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There isn’t any one answer to how vending machines work.  For one thing there are several different types of vending machines.  Soft drink machines work different than coffee machines and snack machines work differently than deli machines.  The earliest deli type machines may have been at Horn and Hardarts, a well known restaurant chain.

At Horn and Hardarts, a customer would insert money into a slot which would allow a glass fronted door to open.  The customer would then remove the food and shut the door.  Employees working behind the machine would replace the food item that was sold.  These restaurants were called Automats .  The first one opened in 1912 and the the restaurants remained popular into the 1950s and early 1960s.

Modern deli vending machines usually feature the same type of glass fronted door that unlocks when money is inserted into the machine.  The handling of the money is more sophisticated in these machines.  The food is on sectioned rotating trays, which turn when an item is removed to replace it with another item.  The machine is restocked on a regular schedule, either daily or every other day.

Vending machines that dispense soda operate differently.  The soda isn’t visible in the machine.  When the money is inserted a mechanism inside the machine releases the selected soda and drops it into a a bin that the customer can access.  Many candy and snack machines work in a similar way, although the selections are usually visible through a glass window on snack machines.

Many vending machines can scan paper bills and make change.  Coin denominations are determined by size, weight and even the number of ridges around the edges.  The machines often make use of digital technology to determine the amount of money inserted and are very hard to fool.  Some vending companies are making use of technology to allow the machines to signal their office if they need to be restocked or if they require more change.

Newspaper vending machines operate on an honor system.  The newspapers are stacked inside and when the customer pays, a the lock on the machine releases allowing the customer access to all the newspapers inside.  The customer is supposed to take one and then close the door so the lock engages.

There are new vending machines being developed all the time.  They dispense many types of products including DVDs, toys, snacks alcoholic beverages and even marijuana in countries where it is legal.  The convenience of vending machines coupled with the low overhead of this type of sales, makes this an attractive business.