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How much is this route worth?


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25 snack, drink and combo machines in locations. Additional 2 snack machines and one change machine in storage. The snack machines are all Crane's, AP's and Rowe's. The drink machines are Royal's and Dixie-Narco's and there are 4 Genesis GO-127 Combo machines. 5 of the machines belong to Coke and Pepsi.

 

This route grosses $29,000+ annually. The owner is asking $24000. The price seems high to me but I'm new to this business and could use some advice. Thanks for your time and consideration.

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You need more details with what types of machines they are.  Saying they are all Dixies, Royals, APs, and Rowes is like saying someone is selling Fords, Chevys, Dodges, and Toyotas.  Give us the model numbers of these machines.

 

The Genesis machines aren't worth much at all.  Almost no one on this forum recommends buying them.  If they are in working condition, you might consider them being worth $200/piece just for the hell of it.

 

The rest of the equipment can't really be valued due to not having model numbers.  Also, you need to see a tax return so that you can verify his income on the equipment.

 

Regardless of him being honest or not, 29,000 divided by 25 machines = $22 per machine per week.  That's not great.  I would venture to say that most of the soda machines are can vendors and most of the snack machines are AP 4000/5000/6000/7000's and Rowes.   In perfect shape and on location.... if I am correct... the average machine here is worth maybe $500/piece.

 

25 * 500 = $12,500 in equipment (wild guess).

 

With that said, someone may argue that the route is worth close to 24,000 but I wouldn't offer more than 15,000.  I would essentially be paying for the equipment and a little extra for the route.

 

Give us model numbers, product pricing (cans, bottles, candy bars, small chips, big chips, cookies, pastries, etc...), and look at a copy of his tax return if he has one.  Without this information, we can't give you much advice on what it's worth.

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Thanks for the response AngryChris, I'll get a list of the model numbers from him. I do know that he started the biz in March of this year so he won't have a tax return. Is there another way to verify income? Maybe I should add up reciepts from purchases, but with the low volume I imagine he's thrown away a good bit of his product.

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Thanks for the response AngryChris, I'll get a list of the model numbers from him. I do know that he started the biz in March of this year so he won't have a tax return. Is there another way to verify income? Maybe I should add up reciepts from purchases, but with the low volume I imagine he's thrown away a good bit of his product.

Did he build this route from scratch or did he buy the route? That information lessens the value because he doesn't actually know what it will gross. Summer is over so sales will start to drop off a bit. You would be buying this route at the worst time of the year.

How does he record income? How does he keep track of sales?

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The route was split between two cities, about 20 miles apart. He's in negotiation with someone on the locations in one city. 

 

 

Assuming that goes through, what's left is the Franklin/Brentwood locations.  Are you interested in just those?  There are 16 machines in 10 locations.  I price them according to how much each location grosses in 6 month's time, regardless of what machine(s) are there. 
 
 
Location #1 - small factory with Royal RVC 660 (Coke's), DN 501 (Pepsi's), and Crane 147.  $1300
 
Location #2 - TV studio with Rowe 4900 and DN 501 (Pepsi's).  $1060
 
Location #3 - USPS building with AP LCM and Rowe 548.  $2600
 
Location #4 - retirement community with Genesis GO-127.  $960
 
Location #5 - auto shop with Rowe 5900jr.  $820
 
Location #6 - break room of retail store with AP CS-112.  $400 (this is not a very good location, you'd probably want to pull the machine)
 
Location #7 - office building with Rowe 4900.  $1200
 
Location #8 - (medical) office building with Genesis GO-127.  $1120
 
Location #9 - break room of retail store with AP LCM and DN 501 (Coke's).  $2900
 
Location #10 - break room of retail store with Rowe 4900 and Royal RVC 660 (Coke's).  $1100 
 
 
TOTAL:  $13,460.

 

So the drink machines are owned by Coke and Pepsi. Is there anything I should be concerned about if I purchase locations with machines I won't own?

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Yes there is, the pop locations are blue sky, the guy has nothing to sell really.

 

As long as there are no machines for sale just go talk to the locations yourself. If you get them call the guy up and tell him to call pepsi or coke to remove the machines and then call pepsi and coke before they move them and say "hey do you have machines at so and so place? just leave them there I will be servicing them.

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This changes everything. The equipment that is listed is probably worth less than $3500. 3rd party equipment is not an asset that you will be buying so it doesn't count. This guy is selling old equipment at slow locations.

At this point, his entire 29,000 route is worth less than half of that in my opinion. Maybe 10k. I wouldn't pay that much for old snacks and 3rd party leases.

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The equipment that is listed is probably worth less than $3500

 

I'd love to know where you guys are getting your machines. I live in a city of over 500,000. Add in the surrounding counties and there's over 1 million people. I've been looking on CL almost everyday for the past 2 months and have found nothing but junk in the $500-$600 range.

 

I searched for all the machines in the above list that the guy owns, and I can buy them all (mostly refurbished) for about $15,000. And that before shipping. How is the value less than $3,500? Am I missing something?

