65tremecgt Posted May 31, 2015 Share Posted May 31, 2015 Hi all, I have lurked around here for a few months and have gained a lot of knowledge from your posts. I have been watching craigslist for a local small route to get back into vending with, I ran a 10 machine soda route 15 years ago and looking to get back into a part time route. Let me know what you think of this route, 21 locations, 21 sodamachines, 13 snack and one national combo, gross $3k a month total machines are all on location, and consist of full size vendo and royal sodas, some with glass fronts, and the snack machines are AP, Rowe, USI, and Nationals. He is asking $23k for the route. From what I have seen locally, people are asking about $1000 for single machines on location that are grossing $150 a month. I am more concerned about getting quality machines and after reading on these forums, I have dismissed many other vending routes for sale based on imported machines, but this group appear to be quality machines, I realize the combo machines drawbacks. Would love to hear some input, obviously I don't know all the specifics of how old the machines are, what kind of contracts may or may not be in place and such or what his bottom line is. When you guys buy a route, what kind of contract do you use for the sale, something that lists all the machines by serial number and locations I would imagine? Thanks for sharing your knowledge! Link to comment Share on other sites More sharing options...
RJT Posted May 31, 2015 Share Posted May 31, 2015 Those numbers are terrible. You are only looking at an average of $22.00 per machine per week gross sales. Don't worry so much about equipment because equipment can be bought at anytime. Be concerned about revenue. Yes, when buying a route you always look at the type of equipment but my main concern is revenue first and fore most. No way I would by that route unless it turned out to be a bargain on the equipment itself. Based on his asking price and number of machines that is about $676.00 per machine which could be a decent deal depending on the equipment. Unless he has machines that are newer models that is still not a great deal based on the $23k capital layout on the front end to get it all. With $23k can get you some real nice equipment and much nicer accounts with much higher revenues. Link to comment Share on other sites More sharing options...
65tremecgt Posted May 31, 2015 Author Share Posted May 31, 2015 Thanks, I thought the numbers were low, and that is just an asking price. What is the price point you like to see in gross sales when considering buying a machine on location? Its hard to evaluate entire routes! Thanks Mark Link to comment Share on other sites More sharing options...
moondog Posted May 31, 2015 Share Posted May 31, 2015 Hi all, I have lurked around here for a few months and have gained a lot of knowledge from your posts. I have been watching craigslist for a local small route to get back into vending with, I ran a 10 machine soda route 15 years ago and looking to get back into a part time route. Let me know what you think of this route, 21 locations, 21 sodamachines, 13 snack and one national combo, gross $3k a month total machines are all on location, and consist of full size vendo and royal sodas, some with glass fronts, and the snack machines are AP, Rowe, USI, and Nationals. He is asking $23k for the route. From what I have seen locally, people are asking about $1000 for single machines on location that are grossing $150 a month. I am more concerned about getting quality machines and after reading on these forums, I have dismissed many other vending routes for sale based on imported machines, but this group appear to be quality machines, I realize the combo machines drawbacks. Would love to hear some input, obviously I don't know all the specifics of how old the machines are, what kind of contracts may or may not be in place and such or what his bottom line is. When you guys buy a route, what kind of contract do you use for the sale, something that lists all the machines by serial number and locations I would imagine? Thanks for sharing your knowledge! I'll have to echo what RJT has said. While it appears that there is some quality equipment , this smells like somebody is attempting to dump his dog accounts as none of them are hardly worth servicing. To be viable this lot would need to be tripling it's gross per month at least. As it stands, it's a lot of work to net maybe $1,500 a month - you could probably do better flipping burgers. Link to comment Share on other sites More sharing options...
orsd Posted May 31, 2015 Share Posted May 31, 2015 Are you in east county SD? Link to comment Share on other sites More sharing options...
65tremecgt Posted May 31, 2015 Author Share Posted May 31, 2015 Yes I am! Link to comment Share on other sites More sharing options...
Bvending Posted May 31, 2015 Share Posted May 31, 2015 When buying existing accounts from someone, or a whole business, we try not to pay more than 40% of gross. This will also vary occasionally depending on the account. We just bought a company with approx 86k annual, and we paid 35k Link to comment Share on other sites More sharing options...
