fgreene Posted July 22, 2013 Posted July 22, 2013 I am looking to getting into vending and am very glad I found this forum. I was wondering if there was anyone out there who would be willing to help me out. I know many of these questions are difficult to answer because of the number of variables but all answers would be appreciated. Also, if anyone is willing to talk outside the forums (either email or phone) I would greatly appreciate that especially if you live in the Philly area (if you are concerned about a conflict of interest, I will let you know where I live and which counties I am looking to work in). I would love to be able to have a mentor to start this business. Some of my questions: I am looking to buy a route from someone (I signed a non-disclosure agreement so I can't get into specifics). How do I evaluate it to see if it is worth the cost? What would be a good return on investment? He has given me the basic financials of the route and would give me more in depth if we proceed further. If the above mentioned route is not good, how do I find one to purchase (Craigslist does not seem to have much worthwhile)? I would be looking for this to become my career. What would be a realistic number of machines I could handle without hiring help (assuming I work 8-10 hours/day and get some office support from my wife). I live in the Philly suburbs so it is dense enough to have a number of possible locations within close proximity but no skyscrapers or anything like that. Can I realistically service 10 machines/sites per day? I know this one is dependent on a lot of variables but I am running numbers to see what I might be able to expect from this business.What kind of gross should I expect from a good machine as an estimate? $300/month? $400/month? $500/month? What would be an average machine? What is a good estimate for insurance? How much money should I set aside for maintenance? Other than insurance, maintenance, fuel, product and commission, what other continuing expenses are there? Thank you in advance for your answers.
AZVendor Posted July 22, 2013 Posted July 22, 2013 Welcome to the forum and good luck with your new career. Many of your questions have been previously answered in this forum or in the Welcome forum. There are few rules of thumb to follow in vending and, as you already acknowledge, the variables are endless. There are two ways to get into vending, the slow way and the quick way. The slow way involves getting one or two can soda accounts and then purchasing inexpensive used machines to install. Use this to get your feet wet and learn about inventory management, purchasing, repair, account retention, pricing vs. profits, taxes, insurance - basically all the basics vending involves. If you still like it a few months down the road, then begin to add accounts and machines and build the route slowly. This is a good way to do it with no debt. The quick way is to purchase an existing route that produces the cashflow and profits that you require to live on. This requires you to jump in head first, trying not to drown. You will immediately have to understand not only can soda vending, but also snacks and possibly coffee or food - refrigerated or frozen. You will not be able to do the job as quickly as the seller could and you won't get up to speed for many weeks or months as you learn the business from the ground up. If you don't wish to sell and want to take the "easy" way, then buy an existing route. You can expect many stumbles along the way as you learn inventory management on a grand scale, commissions, who to call for machine repairs (you won't have time to do them), find someone to move machines (you will likely lose one or two accounts or gain one or two), vehicle maintenance, counting and banking your money, debt management and so much more. If you are convinced that vending is going to be your career, then the quick way may be best for you if you have the cash. Your choices to find a route are Craigslist, the bulletin board at your local vending product wholesaler, or business brokers. You don't mention whether you have been reading any of this forum, but you will be better served if you take the time to voraciously read everything you can before jumping in so you can be familiar with some of the mistakes to avoid. It sounds like you have put the cart before the horse if you are already looking to buy a route and haven't done your due diligence on the industry yet. Buy American, first and foremost. You want equipment from Dixie Narco, Vendo, Royal Vendors, Crane/National, AMS, Automatic Products and USI. The only way to properly evaluate the route is to post the details, less any identifiable info, on this forum and we can dissect it for you. When you are a seasoned vendor and depending on how efficient your route management is you can handle up to 20 machines per day, depending on driving and logistics. There is no "average machine" as far as sales go. There are good machines and bad machines, good locations and bad locations. This is retail and the key is location, location, location. You need to provide specifics so we can evaluate an individual location as "good." You don't need to set any specific amount aside for repairs. You should be making enough money to be able live, pay all your obligations and still be able to pay for some repairs. They tend to come in droves, then not have any for awhile. If you choose to bank some repair money, that would be smart, but I wouldn't make it more than $500 to $1000. It will depend on the route history, age of machines, number of machines....... The insurance you will need is not insuring the machines against theft or damage, that is cost-prohibitive. You will purchase general business liability for a vending company with a "completed products" rider. Try to get one that includes your vehicle insurance as an additional expense. Take advantage of asset depreciation when doing your taxes and use a tax professional. Do not take everything I wrote here as the only information you need. Read and read some more.