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Location #1:  Royal 660 (coke lease): $0.   National 147: $700

 

Location #2:  Rowe 4900: $250.  DN 501 (Pepsi Lease): $0.

 

Location #3:  AP LCM: $1,000.  Rowe 548: NO IDEA!

 

Location #4:  Genesis Go 127: $0

 

Location #5:  Rowe 5900 Jr: $350

 

Location #6:  CS-12: $400

Location #7:  Rowe 4900: $250.

 

Location #8:  Genesis Go 127: $0

 

Location #9  AP LCM: $1,000  DN 501(Pepsi Lease): $0

 

Location #10:  Rowe 4900: $250.  Royal 660(Coke Lease): $0

 

 

 

 

So, not including the Rowe 548, I am at roughly $4,200.  I didn't notice the 2nd LCM when I first looked, but it doesn't make that much of a difference.

 

Just to be nice, I am going to put that 548 at $1,800 to bring it all up to an even $6,000.

 

So there you go, I went up to $6,000 instead of $3,500.

 

Where do you get $15,000?  You aren't BUYING the coke and pepsi leases and the two genesis Go's are pretty much worthless unless you find some personal value in them.  $15,000 for 9 machines (2 LCM's, 4 Rowes, 1 CS12, 1 National 147, 1 Rowe 548) comes out to over $1,650 per machine.

 

There's no way I would pay that much for those machines.  The LCM's are the best snacks there and the Rowe 548 is difficult for me to value.

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Thanks for breaking that down for me Chris! But I have no idea how to find machines at those prices. The prices I'm seeing from dealers and other vending opperators is much higher. These are from the first results when I search Google

 

Rowe 548 - $2,500 (sold)

http://www.usedvending.com/i/1-Rowe-548-Cold-Food-Electrical-Snack-and-Soda-Vending-Machine-with-Change-Machine-and-Dollar-Bill-Validator/GA-I-251C

 

Rowe 548 - $3,200

http://www.vendorsequipment.com/foundations/store/scresults.asp?category=114*Rowe_International

 

National 147 - $1,495

http://www.southernequipmentsales.com/used-snack-machines/15-crane-national-147

 

National 147 - $1,899

http://www.ebay.com/itm/Crane-National-147-Snack-Vending-Machine-for-Candy-and-Chips-/121035002156

 

Rowe 4900 - $1,495

http://www.amequipmentsales.com/rowe4900.htm

 

Rowe 4900 - $1,200

http://www.vendorsequipment.com/foundations/store/scresults.asp?category=78*Rowe_International

 

AP LCM - $1,850

http://www.vendorsequipment.com/foundations/store/shopdetail.asp?params=VE1588^AP_LCM_1_Series_Snack_Vending_Machine_by_Automatic_Products

 

AP LCM - $1,485

http://www.ebay.com/itm/Automatic-Products-AP-LCM-1-Glass-Front-Snack-Vending-Machine-/151030222264

 

Rowe 5900 - $899

http://www.ebay.com/itm/ROWE-5900-SNACK-VENDING-MACHINE-FREE-SHIPPING-/201202051468?pt=LH_DefaultDomain_0&hash=item2ed893a98c

 

Rowe 5900 - $1,595

http://www.amequipmentsales.com/rowe5900.htm

 

AP CS-12 - $995

http://www.amequipmentsales.com/apcs12.htm

 

AP CS-12 - $750

http://www.vendorsequipment.com/foundations/store/shopdetail.asp?params=VE525^AP_CS_12_Countertop_Snack_Vending_Machine_by_Automatic_Products

 

I probably did the math wrong but the numbers are still pretty far off.

 

I'm going to check out the machines later this week. I guess I'll just low ball him and see what happens. If he balks I'll wait for a better deal.

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I know all the other guys are going to get upset but I have paid for locations with a coke or Pepsi asset....if the account is a good account... . I do not agree that it is worth 0 .... Just the other day I acquired a nice 7 story hotel that has 6 Pepsi assets and 1 coke ....I AM willing to pay 3 to 6 times monthly sales for something like that .......I figure if I invest into something doesn't matter vending or something else and I get my roi in less then a year that is a good investment....

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I agree with RSchlig the site is worth some money after all the best machine on a poor site will not make money and will just be over capitalised unless you have a better site to move it to. A average machine on a good site will make good money and a good return on investment if you pay the correct price.. A good site with third  party machine is still going to make money and can be a good investment. Once again it comes down to the price you pay but you cant say the site is worth nothing.

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The only real issue with bottler assets when involved in a route or location sale is that the buyer may have overpaid for the route, either not knowing that they don't own all the machines or not knowing that there is no value to the bottler assets as they only add intrinsic value to the sale.  When calculating the value of the sale based on gross sales, such as you are offering 9 month's gross, then you need to factor in the bottler assets at half the value of the owned assets in terms of gross sales.  Only if the one year's gross sales are far below the value of the owned assets would you not include anything for the bottler assets.