MidStateVending Posted June 1, 2015 Share Posted June 1, 2015 Well, do you want to work 15 months to pay off your investment and start making money? $3000 / 2 = $1500 (net).... $23000 / 1500 = 15.33 months. You also risk that the net figure is over stated.... and one or more of those accounts are guaranteed to kick you out within that 15 months (many times at no fault of your own). I don't buy anything that takes more than 10 months to pay off (using net revenue). In my opinion, offer no more than $15k cash. Maybe start even lower to make room for negotiating. Link to comment Share on other sites More sharing options...
RJT Posted June 1, 2015 Share Posted June 1, 2015 Well, do you want to work 15 months to pay off your investment and start making money? $3000 / 2 = $1500 (net).... $23000 / 1500 = 15.33 months. You also risk that the net figure is over stated.... and one or more of those accounts are guaranteed to kick you out within that 15 months (many times at no fault of your own). I don't buy anything that takes more than 10 months to pay off (using net revenue). In my opinion, offer no more than $15k cash. Maybe start even lower to make room for negotiating. No offense but why would he want to even do that? At that point you are ONLY buying for the equipment and then you have to factor in labor cost to move 36 machines and then store them. The accounts are shown to not really make any money so their is no reason to to worry about trying to keep them and it would be for equipment only. Why not find quality accounts then buy what equipment they need for that account? Just like accounts sometimes it is not worth doing at all because it just doesn't make sense. Before I would spend $15k on this I would rather spend my money on good accounts and good equipment. Don't get me wrong if the equipment is nice and can be picked up at a great deal then might be worth the effort and expense to mess with. I just don't think this is one of those situations. Link to comment Share on other sites More sharing options...
65tremecgt Posted June 1, 2015 Author Share Posted June 1, 2015 Sorry, can't post without approval, I have some capital aND this route interested me due to the quality machines, I figure I could run it for a bit and see what locations are working, 10 of the locations are within 10 miles of my house. I can work on getting better locations and pulling them from the duds. 23 is asking, so I'm sure he's willing to work a deal. Thanks for the great insight! Link to comment Share on other sites More sharing options...
MidStateVending Posted June 1, 2015 Share Posted June 1, 2015 No offense but why would he want to even do that? At that point you are ONLY buying for the equipment and then you have to factor in labor cost to move 36 machines and then store them. The accounts are shown to not really make any money so their is no reason to to worry about trying to keep them and it would be for equipment only. Why not find quality accounts then buy what equipment they need for that account? Just like accounts sometimes it is not worth doing at all because it just doesn't make sense. Before I would spend $15k on this I would rather spend my money on good accounts and good equipment. Don't get me wrong if the equipment is nice and can be picked up at a great deal then might be worth the effort and expense to mess with. I just don't think this is one of those situations. Depends on what he is looking for. He mentioned that the route is already producing $3k/mo. I know vendors that would rather have many small accounts that need service every 2-4 weeks, than to have big accounts. Smaller accounts provide the advantage of 'parking' the machines for better opportunities. Also, the freedom and time to go on vacation or pursue other interests. I can speak on experience: I purchased about 12 accounts for $8k when I first started. It allowed me to continue working my full time job and grow my business on the side. 10 months later I quit my job of 6 years to pursue vending. I don't know about you, but I am not a hustler, so actively finding accounts is extremely difficult (unless purchasing already established accounts). I still say 21 accounts (37 machines) for $15k is a good deal. It's a business in a box, ready to be molded into his own personal business plan. Link to comment Share on other sites More sharing options...
Anacapa Vending Posted June 1, 2015 Share Posted June 1, 2015 I personally would go for it if the route was close, the equipment was good and the vendor had good records. You never know. You might be able to improve sales, either with better selections or relocating the lower volume locations. I'd rather keep growing my business and increasing cash flow then get .0000002 interest at the bank... Link to comment Share on other sites More sharing options...
