jl2112 Posted May 24, 2012 Share Posted May 24, 2012 Someone is selling an existing route that has 50 locations in a small area with about 95 machines total plus 5 not in locations right now. It is selling for $8800 and the guy said it grosses between $6,000 and $7,000 a year. He said they are Vendmaster machines he has books and will share all of his knowledge to build it back to where he had it at one time. He insists (which I would do) that I ride around with him to see everything before a purchase. My question is first I cannot find much on Vendstar so I am not sure how good they are. Also it seems that these machines are averaging low gross income so, in general does this sound like a bad or good deal based on the income he is stating and the machines being used? Link to comment Share on other sites More sharing options...
PerformaVending Posted May 24, 2012 Share Posted May 24, 2012 Boy, those numbers don't sound quite right. More experienced vendors may be able to help you out better in that regard. However, if you are looking at Vendstar machines, keep in mind that these are lightweight plastic machines that aren't noted for their endurance. The equipment cost he's pricing you at $88.00 per machine, and Vendstars aren't worth that on their best day. If you do move in on this, I recommend you approach this deal with caution- it sounds a little fishy to me. Good luck! Link to comment Share on other sites More sharing options...
jl2112 Posted May 24, 2012 Author Share Posted May 24, 2012 He said the machines were Vendmaster and I don't see much on the internet about that so that may be another issue. I accidently mentioned Venstar as well in the original post> Link to comment Share on other sites More sharing options...
PerformaVending Posted May 24, 2012 Share Posted May 24, 2012 Vendmaster? Hmm... do you have any pictures? I'll do some research on my own and see what I can find for you. Wow, first result. Okay, is THIS what you're looking at? Link to comment Share on other sites More sharing options...
Vendelicious Posted May 24, 2012 Share Posted May 24, 2012 Ask the seller if he is willing to finance the deal at $6000.00 over a 12 month period, stating that you will use the revenues from the machines to help pay the deal off. If the guy sounds hesitant about doing that, it could be that the numbers he is providing you with are not accurate. In general, when buying a route, I would start by offering half of what the machines are bringing in in total sales per year and work upwards. In most situations, I would never offer more than what total sales are in one year. If you are willing to go around with him, keep your eyes peeled open and bring a pen and a pad. It might be that you can take this route and increase revenues significantly. Check out what he is vending at each location. Are the machines filled with off the wall products that are not geared toward the location or audience? How well are the machines maintained? Are they dirty, thus reducing sales? Are kids a significant presence, but no toy capsule machines are there? Who knows, maybe his existing route has tremendous hidden potential which the seller is missing! Link to comment Share on other sites More sharing options...
treadmill Posted May 25, 2012 Share Posted May 25, 2012 I would walk away from this deal as fast as possible. According to the numbers 6-7,000 per year comes out to less than $8 per month per machine. Not a very good return for your money. Like I said at the beginning I would not touch this loser of a route, even if it was given to me. Link to comment Share on other sites More sharing options...
DependableVending Posted May 25, 2012 Share Posted May 25, 2012 Ask the seller if he is willing to finance the deal at $6000.00 over a 12 month period, stating that you will use the revenues from the machines to help pay the deal off. If the guy sounds hesitant about doing that, it could be that the numbers he is providing you with are not accurate. In general, when buying a route, I would start by offering half of what the machines are bringing in in total sales per year and work upwards. In most situations, I would never offer more than what total sales are in one year. If you are willing to go around with him, keep your eyes peeled open and bring a pen and a pad. It might be that you can take this route and increase revenues significantly. Check out what he is vending at each location. Are the machines filled with off the wall products that are not geared toward the location or audience? How well are the machines maintained? Are they dirty, thus reducing sales? Are kids a significant presence, but no toy capsule machines are there? Who knows, maybe his existing route has tremendous hidden potential which the seller is missing! Vendelicious brings some good points to the table. If this guy got in the business, located, and got bored with it that he let it go down the tubes, that could explain for the poor performance. If I were you, I would still ride with the guy and take LOTS of notes. I would rate the condition of each machine, what is being vended, cleanliness, and type of location. I might even take pictures. Go home and do the math against your business model. Does it fit your strategy, can you increase the revenue by changing product or cleaning the machines? I will say that I wouldn't buy a route for more than it will gross in one year. If it only grosses 6K, I won't pay over that amount at all. I would come up with a number that I would feel comfortable paying and offer that to him. If he thinks he can get more than that for it, no problem. Let him know how long your offer would be available to him to take, you never know, he may call you back in 2 or 3 weeks and accept the amount. Link to comment Share on other sites More sharing options...
lurtsman Posted May 25, 2012 Share Posted May 25, 2012 As a route valuation, anything north of 100% of gross sales is clearly over valued. If the machines were very high quality, that would give you a reason to buy the machines rather than the route. Consider that a brand new full line machine could be placed behind an auto shop and end up doing 2 dollars per week. 104 dollars per year is terrible, but that machine may still be worth a few thousand dollars or more depending on the quality of the machine. The question is do you trust yourself to move it to a better place. Anyone selling that machine on cash flow is an idiot. In this case, I think the asking price is too high because of the type of machine. If those were all 1800s, I'd say this was a very attractive deal even with low cash flow because you could pull the worst locations and put them somewhere better. 88 per machine may be a bad deal, a mediocre deal, or a great deal. It depends on the quality of the machines as well as the locations. A machine on location can not be worth less than the same type (and condition) of machine in the garage. If you ask for finance, that's reasonable so long as you provide some legal recourse that shows you definitely will pay. Sellers may be concerned about the difficulty of enforcing the payments if you decide to just not pay. Look at all the mortgages that are going into foreclosure. He has to wonder very seriously if you'll just walk away with the keys and destroy his route if he tries to reclaim it for non-payment. If you have a way to guarantee that your payments go through, it's very reasonable. Link to comment Share on other sites More sharing options...
