The economics of vending machines | Hacker News Reader

The economics of vending machines

thehustle.co

251 pointsAnon84163 comments

This is a topic I know a fair amount about. For a brief while, I worked at a startup that made software to manage vending machines and handle digital payments, from the device stuck on the front, to accept credit cards.

Basically, the name of the game is location location location. It's very tough to find a good lucrative location to put your machine at. Why? Because there's likely already a machine in such location.

Also, it's a numbers game as many locations don't make that much profit per month. Therefore you have to have many machines, and getting 50-100 machines in great locations is no easy task.

This article seems to suggest that there's lots of small players competing over marginally profitable locations. There's also a negative externality which can lead to these people destroying their whole business: as people compete over machines that don't make much, they cut costs by not refilling as often and not maintaining the machines.

This means that the general level of trust in these machines goes down. After you lose your dollar a couple of times you stop using them. Aside from trusting official Coke or Pepsi machines, there's no brand loyalty (to the operator - a random name on a small sticker on the machine). So if your machines are well-stocked and in good working order, you won't do any better than anyone else. And after a while there are broken vending machines everywhere, which everyone ignores.

This suggests that the machines should use clearer branding, but it needs to be a brand that combines maker + operator.

The issue there is the same issue that plagues sellers on Amazon or Ebay- brand loyalty is difficult to maintain when one operator often doesn't have the snack you want, or you can't find the operator in your area. Branding could help, but it's unlikely that most consumers will remember what operator their vending machine snack came from, just like I will never remember what 3rd party seller my Amazon product came from.

>it's unlikely that most consumers will remember what operator their vending machine snack came from

Isn't that still a branding issue?

Have a bright orange gorilla swinging by it's tail as the mascot. On both sides of the machine and on the front (though transparent enough to see the snacks without issue). "Wait, gorillas don't have tails?" you question. Exactly, that's the brand name: Gorillas Don't have Tails.

We have a nationwide vending machine brand, with 900 employees for 27'000 machines and full or partial service options.

>> This suggests that the machines should use clearer branding, but it needs to be a brand that combines maker + operator.

Interesting factoid. If you want to manufacture a machine and put large beverage company branding on it they have standards. Things like: it must bring a room temperature beverage down to xx degrees in yy minutes or less.

I think branding is important but also just the "feel" of the machine. Personally I trust the machines with newer looking componenets, fresher looking snacks that with features like a CC reader than I would an older crusty machine. Either way, agree trust is huge.

Are there white papers / briefs out there that have hard information on what quantifies a good location vs not?

You need the locations near each other, or time is wasted driving around. There's economy of scale here. The soft-drink people are already there. That doesn't leave much room for the rest of the market.

I bet this would make a great game! I already have a title: 'Vending machine magnate'.

In any case, congrats to these entrepreneurs, and thanks for sharing.

The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money.

You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are.

250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unlikely given the number of machines.

Perhaps I'm way off though, since my perception is probably skewed by tech companies.

You also need to find a place to put the machine. The article mentions paying up to a 25% comission to the owner of the place. Even if you somehow get amazing margins on the machine itself like 70% (assuming you refill the machine for free) it will turn into 45% margin after actually putting the machine down.

>We surveyed 23 vending machine owners with various-sized operations and found that the average operator in our sample owned 13 machines that gross $309 per machine per month.

Warning: napkin math.

$309 x 13 x 45% = $4017 x 45% = $1807.65 profit (excluding cost of machine)

It's just a side hustle. Even with higher margins you can never go above $4017 so it's never going to turn into a scalable business. Once you consider the cost of the machines of around $2k each (very low estimate) your first 14 months will net you nothing.

"Average" (of 23 survey respondents) might not be a particularly great measure. I can imagine many operators would have 1-3 machines on the premises of the business they are actually focused on (a pizza shop or an office cafeteria with a drink and a snacks vending machine), while others might have 75 or more.

(How much does the average mobile app make? Does that low 4-figure amount (edit-to-add: per year) mean that app development is a dead end?)

Do you need to put aside money for insurance, ongoing repairs/maintenance, restocking physical goods, vandalism/loss of the machine for apps?

I think vending machines are not really a realiable income when looking at the costs that might occur.

So, I'd take any 4-figure app over any amount of vending machines.

You can make more by having more machines. How many machines could one person restock? A lot more than 13. Let's say I have to visit each machine once a week on average (seems reasonable given it's sold $75 worth of stuff), I could stock 100 machines spread out over a small city. A lot more if I have many machines located together in say a university or an office park.

The average operator has 13 machines and views it as a side hustle. But that's true for a lot of entrepeneurial businesses. (The average SaaS owner, the average Youtube personality...). That doesn't mean you can't scale the business to where it provides a very decent income stream.

Gross is the income, not the profit, so you need to subtract the cost of the goods going into the machine to get the profit which will be a lot less than $1807.65/month.

It's good money for something accessible to almost anyone.

It doesn't require much capital, doesn't seem very regulated and needs no deeply specialised skills to get started. No franchise. No middleman or supplier lock-in. No fixed rental payments.

Easy to pull in friends & family labour if you need to scale, and if you miss restocking it's no biggie. Nobody yelling at you. Flexible hours. Rarely have to talk to people except about new sites.

Actually not that easy to think of things with all those properties.

If anything you should be surprised such a thing is profitable, it's a textbook case of "the free market should have squeezed profits to zero".

