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Potential route purchase


Marcomc
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Happy New Year to all.

I'm seeking some expert advice about a potential location I'm considering buying. I'm thinking the asking price is too high. But I wanted to get other opinions as well. The person selling is someone I've dealt with in the past and he's been a pretty solid guy.

It's an extended stay-hotel type location that's 24hrs. It has one snack and one soda machine. The snack machine is a USI that's fairly new. The soda machine is a Dixie Narco 501E I think. It's not old but it's not new either. He says the location grosses about $400/month and close to $600 during the summer. He does pay a small commission monthly (about $40 on average). He's asking $6k. I feel like that's a bit high. I was thinking of offering no more than $4500. I don't wan't to over pay, but I also don't want to miss out on a potential good location either.

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He's asking for one year's gross based on a $500 average which is a starting point.  If he has a contract and if they have card readers then you might consider that price but paying full asking price is for just that type of scenario.  If it's not that perfect then offer what you want.

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Not sure if i should post this here or start a new topic but here goes.

Totally new to the vending scene. Been researching for a few months now and I'm currently in discussions with a guy about buying his route. He has 9 machines (3 soda, 3 snack, and 3 combo machines). They bring in about $1,400 per month and he is asking $15,000. The owner is letting me follow him on his route tomorrow morning. I think that the asking price is too high and I've told the seller that but we haven't discussed price any further. I'll check out the sales and machines tomorrow and then probably put together an offer. Wondering what you guys think?

All input is really appreciated.

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19 hours ago, Marcomc said:

Happy New Year to all.

I'm seeking some expert advice about a potential location I'm considering buying. I'm thinking the asking price is too high. But I wanted to get other opinions as well. The person selling is someone I've dealt with in the past and he's been a pretty solid guy.

It's an extended stay-hotel type location that's 24hrs. It has one snack and one soda machine. The snack machine is a USI that's fairly new. The soda machine is a Dixie Narco 501E I think. It's not old but it's not new either. He says the location grosses about $400/month and close to $600 during the summer. He does pay a small commission monthly (about $40 on average). He's asking $6k. I feel like that's a bit high. I was thinking of offering no more than $4500. I don't wan't to over pay, but I also don't want to miss out on a potential good location either.

Is that $400-$600 gross or net gross?

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Marcomc, it's not a good deal. The max I pay is 9 months gross sales and that's if the equipment is really solid and fairly new. If it does$400/month, then the most I would pay is around $3500. However, I understand if you want to pay slightly more as you have to start from somewhere and grow.  You will realize when you get more machines and locations that better deals can be found once you get to know other vendors in your area. Anyways, I have one Extended Stay location myself. It's a good account and my machines are in the main lobby where there is a lesser chance of vandalism occurring. Are the machines in a laundry room and are there other machines as well?  I know where I am at, Canteen has all the Extended Stays. I do worry about getting kicked out at some point because they have a contract and I don't. These are the sort of things AZVendor is talking about. 

GrownSimba, please create a topic next time if you have concerns of your own so that way no ones post gets hijacked. Anyways, $15,000 is too much unless the machines are like new. Without knowing further details it's hard to say but 8 months of gross sales is a common offer in this industry. You didn't even mention how many locations. Get all the sales numbers from the machines and compare them to the 2nd time you go with the seller. Never buy a route just from a 1 time look unless you know the person really well and really trust them. I have found for myself a lot of people will inflate sales numbers just so that way they can sell their route.

 

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Vendifull that is a good deal for $7000 if you can get 4 like new machines and they gross around $200 each. If the machines are USA made like USI, I would go for it. I admit commisions suck but sometimes you have to pay to play. In a worst case scenario, you should be able to get the $7000 just from the equipment alone. If its more than 40 minutes away though I might not get it but under 20 minutes driving is pretty good. There are so many factors involved though such as how are their prices and how is the climate setting? Everything counts.

 

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So I just got back from my first trip on the vending route I am looking to purchase. The route is 5 locations. 2 of them are really strong manufacturing factories and the other 3 are in larger office buildings/warehouses. Its a total of 9 machines. The 3 combo machines are Genesis model 17378. They have 3 sections. Snacks in the top and side sections and drinks in the bottom section. The other 6 machines are a combination of Dixie Narco and Royal. All the drink machines vend cans not bottles. I got the impression that the prices could be increased over time. He is selling chips for $.65 and candy bars for $.85. He sells the soda for $.75 per can which I think is right, but I think the chips and candy bars could be increased a little bit. Route brings in about $1,400 per month and asking price is $15,000. This would be my first step into the vending business. I don't own any other machines or locations. Wondering what you guys thought for a first timer like myself?

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Thanks for the information. When I first talked to the seller, before seeing the machines and just going off the numbers, I told him I was looking to offer him around $9,500 based on sales. We didn't discuss the price after looking at the machines. I wanted to take a few days to think about it, but i think I might stay at that offer. This would be my first route and I'd be willing to pay a little more than I should to get my foot in the door. One of the locations is also looking to expand the vending that is offered so there is potential to increase the sales there. The machines in some of the locations had coils that were completely empty and didn't get refilled when we were there, so I think with servicing the route a little more there is potential there.

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So this means you didn't ride while he ran the route; that he only showed you locations.  Unusual that he did that without asking for non-compete or non-disclosure agreements.  Foolish of him also to not have inventory with him so he could refill things that were obviously low.

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So we rode together on the route and he did restock some of the stuff at the busier locations but we definitely left some coils, that were already empty, unfilled. He said that he had other people who were interested in the route and asked for the locations but he wouldn't give them the location names without riding along with him. I feel like there was definitely room for improvement on the route in general. Another one of the locations has a water jug machine that he said he refills for them. He said he just buys the big jugs of water and writes up an invoice for the business but this only brings in like $20-$30 a month. This would also be included in the purchase.

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16 hours ago, vendman0729 said:

Vendifull that is a good deal for $7000 if you can get 4 like new machines and they gross around $200 each. If the machines are USA made like USI, I would go for it. I admit commisions suck but sometimes you have to pay to play. In a worst case scenario, you should be able to get the $7000 just from the equipment alone. If its more than 40 minutes away though I might not get it but under 20 minutes driving is pretty good. There are so many factors involved though such as how are their prices and how is the climate setting? Everything counts.

 

Thanks vendman.  I have been going out on the route and it is very close to home, super convenient.  Not the biggest money maker, but it may work for me.

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