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Candy route, what do you think?


jns2010

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Hi!  I'm a newbie getting ready to take on vending.  I've been looking at a couple routes in my area that are up for sale.  The first I've already posted about.  It's a snack/soda route, but the seller is asking way too much. 

 

The second is a bulk candy route.  I like the numbers on this one a little better but you guys are the experts.  Let me know your thoughts!

 

Asking: $2850

 

Average Monthly Gross Sales: $300-$500

 

Locations: 7

 

Radius: 83 miles

 

Farthest Distance From My House: 76 miles (1 location, 2 machines)

 

Seller lives in the same city as me.  He services once a month and says it takes him 6-8 hours total to do the whole route.  

 

Machines: 45 total (22 on locations, 23 not placed)

  • Vendstar 3000 
  • 1-800 vending 
  • U-turn 4 canister
  • All-Metal Pro

 

I am currently waiting on the seller to verify financials and to specify how many of each model he has.

 

I'm not a fan of the idea of 76 miles travel for the one location.  If something gets jammed and I need to get out to service, that seems like it could become a pain.  I'm thinking I'd probably just move those 2 machines which would cut the farthest distance from my house down to 45 miles, and the radius down to 52 miles (much more manageable).

 

What do you think?

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If they're really grossing $300-$500 per month, his asking price is low. Likewise if his asking price is on target, then he's inflating the monthly gross. I just don't see 7 triple head locations averaging >$42/month. Ride along on the route with him before the purchase to make sure what you see him collect is in line with what he's claiming.

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If they're really grossing $300-$500 per month, his asking price is low. Likewise if his asking price is on target, then he's inflating the monthly gross. I just don't see 7 triple head locations averaging >$42/month. Ride along on the route with him before the purchase to make sure what you see him collect is in line with what he's claiming.

 

Sheperdsflock could you explain why the asking price is low for that monthly gross?  I've read take 6 months gross and use that as your starting point for valuation.  Do you feel it should be higher because of the extra (not located) machines?

 

Seller says the machines are primarily vendstar 3000's.  Sounds like those are not the best, so if I do buy I would be looking at upgrades in the future.  Right?

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Sheperdsflock could you explain why the asking price is low for that monthly gross?  I've read take 6 months gross and use that as your starting point for valuation.  Do you feel it should be higher because of the extra (not located) machines?

 

Seller says the machines are primarily vendstar 3000's.  Sounds like those are not the best, so if I do buy I would be looking at upgrades in the future.  Right?

For a buyer yes. But as as a seller usually they start at 10-12 months gross revenue. So 3600-6000 IF his numbers are actually acurate.

Also vendstars are basically all plastic and won't hold up in aggressive locations. You can often find vendstars for $10-20 a machine.

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If it really has the potential to bring in 300-500 per month gross sales then the machines on site currently can always be upgraded and changed as needed with no problem and who knows? May get better gross totals with better machines/different configurations on the same route.

 

but that is all said with the thought of 300-500 per month being accurate and not accounting for drive time/gas costs or any other factors involved so just speaking hypothetically really

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I'm am confused. Your post states

Asking: $2850

Average Monthly Gross Sales: $300-$500

Locations: 7

Machines: 45 total (22 on locations, 23 not placed)

Are you saying there are 22 machines on 7 locations?

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I'm am confused. Your post states

Asking: $2850

Average Monthly Gross Sales: $300-$500

Locations: 7

Machines: 45 total (22 on locations, 23 not placed)

Are you saying there are 22 machines on 7 locations?

 

F J Vending, I need to double check that.  The seller gave me a breakdown of machines by city, but I'm not clear on if each city has just one location, or multiple.  Here's the breakdown from the seller (I took out the city names):

 

City 1: 6 Machines

City 2: 1 Machine

City 3: 7 Machines

City 4: 2 Machines

City 5: 1 Machine

City 6: 3 Machines

City 7: 2 Machines

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1. The equipment is junk.

2. That means the only thing with any value here is the locations and they're spread out all over the place.

3. The numbers. If it's 22 locations in 7 cities then $300 divided by 22 equals $13.63 per location for a lot of driving. And those numbers could be artificially high because he's selling 2 or 3 selections of chocolate and could be giving vend portions that are way too large. $300 doesn't mean anything if your costs are $290.

4. If it's just 7 locations then the amount he's asking and the risk are too high.

He's selling this route for a reason and that reason is he's not making enough money to make it worth his time, so if you buy it you have to have a plan to to turn it around. Starting out it's probably better not to try cleaning up somebody else's mess.

Buy a few Oaks and network everybody you know for your first few locations, after that do some cold calling and see if you can locate effectively, if you can't then bulk vending is probably not for you. Most people who get into bulk vending get back out and locating is the litmus test.

I have bought routes like this but I had a plan and paid $500-$700.

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He's selling this route for a reason and that reason is he's not making enough money to make it worth his time, so if you buy it you have to have a plan to to turn it around. Starting out it's probably better not to try cleaning up somebody else's mess.

 

Could be.  He stated that the reason he's selling is that he's moving out of state.  But I see your points and definitely will need more details on the COGS and the locations before I would consider it.

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So this is how I see it

22 locations in 7 cities that average about $400 per month, so $18 per location. He is also throwing in another 23 unplaced machines. He is asking $2850. I would probably offer him $1500 and see where you end up. I would know more after running the route with him and seeing the condition of the machines.

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