RJT Posted June 1, 2015 Share Posted June 1, 2015 I personally would go for it if the route was close, the equipment was good and the vendor had good records. You never know. You might be able to improve sales, either with better selections or relocating the lower volume locations. I'd rather keep growing my business and increasing cash flow then get .0000002 interest at the bank... I just don't understand this way of thinking at all. The current numbers are an average of $22 a week per machine. That is less than $10 per machine after you factor in all associated cost. Why not just get a job flipping burgers at that point and not risk anything at all. You are NOT going to fix those numbers to a acceptable number by better selection. Yes relocating the machines to other locations could fix it but at that point why not just get your on accounts from the start that would produce better numbers to begin with. I am all for increasing cash flows and growing your business but you have to do it wisely. This is about making MONEY not creating a hobby or making so little money you might as well not do it at all because it would be cheaper and way less risk just getting another part time job. Depends on what he is looking for. He mentioned that the route is already producing $3k/mo. I know vendors that would rather have many small accounts that need service every 2-4 weeks, than to have big accounts. Smaller accounts provide the advantage of 'parking' the machines for better opportunities. Also, the freedom and time to go on vacation or pursue other interests. I can speak on experience: I purchased about 12 accounts for $8k when I first started. It allowed me to continue working my full time job and grow my business on the side. 10 months later I quit my job of 6 years to pursue vending. I don't know about you, but I am not a hustler, so actively finding accounts is extremely difficult (unless purchasing already established accounts). I still say 21 accounts (37 machines) for $15k is a good deal. It's a business in a box, ready to be molded into his own personal business plan. You say already producing 3k a month. How much profit is he making? He could be producing 3 million and still not be making any money. You do realize that sales does not always equal profit. Link to comment Share on other sites More sharing options...
Anacapa Vending Posted June 1, 2015 Share Posted June 1, 2015 All I am saying is that a few dog accounts can really affect your weekly average per machine.. Also there is no mention of where this route is located. We are all in different markets... Link to comment Share on other sites More sharing options...
moondog Posted June 1, 2015 Share Posted June 1, 2015 All I am saying is that a few dog accounts can really affect your weekly average per machine.. Also there is no mention of where this route is located. We are all in different markets... Sounds like this is a specialized route just for morgues. Either way it's completely over capitalized to only be grossing 3k a month. Whoever buys this will find themselves in the machine business as opposed to the vending business. Three grand a month doesn't leave much room for any decent accounts unless there's four or five good ones and the rest of those locations are in various corners of the guys' warehouse making nothing. Link to comment Share on other sites More sharing options...
orsd Posted June 1, 2015 Share Posted June 1, 2015 And the locations are pretty far apart, Ramona is pretty far. You would be better off driving those miles into Escondido or even National City or Chula Vista. Link to comment Share on other sites More sharing options...
65tremecgt Posted June 1, 2015 Author Share Posted June 1, 2015 orsd, you must be local? I agree the Ramona machines are a little far, I'm in Alpine so the others are all within 15 miles of my house and Costco/Smart and Final are centrally located. I am looking for a part time deal, but has to make money, not a hobby. Thanks for all the opinions! hopefully I can post in real time soon! Link to comment Share on other sites More sharing options...
RJT Posted June 1, 2015 Share Posted June 1, 2015 Sounds like this is a specialized route just for morgues. Either way it's completely over capitalized to only be grossing 3k a month. Whoever buys this will find themselves in the machine business as opposed to the vending business. Three grand a month doesn't leave much room for any decent accounts unless there's four or five good ones and the rest of those locations are in various corners of the guys' warehouse making nothing. This^^^^^ Link to comment Share on other sites More sharing options...
MidStateVending Posted June 1, 2015 Share Posted June 1, 2015 I just don't understand this way of thinking at all. The current numbers are an average of $22 a week per machine. That is less than $10 per machine after you factor in all associated cost. Why not just get a job flipping burgers at that point and not risk anything at all. You are NOT going to fix those numbers to a acceptable number by better selection. Yes relocating the machines to other locations could fix it but at that point why not just get your on accounts from the start that would produce better numbers to begin with. I am all for increasing cash flows and growing your business but you have to do it wisely. This is about making MONEY not creating a hobby or making so little money you might as well not do it at all because it would be cheaper and way less risk just getting another part time job. You say already producing 3k a month. How much profit is he making? He could be producing 3 million and still not be making any money. You do realize that sales does not always equal profit. Where I come from, your net is 1/2 of your gross. I purchase cokes for $.25 at the price club and sell them for $.75. Factor in repurchase of product, gas, taxes, and repairs, and my COGS is around 50%. However, like orsd said, if the machines are far apart, that makes a huge difference. Also, it could be that 10 of the 21 accounts are full of expired food... well that would not be good either. Presuming each account is making money however, that averages $142 per month, per account... he does not have to check each account every week. But when he goes in and pulls $142 at one monthly account, that takes an hour to service... he is making $71/ hour.... hardly a McDonalds job. Everyone's business model is different... and I see potential in this purchase....Presuming each account is making money and that the buyer does his due diligence. Link to comment Share on other sites More sharing options...
