This story told is based on a conversation with Zach Downey, owner and CEO at Distinctive sellingwhich operates cotton candy machines in high-traffic locations such as resorts and amusement parks.
Like one college student at James Madison University, Downey was approved to put a pizza vending machine on campus when a funding issue derailed the plan. That's when he “discovered the world of cotton candy vending machines.” Downey entered the BUsINEssand now Distinctive Vending is on track for $500,000 in revenue in 2024.
Image Credit: Courtesy of Seller Badges. Zach Downey.
Read on to learn what goes into building a successful cotton candy vending machine business—and how you can use it passive income.
I didn't know how many people were interested in starting this type side hustle. I still get calls from people asking about the specs.
There are three main things that go into running a cotton candy vending machine business.
Decide on the location of the vending machine before you buy it
First, I've talked to people who couldn't locate their machines before going into business. They just buy machines, and that's not the smartest way to do it. Buying the car first increases your risk. So deciding on a location for your car should be the first step. In my experience, the best way to find a location is to go to the location you want in person and try to talk to the person in charge – this has the best chance of success. If you don't want to do this, you can cold call and email; paid advertising does not work very well.
Once you have your location, it's time to buy the car — and that's the No. 1 thing. 1 that people usually ask about.
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How to buy a cotton vending machine — and avoid surprise fees
I made a big mistake when I bought my first car. There was a mistake Incotermswhich determines how your package is shipped. If you order something from Amazonit's shipped straight to your door. But when you're ordering something from China, there are multiple ways to ship it; the main difference is when you take charge of the package. When we first shipped it, it was Free Carrier (FCA), which means we took control of the package when it arrived at our port. So we were responsible for paying the import tax, getting it from the port to the final country, and that was an extra $3,000 that we had no idea we were going to pay. So it is important to send Duty Paid (DDP).
When looking for a car, if you search for one online, even a quick Google search, you will get 20 different websites. If you continue Alibabathe leading source for Chinese manufacturers, and search for cotton candy vending machines, you will find basically 50 different suppliers, all listing cotton candy vending machines. Now the thing is, there aren't actually people making 50 different types of vending machines.
There are basically five real cotton candy vending machine manufacturers on the market, and everyone else is basically just taking those machines, charging more for them, and flipping the cotton candy vending machines. Of these five real producers, there are essentially two good ones. So if you don't know who the top five are and who the top two are, you're in for a treat. It's like a game of chance, and you're just picking at random.
Of the five manufacturers, I recommend buying your car from Red Rabbit or Sunzee Intelligent.
How to clean and refill the cotton candy vending machine, plus the importance of spare parts
The work doesn't stop once your device is in place: You have to be diligent regarding its preservation.
The car gets dirty very quickly. In my opinion, you are negligent if you don't clean up after 100 servings max. The machine technically shouldn't be refilled until about 150 servings, and then you have to empty the waste water bucket. You should stick to a regular cleaning schedule; clean the inside of the cabinet to prevent sugar build-up and ensure the cotton candy stays fresh and free of particles. Wipe the car windows too, to maintain visual appeal. Deep cleaning tasks, including cleaning the burner cover plate and the top of the oven cover, should not be done every time the appliance is cleaned, but should be done every two weeks or every week.
Be sure to stock up on extra supplies, like sugar and cotton candy, to refill the machine as needed, usually after about 300 servings.
You should also have spare parts for the car on hand. Inevitably, the car will break down, and it's easier to have spare parts on hand than to wait a week or two to get them from China. Some basic recommendations include a replacement furnace, water pump and sugar motors.
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What does the investment of time and money look like?
If you do it right, you can get a car delivered to your door for $7,500. Additionally, you will probably be ordering supplies in bulk, which will cost around $500. But you can start this for under $10,000, no doubt. And then, as far as it goes monthly expensesdepending on the location, most of them will want you to have general liability insurance. It depends on the policy, but expect it to cost anywhere from $100 to $150 per month.
This business can be completely liabilities unless you are the one cleaning and refilling the machines. We employ people to clean the machines and most places are cleaned one to three times a week. We charge about $50 a visit. So $50, if you refill every 100 units, that's $1,000 in revenue for $50 in cleaning costs, which is like 5% in revenue just to have the car clean. This is nothing – this is an extremely good margin. Your cost of goods is 30 cents. You can sell it for $15. There is basically no other business where you can buy something for 30 cents and sell it for $10. Almost no other business. It's crazy. So as long as you outsource the cleaning part, you can do it completely liabilities.
This business is for people who don't mind working on cars because a part will break sooner or later. That's how cars are. And if you don't feel comfortable going to the machine and fixing it yourself, I don't think you should. If you're not comfortable with at least learning how, you shouldn't be starting in the first place. When I started I thought I could just plug the car in, let it go, visit once a month and it would be fine. But that's not even close to how it is.