Ice Vending Machine Business: Read Before You Invest

Would you like to run your own business? Have you considered running an ice vending machine business? In this post I will take you through exactly what you need to know to get started as an ice vending machine business owner in the United States.

What is an ice vending machine business?

It is basically a passive income generator. You purchase a number of machines and have them in various high-traffic locations such as convenience stores. Then the vending machines make money as they are used by customers. The machines dispense quality ice, and you make a profit. With only a small investment, an ice vending machine business is a great way to develop a source of passive income that you can scale. In that sense, many entrepreneurs see it as a good investment.

Why own an ice vending machine business?

There are a number of reasons, but I can break it down into the following four:

  • It’s efficient. As a business owner, you won’t face many of the efficiency issues other busiensses have. You won’t need to hire staff, for example. There is also no need for inventory tracking either. These aspects are built in to the business and it’s operations.
  • Low startup costs. Sure, you can’t start your own ice machine business for free, but you can expect reasonable prices as well as a sensible initial investment. It’s also often the case that there is flexibility around financing. It can be one of the more lucrative additions to your business portfolio
  • It’s steady. Unlike many things in life when it comes to business, people will always need ice. Even if it’s just for an ice cube or two for a drink. And ice sales are constant during economic downturns.
  • It’s almost ‘hands-off’. You will have to be part of your vending business to a certain degree, but you won’t have to be anywhere near your machines. Some machines even allow you to check them remotely as they work in retail locations such as convenience stores

What’s the cost of an ice vending machine?

They are not as costly as you might think. Ice House America is one of the leading brands for ice machines and it says that you can generally expect prices for a machine to range from $43,000 to $150,000. For a business that could eventually bring considerable passive income, that isn’t too much money. And if you’re concerned about buying the unit and repairs etc. the machines usually come with a full manufacturer’s warranty for a year.

There are some machines out there that can cost as little as $20,000. However, you will need to be careful here. The price range quoted in the previous paragraph can offer a machine with a long life. If you buy one for $20,000 you may find out it needs a lot of repair and maintenance within just a couple of years. These repair costs could cost you a lot of money in the long-term.

They’re pretty tough too, with ice vending machines expected to last up to 20 years. This means you don’t have to worry about purchasing a new vending machine a couple of years down the track.

The type of business you run is dependent on what you want and what the vendor can offer. For example, some companies offer only a franchise model, where you have to pay a portion of your profits to them alongside franchise fees. Others will sell you the machine outright. The reason why someone might go for the franchise model is that there is generally more help from the vendor on setting up and so on. But buying outright means you get to keep all the profits.

Then you have to think about placement. High traffic locations are absolutely crucial to this type of business. The perfect location is generally one that has plenty of potential customers. These tend to be office buildings for example, but some of the best locations include a gas station or inside convenience stores. Believe it or not, some companies are happy for you to place one on their premises for zero cost. Others will charge and you will need to shop around for the best deal for you.

It is a good idea to make sure the vending machine you choose accepts only remote payments. That way, you’re able to streamline your business. In terms of credit card payments, you will incur minimal ongoing costs. Nevertheless, it is only a minimal cost, which saves you from having to visit your machine on a frequent basis.

Maintenance is one of your biggest ongoing costs. Equipment breaks down occasionally. It is therefore critical that you have a maintenance company at hand. There are companies that specialize in this kind of maintenance. You don’t want to leave your machine for too long without repairs. Check on your machines regularly to minimize repair costs. Contact your maintenance person as soon as possible when something goes wrong. Even if it is something as simple as a water dispenser problem, if you don’t alert maintenance experts quickly, it will cost you money.

While we’re on the subject of maintenance…

How to maintain your ice vending machine

Like most appliances and machines, you can do a lot of the maintenance work yourself just by looking after the units.

Since they don’t need to be restocked regularly, ice vending machines require less upkeep than most vending machines. If you keep an organized schedule and plan in place, your machine will be in perfect working condition and your customers will be satisfied, while consuming the least amount of time and energy.