jerry1973 Posted July 22, 2013 Posted July 22, 2013 I bought a route about 2 months ago consisting of 13 full line machines (soda and snack) and a bunch of bulk machines also. AZ is right in that there is no true average that you can count on. I have a machine or two thats good for a little over $100 per week and I have them as low as $25-30ish. Most vendors here sort of expect about $50 per week, or they will begin to look for a new home for the machines. Since I am not hurting terribly bad for time, I don't mind the $30 per week accounts at this stage, and am looking at trying to improve those smaller accounts with a more custom product selection. When the time comes when my schedule is full, then for me it will be time to make the decision to move machines at slower accounts to more productive spots. I suppose I did AZ's fast approach, and so far im doing fine, but never think that it don't take work.
moondog Posted July 22, 2013 Posted July 22, 2013 I would agree with everything that's been said here. I schedule 10 machines a day and they average $200 a month (some lower and some higher). With thirty machines placed I'm doing okay and have the time to take on thirty more machines which would put me at just under 100 hours per month (still not quite full time). You need to be very patient with Craigslist as the good account deals only pop up a few times a year (case in point jerry1973). The one big mistake I made was to take on numerous under-performing accounts - anything that grosses less than $500 a month (2 machines) is not worth doing. I went to thirty machines placed in my first 6 months but really wasn't making much money. Three years later, I still have thirty machines placed, but now I have much better accounts and am making some money. You'll need to give us more info on your proposed route purchase - equipment, revenue, types of accounts etc. In the mean time read this forum all the way back. Don't be disappointed if we end up telling you that this is not a good deal - most of the deals out there fall into that category.
mission vending Posted July 22, 2013 Posted July 22, 2013 As previously mentioned there are many variables to all of your questions. Depending on the locations and distance between them I can, in a 10 hour day, service 12-20 locations and 30-45 machines. The 10 hours is servicing machines only, I have a couple of part timers that load and clean the truck for me in the evenings. I have a number of locations that have 3-8 machines so that is how I can service more machines without adding locations. You mention that you signed a nondisclosure, you should be able to share that information with advisers and consultants without violating the agreement. Even if you can, I'd suggest you pick one or two members whose posts you like and find credible and share some info with them via PM. The more experienced and knowledgeable members will be happy to help and will understand the need to keep the info confidential.
Walta Posted July 22, 2013 Posted July 22, 2013 You left the government out of your cost list, every state is deferent the only thing that is sure is the state, county and or town will have their hands in your pocket. Don’t buy Combo or small equipment they do not hold enough product make stopping your truck profitable. If you can swing it temporarily move 300 miles from home and get a job as a route man 6 months, tell your new employer your plan. Now you may have 1 bad boss if you get in this business you will have 30 people that think they are your boss and some will be bad. If you buy a route, don’t believe any income not reported on provide tax return. Walta
mission vending Posted July 22, 2013 Posted July 22, 2013 If you buy a route, don’t believe any income not reported on provide tax return. I second that comment in particular.
fgreene Posted July 23, 2013 Author Posted July 23, 2013 Everyone, I appreciate the responses. I have been looking into this for the past couple of months. I contacted a couple of the Healthy Vending companies and almost got sucked into their pitch but did the math and quickly came to the conclusion that it is a bad deal (which most of you already know). I still find the prospect of owning my own vending company very appealing. While doing some research about vending, I came across this site last week. I have found that there seems to be a lot of knowledgable and helpful people on here that is why I felt comfortable posting. Without getting too specific, the deal includes 5 locations and averages about $5000 gross per location (8 machines total and a 15% commission). However, it is propped up by 1 site which generates over 40% of the revenue. I'd be worried that the one site is not sustainable and will not make as much money as it currently is. He is looking for 25k. I am leaning against it because of it I am not really looking to jump in head first but I came across that ad and wanted to check it out. Right now I am looking to start small (2-5 locations) and thought the easiest thing would be to buy an existing route (if possible for such a small number of sites). The one thing I'd be concerned about by buying such a small route is that there is a reason it is for sale (i.e. a money loser). Would you recommend paying someone to find locations for me? I am not sure I would be able to find adequate locations on my own while working fulltime during the day (I do have time after normal business hours to manage the machines). Jerry1973, The accounts you make $30 a week, are they bulk machines? Moondog, When you say $200 a month, is that gross or gross profit? Thanks again.