jl2112 Posted May 25, 2012 Author Share Posted May 25, 2012 You guys have some very good suggestions and some things to consider so thanks for the input. The price seemed high to me as well for the revenue he is stating. I take it these machines are not the best as well? Here is the picture he has included in the add of the Vendmaster machines. Link to comment Share on other sites More sharing options...
kandyking Posted May 26, 2012 Share Posted May 26, 2012 I buy those machines locally for $35 a piece. If those machines are in a location making $8 a month, then they are worth even less than the $35 because of the time and labor required to remove and relocate those machines. They are worth more to me delivered to my warehouse than in a location that a sure dog. Link to comment Share on other sites More sharing options...
musser Posted May 26, 2012 Share Posted May 26, 2012 It sure seems like there are a lot of routes for sale. I have looked at a few and they all have the same issues: crappy machines (u turns, plastic junk (but I repeat myself), filthy worn out & out of production junk, all in poor locations, that haven't been properly serviced or merchandised, and an unrealistic price. A route of new looking equipment in good locations well serviced IS worth a dollar for a dollar of gross IF they are on the early side of a contract, late side figure 75%. Charity is almost worth nothing right now, but like new in good stops TOP end 75% of gross. I have done a lot of figuring on various routes and its really kind of sad. The typical route I have looked at is only worth about 40% of the gross. why? because I figure what it would take to build the route myself with new equipment and then figure what it would cost to bring the junk route to that level. I buy vending but not broken dreams. Link to comment Share on other sites More sharing options...
kandyking Posted May 26, 2012 Share Posted May 26, 2012 One mans broken dreams is another mans new machines. I buy equipment from people who have failed at vending, rarely routes. If their routes were doing great, they would still be servicing them. I recently went on collection with someone who was selling to see a route I was contemplating and he averaged between $8 and $12 a machine with one of them pulling in (and I kid you not) a single quarter in what he claimed was a six week cycle but I suspect even more because the wife mentioned she was last there in February. I passed on the route but offered $25 a pop for every machine he would drop to my warehouse. Link to comment Share on other sites More sharing options...
wallstreeterww Posted May 27, 2012 Share Posted May 27, 2012 Kandyking a quarter per vend cycle? Isn't that some kind of world record low? So were the machines 1800's or nothwesterns? From all the info on this forum these 2 seem to be the most sturdy. Link to comment Share on other sites More sharing options...
kandyking Posted May 27, 2012 Share Posted May 27, 2012 If they were 1800's or NW's I would have purchased everything he had. They were Vendmax Emperor Deluxe singles and generic triples that look like the Seagas. http://www.google.com/imgres?q=vendmax+emperor+deluxe&hl=en&client=safari&sa=X&rls=en&biw=1280&bih=686&tbm=isch&prmd=imvns&tbnid=tOd10dlM3BPFaM:&imgrefurl=http://grovecanada.wordpress.com/trumpeter-swans/&docid=X48Y-SDNNu9QVM&imgurl=http://grovecanada.files.wordpress.com/2011/08/54937f_20.jpeg&w=450&h=600&ei=6B3CT-SiAYqI8QTpp6SWCw&zoom=1&iact=hc&vpx=180&vpy=126&dur=1053&hovh=259&hovw=194&tx=125&ty=160&sig=104633327192212810103&page=1&tbnh=152&tbnw=114&start=0&ndsp=22&ved=1t:429,r:0,s:0,i:73 Link to comment Share on other sites More sharing options...
lurtsman Posted May 27, 2012 Share Posted May 27, 2012 It sure seems like there are a lot of routes for sale. I have looked at a few and they all have the same issues: crappy machines (u turns, plastic junk (but I repeat myself), filthy worn out & out of production junk, all in poor locations, that haven't been properly serviced or merchandised, and an unrealistic price. A route of new looking equipment in good locations well serviced IS worth a dollar for a dollar of gross IF they are on the early side of a contract, late side figure 75%. Charity is almost worth nothing right now, but like new in good stops TOP end 75% of gross. I have done a lot of figuring on various routes and its really kind of sad. The typical route I have looked at is only worth about 40% of the gross. why? because I figure what it would take to build the route myself with new equipment and then figure what it would cost to bring the junk route to that level. I buy vending but not broken dreams. Do you tell the sellers from the start that you are not planning to offer more than 40% of gross? It may save both of you some time. Link to comment Share on other sites More sharing options...
musser Posted May 29, 2012 Share Posted May 29, 2012 No, that would be silly. You need to learn about the route before you can make any offer. Like I said, like new equipment, in good locations, doing good numbers, in the early years of a good contract ARE worth a dollar for a dollar. The 40% figure is a number that I seem to have been coming up with lately because: To bring a poor route up to snuff will cost so much money the price needs to be discounted that much to come out with a figure that is equal to what you can do starting from scratch. In other words every seller is a BSer, some just BS more than others so the value varies. But, you need to have the conversation first to make the discovery. And what I have seen lately is that a lot of routes for sale are so run in the ground they can't be fixed ( too expensive) and the owners are better off just running the biz the rest of the way down and walking away (unless they can find a fool). Link to comment Share on other sites More sharing options...
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