allen watson Posted December 18, 2014 Share Posted December 18, 2014 Sounds similar the route and age of machines I bought 6 years ago. I was able to put in drink machines in nearly all the stops within 2 years and doubled the route income. Initially you will be working your night job and your new day job. Burning the candle at both ends will burn you out. You will either have to hire someone to help out with the route or cut back your night hours. You ultimately have to decide if this is what you want to do with your life. If it is, then buy it and don't look back. Link to comment Share on other sites More sharing options...
moondog Posted December 18, 2014 Share Posted December 18, 2014 Hey guys, I have an update. I went and met with the owners today and i must say i am on the fence about the whole thing, maybe my expectations are too high. There are few things that I see as negatives and I would like your opinions. First of all, looking at the tax returns for 2010, 11, 12. The gross sales were 105k in 2010 and sunk down to 67k by 2012. They told me that the economy has had a big impact on their business but they have assured me that it still did over 65k last year. I was unable to see the tax records from 2013 since they haven't got the paperwork from the accountant yet which leads me to another issue. Their lack of inventory tracking or information about how much each of their locations make is astounding, they don't track anything at all, they just keep all of their reciepts and they take all of them to the accountant. They said that they have been doing it so long they don't feel the need to keep track of things like that. Keep in mind they are very old school, they don't even own a computer. They are 71 years old. So needless to say I am a little worried that the sales are less than they think they are currently although they raised prices to 1$ on candy 6 months ago. They said they will snail mail me the newest tax returns in the next couple weeks. The next issue is the age of the machines. I know that most of the large snack machines are pretty much all the same but they do have national candy machines from the 60's still on route. I understand of course that these can be upgraded after I buy everything but my concern is the value of the machines compared to the 40k asking price. I am also concerned about the lack of contracts they have with locations. They have commison machines in two school districts which I think could very profitable at only 10 percent commission but other than that they don't have any contracts with locations. They have had some of these locations since they got the business 30 plus years ago and I'm worried that if they retire then the location may not want me to stay in once their long time vendor leaves. Ok, so the upside to this meet. If they are accurate on the numbers then they still have 32 locations with machines that could be upgraded to improve sales and they currently do 0 soda machines which leaves a ton of potential to make this a great business. There is absolutely tons of extra parts and machines. It will take me days of hauling with truck and trailer to pick it all up, everything from snack machines to cigarette machines to all the parts that are used on those machines including bill validators and coin mechs to the motors that drive the spirals in the machines. It is an insane amount of equipment and the near 4 car garage is completely packed to the point that you have to walk sideways through it and there is overflow into the other garage as well. They have also said that they will train me on repairs and I am more than welcome to call them anytime I need assistance with anything, again these are very nice and seemingly honest people. I feel like I should move forward with this but the dip in sales and old machines worry me. What do you all think? I think this would be a great opportunity for you if you are willing to do the work necessary to get this route up to snuff. With soda machines added to the mix, you should easily jump your sales to at least 130k per year. Should you proceed, be ready to sink at least another 20k into this operation to get it cleaned up and performing at it's optimal level. My concern here is that this is a big bite for someone attempting to do this on a part time basis. Even without all the needed upgrades, 32 locations is a lot to manage in your spare time. I would let them keep the 4 car garage full of stuff (sounds like a good Craigslist project for them in their retirement ) Link to comment Share on other sites More sharing options...
Rustinm Posted December 18, 2014 Author Share Posted December 18, 2014 This is what the old candy machines are http://www.ebay.com/itm/like/181531605267?item=181531605267&vectorid=229466 Link to comment Share on other sites More sharing options...
Golfdogs Posted December 18, 2014 Share Posted December 18, 2014 This is what the old candy machines are http://www.ebay.com/itm/like/181531605267?item=181531605267&vectorid=229466 Yikes! Link to comment Share on other sites More sharing options...
FrCorey Posted December 18, 2014 Share Posted December 18, 2014 Without a list of equipment. You just might have a ton of old machines that are only worth pennies on the dollar. maybe they have tons of parts cause the machines are decade old. or just crap. Link to comment Share on other sites More sharing options...
AZVendor Posted December 18, 2014 Share Posted December 18, 2014 That's exactly what I was afraid of. Those pull knob machines have zero value except to a collector. If that's all the locations require then you might as well have an honor box or a turn knob Antares machine there. This old route will never produce enough income and especially profit for you to make it worthwhile. This is what I meant by the vending industry passing them by. You need to list all the machine models and quantities of each in case there are actually some useful assets. Link to comment Share on other sites More sharing options...