Agree.

Also surprised it hasn't been feudalised somehow. Some company owning all the machines and then uber-ing out the hard work of siting them and restocking them. Gamifying the process of monitoring, "your fleet", the "ching" on your phone when someone buys a bottle of water or candy bar. Special deals for site owners. Branded supplies. An app for customers to talk to the vending machine. Loyalty points. A snack radar. Etc.

I think it's great the market is mostly independent operators.

The parts that can be feudalised already are. The big companies make the machines and sell them. Big companies make the software. What is left is the physical efforts of finding a location, putting the machine in place, and then tending it regularly. There isn't much to be gained by adding a layer of management over the top of that, so big players can't really skim off the top by good management making things better.

Also big companies have too much to lose to fraud. The route operators are alone with big piles of cash. It is very easy for someone who knows what they are doing to "discover" a broken a machine (read they break it) and it was dispensing the J row without payment, then take the extra cash.

All in all it is best to leave route operations to little players.

I dunno, I'm fairly sure Coke machines are all owned / franchised by Coca Cola; after all, you can't just use their brand on the outside of your machine. I think.

I've seen plenty of branded machines for sale at auctions and craigslist. They may have been connected to Coca Cola at one point, but they aren't necessarily connected now.

I would imagine locations are somewhat "sticky". Your local auto repair shop isn't interested in booting their vendor for another one that charges 65c for a soda instead of 75c, as long as they're not getting bad service. And they're not interested in the conflict and confusion of allowing a 2nd operator to put a competing machine right next to it at a slightly lower price.

Everything seems to suggest that this has already happened. The reason this works as a 'side hustle' is because it's only lucrative if you ascribe a very low value to your time (and your car mileage, and the stress of doing admin for your 'business').

The fact the big players don't bother, the number of 'entrepreneurs' doing this in their spare time, the fact that they repair, move and restock the machines themselves, the calculations which ignore the presumably high risk of vandalism or theft, the presence of a landlord who can charge you as much as they like. And finally, the existence of 'mentors' who will charge you to be taught how to replicate their business.

I'd add that what people here are calling a "side hustle" is something that quite a few people without a lot of marketable skills would call a job/income stream. And, yes, there are a lot of jobs/income streams that work for individuals who lack a lot of alternatives that don't work for companies that have offices, accountants, etc.

There are a lot of opportunities like this. However, when you look at many of them in detail, they pay very very poorly.

As a sole operator though the pay is better because you don't have overhead. If you pay a helper, some of the net income goes to you as the manager, and some to them (you can split that up however you choose). In some businesses management is hard and so the manager can skim off the top of their employees and yet their great management skills can pay the employees more than they would get along. This isn't one of those business where skilled management is required though, so a manager is just skimming off the top and a good employee will soon figure out they can start their own business and make more money without the manager.

I think what makes it a "side hustle" is that it is practical to do on top of a full time job (multiple jobs). Obviously if you scale the number of machines up it starts to look more like a small business, but it looks practical to do one or two machines in your "spare" time.

Slightly pedantic comment here, but in economic theory, even in a perfectly competitive market, profits never drop to zero. Profits need to be high enough that owners of an enterprise don't decide to do something else with their time and money. These businesses may not make enough in profits to attract venture capital, but that doesn't mean they aren't more lucrative to the people running them than their other options.

Even more pedantic, but in economic theory in a perfectly competitive market (edit: at equilibrium) economic profit exactly equals zero. This is because the owner not doing something else with their time (called opportunity cost) is accounted for as a cost. What you're describing would be called "accounting profit" instead of "economic profit" by an economist to specify it only takes into account costs on the books, not opportunity costs.

Edit: See https://en.wikipedia.org/wiki/Zero-profit_condition

Economics includes opportunity cost, so yes, in competitive markets profits will drop to 0.

Parent says "the free market should have squeezed profits to zero." Theory says that the free market should squeeze economic profits (not accounting profits) to zero. That has already happened: $500,000 (annual revenue for 2 people) - $250,000 (COGS: 50% of revenue) - $50,000 (commissions: 10% of revenue) = $200,000 (gross profit) - $62,500 (cost of capital: 5% of 250 * $5,000) - $50,000 (economic depreciation: 250 x $5,000/25) - $100,000 (cost of labor: 2 x $50,000, including benefits) = - $12,500 (economic profit)

If this business is so lucrative, why isn't organized crime involved? It seems like a field where they have a number of comparative advantages:

1. Good at negotiating with local businesses. 2. Good at motivating low-paid employees to handle large cash sums without pilfering. 3. They love cash businesses. 4. More tax efficient than people doing 'side hustles'. 5. Good at managing kick-backs to eg. motel staff.

My guess is that the most 'gold mine' locations are already controlled by entrenched players who defend them using a variety of legal and illegal methods - vandalism of competitors' machines, high rents, kickbacks, threats to landlords.

Then all the marginally profitable locations are competed over by amateurs who routinely lose money and get disillusioned.

This comment sounds like the inspiration for an Anchorman style comedic exploration of the dark underbelly of the vending machine world.

I did hear one of those factoids saying more people are killed by vending machines than sharks...

https://freakonomics.com/2011/09/08/how-are-sharks-less-dang...

Sure, but how many people are killed by mafia thugs when trying to muscle in on their vending machine territory

The US mafia was for a time at least. Used to be common knowledge.

https://www.reddit.com/r/explainlikeimfive/comments/5f5lph/e...

