid problems as well.

Step 4: Come up With a Structure for Your Vending Machine Business

The structure of your business is also important. You need to decide what type of business model you want to follow. This should be included in your business plan, but now is the time to form a legal entity.

The common structures you can choose from include a corporation, sole proprietorship, DBA, partnership, and LLC. If you’re going to start a vending machine business in California, we recommend going with an LLC. An LLC is perfect for a vending machine business because it protects you from lawsuits and keeps your assets separate from the business.

While it might not seem like vending machines have a lot of liability, sometimes accidents happen, and people can come after you if your machines are responsible. Corporations, S-corps, and some other business types are also effective at shielding you from some liability.

When you register an LLC in California, you’ll need to submit your Articles of Incorporation. This will usually include information like your name, contact information, address, and some other personal details. To remain in good standing, your business will also need a registered agent.

Step 5: Choose a Registered Agent in California

If you’ve chosen to set up your business as an LLC or corporation in California, your next crucial step is to designate a registered agent. This is a necessary action when you are preparing your Articles of Organization, the document required to officially register your LLC or corporation with the California Secretary of State.

So, what exactly does a registered agent do? A registered agent is a person or entity appointed to receive important documents on behalf of your business, such as tax forms, legal notices, lawsuits, and official government communications. In short, the registered agent serves as your business’s main point of contact with the state.

Who is eligible to be a registered agent? The registered agent must either be a resident of California or a corporation authorized to operate in the state, such as a registered agent service. If you wish to act as your own registered agent, you must designate an individual within your company, as California law prohibits businesses from serving as their own registered agents.

For more detailed information on the requirements for registered agents in California, refer to the California Corporations Code.

Don’t forget that to run a business, you need to: register a business entity (LLC is the most suitable option, more details here), obtain an EIN (you can apply online here), open a business bank account (more details here), understand accounting and taxes (more details here), and register a domain and create a website (this is optional, you can do it here).

Alternatively, you can delegate all of this to a registered agent starting from $0 + State Fees and get everything done in 1 day. This can save you time and ensure everything is done correctly, leaving you to focus on growing your business.

Apply Online

Step 6: Obtain the Necessary Licenses and Permits

A vending machine business will require licenses and permits. Depending on what you sell from your machines, these permits and licenses will change. For example, you’ll need a liquor license to sell alcohol from a vending machine in California or a tobacco license if you plan on selling tobacco.

Additionally, you may need more than one license or permit if you plan on selling two different items that require a license.

In California, you also need permits like a Food Seller’s Permit if you plan on selling food. Some reseller’s permits are also available if you plan on selling food that was already manufactured. For these reasons, it’s important to take some time to consider what permits you’ll need and how many you need.

That said, you’ll always need a business license of some kind if you plan on selling anything in California. The type of license you need and where you can apply depends on the location of your vending machines.

You’ll need a license for every city you plan on operating in. This can become challenging to manage, so we recommend learning more about business licenses in California here.

Step 7: Sign Contracts With Property Owners

One aspect of a vending machine business that’s unique is the contract part. To run a successful vending machine business, you need to sign contracts with the owners of the spaces you plan on using.

Whether that’s a government-owned location or a private property, you need to come to some type of agreement with the owner. Thankfully, you can be creative with this, and there are no laws stating what you have to commit to.

Typically, you’ll have to pay a small portion of your profits to the business owner or come up with some type of square footage rental plan. The type of plan you choose depends on you and the other business owner. Therefore, these contacts will vary quite a bit. Some popular options are found below.

• Allotted compensation and/or payments
• Signing contracts pertaining to the location of a vending machine
• The type of stock that you will sell
• A length for the agreement to avoid complications if the owner wants you out or if you want to leave
• Responsibilities for damage to the machine and how fast it will be repaired or replaced
• Notifications about damage to a vending machine
• The names, addresses, and contact information of the parties involved
• Termination clauses
• Types of vending machines allowed on the premises

These are only some examples of tidbits that you should include in a contact with a business owner.

Step 8: Purchase or Rent Your Machines and Find a Supplier

The next step is to purchase the vending machine you want to use for your business. Take some time to consider your budget and the type of products you want to sell because this can cost you between $3,000 and $10,000 (on average).

You can look for used vending machines or even find niche options that fit your business model better. Then, you can purchase your machine and buy more as your operation expands.

Buying the machine is important, but you also need to make a deal with a supplier. You’ll need someone to replace the contents of the machine and many companies in California offer this service. Take some time to find a reputable supplier and come to an agreement with them to avoid any problems or late deliveries.

Step 9: Insurance for Your Vending Machine Business

Insurance is another factor you need to consider. The cost to insure one machine is small, but once you have many machines, it can become a big expense.