Rustinm Posted December 18, 2014 Author Share Posted December 18, 2014 So I believe that most of the machines do have bill validators, he refers to these machines as the glass fronts. I defiantly understand that there is a ton of work to be done. I will have some help, my brother is very willing to help whenever I need it and he will probably end of servicing the route when I am not able to. I'm not sure about the competition around him, most of his stops are in a pretty rural area and in small towns. So what I am thinking overall is that I don't think there is much of a future in cigarette vending and I would like to have some negotiating power. So I would like to offer them 35k without the cigs. They have 6 bar locations but they are very limited to what they can do with it. The machines they are using can only be set to a maximum of 6.40 per pack which obviously isn't enough to make much of a profit on. So, is that a fair price for 32 locations? I don't want to give them an offensive offer and I'm sure after they dropped their original price from 65k to 40k that they feel like they are giving it away at this point. This is a big commitment for me as well, but I hate shop life and I despise night shift so even if I am burning both ends of the candle I know I have to start working my way out of working for the man. Link to comment Share on other sites More sharing options...
Rustinm Posted December 18, 2014 Author Share Posted December 18, 2014 I have one more idea in mind. This is something I think you guys have already suggested. i am going to try and go on route with him next week. I'm off On Monday and Tuesday so I should be able to see exactly what is going on with this stuff and see exactly what he is selling. Link to comment Share on other sites More sharing options...
jerry1973 Posted December 18, 2014 Share Posted December 18, 2014 I have one more idea in mind. This is something I think you guys have already suggested. i am going to try and go on route with him next week. I'm off On Monday and Tuesday so I should be able to see exactly what is going on with this stuff and see exactly what he is selling. good idea. I would hope that that old machine is an exception and not the norm of what this route consists of. I also wouldn't want anything to do with those cigarette machines either. Link to comment Share on other sites More sharing options...
AZVendor Posted December 18, 2014 Share Posted December 18, 2014 The cigarette portion is losing money at $6.40/pack even if he's selling the crappy generics. I don't see how he is making any money after splitting with the bars and after his time. There are ways to get the machines to go above $10 per vend where they should be but it requires an electronic upgrade. This situation and the old pull knob machines are prime examples of what's upside down and antiquated with this route. I do understand that the demographics in rural towns are different but you can't be a charity like they are now - you have to turn a profit on each location. Link to comment Share on other sites More sharing options...
Rustinm Posted December 18, 2014 Author Share Posted December 18, 2014 So if I can get the route for 35k and the old candy machine is a rarity should I move forward? Obviously I have to look at last years income before I move any further but assuming it grosses 65k plus with a decent margin I can always upgrade and expand with what is already established. Are the school districts usually profitable? He mentioned that the machines are on a timer and shut off after school hours so I'm sure what's in there isn't too old correct? I'm thinking over all I could make this business much more lean and improve margins over all by pulling the slow accounts and upgrading where needed. Link to comment Share on other sites More sharing options...
orsd Posted December 19, 2014 Share Posted December 19, 2014 So if I can get the route for 35k and the old candy machine is a rarity should I move forward? Obviously I have to look at last years income before I move any further but assuming it grosses 65k plus with a decent margin I can always upgrade and expand with what is already established. Are the school districts usually profitable? He mentioned that the machines are on a timer and shut off after school hours so I'm sure what's in there isn't too old correct? I'm thinking over all I could make this business much more lean and improve margins over all by pulling the slow accounts and upgrading where needed.Timer dont mean squat it only that it is electric and could be on a Christmas light timer And electric encompasses the piece of golpher national 140 to a new mercant media Most likely on the model 140 side of things Link to comment Share on other sites More sharing options...
allen watson Posted December 19, 2014 Share Posted December 19, 2014 If ALL the candy machines are like the link you posted I would offer them $10k. Even that is a stretch. I just pulled one of those from my route and would never consider putting it back in service. They belong in a museum or on a movie set in Hollywood. Link to comment Share on other sites More sharing options...
Rustinm Posted December 19, 2014 Author Share Posted December 19, 2014 They are defiantly not all like that, not sure of the model number of the newer ones but I will find out. Link to comment Share on other sites More sharing options...
Rustinm Posted May 19, 2015 Author Share Posted May 19, 2015 Hello vending gurus. I know it's been a while but I have some updates on this and some questions. I have a ton of new information on this business and the deal has changed significantly. I am going to attempt to not make this too wordy. I negotiated out of the cigarette vending machines which I was told "don't make much money". I was able to get the price knocked down to 37k with that. The owner still has very crappy records of what the business does. Recently I found out that without the cigs machines the business only grosses around 32k per year instead of the 67k it makes with the 8 cig locations. This is a big problem for me for obvious reasons. I feel like the biz isn't worth 37k with the poor performing snack machines. She is willing to do owner financing and may be open to more negotiation but I think I might be wasting my time. What are your thoughts? I may have left some info out here so ask away. Link to comment Share on other sites More sharing options...
