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Whats it worth?


parrotthead
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I have the opportunity to buy a route. All of the locations are in my area or very close to my area. The machines are in high traffic areas. There are 50-60 locations( some of them haven't been worked in a while so they may not be there). Here is the down side, most of the machines are vendstars and will have to be changed out. The route hasn't been run right in years. There are about 10 oak vistas/ a&a machines that go with the route as well as 6-8 more vendstars. So what do you think? 

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Depends on how many aren't there anymore, and how much money is being generated a month. And then add in that you say the route hasn't been run right in years, not sure how many locations you're actually going to be able to keep. Unless it's generating a ton of cash and you can prove it, i'd either pass, or offer what you'll get back in less than 6 months. 

 

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Yea, youre going to want to verify the actual number of locations and what the sales are. There's a possibility you could get a really good deal though if the seller is desperate(sounds like it could be the case) and the sales are there. 

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The seller is a local business owner and he doesn't have time to work it. He wants $5000. I can probably buy it for $4000. I know several of the locations around town and I have really wanted to get in them. One is an industrial plant break room and they want more machines. Another one is one of the best bbq restaurants in the state. There are 5 court houses, the courthouse here has machines on every level and those machines are always empty ( I know its because they aren't worked right). 

 

He's not desperate for cash, he probably does more in sales in a day than I do in a month.

 

I want to see exactly is still there. And what I would have to do get it up to my standards. I have a lot of machines in my shed and we could change out all of the locations that could/ will take a rack. Then I would have to look for northwestern triple plays or 1800 vending machines.

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Most of the equipment is junk. So, it comes down to what would it cost you to get the locations, or locations like them, on your own. You have equipment in storage so basically the route is "worth"  just the cost of locating. 

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I am going to add a little to my first comment. I have bought a lot of routes, little & big. The biggest issue I have had is a route being really run down and not serviced the locations can be unhappy. So you get blindsided because you are the first guy they have seen in awhile and the location will vent on you. Many times, "just take it with you".  You can save some of these but not always. It is best to have the seller take you to each location and do the explaining about bad service etc. I have even taken machines with me and swapped the real clinkers right then.

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I would have walked away the other day if it wasn't for the locations, they are places I have dreamed of being in since I started this. I've got some really good locations  but some of these would be great. 

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Have you paid a locator before? What's the most you would pay them to find you a location? That's probably how I would proceed. Maybe a bit higher since you could turn around and sell any equipment you replace. 

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I think I could sell the vendstars for $40 each, it may take a while but I'm used to waiting on my money.

 

Here is what I'm thinking give the guy $2000 (with the understanding that it is totally refundable) Work the route, if I want it I keep the quarters and pay him off within a year. If I don't he pays me my $2000 back plus what it cost to run the route and I give him his quarters. What do you guys think?

 

I've never bought a route thanks guys for all of your help.

Edited by parrotthead
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If you go that route, I'd give half upfront and the other half after you're satisfied with the route. Not sure if it would work normally, but since both of you know the route had been neglected, the terms might work out. 

Maybe work out something on the price where if a certain number of locations are gone, that the remaining balance would be adjusted.

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3 hours ago, parrotthead said:

I think I could sell the vendstars for $40 each, it may take a while but I'm used to waiting on my money.  If these Vendstars have been in busy locations for years I am guessing they are a wreck (missing all of the doors, canisters coming apart, lenses yellowed). Selling these for $40 per unit after you pull them will be a real challenge especially if they are in really poor shape.

 

Here is what I'm thinking give the guy $2000 (with the understanding that it is totally refundable) Work the route, if I want it I keep the quarters and pay him off within a year. If I don't he pays me my $2000 back plus what it cost to run the route and I give him his quarters. What do you guys think? Obviously I don't know the guy but you put yourself in a bad spot the moment you hand over money to an unknown person with they expectation that may have to refund it to you. Also you would have to determine "what it costs to run the route" then you are asking him to trust you on how many quarters have been pulled from the inception of the deal. Way too complicated in my opinion. Keep in mind that you two may not be on great terms if the deal goes south so that makes things even tougher to work out in that case.

Keep things as simple as possible.  I suggest one of two options: 1) Do what Musser suggested. Set a price for each location prior to going out. Both of you go to each location and verify that the account is still in good standing. Put your sticker on the machine, pay him for it, and then move onto the next location and repeat. If you go in and they tell the guy to grab the machine and go, you lose nothing. Option 2) Agree on a very low price (1.5k-2k cash) and you take over letting the chips fall where they may. This means for one price he can forever be rid of the the route and it's responsibility. Then it's up to you to deal with the accounts from that point on. It's a gamble but it sounds like these locations are strong enough that you would make your money up in no time even if you lost several of them. Honestly, I like this option with better equipment (Oak, NW etc..) because if you walk in and they show you the door immediately you still have a tangible asset that can be placed somewhere else. Not the case with a beat up Vendstar that is dumpster ready. This is also effective if someone just wants out right now or if they need cash. You said that he is not hurting for cash so this option is probably not the way.  I have bought a lot of routes over the years using both methods an have done fine. I really like option 1 for bigger routes.

I've never bought a route thanks guys for all of your help.

 

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15 hours ago, parrotthead said:

I think I could sell the vendstars for $40 each, it may take a while but I'm used to waiting on my money.

 

Here is what I'm thinking give the guy $2000 (with the understanding that it is totally refundable) Work the route, if I want it I keep the quarters and pay him off within a year. If I don't he pays me my $2000 back plus what it cost to run the route and I give him his quarters. What do you guys think?

 

I've never bought a route thanks guys for all of your help.

He wants out, you want in, agree upon a price, pay him and be done with it. After your deal he never wants to think about candy machines again.

When I buy a neglected route the first thing I do is swap out all the equipment for nicer clean equipment. This does two things, 1. It shows there is a new Sheriff in town and 2. With a swap out you're only in the location for like 60 seconds so there isn't much of a chance for the location owner to kick you out over the previous persons poor performance.

You'll still get some kick outs, but hey that's a part of this business.

You should try to get the route for $2500-3000 based more on his desire to be out more than the actual value, maybe fall back to $3500 if you really want to take on this project.

If it's been six months since he serviced there could be $1000 in the machines.

 

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4 hours ago, Bravo Duck said:

He wants out, you want in, agree upon a price, pay him and be done with it. After your deal he never wants to think about candy machines again.

When I buy a neglected route the first thing I do is swap out all the equipment for nicer clean equipment. This does two things, 1. It shows there is a new Sheriff in town and 2. With a swap out you're only in the location for like 60 seconds so there isn't much of a chance for the location owner to kick you out over the previous persons poor performance.

You'll still get some kick outs, but hey that's a part of this business.

You should try to get the route for $2500-3000 based more on his desire to be out more than the actual value, maybe fall back to $3500 if you really want to take on this project.

If it's been six months since he serviced there could be $1000 in the machines.

 

Thanks I was thinking the same thing

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