From the article:

> All costs considered, an operator who makes $5k per month in revenue might take home something like $2k in profit.

That's actually not bad at all.

The issue, as you mention, is that it may be difficult to implement economies of scale. But even 200k for 2 people is something the majority of people would be quite happy with out of a full time job, and considering that this does not require any special degree or training this is very good.

I think these businesses are impossible to scale because of the trust issue. You can pay someone a decent wage to empty the machines but you lose all your profits. Or you pay them rock bottom to drive around with thousands of your dollars in cash and merchandise. Then they rip you off in various plausibly deniable ways.

>The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money.

Literally every industry is like this. Ease of entry, margin, stability, pick one.

> Perhaps I'm way off though, since my perception is probably skewed by tech companies.

Where you're standing makes a massive difference to your perception. Using your back of the envelope calculations, 200k or even quite a bit less is a lot of money to many, if not most, people. The median USA income is apparently 50k, so they'd be earning more than most other people. Compared to a hard working minimum wage job, which can have longer, inflexible hours, this is definitely worth the squeeze for many people.

The only thing missing in OP's calculation is the cost of employees. Maintaining a fleet of 250 vending machines alone doesn't seem very possible.

If we assume that the restock is 3 times a month (close to the once every 2 weeks that was mentioned in passing), that leaves around 25 visits per day. If they're in close geographic proximity, that seems like it might be doable.

It would also be a lot easier if the majority of your machines were identical. The majority of vending machine products have a LONG shelf-life. So if you stock a truck with all of the things that all of your machines carry, you don't have to take the step that the article alluded to where you take stock and then go get the supplies. You'd just have all the possibilities on hand and restocking the truck only happens maybe once a week once you get a good idea of the flow of the individual products. It seems very feasible to me that 2 people could service that many machines. Especially if you're willing to work 12-16 hour days some days.

Assuming a time to restock of 30 minutes per machine, it would still require a workload of 90+ hours per week.

I guess a team of two could do that.

This is a bit myopic - $200k for two people for what's basically a no-skill gig is a pretty decent income in most of the country. At that scale it's not a side gig anymore, it's your primary income, and I can imagine the hours are probably comparable to a normal job. And really, I can think of way less appealing jobs that pay worse with less flexibility.

It's not really $200k in income. That number ignores the initial investment (and thus its associated cost of capital) as well as the economic depreciation of the machines (since you have to replace them after, say, 25 years). As I calculated in a different comment, the actual economic profit is negative.

If you're considering depreciation then you don't need to account for the initial imvestment, just the financing costs thereof. You're adding an asset and depreciating it, rather than considering it as 'money spent'.

The initial investment (and its associated cost of capital) is quite separate from economic (as opposed to accounting) depreciation: if you could get a valuable asset for free (doesn't matter how) whose market value falls every year thereafter, you have no initial investment and thus no cost of capital. However, you have economic depreciation. On the other hand, if you buy a valuable asset that maintains its value forever, you have a cost of capital, but no economic depreciation. In real life, you have both for most assets. As an aside: the financing cost of the initial investment is irrelevant. What matters is the opportunity cost: what profit (or return) could you have made by investing the money in a different asset of the same risk instead (which is the cost of capital)?

No, the initial investment is negligible. Article has the high end of brand-new machines at $8k.

It's not $200k in income because you have to stock the machine.

But you subtracted the wage if I remember correctly. I would consider the wage as a profit.

I'd agree, but its one case study. One of my best friends told me recently he has about 150 vending machines(in the sf bay area), he is the silent partner, providing capitol and his other partner does the stocking and collecting/refilling of coinage. I didn't want to pry into how much he was making but after reading this article it seems like it could be a lucrative side business for a non tech employee. (he is a manager primarily(non-tech)). There must be a number of machines that would be a limit where taking on additional workers/partners ceases to make it a profitable venture.

Seems like a partnership like that would be based on unconditional trust.

If the other partner is responsible for restocking and collecting the cash, you have to take their word that revenues are what they claim.

You're right. This is why (as they said in the article) there aren't any massive players in the market. It's viable if you have a few machines in your area that you restock as a hobby, but the minute you add in any sort of overhead, your margins will dry up immediately. Plus, the numbers in the article are actually a little high. 25% margins or less are more common, and generally a single machine will only bring a few hundred or less per month in profit.

Why wouldn't you just contract a service company to stock and maintain your machines? I don't see how this isn't an excellent entirely passive opportunity. If the returns are low, that's still money you didn't have last month and money you could potentially spend on another machine to exponentially increase your business. If you are contracted with a service company you could scale infinitely.

It might not be a good investment, according to the article:

- Many of the best locations — places with heavy foot traffic, or large worker populations — are already saturated with machines.

- Some owners have to make 100+ calls before landing a decent location. In the end, they often end up paying the owner a commission of 10%-25% of gross sales to drive home the deal.

- And these figures are pre-expenses. The business comes with its share of overhead costs. For starters, ~50% of revenue goes toward the cost of items that go in the machines.

- Most vendors have seen a 10-50% dip in revenue this year due to the stressors of the pandemic.

Also not really addressed, what's the life span of a vending machine?

I know I've seen some ancient ones out there, but most seem pretty new. It says new ones are 3k, if it lasts five year that's sixty dollars a month.