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The route was split between two cities, about 20 miles apart. He's in negotiation with someone on the locations in one city. 

 

 

So the drink machines are owned by Coke and Pepsi. Is there anything I should be concerned about if I purchase locations with machines I won't own?

i get the feeling that he had a much bigger route at one time and somebody's already cherry picked all the choice locations.  Based on those 6 month gross numbers I wouldn't pay anything for this mess even if he owned the soda machines.   The Rowe snack machines were good units in their day but Rowe has been out of business for many years and their equipment is fairly obsolete.  The soda machines, being bottler owned all have a fairly hefty monthly quota attached at higher than normal prices and it doesn't look like these accounts would even meet that quota based on the gross sales numbers, which is part of the reason I think he had more machines at some point. All in all I'd say what you've got here is the dregs of a once pretty successful operation.  Pass on this one.

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Thanks for all the input everyone gave. The guy said he will be servicing the route on Thursday and that I'm welcome to ride along. I'll take him up on the offer just for the experience, and pass on the route. 

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i get the feeling that he had a much bigger route at one time and somebody's already cherry picked all the choice locations. Based on those 6 month gross numbers I wouldn't pay anything for this mess even if he owned the soda machines. The Rowe snack machines were good units in their day but Rowe has been out of business for many years and their equipment is fairly obsolete. The soda machines, being bottler owned all have a fairly hefty monthly quota attached at higher than normal prices and it doesn't look like these accounts would even meet that quota based on the gross sales numbers, which is part of the reason I think he had more machines at some point. All in all I'd say what you've got here is the dregs of a once pretty successful operation. Pass on this one.

This is why I give them no value. There are no tax returns, the current vendor is relatively new, and bottler assets are not the buyer's assets. It's different when there is no fear of losing the leased machines but 29,000 isn't going to cut it.

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You would need to arrange with the bottler to transfer the existing contract to the new vendor.  The route would stay in place.  Purchase the route based on "recorded income" that means deposits put into the bank or tax returns.  On those bottler machines be sure to have the current owner record each serial number with each machine.  Have those numbers transferred to your name with the Bottler before transferring any money.

 

Most bottlers will check with the seller and buyer before leaving machines on site when a route sale is taking place. They will want to be absolutely sure both parties agree to the terms.

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Also make sure that you are able to setup an account with the bottler I was informed that coke is no longer taking New vendors...at least here in Arizona

My understanding is that they no longer do it in my region either.

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I see you have a location with a food machine and a snack but no soda.

I think you will find most vendors lose money on food. That likely means the food machine is full of soda. That is a bad idea it is hard in the machine and an already problem prone machine will fail more often.  My guess is the sales at that location will not cover the losses from the food and the high maintenance cost that go with that machine.

 

As to the value of a used 548 the gap between trade in price and refurbished sale price can be very large.

 

Some operators are moving away from food and are dumping them on the market in the 400 to 700 range.

 

A lot of labor and parts can go into fixing this machine so a high sale price is not unreasonable. 

 

Your PM said you were looking at sum older equipment

 

Dixie Narco 440 440bottle 276 368 501 one more called cavalier386
snack machines are: rowe4900JR usi3000 ap111 ap6000 ap113 usi5000 ap435 electro-vend-vs-99 apLCM ap7000 ap5000 usi4000

 

Dixie Narco 440 440bottle,, Cavalier 386 ap435 and electro-vend-vs-99 are so old they there value is there weight as scrap.

Rowe4900JR and ap5000 are of little value unless they have been kitted to newer boards and BA added.

The usi3000 and 276 are too small a machine to operate profitably.

The AP 6000 & 7000 are good old machines that came out in 1980.

The ap113 usi5000 USI4000 are the best of this lot.     

 

Walta

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One of the advantages of purchasing a route with a existing agreement is that bottlers honor it.  You would need to check with the bottler to confirm that you will have the same terms.  I haven't heard of them not honoring existing agreements involved in a sale unless it is one or two machines.  They may allow you to keep the machines on site with the understanding you cannot order additional units.

 

You need to do your due diligence.


Chris you might check with the 7-Up group in Ohio.  Last I heard they were eager to work with vendors to the extend of allowing other bottlers products in the bottom two buttons.  They also have a great line up of products that are very popular now.

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One of the advantages of purchasing a route with a existing agreement is that bottlers honor it. You would need to check with the bottler to confirm that you will have the same terms. I haven't heard of them not honoring existing agreements involved in a sale unless it is one or two machines. They may allow you to keep the machines on site with the understanding you cannot order additional units.

You need to do your due diligence.

Chris you might check with the 7-Up group in Ohio. Last I heard they were eager to work with vendors to the extend of allowing other bottlers products in the bottom two buttons. They also have a great line up of products that are very popular now.

I have several 7up leases but no pepsi or coke. I could get a few pepsi leases but I don't want to order from pepsi.

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