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Pricing a Location


SchligVend

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So I have an opportunity to take over a location, this location is a national hotel in a prime downtown area, this location has 6 machines does 250 on the off season and up to 500 a week during the busy season . The reason why it has so many machines is because it is a 5 story hotel and it has Pepsi leases on every floor and a coke lease in the breakroom for the employees. Since these are all Pepsi and Coke assets how should I price this location.

 

This location does have a contract that expires in 18 months.

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The "busy season" will fluctuate depending on what they book rooms for.  I doubt they have a busy season as much as they have busy weeks due to downtown events.  They may be busier during Nascar weeks and Spring Training, but then maybe not as downtown Phoenix is nowhere near any ballfields.  That would lead to Civic Plaza events (conventions and such), Allstar Games (none in the future) or popular baseball or basketball events being the major draws.  I am assuming you're speaking of downtown Phoenix.

 

Are there no snacks here?  Most hotels will have one on the main floor and usually on every other floor for the guests.  Pricing for the soda assets alone is for blue sky only as there are no actual assets to buy.  You will have to decide what you're willing to pay for the privilege of making some small profit in the long run.  You might offer 6 months of average gross sales or 12 months of average gross profit.  You may have to educate them as to the fact that they can't expect to get 12 months of gross sales because they own no assets, but some people can't be taught anything.  Consider too, that the Coke machine for the employees is probably priced below market. 

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Vandalism is extremely high in hotels. That should make you feel all warm and fuzzy when staying there.It don't matter how upscale they are, 5 story building usually means the first floor vendor gets the most use and the rest have out of date problems.

 

Most hotels can tell you what their average occupancy is. This will tell you how much the vendors sit idle. Hotels don't have a very high occupancy rate. They need at least something like 38% to survive and so do you. Don't forget about commissions?  

 

18 mo left on contract means you need a pay back of your money invested in six months. Otherwise you will never make a dime. In 18 mo they will change to Coke so they can have brand new vendors with C/C readers

 

If I were to set a Hotel I would want the Vendo 721 HVV from Pepsi. Electronic lock. Thieves in most cases will keep walking because they are tanks.

 

I would check for outdated product in all the vendors before putting up a nickel. All lights are working. Look for repaired vandalism. Vendo's may  have two bill validator knockouts and the top one may have been assessed at sometime in the past. D/N will  have warped doors with the theft plate on the side showing signs of prying. This can be a sign of trouble. Will be more evident on the slowest floors.  

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Vandalism is extremely high in hotels. That should make you feel all warm and fuzzy when staying there.It don't matter how upscale they are, 5 story building usually means the first floor vendor gets the most use and the rest have out of date problems.

Most hotels can tell you what their average occupancy is. This will tell you how much the vendors sit idle. Hotels don't have a very high occupancy rate. They need at least something like 38% to survive and so do you. Don't forget about commissions?

18 mo left on contract means you need a pay back of your money invested in six months. Otherwise you will never make a dime. In 18 mo they will change to Coke so they can have brand new vendors with C/C readers

If I were to set a Hotel I would want the Vendo 721 HVV from Pepsi. Electronic lock. Thieves in most cases will keep walking because they are tanks.

I would check for outdated product in all the vendors before putting up a nickel. All lights are working. Look for repaired vandalism. Vendo's may have two bill validator knockouts and the top one may have been assessed at sometime in the past. D/N will have warped doors with the theft plate on the side showing signs of prying. This can be a sign of trouble. Will be more evident on the slowest floors.

I just wanted to emphasize that seeing expired product in a machine is a good indicator of a slow account.

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Let's say that account does $300 week from 6 machines at hotel pricing. If the bottles are $2.50 or cans are $1.25 , you are selling about 2 cases if cans or 1 case of bottles out of each machine. What's worse is that you will probably get up to 50% of your sales from the 1st floor if it has a lobby. That means the other floors might sell 1/2 case of bottles each week while the first floor does alright.

Maybe you should spend about $15 on soda out of the top floors to see if the dates are good on the oddball stuff. It's a lot cheaper than moving equipment and losing case after case of soda due to expiration dates.

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Given that these are all bottler owned assets, I wouldn't offer a penny over three months gross.  Vandalism doesn't bother me that much since these are not your machines and you already know the drill on the higher bottler prices and quotas - not too sure the upper floors will satisfy the Pepsi quota with all those machines in the mix.

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