Vending machines last way longer than 5 years; 25 years at least, the only thing is they require maintenance and repairs every once in a while, and the payment system may need to be swapped out depending on developments (e.g. accepting cards, contactless, phones, google/apple wallet, alipay, bitcoin, etc).

Yeah it seems like being a Lyft or Uber driver where your hourly pay ends up getting driven towards the minimum wage.

That might not matter if these are passive investments. If you have a company servicing your machine, so what if your profit is low? Save your money and buy a second machine, then another one, then enjoy your exponential growth on your vending empire. If things are making money you aren't doing poorly, especially when you might not ever have to visit one of your machines and can work another job or pursue your interests.

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situation where you’re creating efficiency by specializing. What does the servicing company need you for? If all you do is own the machines, they can do that themselves without complicating their business at all.

You’re sourcing the location.

That works if you own the location, otherwise it isn’t anything the servicing company couldn’t do just as well. Plus they’re more likely to have relationships with property managers, office managers, etc. Double plus, your costs would include the servicing company’s profit margin. So by definition their costs are lower, which gives them room to offer location owners a better deal than you can.

there's no capital risk for the servicing company.

I get that there’s some value-add on the owner’s part by taking on the capital risk, but in this case it seems like it’s mostly an illusion. After all, the servicing company’s business (assuming they don’t own any of their own machines) is entirely dependent on having access to other people’s machines. Your risk might as well be theirs, plus they don’t have assets to leverage.

I think the difference here vs something like say owning a building and hiring a property management company is the negligible value of the machine compared to operating costs. The capital portion is such a small piece of the puzzle that just owning the capital and contracting out everything else isn’t going to be competitive. I think this is borne out by TFA, which doesn’t describe any owners working the way that parent suggests.

Also, ATM machines. When my daughter was sick with cancer ten years ago I was a contractor. I couldn’t put in enough hours because I was always at the hospital with her. The handful of ATM’s I owned at the time allowed us to keep paying our bills.

Cash isn’t as common now (pre-COVID), and even less so post, but my guess is there’s still money to be made in some parts of the world.

ATM machines are cheap, about $1,500. If you put them in places where people REALLY need cash (strip clubs, festivals, etc...) you can make a fine living.

I eventually sold mine to a friend because my consulting required me to travel and you lose all your profits if you have to pay a company to manage (refilling) the money for you.

I have some funny stories like the time I was sitting behind a strip club in a bad part of town at night with $30k in cash waiting on a tech because the magazine jammed.

I once had to withdraw 60k in $20’s for my friend and business partner at the time. He was out of the country and is 18 year old cousin was refilling the ATM’s. His ATM’s were two hours from me. We sat in the back of a large Wells Fargo branch with money counters and VERY SERIOUS (read: terrified) EMPLOYEES as I handed the $60k they just counted to a kid and sent him on his way. LOL

In the ATM biz everyone knows each other and lending money is common and done on a handshake. The reason is, if you can’t be trusted with cash you don’t last long. So if you’ve been around nobody had a problem letting you borrow $100k in duffle bags in the parking lot of a Home Depot at 6am.

Everything is tracked because the ATM’s all go through a data provider that handles the bank interchange. You should see the volumes of money that pass through them. Even the small ones back then would process hundreds of millions in $USD a year. When you lend someone money you call Chris at the data company up and say “I’m borrowing $50k from Tom so send the next few wires to him”.

M-F you get an ACH from the previous days withdrawals plus whatever fee you charged. Monday’s includes Fri-Sun. It’s an interesting business and it’s fun. I never got robbed but I’m ex military and stayed strapped and aware of my surroundings.

Not in the Netherlands anymore, as they'll simply bomb your house for the ATM

I would have assumed that strip clubs owned/operated the ATMs inside their clubs. Why not make that much more money from their customers?

When recreational marijuana became legal in CO, the ATMs close to the shops were always out of cash because they only dispensed $20 bills when everyone was trying to pull out $300-$400 at a time. The smart ATM owners started dispensing larger denominations to avoid the Out of Cash problem

Surprised to see no mention of Japan in the comments. As any visitor can attest, the country has way more vending machines than anywhere else I know of, and in way more categories. Soft drinks, tea (hot and cold), coffee, beer, hard liquor, tobacco, snacks, ice cream, rice, toiletries, even the semi-apocryphal used panties.

The article below outlines some reasons why, but it seems to boil down to high cost of labor & real estate, high population density and heavy public transport usage. In suburban shopping arcades (shotengai), which by and large are dying a slow death, it's not uncommon to see closed stores that have literally been replaced by a vending machine or two (often owned by the store owner) retailing the same products, particularly for liquor and tobacco.

https://www.businessinsider.com/why-so-many-vending-machines...

Not that Japan has the monopoly on weird vending machines:

https://www.norwegiansalmon.com.sg/

There are lots of weird and wonderful vending machines around the world: https://www.straitstimes.com/singapore/live-crabs-and-lego-s...

In Romania I came across an egg vending machine. There was a padded cushion where the eggs dropped down.

http://www.eggvendingmachines.com/wp-content/uploads/2011/09...

There are cheese vending machines in several towns in the Alps:

https://www.filbing-distribution.com/s/cc_images/cache_60041...

Quite useful actually, avoids long queues on Sunday morning when everyone wants to pick up some cheese on the way home

Sunday morning...on the way home? What cultural thing that I'm not aware of would the population in mass be coming home...(church?) that would cause such a large queue at the cheese shop?

