A subsidised vending machine business involves placing vending machines in locations where the owner or operator offers goods (such as snacks, beverages, or healthy foods) at reduced prices (to usual). The difference between the actual cost of the products and the lower selling price is covered by subsidies, which can come from the vending machine owner, host organisations (like schools, gyms, or companies), or external sponsors.
Why?
The goal of the subsidised pricing is to make it more affordable to the people where the vending machine is located. This can be as an employment perk, to promote a certain product, to promote a certain lifestyle (healthy foods) or to make it more affordable in certain cases.
The logic as an employment perk is two fold: one as an incentive to work there, two: to make it more likely that staff won’t go out far to drive to buy snacks due to the fact that vending machine goods usually sell at a premium to shop prices (as the vending operator wants a profit and the host location must be paid).
Who picks up the tab
It depends, there are various options. The host can offer the vending machine operator free space in exchange for agreed-upon reduced prices. But there are also companies which subsidises it in order to push the price further down as a perk for people working there (I know of a place that does this in Century City, Cape Town). In this case the vending operator might agree to sell the goods at cost in the machine, and the company pays the vending machine owner a monthly fee for the vending machine rental and to keep it stocked. This is more prevalent in professional settings, startups than in say factories.
The other option is sponsorship’s, sometimes, subsidies come from companies or institutions (such as employers or schools) that wish to offer affordable options for health or wellness initiatives. But this can even be extended to external sponsors to cover new products entering the market looking for exposure.
Business Model
So there is in essence three ways to make money: increased volume sales due to lower prices, subsidies or sponsorship’s. This business does require a bit more work than a normal vending machine business due to the fact there is more negotiation involved than the usual “we will pay you x amount a month to put your vending machine at your location”.
