indiana Posted January 28, 2013 Share Posted January 28, 2013 I am still in the market to purchase an existing vending route. One that I've had my eye on for the last three months is still available. In my initial conversation with the owner, I understand he is planning on retiring, which is also related to some health problems. The route includes: 7 AP snack machines 4 20oz soda machines (some are leased from Pepsi) 1 12oz soda machine All machines are located inside other businesses, some are industrial locations. The locations I've heard that are included so far are a Sam's Club (assuming the breakroom), a local school, two lumber yards, a uniform store, car auction facility and a busy warehouse. When I asked how often the route needs to be serviced, the owner said he services the route twice a week, Tuesdays and Fridays. This sounds like way more work than necessary, I can't imagine AP snack machines or soda machines emptying in two days. I think he may be driving the route once to service food and another to service soda separately. The owner states the soda machines must be restocked every other week, and once weekly during hot summer months. There's also an agreement to supply the local school with a large order of soda during baseball season. The route's factory location includes "two canteens that need servicing every two days or it will dry out." I'm not sure what this means--I'll ask him today, any insight you all can provide would be helpful too and much appreciated. I am willing to service the route as needed, but driving the route every two days sounds exhausting. Annual gross income "can vary up to $28,000 per year." So I would guess net is around $10-12k. He is asking $10k for the route, or $13k including a 2004 Chevy express van (I have no idea of the condition of the van). I know to ask for financial statements that prove the level of income, supposedly this is no problem. I have asked to see the locations and drive along with him for a week or two and watch him service the machines. No problem. I also need to find out if I can service the locations on weekends, or only during the week. Are there any additional questions I should be asking? Also, assuming I can verify income of around $28k, what do you think of the purchase price? Thank you! Link to comment Share on other sites More sharing options...
indiana Posted January 28, 2013 Author Share Posted January 28, 2013 Update: Spoke with the owner and I get a really good feeling, he's friendly, knowledgeable and seems to genuinely care about his route and locations and the level of customer service they receive. Canteens are break rooms. There are no accounts for coffee services included, although a couple locations are requesting it. He insists that his full-size machines really do need to be restocked every couple days, twice a week. He also employs someone to help him run the route that he says he trusts completely. I've been invited to ride along with the owner on the route tomorrow to take notes and learn more about it. Any feedback or insight from the group is appreciated. I'll update this thread with more information tomorrow after I see the locations. Link to comment Share on other sites More sharing options...
mission vending Posted January 28, 2013 Share Posted January 28, 2013 Even if all the bottle machines are leased the price in not unreasonable. The equipment alone, depending on condition, might be worth around 7K. Just do your due diligence and get some more info, especially revenue documentation. Link to comment Share on other sites More sharing options...
dogcow Posted January 28, 2013 Share Posted January 28, 2013 for the revenue look at the taxes, assume whatever he says on the taxes is accurate, why? most people dont pay more taxes than they have to, so you can use it as a revenue baseline. if he says he cheats on taxes i would be very skeptical of any revenue figures only deal with those figures u can verify by tax returns or deal by equipment value Link to comment Share on other sites More sharing options...
FrCorey Posted January 28, 2013 Share Posted January 28, 2013 Does the soda machines lease transfer? or is the bottler going to want the machines back when they find out? for the sruff he does own, does he have the manuals or any parts for when you need service? and or, does he have anyone to do it, if you cant service the equipment. i.e what do you do when they break down or need maintiance. Link to comment Share on other sites More sharing options...
cvending Posted January 28, 2013 Share Posted January 28, 2013 If he is claiming his full size machines need restocked twice a week, either he is selling product too cheap or machines are giving product away. I have machines that are turning $150/week by filling them once. That means about $600/mo or $7K/yr per machine. Yes they are low when we get to them, but we do not see enough of a bump to go to twice a week when we tried that. Do the math. That should be much more tyhan %28K/yr. Check his selling prices and profit margins. Also, if he retiresd are the existing accounts willing to stay with the new vendor? Good luck Link to comment Share on other sites More sharing options...
moondog Posted January 28, 2013 Share Posted January 28, 2013 Sounds like this could be one of those rare good deals but I agree with cvending on the snack machines. The numbers based on restocking them twice a week are way out of whack. This is one area you should really focus on when you do your ride-along tomorrow. Link to comment Share on other sites More sharing options...