City dwellers driving back home after the school holidays (two weeks in Jan/Feb/Mar, staggered depending on the city, to reduce congestion on the slopes)

Skiing is serious business here :)

Can't be that serious if you're driving back Sunday morning. Serious would be skiing at least half-day, and driving back Sunday afternoon! Or ski full day, and overnight drive it back!

I used to live in a small French village, and one year a pizza vending machine appeared.

It actually made really decent pizza. I think it was restocked by the local pizza place, to handle late night business because they closed absurdly early.

I counted 16 vending machines side-by-side outside a random shop I visited in "my" town (the town where I stay when I'm in Japan).

And yes they're everywhere. I appreciated them particularly the first couple of years I visited, as at that time shops insisted on you paying as accurately as possible, they tended to refuse accepting banknotes if that implied returning a lot of coins. Strange thing, and that has since changed (i.e. that's not a problem anymore), but, back then the easiest way out was to simply buy a 100yen coffee from a vending machine, paying with a note, and keep the change to use in shops.

Been here since 98, never ran into the issue of not being able to pay with banknotes because of returning lots of coins. In fact quite the opposite. Go into a convenience store, buy a pack of mints for $1.04 (104 yen) hand them an $100 bill (10000yen) no one blinks an eye.

Most convenience stores in the USA won't accept $100 bills AFAIK.

I can see if it was some tiny store and they couldn't make exact change then yes, they'd have an issue.

Also, liquor (and maybe beer) I think may have changed. I haven't seen a beer/liquor machine since 2016 but the one I saw then required an id card to prove you were old enough to buy. Tobacco too apparently (I don't pay attention to cigarette machines)

https://ja.wikipedia.org/wiki/Taspo

Nowadays I think I only saw liquor/beer machine only in hotel. I don't remember last time I saw them on the street anymore.

>Been here since 98, never ran into the issue of not being able to pay with banknotes because of returning lots of coins. In fact quite the opposite. Go into a convenience store, buy a pack of mints for $1.04 (104 yen) hand them an $100 bill (10000yen) no one blinks an eye.

Similarly, I was surprised in Amsterdam when a family got on a bus and didn't have a ticket (or whatever) and so just gave the driver a 50 Euro note, and he made change and gave them their tickets.

In Thailand I began to wonder how much trade the 7-11's do just from foreigners needing to break large bills, where "large" was 100 THB or more (3.20 USD).

Being an American tourist, I always felt guilty about it and would make sure to buy at least a hundred baht of goods if I was breaking a thousand, but I'm pretty sure it was standard to buy a 7-baht bottle of water and calmly collect your 993 baht in change.

Alcohol vending machines are rare, but still exist. There’s one outside of my in-laws house (rural Shiga-ken).

Even though I do not drink alcohol, I loved seeing Alcohol vending machines in Japan. A couple of hotels we stayed at had alcohol vending machines and I thought it was so awesome we were in a society where the trust level was so high that you could leave alcohol vending machines out in a public space and it did not cause trouble.

In America, that vending machine would last a couple of hours at most.

In most countries outside of Japan any vending machine wouldn't last.. the only place I still see them in my own country is inside airports and the like. The vending machines disappeared from outside years ago when some people started breaking them to get at the money.

Similarly, I've been on two long trips to Japan recently and had no issues either.

Though I suspect that there's less of an issue when the conbini you're in has a change machine at the teller. So they just put the bank note in and it dispenses whatever the change amount is, even if many coins also come out.

>Most convenience stores in the USA won't accept $100 bills AFAIK.

At some point, with some marginal exceptions (such as dollar coins that have never been that widely used and a $2 bill ditto), the US at some point apparently decided that it was going to keep the same coins and bills in general circulation forever. So we still have essentially valueless pennies and $100 bills, while in circulation, aren't taken by a lot of places in the US. They're even a bit hard to get. I had to go to a couple of bank branches last time I needed to restock my "emergency" travel cash supply.

We used to have to acquire large numbers of quarters to do our laundry in the USA, and the easiest way was to feed a $5 bill into a vending machine and press the 'reject' button. Clunk clunk clunk clunk...

It also helps that it’s a high trust society and you don’t get a lot of delinquent kids breaking in to get cigs or beer. Obviously cameras help with that.

Yes I thought that when I visited. A vending machine on the streets of a UK city full of beer and cigs wouldn't last 3 minutes.

Railway stations in the UK used to have cigarette vending machines, back before smoking ban.

Not sure about the UK but in the US when there used to be cig vending machines it would be under the supervision of staff, so like in a bar.

In Japan they are out in the open in non descript corners and alleyways, although there is usually a streetlight.

They do require a "tobacco passport" to operate, which aims to make it harder for kids to buy them: https://en.wikipedia.org/wiki/Taspo

Then again, this is the same country where it's sufficient to self-certify by tapping a button that you're over 18 when buying hard liquor at the 7-11.

Is underage drinking a problem in Japan? Genuinely curious, I know salarymen feel obligated to drink with their bosses but have never heard about unruly drunk Japanese teenagers

Drinking is allowed over 20 years old but some university students tend to drink on eighteen on party. It's illegal but not thought as serious problem.

For high school student or below, smoking is problem (So vending machine must have authenticate feature like card(Taspo) or face age recognition) but drinking is looks like not popular but still considered as problem.

