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Location price help.


jaynig

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This one is asking $80k. 85% of all sales are done at one location. Says profit is $40k a year and margin is around 60-70%. Has a food machine that sells microwaveable burgers burritos etc.

 

Gold Mine  - $80000 
 

Start the New Year right - with a new income! You won't see a route more lucrative than this one! Two major addresses each with three sub-locations. At least two fills per week required for one. Twelve machines total. 

 

 

 

 

 

Here is a breakdown of machines and their est value:

 

 1 model 431 Shoppertron .......................$2250                     = $2250
                     3 model 3500 10-select drink machines...$1500 - $2000 ea   = $4500 - $6000
                     2 model 3509 32-select snack machines...$2250 ea              = $4500
                     2 model 3160 47-select snack machines.. $2500 ea              = $5000
                     1 model 3205 coffee machine...................$3500 ea              = $3500
                     2 model 3151 12-select drink machines... $2450 ea              = $4900
                     1 model 511 Vendo drink machine...........$1000                   = $1000
 
                     Total                                                                $25,650 to $27,150
 
 Think they are overvaluing their machines a bit. 
 
 
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This one is asking $80k. 85% of all sales are done at one location. Says profit is $40k a year and margin is around 60-70%. Has a food machine that sells microwaveable burgers burritos etc.

 

Gold Mine  - $80000 
 

Start the New Year right - with a new income! You won't see a route more lucrative than this one! Two major addresses each with three sub-locations. At least two fills per week required for one. Twelve machines total. 

 

 

 

 

 

Here is a breakdown of machines and their est value:

 

 1 model 431 Shoppertron .......................$2250                     = $2250
                     3 model 3500 10-select drink machines...$1500 - $2000 ea   = $4500 - $6000
                     2 model 3509 32-select snack machines...$2250 ea              = $4500
                     2 model 3160 47-select snack machines.. $2500 ea              = $5000
                     1 model 3205 coffee machine...................$3500 ea              = $3500
                     2 model 3151 12-select drink machines... $2450 ea              = $4900
                     1 model 511 Vendo drink machine...........$1000                   = $1000
 
                     Total                                                                $25,650 to $27,150
 
 Think they are overvaluing their machines a bit. 

 

Too much USI equipment for me and yes the valuations a a bit high and you'd be sticking all your eggs in one basket so to speak with only two accounts - what happens if one of them shuts down or the owners son wants to jump into the vending biz?

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Don't have a problem with the USI equipment. But the price is waaaaay to high. The %of revenue coming from only a couple locations is not a deal breaker, but ought to be concering. Are there contracts involved, how long on location, what kind of business, how long have they been in business, etc etc.

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Sounds like this ad is from a business broker and you will always pay the most using a broker because they are in it for their fee.  If there are contracts that lock you in for more than one year and if the prices are good (your market pricing or higher) and if the commission rate is low (10% or less), then I would not pay more than one year's proven gross. 

 

The equipment is good and pretty late model with the cold food machine being the oldest.  The seller obviously got the equipment from a USI distributor and very likely got the accounts that way too.  The price the seller paid to the distributor was too high to begin with, so they are trying to recoup their investment. 

 

One of the most important questions to ask is why they are selling it.  If these are relatively new locations you could be dealing with the USI distributor himself, as many of them will solicit and secure locations, install the equipment and then go out looking for a buyer.  This is the only way in this economy that most distributors can even sell equipment right now.  If this is the case, there won't be any long term proof of sales because they accounts might not be long term yet.

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One of the most important questions to ask is why they are selling it.  If these are relatively new locations you could be dealing with the USI distributor himself, as many of them will solicit and secure locations, install the equipment and then go out looking for a buyer.  This is the only way in this economy that most distributors can even sell equipment right now.  If this is the case, there won't be any long term proof of sales because they accounts might not be long term yet.

 

I have run into that before as well.

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Sounds like this ad is from a business broker and you will always pay the most using a broker because they are in it for their fee.  If there are contracts that lock you in for more than one year and if the prices are good (your market pricing or higher) and if the commission rate is low (10% or less), then I would not pay more than one year's proven gross. 

 

The equipment is good and pretty late model with the cold food machine being the oldest.  The seller obviously got the equipment from a USI distributor and very likely got the accounts that way too.  The price the seller paid to the distributor was too high to begin with, so they are trying to recoup their investment. 

 

One of the most important questions to ask is why they are selling it.  If these are relatively new locations you could be dealing with the USI distributor himself, as many of them will solicit and secure locations, install the equipment and then go out looking for a buyer.  This is the only way in this economy that most distributors can even sell equipment right now.  If this is the case, there won't be any long term proof of sales because they accounts might not be long term yet.

if the seller got it as a package deal with the location id be careful of any lease or finance payments still owed on the machines make sure the seller owns the equipment free and clear i think you can check w/ USI and they can determine it from the machine serial #s

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Good call on that, dogcow, I forgot to mention that as a possibility.  The note could even be carried by the distributor himself.  This deal should include a clause that the machines are sold free and clear of any encumbrances and that any liens against the equipment must be released and any notes owing against them must be paid in full by the seller prior to the final sale to the buyer.

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Thanks for the replies.  A couple answers to your questions.

 

No contracts, locations are a youth correctional facility and car dealer.  Machines are paid for, no connections to usi, this individual bought them directly from person who had location. Been there a few years. Individual is mid 60s and having health problems, mostly with feet, cant get around anymore.

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Then you should discount this for no contracts. You didn't say what the annual sales are and I wouldn't back into the numbers. He needs to give you proven sales figures, by location, for as long as he's had it to sustantiate whatever sales he claims and he needs to give you his prices by category, such as can soda, bottles, chips, cookies, chocolate, pastry, etc. It sounds like good accounts but you need to protect yourself from things out of your control such as an account deciding to change vendors.

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If you are an experienced vendor then this won't be so scary as you will know how to take care of high volume locations.  But if you are new to this then you need to do your due diligence and determine if you can handle it.

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If you are an experienced vendor then this won't be so scary as you will know how to take care of high volume locations.  But if you are new to this then you need to do your due diligence and determine if you can handle it.

 

Larger locations don't seem to change vendors as often as smaller ones, so even without a contract if I had the opportunity to meet with the location and they were OK with the change I would not have a real problem with not having a contract. In my experience, it is not likely that they will change vendors if they are satisfied with their current one as long as you meet and/or exceed their current expectations but it still is a small but real possibility. If you are unsure, as AZ puts it, then unless you can handle the worst case scenario, losing the account, then I would think really hard about proceeding.

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