Keep a detailed maintenance schedule

Stay organized if you want your vending machine maintenance to stay on track. Maintaining a written plan that outlines the steps you need to take and when they need to be taken is a good way to keep from getting behind. Keep a spreadsheet on your computer or on your phone, or a schedule in your office. The schedule should include:

  • Clean surfaces, remove dirt and mud, empty trash cans, disinfect surfaces.
  • Clean ice maker, augers, and add salt each month.
  • Clean machine floors, aerate freezers, and sanitize water dispensers as needed

Plan for water contamination events and monitor them

A local water supply supplies water to your ice and water vending machines. As a result, you will need to watch for water advisories if you have ice vending machines installed anywhere. If the water supply in your area is contaminated or water advisories are issued, you’ll need to take additional cleaning measures. 

Prepare a water advisory maintenance plan that includes:

  • Clean the applicator, the container, the bin, and the auger
  • Remove the sediment and dechlorinator filters
  • Place towels on the machine floor to keep the floor clean while you are performing maintenance, or sanitize the floor afterward

Maintaining and repairing the lot

Improve the appearance of your vending machine to encourage customers to visit it. Adding maintenance steps such as light bulb replacements or surface repairs might be necessary if you own the lot. The land owner may need to be consulted about repairs if you don’t own the lot.

How much will my ice vending machine business make?

Obviously, you’ll have to work hard and make sure you actively run the business, but the industry can be one that brings considerable income. If you go with the average price points and the expected sales volume in the industry, you can look forward to a net income of around $3,600 per month. Average costs for the month are around $230.

Everest Ice and Water Systems is an INC Top 5000 company and provides a very useful profit calculator on it’s website. Take a look at the calculator here for a realistic idea of your income prospects with ice machines.

A bag of ice is not a huge business cost. Each 100 pounds of ice typically costs $0.25 in water and electricity.

Therefore, a bag of ice weighing 20 pounds might cost as little as $0.05 in utilities. Some people bring coolers, but for those who use bags, they will each cost around $0.10.

This means the variable cost of a 20 pound bag of ice is just under $0.15. If the bag is sold for $1.75, your variable profit is $1.60.

  • A $35,000 machine has a life of 10 years, so it costs around $300 a month.
  • Assume your rent is $300 per month. At $1.60 per bag profit, you would need to sell 375 bags per month to break even.
  • Each day, this amounts to about 12 or 13 bags. Naturally, you’d rather do more than break even, you’d like to make a profit.
  • It is therefore critical that you find a site that attracts 30 customers or more per day

You will likely have to spend some money to rent a site that attracts 30 or more customers per day.

In some areas, it could cost as much as $500 per month.

Gas stations and convenience stores both cater to the same types of customers, so the first place to start is there.

At least 10,000 cars per day is probably a good target.

Furthermore, there should be easy access to the ice machine, good ingress and egress, and road accessibility alongside parking blocks.

With $300 per month in capital costs (machine and site work) and $300 per month in rent, multiplied by an additional $100 per machine per month in licenses, maintenance, repairs, and other costs, the break even point is approximately 14 to 15 bags per day.

If 50 bags were sold per day, a machine would produce about $1700 per month in profit.

How much energy does a machine use?

With environmental concerns now a priority, as well as financial concerns, it’s important to be aware of how much energy your machine will use.

Here is a handy calculator I found online that will give you the full picture on the typical rate of ice maker energy use.

Next steps

To get started with your ice vending machine business take the following steps:

Set up your business by choosing a name and arranging for a logo to be created. The logo is quite easy to take care of. You can head to any freelance websites like Fiverr and get a designer to do it for you there. It won’t hit your bank account hard and will enable you to start branding your business.

Then create a website for your business. Again, this is not expensive, and you can even set up free websites via Google and WordPress. Don’t worry too much about making the site perfect, it’s more about making sure that you have a presence online. Getting your vending machine business listed on Google is also important. Do this by creating a Google My Business listing. You can then be found by people looking for vending services in your area.

Then establish an LLC, corporation, or any other business entity you intend to use for your business. An attorney can help you with your business entity formation, or you can use online resources that can help you do this yourself.

Then, head on over to:

Ice House America

The Ice Depot

Bag of Ice

These are great places to start with setting up your own ice vending machine business.

Want to learn about another opportunity? Take a look at my extensive guide to Quiznos franchises.