In croatia they have tiny little 5'x5' walk up convenient stores everywhere that might as well be vending machines, but I'm sure the drunks would get in there in no time if they weren't manned.

The U.S. used to have cigarette vending machines. I believe they were phased out due to the desire to enforce age limits for smoking more strictly, not because of theft.

My general impression is that the U.S. used to have more vending machines in general ~30-40 years ago. I remember soda machines being outside of every grocery store, but I don't see that anymore. Newspaper vending machines also used to be common. But I don't have any data to back that up.

yes, there were more vending machines:

https://www.atlasobscura.com/articles/vending-machines-snack...

I remember the cigarette machines from my youth. I was amazed that something so forbidden (I was a kid, and my parents didn't smoke) was available in restaurants if you were just bold/sneaky enough.

In Germany there are bars that still have them, but I think they're pretty rare now even there. The one used by one of my friends who smokes a lot even requires old DM coins, which you can get at the bar.

That's an amazing bit of indirection that both spares them having to update the machine and let's them change the price without reconfiguring the machine. Just like subway tokens.

Also in theory allows them to ensure that only people over the legal smoking age can use the machine

No they're still very common here. There are at least three within a 50m radius of my front door (inner city). Someone made a map of cigarette vending machines tagged in OSM in Dresden: http://ubahnverleih.de/osm/zigaretten/

Germany still has ubiquitous cigarette vending machines You need some electronic proof of age (drivers license, ID card, bank card), but of course you could just "borrow" someone else's and use that. It's just a date of birth stored on the card.

In LA the newspaper vending machines are still there, very common for ethnic language newspapers in certain neighborhoods, but probably 50% are abandoned on the sidewalk and used for trash and the occasional arson. Its one of those things where seemingly it's no one's responsibility to remove it, so there it will remain until they rust into dust or someone plows over one with their car.

LA is stuck in a bit of a time portal, though. Local mom and pop shops reign supreme still, especially ethnic stores, and there are even payphones still in frequent use by bus stops.

So now they have salmon in vending machines... Tried to buy some fish once and the cashier just laughed at me and wanted to sell me fishing equipment.

If North America was speckled with machines vending hot canned coffee, I would use them far more often than e.g. Starbucks. I drank so many Boss coffees last I was in Japan, they're so convenient -- no line, not too-hot-to-drink, open 24/7, such as in the early dawn. Just a wonderful thing.

I’m not sure what you refer to as early dawn, but here in the Midwest all Dunkin’ Donuts and many Starbucks are open at 5am.

Side note: it blows my mind each time I’m in California and I have to drive forty five minutes or more to find a Dunkin’.

It blows my mind that someone would want to find a Dunkin’ in CA where there’s far better options, but to each their own!

Known viable option for coffee for someone from out of town, whereas a local brand is an unknown quantity and McDonalds and Starbucks are undrinkable.

LA is known for their many donut shops, mostly owner-operated. https://time.com/longform/national-doughnut-day-photos/

Here in the Bay Area I have a 24-hour donut shop about a quarter mile away. I have been making a point to patronize them, so they survive COVID.

Dunkin' Donuts pulled out of California, and is shrinking nationally. There are much better options out there if you look...

> Dunkin' Donuts pulled out of California, and is shrinking nationally.

Dunkin' just opened a location in Redwood City, on Woodside Road near El Camino. So they're not pulling out of CA. There are also locations in San Mateo, Fremont, Half Moon Bay, and Concord.

Definitely not as common as Starbucks, but they're growing their presence, not shrinking these days. Source: my wife went to school on the east coast and is a big Dunkin' fan...

Dunkin’ Donuts barely has a presence on the west coast, you are probably better off looking for local chains.

Just playing around with Google Maps I could see about 10 Dunkin’ Donuts in the SF bay area (pop 8 million), and about 20 Dunkin’ Donuts within the Kansas City limits (pop 500,000). I couldn’t find any Dunkin’ Donuts in the Portland or Seattle areas but I didn’t look very hard. My impression is that the folks living in the PNW would regard Dunkin’ Donuts as some kind of foreign intruder.

There are plenty of coffee shops open at 5am, speaking from experience living on the west coast, but if you are particular about getting Dunkin’ Donuts specifically you will usually have to drive farther, on account of them not really being a west coast phenomenon.

Now that I live on the east coast I can see a Dunkin’ Donuts spaced about every quarter mile, and I can only imagine what kind of hysteria led there to be so many of them so close together.

They're closer together than that in Chicago's loop, although I think 7-Eleven wins the density contest. There's one block that has two 7-Elevens on it and there's another across the street from one of the two corners that doesn't have a 7-Eleven on it. (Interestingly, Google maps doesn't show all the locations when I pull up the relevant block.)

california donuts is 24h

Dunkin’ Donuts donuts are an abomination, unedible, atrocious. It’s no surprise to me you don’t see them as much, I’ve been waiting for that particular chain to die for quite some time.

Indeed, even 7-Eleven donuts are superior to Dunkin. And in Los Angeles, at least, donuts seem to be a popular immigrant business and there are a kajillion non-chain donut places everywhere.

It’s for coffee, not donuts. They even rebranded to drop the latter from their name.

There's a Dunkin just built in Sunnyvale on El Camino, not open yet but they're moving in the furniture. First one I've seen outside of an airport here.

> ...it blows my mind each time I’m in California and I have to drive forty five minutes or more to find a Dunkin’.

