How can you turn $1.00-$2.00 snacks into a steady six-figure business? Ask the Vending Machine King, Jaime Ibanez.
Ibanez is the owner of Vending Bites, a vending machine service that provides businesses snack and drink options for their employees and customers. He is based in the Dallas-Fort Worth area and has over 50 machines in various locations. He started his business when he was only 18 years old. On social media, he is the face of the vending community through his candid videos on what it is like to own, operate, and manage machines.
Ibanez started his business right after high school when he was looking at ways to make money. He remembers how hard it was to start out when he bought a machine in a location and was kicked out a day later.
From that experience, and the many others, Ibanez has learned some good lessons that other vending machine business owners should understand as they start their vending journey. He has partnered up with Classic Cookie (one of his fast-moving snack product brands), to share some tips to help your new vending business.
Here are Jaime Ibanez's 6 tips for you as a new vending machine business owner.
Tip #1 - You Get What You Pay For
According to Ibanez, this is the most important tip for any new vending business owner. While securing a location is the first important step, buying the right vending machine is crucial.
In Ibanez's experience, vending machines can cost anywhere from $300 - $6,000 before adding on accessories like card readers, coin mechanisms, signs, etc. "Nobody wants to pay $6,000 when they get started," Ibanez says. "You don't have to buy the best of the best that looks good, but if you buy the cheapest, they usually are older machines."
Ibanez says that cheaper machines come at a price. He has noticed that the cheaper the machine is, especially when they are used, the less you can do with that machine. For instance, Ibanez cautions, "If you buy the cheapest, they usually are older machines that you can't put a credit card reader on." Credit card readers are crucial for the modern vending business. Parlevel Systems, the creator of the PayPlus credit card reader, did a study where they found that machines in San Antonio, TX with their credit card reader increased average sales by 42% and sold 38% more units on average compared to those machines that did not have the reader. If your machines do not have a credit card reader, you are missing out on potential sales.
Ibanez also elaborates on servicing old machines. "With cheaper machines, you have to change more parts because they are out of service more often," he says. "Because of this, you are going to pay more in parts, especially with drink machines. On [older] soda machines, the compressor goes out. This is the most expensive part of a machine."
Instead of going with the cheapest deal, Ibanez recommends that you do your research on machine brands. He says that you can find a good middle ground on the type of machines you can get. They may not be the cheapest, but they will keep your long-term vending business' costs low. "Two brands I always go for are AMS for combo and snack machines, and USI (or Wittern) machines," Ibanez says. "USI is my favorite because they have a sleek modern look to them with a touchpad. They are the best to put in high traffic locations like office buildings."
While you research different brands, Ibanez also issues a warning. "Buy USA made machines," he says. "Buying machines made in other countries can cause a lot of headaches."
At the end of the day, the old adage of, "You get what you pay for," is true. The cheapest machines will have more technical work for you to do to make sure they correctly operate. Newer machines are stress-free but more expensive up front. If you are willing to take the risks on cheaper machines, just be well informed with your decision. Cheaper is not always better.
Tip #2 - Be Ready to Get 100 Nos
Ibanez's second tip is all about your mindset when finding locations to place your new vending machine. "Be ready to get 100 nos before you get your first yes." To emphasize this tip, Ibanez relates the story of buying his first vending machine.
On getting started with his vending business, Ibanez said the following:
"When I first started my business, I got my first machine by buying one from a previous vendor in a nursing home location. This machine was making money from day one.
"The next day, the nursing home manager calls me and says, 'Hey, we don't want the machine anymore.'
"We had a week to take the machine out. I didn't have anywhere to store it, and I needed to find a new location for it. For hours and hours, I talked to hundreds of different businesses. I started to get stressed out.
"Finally, after three days of constant calling, I got a yes from a barbershop. We placed the machine in the shop, and I still have that location to this day."
*Check out the soft packaged cookies from the photo above: Peanut Butter made with Reese's® Peanut Butter Chips and Double Chocolate made with Hershey's®
From this story, Ibanez says how each "No" was hard. He had to call many different businesses before he finally found one that would give him a shot. This constant rejection is something that you may not be accustomed to when starting your business.
"You can't give up in this business," Ibanez exclaims. "I see people on social media within the vending community, and they post about their first machine they bought. They are very excited about getting into the business, but they have struggles. They can't find a location for a few months after they get their machine, and they put the machine back up for sale. It's really sad."