indiana Posted January 28, 2013 Author Share Posted January 28, 2013 At this price, and established locations so close in my comfort area, it would be a nice investment--especially if I could get away with servicing the route once a week or every other week. I will take note of inventory levels, approximate cash pulled and prices. Thanks everyone. I'll update the thread tomorrow. Link to comment Share on other sites More sharing options...
mission vending Posted January 29, 2013 Share Posted January 29, 2013 At this price, and established locations so close in my comfort area, it would be a nice investment--especially if I could get away with servicing the route once a week or every other week. I will take note of inventory levels, approximate cash pulled and prices. Thanks everyone. I'll update the thread tomorrow. Good Luck, looking forward to the update. Link to comment Share on other sites More sharing options...
TKK Posted January 29, 2013 Share Posted January 29, 2013 Keep us updated buddy. Does he pay commission? Link to comment Share on other sites More sharing options...
indiana Posted January 29, 2013 Author Share Posted January 29, 2013 Will do! No, no commission is currently paid. I don't believe there are any contracts though, either. Link to comment Share on other sites More sharing options...
mission vending Posted January 29, 2013 Share Posted January 29, 2013 If you do proceed with the purchase have him introduce you as the "new route guy" so they can get to know you before they learn of the sale, say in 30-60 days or so. Link to comment Share on other sites More sharing options...
ruff84 Posted January 29, 2013 Share Posted January 29, 2013 I saw the add on craigslist, sounded like a good deal. If i was closer i probably would have jumped on it as well. Link to comment Share on other sites More sharing options...
indiana Posted January 29, 2013 Author Share Posted January 29, 2013 That's great advice. Something I've been impressed with and thought was a good sign so far was how concerned he's been with the customer service his locations will continue to receive with the new owner. I definitely want the transition (if there will be one) to be as smooth as possible. I saw the add on craigslist, sounded like a good deal. If i was closer i probably would have jumped on it as well. Hey thanks! That's great feedback, glad to hear that. He's been posting it for a while, so I am hopeful he's quite motivated. I'm comfortable with that area, I'm out that way every week for school. Link to comment Share on other sites More sharing options...
RJT Posted January 29, 2013 Share Posted January 29, 2013 If the numbers can be verified the asking price is a good price even with the bottle owned assets involved. Most “numbers” can be verified through receipts on purchases. Easy to fudge revenue much harder to fudge purchases. Like, Mission said due the due diligence then make a decision. If you do proceed with the purchase have him introduce you as the "new route guy" so they can get to know you before they learn of the sale, say in 30-60 days or so. Yep, best way to do it. Then after a few months and they know and like you then tell them you bought the person out. Link to comment Share on other sites More sharing options...
spdydre Posted January 29, 2013 Share Posted January 29, 2013 I dont know how you guys feel abuot contracts but I wont make another route or multiple machine purchase without one. I purchased 8 machines at a company that an employee was running for around 4k he was originally trying to sell for 10k. No contract. As soon as I made the purchase 30 days later they said they were bidding out the vending services and I had to pull all the machines off the location to storage. Good thing I bargained with that guy for months to get him to that price imagine if I paid 10k for all those machines? It was a big hit to me because I was just starting out and the cost to move all those machines to storage then move them again to another location was close to another $1500. I was able to replace them all but if there is no contract I would offer the cost of the equipment only Link to comment Share on other sites More sharing options...
RJT Posted January 29, 2013 Share Posted January 29, 2013 I dont know how you guys feel abuot contracts but I wont make another route or multiple machine purchase without one. I purchased 8 machines at a company that an employee was running for around 4k he was originally trying to sell for 10k. No contract. As soon as I made the purchase 30 days later they said they were bidding out the vending services and I had to pull all the machines off the location to storage. Good thing I bargained with that guy for months to get him to that price imagine if I paid 10k for all those machines? It was a big hit to me because I was just starting out and the cost to move all those machines to storage then move them again to another location was close to another $1500. I was able to replace them all but if there is no contract I would offer the cost of the equipment only Since we are rumaging around in the grave yard digging up bones I will keep my shovel in the mix. Good luck with that. Most times either they don’t have a contract or the contacts are not transferable, or they are not worth the paper they are written on. Are you going to sue an account that breaks the contract? Unless it is for many thousands of dollars you are wasting your time and money along with your reputation in the vending community once people here you are suing people over a vending contract. Most people would steer clear of doing business with you. Best thing is do your due diligence and have a “recourse” clause with the company you are buying the accounts from. If you loose the account by no fault of your own then you can go back to the company for a partial refund minus agreed asset value. This can be done even with money held is escrow for a short period of time. Now getting someone to agree to this may be difficult but the best approach. Link to comment Share on other sites More sharing options...