jerry1973 Posted July 23, 2013 Posted July 23, 2013 Jerry1973, The accounts you make $30 a week, are they bulk machines? no they are soda machines that are in smallish locations. I have been working with them to see if there is anything they would drink if it was in the machine, and I have made some progress but overall they are probably just losing accounts. However it don't take me but about 15-20 minutes to throw some soda in the machine and to talk with the location for a couple minutes. Like I said, I will probably eventually pull the plug on these accounts, but at the moment I have bigger things to take care of. I would be very afraid of spending 25 grand on a route where 40% of the revenue is from one location. I believe that the business needs to be so that if you lose any account it can survive. This sounds like if you lost the big one the whole operation would be in jeopardy.
moondog Posted July 23, 2013 Posted July 23, 2013 Everyone, I appreciate the responses. I have been looking into this for the past couple of months. I contacted a couple of the Healthy Vending companies and almost got sucked into their pitch but did the math and quickly came to the conclusion that it is a bad deal (which most of you already know). I still find the prospect of owning my own vending company very appealing. While doing some research about vending, I came across this site last week. I have found that there seems to be a lot of knowledgable and helpful people on here that is why I felt comfortable posting. Without getting too specific, the deal includes 5 locations and averages about $5000 gross per location (8 machines total and a 15% commission). However, it is propped up by 1 site which generates over 40% of the revenue. I'd be worried that the one site is not sustainable and will not make as much money as it currently is. He is looking for 25k. I am leaning against it because of it I am not really looking to jump in head first but I came across that ad and wanted to check it out. Right now I am looking to start small (2-5 locations) and thought the easiest thing would be to buy an existing route (if possible for such a small number of sites). The one thing I'd be concerned about by buying such a small route is that there is a reason it is for sale (i.e. a money loser). Would you recommend paying someone to find locations for me? I am not sure I would be able to find adequate locations on my own while working fulltime during the day (I do have time after normal business hours to manage the machines). Jerry1973, The accounts you make $30 a week, are they bulk machines? Moondog, When you say $200 a month, is that gross or gross profit? Thanks again. That would be gross. I have several machines that do $600 a month and others that only do $100. I have a few soda only accounts that are small and pull down the average but like Jerry says, they're quick to service. Usually with the larger accounts, the soda machines do twice what the snack machines do, and I have numerous accounts where there are three or more machines per location so they're more efficient to service. Basically, I shoot for $125 per hour profit so after I deduct time for the support activities (buying product, prekitting, deposits etc.) I end up making $100 per hour. I'm not real thrilled by the account you're looking at and I sense that you're not either. It sounds like the guy is trying to dump four of his dregs and throwing in one decent location to sweeten the pie - all at top dollar. 15% commission is about as high as it gets for full line vending unless you're looking at Disneyland or JFK Airport. I doubt if there's $8,000 worth of equipment and with the high commission, I'd be surprised if you cleared $800 a month. Given what I know about this deal, my highest offer would be $14,000 - a long way from 25 grand. Even at that I would think twice due to the four locations that are grossing less than $400 each per month - there may be potential to improve those accounts but I wouldn't pay extra for what could be. Ps. Sit tight and keep an eye on Craigslist - a good deal will come your way but you need to be patient. Hiring a locator is probably not the way to go.
Vending How Chris Posted July 23, 2013 Posted July 23, 2013 In addition, I might recommend contacting existing vendors and seeing if you can shadow them or even work for them. That way you can get a much better idea of the business and learn about your own business on the job. You can also vet someone who might later sell you locations without having to spend a lot of money up front. As walta said, this is easier if you do this outside of the area where you want to set up shop, so you don't become your employers competition.
mission vending Posted July 23, 2013 Posted July 23, 2013 Depending on the age of the equipment and the locations themselves I'd probably be in the 10-14K on this purchase as well.
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