It blows my mind that anybody would drive 45 minutes to find a Dunkin' in CA when local donut shops are everywhere and they are so much better (granted, Dunkin' is a pretty low bar).

Not for donuts. Guaranteed minimum viable coffee. Starbucks and McDonalds are undrinkable (opposite ends of the spectrum).

Climbing Mt Fuji in Japan is a reasonably serious climb (for ordinary people). At 3600m you need to think about altitude acclimitisation and it's best to sleep overnight on the way up.

The achievement is only undermined by the fact that there is a literal queue of people in front of you for the entire ascent, and by the fact that after completing the climb you are greeted with a vending machine at the summit!

Like most people, my first thought was "how do they restock those machines?"

Turns out the summit of Mt Fuji has civilizational amenities, and there's actually a vehicle that goes up to the summit via a trail.

https://www.flickr.com/photos/182302882@N05/48439659072/

Thats about 12,000 feet. You dont need altitude acclimatization for that, it'll just suck a decent bit more than normal. I just went backpacking at 13k+ feet without any prep, it was fine outside of needing to take more breaks.

It really depends on the mountain, which you should always research beforehand.

For example, I climbed Mt. Massive in Colorado (second highest peak and >14k feet) without any special training or problems (I normally live near Washington DC). If you are in reasonably good shape (i.e. you run regularly) then you should be fine. Yeah, I stopped to catch my breath a little more frequently the higher I got, but it was a totally manageable 8 mile round trip.

This can depend widely on the altitude you are acclimated to (what altitude do you live at, how regularly do you hike/climb/run near the target altitude, etc.), as well as how quickly you go. For some, finishing the mountain without having to overnight on or near it is more convenient, but others might overnight so they can go faster on summit day without getting altitude sickness.

Side note (I'm not saying this applies to above comment): I'd caution anyone to take 12,000 feet seriously, it's a serious altitude and you want to think in terms of turnaround times and eventualities, not "I'm getting to the top no matter what".

That's not true. Plenty of people get sick on this mountain, it's not the norm and plenty of elderly and children climb this mountain, but there's definitely a not-insignificant number of people who could not handle the altitude without acclimatisation, among which many who're in perfectly fine health. Your personal experience does not refute any of that, just google Mt Fuji Altitude Sickness.

I live at sea level, and I've been up to 10,000 feet five times. I've felt fine for four of them, but the fifth time, some light physical activity (~60 minutes of walking) put me flat on my ass, made my feet feel like lead, and made me want to do nothing other than to lie down and sleep.

Different people react to altitude differently.

It just depends. I live at sea level in the bay area but regularly spend a week at a time at 8000ft near tahoe. I've never thought twice about it.

When we went to Peru, we flew in to Cusco which is around 11,000ft which seems like "not that much higher"; however, the decrease in pressure and O2 content is exponential, the the transition between "no problems" and "some problems" may be abrupt. My wife is fitter than I am, but seemed to have had more issues on our first few days, despite us both taking Acetazolamide (although we didn't bother until after arrival).

Another factor is that speed of ascent factors into onset of sickness; flying in to a high altitude can be worse than ascending over a period of days, as it takes time to acclimate.

Physical fitness doesn't seem to have a lot to do with how a given person will respond to altitude. I believe women and older people are slightly more likely to respond poorly, but it's kind of a crapshoot.

We hiked over 15,000ft but it definitely sucked at times -- tingly hands and feet related to the drugs, I believe.

Funny thing was, after > 1 week at that altitude, we both stopped taking our drugs the morning of our departure. Our flight was delayed by a few hours and by 1pm I started feeling the onset of symptoms again, wishing I had taken my dose that morning.

The article doesn't cover a scenario I am familiar with: If you own your own small business doing something else and also have one or more vending machines to help make that work.

Growing up, I knew a guy named Clark. He ran a barber shop and he drove a school bus and he did leather work in the back room of his barber shop during slow times and he had a soda machine in his barber shop.

Restocking was a matter of getting bottles of soda out of stacks of supplies in the back room where his leather working stuff was. I know because my parents had a store next door for a while and I sometimes restocked his machine when he was too busy to get to it just to have something to do while bored out of my mind hanging at my parent's store.

I wrote about that once, probably badly:

https://noonegoesthereanymore.blogspot.com/2020/06/clarks-ba...

I find it interesting that the operators are buying from Sam’s club rather than a legit wholesaler. $0.50/unit for soda is ridiculous

I looked into this a few years ago because someone on reddit wrote a long post about I couldn’t find. The ROI looks amazing until (as the article alludes) you look into how much labor is required to keep the operation going. It kind of works if you have capital and your time has low opportunity cost.

I think the smart way to do it would be to start a franchise that provides machines with financing, acts as a wholesaler, etc so you can take a cut of the operation with less capital investment and less driving around to actual machines. But then that starts looking like an MLM...

Knew a guy who had vending machines at my office.

He was a UPS driver and many of the vending machines were on his typical route.

Seemed like a good side gig.

I found this odd too. Most of the largest wholesalers have microscopically thin margins (i.e., they're not making much from you), whereas grocery stores tend to be a lot higher. I'm not an expert in the food distribution business but it seems most wholesalers (McLane, for instance, https://www.mclaneco.com/content/mclaneco/en/customer.html) are happy to take new customers. Maybe Sam's club is offering a better deal than wholesalers on specific items because of coupons/sales and whatnot?