Ibanez remarks how new vendors need to be ready for rejection, and plenty will come, but in the end they should persevere until they find a location that will work with them. Once you place a machine, your work is not done, but it provides a lot of positivity and excitement.
Tip #3 - Create a Good Website
A good website is something that can set apart your vending business from your competitors. Ibanez shares some tricks in creating an effective vending website.
"This tip seems a little obvious at first," Ibanez says, "But a lot of people don't put focus on their website. I've gotten half of my locations through my website alone."
Ibanez points out that having a website is an easy way to get good locations without doing a lot of work. Once you put in the effort to building the website (whether by yourself or through a third-party developer), all you have to do is sit back and wait for the referrals to come in.
To bring more traffic to your site, Ibanez suggests the following
Make sure your SEO works - When a business owner, HR manager, or other employee type into Google search the phrases "vending machines near me" or "vending machine service near me" your business should be in the top three rankings
Stay simple and keep this minimal - "In my head, businesses go to your website to not search through your information to find stuff," Ibanez says. "You need [the website] to be simple and should have your contact information in an easy and noticeable place."
Use the custom website resources out there - This will take a little bit of a learning curve, but platforms like Wix and Shopify are great user-friendly custom website builders. With them, you can easily build a simple website for businesses to find you.
A good website can be the difference maker in quickly scaling your new vending machine business.
Tip #4 - Sound Like You Know
When starting out and trying to convince locations to use your vending machine service, you might feel nervous about how new you are to the industry. Ibanez shares this tip to help you overcome these feelings.
"You need to be confident," Ibanez says. "You need to make sure you sound like you know what you are doing. I started when I was 18-19 years old, yet I didn't go in to a location telling them that I was just starting. I was confident."
According to Ibanez, the key to being confident is research. He advises that you thoroughly research the vending industry. Then, learn everything about your prospect locations to figure out what service they would need. "I knew everything about card readers and other things about the machine and location I was going to talk to," he says. Research can come from YouTube videos, taking online courses (like Ibanez's here: How to Successfully Start a Vending Machine Business), and other vending news outlets.
The way you present yourself is also important. When going into a prospect location, Ibanez recommends looking nice (collared shirt, pants, shirt with your logo, etc.) and introducing yourself. "You can say something as simple as, 'Would you like some vending machines for your employees?'" he suggests. "This might be different based on each location you go into, but the concept is the same."
As mentioned in Tip #2, you will get a "No" at many locations. Ibanez believes this to be a perfect opportunity to dig a little deeper and show that your business is unique. "Don't just walk away," he says when a business rejects your service. "Most of the time, locations already have vending machines from another provider. Ask [the prospect location] how they like their current service. Some businesses might say that their vendor only comes once a month. Others may say that their machines are always empty or broken. We get a lot of locations from people kicking out their previous vendor." Ibanez says that about 30% of his current clients came from these businesses kicking out their previous machine providers to get better service.
"On one of our machines that replaced another vendor's, we put in new credit card readers," Ibanez explains. "The previous company did not have that on their machines. Now, that machine is doing about $1,200 a month in business for us." The opportunities are there for you also.
Fixing machines can be another hard aspect to be confident in for a new vending owner. Ibanez has been there. "The first few months after placing machines, we got calls," he said. "I would be really worried going to the location to fix them." To be truly confident, Ibanez recommends that you learn everything about your machine. At one point, Ibanez himself had an extra machine in storage. To gain confidence when servicing his clients, he took apart the machine and then put it back together to learn how the machine worked.
With better service and confidence, Ibanez says you have to deliver on your promises. "If your machine is broken, you need to have it back up and running that day," he states. "You can't wait a week."
All-in-all, being confident and professional about your business will make you attractive for prospect locations.
Tip #5 - Utilize Grocery Stores
Now that you have a machine and a location, you need good products that customers will like and buy. Before switching to a major vending distributor, Vistar, Ibanez used a few different places to buy product at a good price. This helped to keep his costs low and make better margin on each sale.
When starting out, Ibanez used Sam's Club to get most of his products. However, he shares that grocery stores are a lesser known place where you get more variety and cheaper items at times.
Check out Jaime shopping for products in the video below
"For the first six months of my business, I bought most of my soda cans from grocery stores like Albertson's, Kroger, and others," Ibanez details. "A lot of times, they have specials where you can get a wide variety of drinks for cheaper."
