What profit margins should I expect?

[VendingMak]

I'm looking into buying a route and wanted to know what profit margins to expect.

Lets say the following:

• 100 machines (70 drink and 30 snack)
• 50% COGS
• Other expenses like warehouse lease, gas, car repairs, etc

What would be a reasonably expected bottom-line profit margin?  25%? 35%?

Thanks!

[AZVendor]

There is no way to tell you that because all of the variables you mention and some even more important like what your prices are and what the current sales volume by MACHINE is.  Even then there is no rule due to the variable sales at any given location.  You need to get copies of all sales by machine for the last year and a copy of the business tax returns for the last two years to get any idea of what you are asking about.  I mean that there is no way to guess what your warehouse costs will be, we don't know what your COGS is because we don't know your product costs, where you will buy them or what your prices and commissions are.  This is an invisible question with no answers.

[orsd]

A good target would be 20-25% if you did all the work.

If you have employees I'd say 5-10%.

These are rough target figures for a well run, well managed route.

As AZ said there is no way to tell for an existing route unless we knew details. Hell, it could be a money loser for all we know.

[TKK]

I would guess between $70 to $70,000.

why are your cogs so high?

Snacks you should be around 40%. Drinks if bottler about 65%cogs owned like 40%

[Southeast Treats]

Labor costs have a big impact - a smaller route you work yourself with good accounts can do better than a larger route with employees and slower accounts.  Warehouse costs can vary widely.   Look at the current operator's numbers and how he does business compared to how you plan to do business. 

[AngryChris]

I work from home and i only have one route.  Because of that, overhead is low.  My biggest expenses (aside from equipment) are cogs and repair costs.  Repaires used to be as high as about 17% of gross sales, but i have gotten that down to maybe 10% due to retiring obsolete equipment and upgrading machines.  My point is that a route with older equipment might be pretty inefficient, but if accounts are small to begin with, no amount of investment will help your bottom line.  Slow accounts (under $2k/year) have practically no value except for equipment because repair costs and stale products can eat all of the profits.  This is just one factor that can greatly affect margins.