Vending Viability Through The Years

Feb. 25, 2016

Not too long ago, I got a call from a New York Times magazine reporter. It’s not the first time the media has reached out to ask about the vending industry, but more than current trends, this reporter wanted data and the movement of the industry from the past to the present. It got me thinking about the last 20 years and what overarching themes I would report have affected vending.

Revenues grew with machine placements

Vending has really seen flat to increased growth for the past two decades. The industry revenue was $20.2 billion in 1995 with roughly 2.6 million machines (beverage and snack vending machines). In 2000, the revenue had increased to $25.6 billion (the highest point ever) with 3.3 million vending machines. Our most recent State of the Vending Industry Report estimates a revenue of $20.7 billion annually with 5.1 million vending machines. As far as operator sizes, there are significantly less small operators going from 81.3 percent in 1995 to 75 percent in 2000 to 51 percent in 2014. But while large and extra large operators have seen tremendous growth, the dollar percentage of sales has gotten better for all size operators with the exception of extra large. In 1995, the small and medium operators were taking in 23.4 percent of the industry revenue. In 2000, that number dipped down to 21.3, but by 2014, it is back up to 30 percent. Large firms saw a more steady increase going from 7.3 percent to 11.5 percent and finally to 22 percent of the industry revenue. I’m speculating, but I think more DEX data as well as vending management systems and telemetry are playing a role here.

Locations served change

In the last 20 years probably the biggest change for the vending industry has been the decrease in the manufacturing, fabrication and warehouse facilities served by vending. In 1995, a large majority of vending machines were placed at those types of locations, nearly 40 percent. By 2000, that percentage had dropped to 28.3 percent, which is only slightly higher than it is now, 22 percent.

Micro markets and cashless

Some interesting movement has happened in the last 10 years as well. Of note, I see at least three things. Vending saw revenue declines because of the Great Recession, which took a toll on businesses nationwide. Since vending feeds the workers of America, our industry was hit especially hard when companies cut wages and laid off employees.

After the Great Recession, vending operators began to see higher revenues, but didn’t add more vending machines because they had a warehouse full of machines, plus, a new type of break room solution was evolving – Micro Markets.

Micro markets have replaced vending in many large accounts. The estimates are that there are approximately 9,000 micro markets now.

The last interesting increase in the last 10 years has been the acceptance of cashless payment, or vending machines taking credit/debit cards as well as payment via smartphone. Back in 1995, only 57.6 percent of the vending machines in the U.S. accepted dollar bills (as opposed to coins). By 2000, that number was 80 percent. Cashless was added to the report in 2004, which meant that pretty much 100 percent of vending machines accepted paper money. In 2004, only 2 percent of vending machines accepted credit or debit cards (no mobile at that time). Last year, our research suggests 11 percent of vending machines now accept multiple forms of cashless payment (a number that is still far less than other retail locations).

It’s been an exciting journey we’ve taken, and many of the operators can tell personal tales about these transitions, either first hand or while growing up in the family business. And there will be more stories to tell in the decades to come.