Somewhat related : Warren Buffett seemed to have an interest in such "low-cost" hustles[0] nearly 75 years ago and seemed to have done well with it:)

[0]https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-p...

I have trouble believing this would still work; why should a barber shop get only a fraction of what people put into the machine? They see that thing all day and will know how much money goes through it, what's stopping them from kicking Buffet out and buying their own?

I think the modern equivalent around here is the odd slot machines and cigarette vending machines at pubs; I'm fairly sure they aren't owned by the pub itself, because of regulations and stuff.

Because the barber wants to go home after a long day of cutting hair not go restock the machine. Better to get a small profit on an unused corner than deal with inventory management.

Except someone else sees the machine taking in cash, and says to the the barber “I’ll give you a 20% cut to swap out to my machine”. When the economics wake up, it’s a race to zero.

Races to zero never reach zero. Eventually someone says it isn't worth it.

Given that the barber has limited resources and time, perhaps he might think twice about constantly changing his partners for a couple of hundred dollars more per change,no? Remember, there are switching costs for these sort of things.

Personally ,I tend to weigh the (hard) benefits of cash and the (soft) costs of switching things before making a decision.

I was pleased to find dairy vending machines in Greece, for when you can't wait for that yoghurt:

https://popupcity.net/observations/cooperative-milk-vending-...

Apparently they are farm-to-machine, which is also nice. Seemed to get plenty of use at least where I was in Thessaloniki.

Here’s the real lede:

> Ibanez’s YouTube channel, which chronicles his life as a vendor, boasts 362k subscribers and now earns more than his machines.

The margins on vending machines are tiny and the net revenue is not enough to sustain much beyond minimum revenue. If you had a few hundred or thousand machines this would be a great business, but it’s a long way up from 1-2 machines. Many of the people in this feature are boasting about only having to do 2-3 days of work every 2 weeks, they won’t get the scale they need.

lmao, that's a good one. It's like those reality soaps on Discovery (e.g. the gold miners), always complaining that they didn't find nearly enough to make ends meet, but surprise surprise, next season they buy tons of new equipment. They're not in the gold mining industry, they're in the acting industry.

The motorcycle / car customizers aren't as much into that business as they are in the acting & marketing one. Worked great for OCC, the show turned them into an internationally recognized brand. Wouldn't be surprised if they earn more off of merchandise than motorcycles.

I tried this a few years ago and I can really attest to just how awful an idea buying a used machine is. I found a decent condition one on craigslist for $100. I bought it, and it's been stuck in my garage for 2 years now. I must have gone through $200 of parts just trying to get the bill collector to work, and it still doesn't. It would be at least a few hundred more to bring it to a place that can fix it. If you're thinking about doing this, you need to make sure that every part of the machine works, because if you're just starting out I can guarantee that you won't be able to do the maintenance yourself.

I think the awful idea is paying $100 for something that costs well over 20-30x that cost new, according to the article, and expecting it to work without investing a significant amount of time and money.

I work at telemetry system called VendingMetrics. We initially created this with my dad who got over 20 years experience in vending. I must to say, it’s much harder business than everyone thinks. Different machines, different settings, firmware, motherboards, external devices. Many things can go wrong but yeah if you are lucky and like old-tech it could be work for you. :)

I would be also interested of costs. The article seems to have gross figures only.

> All costs considered, an operator who makes $5k per month in revenue might take home something like $2k in profit.

I was looking for the same, the above helped me to get an idea about the net income.

This line doesn’t line up with the data also in the article. The gross margin on each product is about 40%, you then lose 15-25% on stocking the machines, plus have to pay for gas, a car, insurance, repairs, initial outlay of machines etc.

You’re getting maybe 5% net margin.

> you then lose 15-25% on stocking the machines

What? How've you come to that conclusion?

Sorry I meant on paying the owner of the place you’re putting the machine

Why do you have to be running around town stocking these machines yourself? Surely there are service companies who do this for you, just like US vending machines.

Right and there goes your margin

Really interesting article. Still two questions about the economics that I don't understand:

1/ Why no economies of scale? Why aren't there companies that own 100k machines throughout the country?

2/ Why don't the venues run their own vending machines?

One big takeaway here from this is that you can compete on inventory. Keep the high-volume items that are popular, but also sell, e.g., masks, sanitizer, other knickknacks that are relatively disposable and are good impulse buys.

I think of Amazon Go stores as giant vending machines that you can walk into.

If you find this topic interesting, there’s a book by Kerry Segrave called ‘Vending Machines: An American Social History’ that’s surprisingly readable for a book about the history of vending machines.

In NY you’d have to deal with the mob to break into the business at all.

Vending machines are still all over college campuses in the US. But I suspect the small outfits cannot compete with the big players in this scene. Seems like it's all just coke or pepsi.

coke and pepsi own their own machines (not entirely, but many of them). However there are a lot of other things sold in vending machines that coke/pepsi don't control.

Seems like it would be a pretty interesting business to get into, my dad is thinking about it, since he works as an operator right now. Seems like water has best margin :D

I'm surprised that no is mentioning the cost to power a soda machine (refrigeration). Do places just eat the bill for your giant refrigerator?

And let's not forget that an iPhone is basically a vending machine in your pocket ...

I have no idea why you're getting downvoted, what you wrote is true.

I've never gotten a bag of M&Ms out of my iPhone.

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