HHV Posted August 16, 2013 Share Posted August 16, 2013 I thought I would ask all of you your opinion on a route I am considering purchasing. Here is the scoop: 17 locations all consisting of racks, wizards, candy cranes, and grip testers. I have seen the records for the last three years. They started off at about 20k gross and it has declined to 11k last year. I am projecting about 9k this year. They indicate the reason for decline is because they haven't been as diligent in the route. The consists of restaurants, grocery stores, and amusement centers. I am confused as what to offer. 75% of gross sales for the last year is what I was thinking because I am going to have to put the work in to build it back up. Any ideas Link to comment Share on other sites More sharing options...
mjacks Posted August 16, 2013 Share Posted August 16, 2013 Hard to say with out seeing the current condition of the machines and route. If all the machines are beat up then you will have to put out cash to get it back up to speed to get back to the $20k mark. If it is just empty machines/old merchandise then you shouldn't have to invest a lot. If the machines look good and working well I wouldn't have an issue going to $11k since I know swapping merchandise is easy work. If not maybe half that if I am going to have to replace and refurbish stuff. You are really buying the locations in this case. Link to comment Share on other sites More sharing options...
shepherdsflock Posted August 16, 2013 Share Posted August 16, 2013 You should get the seller to let you come with him on a service ride. View the machines on location and see if you spot any red flags. Has the local competition put in nicer machines in his locations? Are the machines in proper working order? Does it look like the guy has been neglecting the route as much as he claims or could he be hiding something else? Purchasing a route requires a lot of diligent investigation before handing over the money. 75% of gross for one year would be a good deal if the numbers are verifiable. Yet another reason to ride along on the route; verify that the collections you see in person are in line with what the seller is claiming. My own experience with a bulk route purchase has been positive. I've been able to increase revenue by increasing service frequency and product rotation. You might be looking at a similar situation where you might be able to make a neglected route a good performer. Link to comment Share on other sites More sharing options...
Snack Express LLC Posted August 16, 2013 Share Posted August 16, 2013 The above is great advice. I wouldn't buy anything unless I went on a route with him. If he says NO then don't go. Link to comment Share on other sites More sharing options...
PowerVendor Posted August 17, 2013 Share Posted August 17, 2013 This topic has been debated on the forum in detail. The consensus from a former thread said a good way to value route is the value of the equipment plus 25% of one year's gross. You can better calculate the market value of the equipment and go from there. From what i have seen, most folks tend to exagerate gross sales. In your case, how does the value of the equipment plus 25% of gross compare to how you or he value the route? If you don't go a lot higher than equipment value, you know the route is worth at least that. Shepherdsflock has some excellent comments. The seller may be bailing for several reasons, like he may be about to lose his best locations. Link to comment Share on other sites More sharing options...
orsd Posted August 17, 2013 Share Posted August 17, 2013 Or the new " healthy " crap laws are wrecking his school accounts Link to comment Share on other sites More sharing options...
sherlock Posted August 17, 2013 Share Posted August 17, 2013 One important piece of info to get (if you haven't already) is "What is he asking for the route?". It's a mistake to make an offer until you know how much he's hoping to get. Sorry, if I missed it...I just didn't see his asking price anywhere. Link to comment Share on other sites More sharing options...
HHV Posted August 17, 2013 Author Share Posted August 17, 2013 One important piece of info to get (if you haven't already) is "What is he asking for the route?". It's a mistake to make an offer until you know how much he's hoping to get. Sorry, if I missed it...I just didn't see his asking price anywhere. One important piece of info to get (if you haven't already) is "What is he asking for the route?". It's a mistake to make an offer until you know how much he's hoping to get. Sorry, if I missed it...I just didn't see his asking price anywhere. Yeah I guess I forgot that. This is the kicker....35k but that also includes about 10k in extra machines, but they said we could work out a deal that didn't include the machines. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.