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Vending is always a popular area for prospective franchisees to explore. Not only is it one of the least expensive franchise industry segments relative to several others, it is also considered as a more "passive" investment as vending machine owners don't typically have to be on-site daily in order to make money, which appeals to many people.
In addition, vending also has consistent demand. We Americans run faster and eat more on-the-go than ever before, and vending machines and non-bank ATM’s are conveniences we have come to expect. We use them a lot — and usage is bouncing back after a pandemic dip.
When it comes to vending machine ownership, revenue is based on low amounts per transaction. Volume matters, and machine owners must carefully monitor key performance indicators (KPI’s) to maximize profit. Diligently tracking and monitoring locations is key for efficient operations and maximum cash flow.
Give focused attention to these KPI’s so that your efforts pay off.
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1. Unit Quantity and Location
Location always matters as a vending or ATM franchisee. The best locations with high foot traffic earn higher transaction fees, more transactions, and are easy and cost-effective to service.
A larger portfolio of machines should wield higher overall revenue, but each unit installation must be tracked by location. This includes physical location like a particular neighborhood. It should be by type of location too—ATM machines in nail shops might be considerably less profitable than those in a restaurant, for example. Knowing how various types of locations perform will help guide future plans.
2. Performance of Each Unit
This sounds similar, but it’s important to recognize changes and differences between individual vending machines. If two units that you would expect to earn comparable amounts are not doing so, it may be a red flag that there are maintenance issues or limited access during certain hours that prevent the use of the machine.
3. Uptime and Downtime by Unit
Look for anomalies. Bad card readers, lack of receipt paper, or empty machines mean zero income. It is impossible to make money on a machine that someone cannot use. If you see patterns by brand name, machine software, or location, you have data you can use to improve access and uptime.
4. Product or Cash Dispensed
You must understand what is needed in each machine. For ATM machines, withdrawals are vital to knowing how much cash is utilized and how to schedule refills. A machine that is out of cash more than once will die a quick death. With vending machines, if some food items are empty, at least the buyer probably has a few other choices and will likely still purchase something. But knowing which favorite items to fill is crucial data for planning purposes. As an owner, the relationship is reversed, and you must feed the machine!
5. Cost of Cash and Product
Vending machines products are easier to price than the cost of money. If you have an ATM, cash costs include interest on the money you rent for a machine or the opportunity cost of your own money sitting in a machine not earning anything for you. Be sure to add in the delivery and insurance costs for transporting cash (armored cars can be pricey) or merchandise for your vending machine. This is your highest expense, by far, and must include all aspects of acquiring it.
6. Profitability
Which unit is making money and which is not? All the prior KPI’s lead to this. If you’ve addressed anomalies in downtime and analyzed each unit for peak performance, profitability should follow. It if does not, consider non-renewal of your contracts—maybe even an early termination if it makes sense.
7. Contract Status
Since you never, ever want to be losing money on a unit, knowing contract terms and dates is important. Get out when you need to, and stay on top of the renewals and negotiations for your most profitable installations.
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Juggling multiple ATM or vending machines can be challenging. With low-transaction fees and myriad locations and circumstances, the details matter; by location and by machine. Implement and regularly evaluate your KPI’s to manage your franchise for peak profitability.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.