moondog Posted June 1, 2015 Share Posted June 1, 2015 And the locations are pretty far apart, Ramona is pretty far. You would be better off driving those miles into Escondido or even National City or Chula Vista. Am I missing something here? How did you determine that this route is in east SD county. Link to comment Share on other sites More sharing options...
orsd Posted June 1, 2015 Share Posted June 1, 2015 I saw the ad myself while perusing cl. Link to comment Share on other sites More sharing options...
WhiteRoom Posted June 1, 2015 Share Posted June 1, 2015 I'd stay away from this. I mean, sure, if you want to pick up a slow account on the cheap that fits into your route and has great equipment, go for it - occasionally. But to buy a whole route full of those accounts sounds like an exercise in lots of driving, constantly rotating near-expired product, service calls and repairs that eat up months of profit, and a general high level of frustration for a small amount of profit. My route has a few dogs like this, and some really great accounts - I can say for certain that the dogs are highly frustrating and will be gone as soon as I can make it work. And they won't be replaced by anthing doing less than about $500 a month. Link to comment Share on other sites More sharing options...
RJT Posted June 1, 2015 Share Posted June 1, 2015 Where I come from, your net is 1/2 of your gross. I purchase cokes for $.25 at the price club and sell them for $.75. Factor in repurchase of product, gas, taxes, and repairs, and my COGS is around 50%. However, like orsd said, if the machines are far apart, that makes a huge difference. Also, it could be that 10 of the 21 accounts are full of expired food... well that would not be good either. Presuming each account is making money however, that averages $142 per month, per account... he does not have to check each account every week. But when he goes in and pulls $142 at one monthly account, that takes an hour to service... he is making $71/ hour.... hardly a McDonalds job. Everyone's business model is different... and I see potential in this purchase....Presuming each account is making money and that the buyer does his due diligence. Yes, each "business model" is different however the bottom line is profit. How can you assume this route is making money? We have no idea what product cost is in that area nor do we know what his selling price on the products are. A few things you left out of cost is what is your time worth? Stales? Insurance? Theft? etc With that low volume in that number of accounts he cant be making that much profit. If he would have said he has 12 accounts doing that revenue that is a different story. Link to comment Share on other sites More sharing options...
gwdt2011 Posted June 1, 2015 Share Posted June 1, 2015 I am in a similar position as the OP. A couple of points: 1) As I am looking to start in the business, it is a much easier sell for me when I try to acquire new locations to say "I service 25 vending machines weekly, and I would love to provide service for you as well," as opposed to "Can I put my first machine here?" We all have different strengths. Mine isn't cold-selling, and every little edge counts. 2) My time/value isn't really a factor for me as I get started. I expect the work to be tougher and longer hours. I KNOW I could make lot more money today as a burger flipper or bartender, but two or three years from now I can be making better money working better hours as my own boss. I am willing to sacrifice up front (as most entrepeneurs are) for the hope of a payoff down the road. All that being said, I am also trying to figure out what some different routes are worth. The OP found routes that made $22/week. I found some that make $42/week. I understand there are a ton of variables involved, but is there any number or combination of numbers or formula that can help us determine what a route is worth? The seller is asking for one year of gross profits. My thought was that number should be one year of net profits. I would guess we are either both wrong or there is no right answer. Without hijacking the thread too badly, is there a formula we newbies can use to make sure we aren't overpaying for a route/asset? Link to comment Share on other sites More sharing options...
moondog Posted June 1, 2015 Share Posted June 1, 2015 I saw the ad myself while perusing cl. Yep, once you get east of the 15 the commercial activity dries up pretty quick down there. Link to comment Share on other sites More sharing options...
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