AZVendor Posted May 19, 2015 Share Posted May 19, 2015 Due to the high vend price of cigarettes those sales will always skew the numbers so it's good to remove those sales from equation just to see what the regular vending does. Now you need to evaluate whether they have any vending accounts that can be improved with an additional investment. You still have the opportunity to put out a bunch of soda machines of your own but if the snack sales aren't good then your soda sales probably won't be either. Link to comment Share on other sites More sharing options...
moondog Posted May 19, 2015 Share Posted May 19, 2015 Hello vending gurus. I know it's been a while but I have some updates on this and some questions. I have a ton of new information on this business and the deal has changed significantly. I am going to attempt to not make this too wordy. I negotiated out of the cigarette vending machines which I was told "don't make much money". I was able to get the price knocked down to 37k with that. The owner still has very crappy records of what the business does. Recently I found out that without the cigs machines the business only grosses around 32k per year instead of the 67k it makes with the 8 cig locations. This is a big problem for me for obvious reasons. I feel like the biz isn't worth 37k with the poor performing snack machines. She is willing to do owner financing and may be open to more negotiation but I think I might be wasting my time. What are your thoughts? I may have left some info out here so ask away. So, to sum this all up, there's 32 locations with mostly snack machines only doing $80 a month gross each, for 32k. As much as I sympathize with all the time you've spent following this, the bottom line is that these are low volume accounts that likely would never do more than $200 a month each even if you added the soda machines. Hate to say it but I'd pass on this. Link to comment Share on other sites More sharing options...
Rustinm Posted May 20, 2015 Author Share Posted May 20, 2015 Thanks for the fast replies as always guys. I've been thinking walking away is my best option but I wanted to get a second opinion. It does suck that I've been working on this for so long but it has been difficult to get information from the owner due to their lack of record keeping. So, one last question. At what price does purchasing this route make sense? There is always that chance that at least some of the locations are winners with better equipment. So keeping in mind that there is now flexible owner financing possible is there a deal to be made here or is it a total waste of time? Link to comment Share on other sites More sharing options...
AZVendor Posted May 20, 2015 Share Posted May 20, 2015 It would still be most helpful to know what all the machine models are and how many of each there are - full size machines that is. For the pull knob machines you can just lump them together. At this point I would only be at half the asking price. That's with no other info. They won't agree but you have to start somewhere. What you don't want to do is pay more than the value of the old machines because I don't think there's any other value in it at this point. There's potential in added soda sales but that doesn't enter into the equation at all. Link to comment Share on other sites More sharing options...
Rustinm Posted May 20, 2015 Author Share Posted May 20, 2015 I will figure out the models of the machines tomorrow and post them, I'm pretty sure they are all nationals. Just different ages and sizes. Link to comment Share on other sites More sharing options...
Rustinm Posted May 20, 2015 Author Share Posted May 20, 2015 Hey guys, I haven't got a chance to look up model numbers yet but just a quick question. What is the average profit margin for a snack business? Should i assume they are making a 30 percent margin? Link to comment Share on other sites More sharing options...
moondog Posted May 20, 2015 Share Posted May 20, 2015 Hey guys, I haven't got a chance to look up model numbers yet but just a quick question. What is the average profit margin for a snack business? Should i assume they are making a 30 percent margin? You need to be at or around 100% (double your purchase price) What usually happens is that some items are more to offset the few items (candy bars) that tend to be less. Link to comment Share on other sites More sharing options...
Rustinm Posted May 21, 2015 Author Share Posted May 21, 2015 Moondog, your saying that the gross revenue for the year should be 100 percent of the purchase price? So if the biz is making 32k per year I should pay around 32k for the biz? What about after expense profit margin, the actual bottom line income? Link to comment Share on other sites More sharing options...
Rustinm Posted May 21, 2015 Author Share Posted May 21, 2015 I don't have actual model numbers here guys but this should give you an idea. This is what the list I have says. 2 lectra vend glass front 9 snackshop glass front 10 national pull knob 1 Rowe glass front 5 national glass front 1 candyshop glass front 5 snack shop, not specified 1 candyshop, not specified I know this vague but this is what they gave me. i don't really think they know what they have or what they are worth. I don't have actual model numbers here guys but this should give you an idea. This is what the list I have says. 2 lectra vend glass front 9 snackshop glass front 10 national pull knob 1 Rowe glass front 5 national glass front 1 candyshop glass front 5 snack shop, not specified 1 candyshop, not specified I know this vague but this is what they gave me. i don't really think they know what they have or what they are worth. Link to comment Share on other sites More sharing options...
AZVendor Posted May 21, 2015 Share Posted May 21, 2015 AP had electric dro shelf machines similar to the pull knob machines that were called candyshops and snackshops so I'd bet most of those on the list are no better than the pull knob machines they have. This is really a dumpy route if that's the case and I doubt it's even worth 10K since you'll have to upgrade so much regardless of the gross sales. I would deduct the expected cost of every machine you'll need to replace and you'll probably get down to no more than 1/2 their approximate net profit. So basically this may not be worth any more than 6 months net profit. The will certainly not see it that way and you'll then have to walk away and wait for them to become more desperate than they are now before you might get it for what it's worth. L Link to comment Share on other sites More sharing options...
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