Owning a vending machine (or three) is an interesting idea for people looking for something different, interesting, and profitable.
Here are the Top 10 reasons to put your hard-earned money into a vending machine business.
1 Uncorrelated Returns to the Equity Markets
Many investments in stocks, ETFs or
index funds tend to move up and down with the markets. Sometimes even bond funds fall in sympathy with Australian equities which leaves an investment portfolio devastated. Vending machines sell food-related items that entice people to spend on them. Even when the markets are down, the income keeps flowing in.
2 Physical Asset, Not a Paper Asset
For anyone who’s found previous stock market declines scary, owning a physical asset that throws off real cash has a sleep-at-night factor that owning paper stocks doesn’t. Most investments are just digits lit up on a screen now, but a vending machine is a physical asset you can see, touch and enjoy owning.
3 Low Initial Investment
Some investments require AUD $10,000 or AUD $100,000 to jump in. With vending machine investments, the initial outlay is considerably lower. There are fewer barriers to entry to investors keen to get started too.
4 Choice of Product
Buying into a company, you don’t get to choose what products they sell. However, with a vending machine, you can pick whether to sell soda, water, snacks, gum, or something else. If you can get a vending position in a neighbourhood that’s on a health kick, then you can even stock the machine with only healthy choices and promote its availability.
5 Attractive Alternative Asset Class
Unlike investments in gold or cryptocurrency, the value of the asset is based on the stream of cash flow expected when owning a vending machine. Once you
find the perfect place to buy a vending machine, you’re all set. Just come around on a semi-regular basis to empty out the cash takings and deposit them in the bank.
6 Not a Seasonal Investment
Unlike some other
investments that tend to do well in a specific quarter, vending machines keep busy through the month and years. While they may peak at times when there’s a local sports event nearby or on holidays, generally the income is quite smooth and predictable.
7 Machines Last a Long Time
The vending machines are designed to be durable and usable for many years. They do not break down often and don’t cost much to repair when they do. The inner workings have improved drastically over the last decade to make them far more reliable than they were when we were children and snacks could get stuck half-way out of the rack. The replacement costs for a new machine is manageable from the profits generated from sales too.
8 Live off the Income
For investors who are willing to take the time to restock and service the machine on a weekly basis, then a vending machine (or several of them) can generate a healthy regular income. The income stream, after accounting for capital expenditures and stock, provides an income that easily rivals other income-bearing instruments like bonds or cash dividends from stocks.
9 Talking Point
For vending machine owners, it’s an interesting topic to talk about in the bar with their buddies. Most people are curious about it and would like to learn more. Can they do it as well? How much will it cost to start? Etc.
10 Pride of Ownership
There’s a pride of ownership that comes from having one or more machines. You just don’t get this feeling when you own 100 shares of a company. It’s not the same. Ultimately, it feels good to own something real.
When you’re looking for a physical asset that throws off regular profits to live on or you want to save up and reinvest into another vending machine, it’s difficult to discount investing in a vending machine. While it’s a little unconventional, this helps to prevent the market getting oversaturated with machines at each location which keeps your profits up for the year.