spdydre Posted January 29, 2013 Share Posted January 29, 2013 True but Id rather not take that risk Im not in the position to just spend 20k then have no accounts and a bunch of equipment sitting around. So far Ive used this method and I havent had any issues. People either get a contract or drop the price. there are alot of tire kickers in this business people selling will always negotiate because they get tired of the run around. If they dont just wait it out they will eventually. Link to comment Share on other sites More sharing options...
indiana Posted January 30, 2013 Author Share Posted January 30, 2013 Everything looked good--and I had a great day riding along with this very friendly, professional owner today. I was impressed with the locations, and he does a hell of a job maintaining strong relationships with his locations. He's been in the business a long time, and be generously walked me through his route and spent HOURS of his time teaching me whatever he could think of related to running a vending business, with no guarantee I'd buy his route. In regard to the route being serviced twice a week--I'd conclude that this could probably be consolidated to once a week. I think he makes the personal decision to service more frequently because he enjoys it and sees the importance of seeing the business owners on a regular basis. There are a lot of good things to say about this opportunity. I understand there are a couple very serious, very interested parties also in the running. And he seems pretty firm against negotiating on the price or terms (such as financing or including additional product, etc). I love the route--so we'll see how it goes. I'll do my best. Link to comment Share on other sites More sharing options...
TKK Posted January 30, 2013 Share Posted January 30, 2013 Did money look right? That's not a bad deal at all. I would replace the coke machines with your own. I've found good machines from $200-$500....I'd definately change those. That's good that it can be more efficient. I think once a week is perfect for high locations. Just make sure you accommodate your vends. Like the best place I have I was going once a week coke was always gone. Thenbi did 2 rows gone again. Now 3 and now its good Link to comment Share on other sites More sharing options...
indiana Posted January 30, 2013 Author Share Posted January 30, 2013 Did money look right? That's not a bad deal at all. I would replace the coke machines with your own. I've found good machines from $200-$500....I'd definately change those. That's good that it can be more efficient. I think once a week is perfect for high locations. Just make sure you accommodate your vends. Like the best place I have I was going once a week coke was always gone. Thenbi did 2 rows gone again. Now 3 and now its good Money looked good. Very organized and professional. He definitely does a better job than I do, I was happy for the day-long crash course! He cares about what he does. Link to comment Share on other sites More sharing options...
moondog Posted January 30, 2013 Share Posted January 30, 2013 Money looked good. Very organized and professional. He definitely does a better job than I do, I was happy for the day-long crash course! He cares about what he does. Sounds like a good time to "pull the trigger" - this one smelled pretty good. Dump the bottler machines ASAP so you're not locked into that mess What was the deal on the machines that needed stocking twice a week? If he's got some smaller equipment, maybe look at upgrading that Link to comment Share on other sites More sharing options...
indiana Posted January 30, 2013 Author Share Posted January 30, 2013 All his snack machines are high quality, 4 and 5-wide AP. They're all clean and look big enough for weekly servicing. Most items were only stocked (and restocked today) half deep. If the machines were filled (each spring filled to capacity), the route could very likely be serviced only once a week. Link to comment Share on other sites More sharing options...
moondog Posted January 30, 2013 Share Posted January 30, 2013 All his snack machines are high quality, 4 and 5-wide AP. They're all clean and look big enough for weekly servicing. Most items were only stocked (and restocked today) half deep. If the machines were filled (each spring filled to capacity), the route could very likely be serviced only once a week. Sounds like an opportunity I'd jump on if you're ready to go. Link to comment Share on other sites More sharing options...
indiana Posted January 30, 2013 Author Share Posted January 30, 2013 Sounds like an opportunity I'd jump on if you're ready to go. I appreciate the reassurance, that's exactly what I was looking for. I'm getting my side of things reviewed and prepared now. Link to comment Share on other sites More sharing options...
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