A few years ago, Ibanez shares how 4 cases (12 cans each) of soda totaled $10 from a grocery store. The unit cost per can on this special was about $0.21. At the same time, Sam's Club sold cans at around $0.35-$0.40 per can. "The extra $0.15-$0.19 per can make a difference," he says. "That extra money goes directly back into your pocket."
How can you find such great deals for your vending machine business?
"What I would do is I would get the newspaper at the house, so I could compare the different grocery stores in our area," Ibanez explains. "Grocery stores usually do a deal each month. Since you could only buy so many on one purchase, I would checkout, take the soda to my car, come back in, and buy the max deal amount again. This would take me about 4-5 trips to my car to get the amount of soda I needed for restocks. Starting out, this is a great method, but we don't really do it anymore because we go through so much soda and need a greater variety which we can get through Vistar."
Ibanez also says that his best performing products are soda bottles and cans. "Our top 5 items across all of our machines are all drinks," he reveals. "That's how much better we do in selling drinks than snacks."
Jaime Ibanez's Top 3 Best-Selling Drinks
Energy Drinks (Red Bull & Celsius)
Jaime Ibanez's Top 3 Best-Selling Snacks
Hot Fries Chips
Check out this video on Ibanez buying products today, including Classic Cookie.
Grocery stores are a great way to find deals on cheaper drinks and snacks to make you more money on every sale.
Tip #6 - Get Organized
Ibanez's final tip is all about making sure you organize your business to be as efficient as possible.
Owning a vending machine is one thing, but to operate and manage products, parts, cash, etc. is another side of the business you may not have thought about. The key to success is using your time wisely by being organized.
Ibanez says, "You need to not only write down the number of products when you store them from the store, but you need to write down all the items in each of your machines, what has sold, and what is left. This business is a number's game. Write down things and keep track of everything." Credit card readers, like Nayax, can help expedite this process by tracking inventory for you with their premium service.
While inventory management is a key part of being organized, Ibanez says that storing product in an effective way is also key. "You need to have everything neatly organized, especially your product," he says. "In some states, there are laws where you need to have food a few inches off the floor." Ibanez also recommends organizing your product in a way that when you are ready to restock, you can easily grab the items that you need to take to your machine.
Check out Ibanez's vending warehouse tour video where he organizes product
Another thing to stay on top of is the government paperwork and licensing. Ibanez recommends getting these as soon as you figure out that the vending business is right for you. He says, "Make sure you have all your permits at some point so you comply with government regulation. Make sure you get your feet wet and see if owning vending machines is something that you want to do. Once you make that decision, get the permits and licenses with everything."
Bonus Tip - Small Towns Can Work
The last piece of advice Ibanez has for you as a new vending machine owner is about where a vending machine business can work.
"Vending is good if you are in a small town," Ibanez says.
In a recent visit to Leal's Snacks in Waco, TX, Ibanez saw the business work up close in a smaller area. Ibanez is based in the Dallas-Fort Worth area that has a metro population of 6.49 million people, while Leal's is based in Waco that has a metro population of about 250,000 people. Of his visit to Waco, Ibanez said, "[Leal's] is in a small town, and he has no competition. When I say he runs that town, he runs it. He has all the locations in that place."
Check out Ibanez's visit to Waco in the video below
Smaller towns mean less competition and shorter distances to service machines. There are plenty of smaller towns outside of the bigger metro areas that you can find to dominate with your vending machine business. You do not have to think about whether the size of your town will get you the business that you want.
Jaime Ibanez is one of the best sources for tips on starting your vending business. From presenting your service at locations to utilizing local resources for better product prices, Ibanez's six tips are important for you to remember as you begin your new journey.
As a summary, here are the six tips for you below:
You Get What You Pay For - the cheaper machines are not always the best option
You'll Get 100 Nos Before a Yes - persevere when you are out getting locations
Create a Good Website - you can get easy leads with a simple, professional site
Utilize Grocery Stores - sometimes, you can find goods that cost less on weekly deals
Get Organized - make sure you account for and have all your ducks in a row
Now, what are you waiting for? Act on these tips to turn your snacks into stacks with a vending machine business today!
Comment below on which tip you want to start applying to your vending business today.
To take a starter course from Jaime Ibanez click here: How to Successfully Start a Vending Machine Business
To see Ibanez's website click here: Vending Bites at DFWVending.org
Are you interested in having Classic Cookie packaged snacks in your vending machine? Check out our full selection here: Classic Cookie's Vending Snacks
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