While it may seem unnecessary, vending machines are vulnerable because they’re not always locked behind something. For this reason, you should always insure the machine and the products you have inside. This can help you get reimbursed if someone damages the machine, steals money from it, or removes products from the machine.

Insurance can also help you if someone gets hurt near the machine or if the machine breaks something in a store by falling. These are only some of the factors you need to think about when considering insurance for your vending machine business.

What Are the Problems With Vending Machine Businesses?

Vending machine businesses are a great way to make money but it’s important to understand the risks and problems with a vending machine business. Learn more about some of these problems and how you can overcome them below.

Theft and Fraud

One of the biggest issues with vending machine businesses is theft and fraud. Unlike other businesses, some vending machines are left outside and unmonitored. When this happens, people can steal products from the machine or attempt to hack into them.

People can also break into the section of the machine that holds the money to steal any profits you may have made. This can cause you to lose money, products, and even the machines themselves if someone decides to take them.

To avoid this problem, it’s best to keep your vending machines in places that close at night. Some examples include malls or hospitals. It’s also smart to keep your machines in areas with a lot of foot traffic and little isolation to avoid your machine becoming an easy mark.

Technical Issues and Maintenance

Vending machines don’t always work properly. They may not accept money or fail to grab an item for a customer. Some vending machines can also take someone’s money and not give them a product.

In these cases, you need to find someone to fix the machine or replace the necessary parts yourself. While it’s not hard to fix these machines, you might not know it’s broken until you’ve lost out on a lot of sales.

To avoid this problem, we recommend making a deal in your contract to have owners of locations notify you when the machine is broken. You can also put in some legwork to check on your machines often to avoid downtime.

Location Problems

Finding the ideal location for your vending business isn’t always easy. In fact, some locations may look appealing, but in reality, they’re terrible locations. If you sign a lease with someone to place your machine in a location and you don’t like it, this may result in a loss in money if you can’t get out of the agreement.

Additionally, some locations may have seasonal fluctuations you must consider. For example, vending machines on a beach in California might get less foot traffic when it’s cold outside. The branding or change in ownership of a private business may also prove difficult for you to overcome if people dislike the brand or if they tell you to leave with your machine.

Vending Machine Business FAQ

Have questions about starting a vending machine business in California? We have answers to the most common vending machine business questions down below.

Can You Sell Alcohol From a Vending Machine in California?

Yes, you can sell alcohol from a vending machine in California. To sell alcohol from a vending machine, you have to comply with alcohol licensing and registration. This means that you have to have your liquor license to sell alcohol from a vending machine in California.

The type of alcohol you sell can also change the requirements for what you need. Make sure you consider this before you start filling your machines with alcohol.

Vending machines for alcohol can also be advanced. Some models can scan someone’s fingerprint or read their ID to see if they’re eligible to purchase alcohol.

Can You Sell Tobacco From a Vending Machine in California?

Yes, you can sell tobacco from a vending machine. You can sell e-cigarettes, cigarettes, cigars, and other tobacco products from a vending machine in California if you have the right licensing.

Typically, you need a federal and state license to sell these products from a vending machine in California. It’s also important to consider the location of the machine. According to California law, the machine must be at least 15 feet away from a storefront that has an on-premise license.

What Are the Best Vending Machine Locations?

Location is everything when it comes to a vending machine business. You want to place the machines in areas that make sense so that you can profit

• Malls
• Grocery stores
• Barbershops
• Train stations
• Hospitals, doctor’s offices, or other health centers
• Laundromats
• Schools
• Universities
• Office buildings
• Apartment complexes
• Hotels, motels, and hostels
• Bus stations
• Airports

Depending on the products you sell, these locations will vary. That said, we recommend looking into these locations to start the process. Make sure you contact the owner of the location before you start installing the vending machine.

How Long Does a Vending Machine Last?

The average vending machine will last for around 10-15 years. That said, you have to maintain them properly. This includes checking on the hardware, repairing problems, and keeping the machine clean. While a vending machine will last for 10-15 years, its value will decline after around six years because this is when problems can start.

It’s also important to note that the biggest cause of a failing vending machine is an issue with the refrigeration unit or the heating unit. Vending machines with other niche technology are also more likely to fail. In fact, this even includes electrical machines. If you want a vending machine that lasts the longest, your best option is a mechanical one.

Start a Vending Machine Business Today

A vending machine business is a great way to make money. Whether you’re in San Diego or San Francisco, there are plenty of opportunities to settle down, set up some machines, and start selling food. While it’s not difficult to get started,

it’s important to consider what you’ll need. Always get the business licenses that you need and look into permits that determine the type of food or drinks that you can sell. As long as you follow everything by the book, you shouldn’t have any issues.

That said, if you need more help, we have plenty of resources to help you start a business in California. Thankfully, once you know the basics, getting started should be a breeze. Manage your time, money, and products well to achieve the best possible success.