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Jackie Le

New member looking to get into the industry

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Hello everyone,

 

My name is Jackie and I am from Orange County, California. I’m doing research to start a vending business to make some extra money for my family.  I would appreciate any advice or recommendations.  I started my research looking at healthy vending.  Companies such as healthy you, healthier 4u, instahealthy etc.    but the more research I do it seems like I’m better off starting it on my own with used machines.  Thank you in advance edit any tips and recommendations.  Also wondering what kind of permits are required in California to start a vending machine business. 

 

Thank you

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Skip the healthy garbage.  Start with used can vendors until you have a good understanding of what it takes to run 10 or more machines.  Then you can grow into snacks and multiprice soda machines.  This will keep your investment to a minimum in the likely event you decide this isn't for you.  It's not easy, especially in California where it's nearly impossible to find anyone to repair or move your machines.  When you begin with snacks you will need at least 5 to be able to control your stale products.  If you want extra money for your family then you surely know that you will have to invest heavily in machines to do that so is that money best spent on vending machines that can't guarantee you a profit?  A second job will net you a better return on your investment.

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Always good to see someone working to get ahead, best of luck!  Having said that, vending has been described as a "nickle and dime" business, as that is all you might make some weeks.  If you had 8 or 10 really good accounts and did all the work yourself out of your home, you could be looking at a fair income for your time.  Getting to that point, however, takes lots of time and investment.  Good accounts are difficult to come by simply because someone else is usually there ahead of you!   But what AZ says is a good start if you want to try it.  Canned drinks have a good shelf life (other than diet varieties), and good used can vendors can be found at reasonable prices (Craigslist or EBay to start).  If you like shopping for deals, you can get better than wholesale prices on your products.  Try to find a location first before buying equipment, unless you have room to store it and just run across a crazy good deal.  Also plan how you are going to move your machines.  Vending equipment is much heavier than household appliances - steel on steel with steel insides.   Pro movers cost too much.  Maybe find another vendor that you won't be competing directly with and see what they will charge.

Licenses and permits -I am across the country in Florida, so can only speak in general terms.  Sales Tax registration and payment is usually required.  I think CA also has container deposits that have to be dealt with.  Most places will require some sort of local business license (city/county) based on the location where your business is based.  You are not dealing with perishable foods or food prep so the health dept likely will not be involved.   The form of business is up to you (sole proprietorship, LLC, etc). but does not have to be complex to start; it can always be changed down the road.   Keep good books and pay your taxes, the government needs your money and does not like being cheated!!!

Finding a location - first, just keep your eyes open as you move about your community.  Again, the really good spots are probably already taken, but something viable is usually out there waiting.  You want a location with lots of people as potential customers, good visibility, and somewhere that is safe for your machine and for you when you service the machine.  Tire stores, full service car washes, medium size offices (at least 30 employees) like a phone room, small industrial operations... all have good potential.  Stop and ask to speak to the manager or owner and offer your service.  Don't offer a commission unless asked, and if they do ask, be agreeable but let them know the sales prices will have to go up to support their share.  (5 to 10 percent of sales max).  If you see a new business getting ready to open, get in there!  The first vendor in the new door usually gets the location.  Have some business cards to hand out, as it usually takes more than one visit to land an account. 

What to expect:  Working from home and keeping your expenses to a minimum, you have a chance to make some spare money, but don't get too excited.  Let's do some math.  Say your machine is in a fair location and you sell about 3 cases a week (about 10 per day X 7 days).  For easy math, lets say you sell for $1 a can.  So $70 a week in sales.  If the drinks cost you .35, sales tax is .07, and the location gets .10, that means you gross .48 per can or $33.60 per week.  Now deduct the value of your time to go and buy the product and take it to the machine, the gas your car uses, and any other business expenses you run across (licenses, moving fees, repairs) and the price you paid for the machine to start (until it has repaid itself).  So how much do you make net?  Not much to start.  When that machine and a few others are paid off and still earning for you, and you have things well organized you can see a benefit, but it's not an overnight success for sure.  I hope I have not been too discouraging, just go in with your eyes wide open and good luck!

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1 hour ago, AZVendor said:

Skip the healthy garbage.  Start with used can vendors until you have a good understanding of what it takes to run 10 or more machines.  Then you can grow into snacks and multiprice soda machines.  This will keep your investment to a minimum in the likely event you decide this isn't for you.  It's not easy, especially in California where it's nearly impossible to find anyone to repair or move your machines.  When you begin with snacks you will need at least 5 to be able to control your stale products.  If you want extra money for your family then you surely know that you will have to invest heavily in machines to do that so is that money best spent on vending machines that can't guarantee you a profit?  A second job will net you a better return on your investment.

Thank you very much for replying as well  as the tips AZVendor. I have considered a second job, but after thinking about it I wanted to find something I can call my own and grow. Other types of businesses out here cost way to much to start.  With vending I felt I can start with about 30-40k or even less. What are your thoughts on buying an existing route from a person that is considering retiring.  He said he has 39 machines half soda and half snack machines and makes around 42k gross. He says it takes him 24hrs per week to do this route.  Of course I would need to check each machine to see how old each is And do my due diligence.  What do you think is a fair price for a route like this. 

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1 hour ago, Southeast Treats said:

Always good to see someone working to get ahead, best of luck!  Having said that, vending has been described as a "nickle and dime" business, as that is all you might make some weeks.  If you had 8 or 10 really good accounts and did all the work yourself out of your home, you could be looking at a fair income for your time.  Getting to that point, however, takes lots of time and investment.  Good accounts are difficult to come by simply because someone else is usually there ahead of you!   But what AZ says is a good start if you want to try it.  Canned drinks have a good shelf life (other than diet varieties), and good used can vendors can be found at reasonable prices (Craigslist or EBay to start).  If you like shopping for deals, you can get better than wholesale prices on your products.  Try to find a location first before buying equipment, unless you have room to store it and just run across a crazy good deal.  Also plan how you are going to move your machines.  Vending equipment is much heavier than household appliances - steel on steel with steel insides.   Pro movers cost too much.  Maybe find another vendor that you won't be competing directly with and see what they will charge.

Licenses and permits -I am across the country in Florida, so can only speak in general terms.  Sales Tax registration and payment is usually required.  I think CA also has container deposits that have to be dealt with.  Most places will require some sort of local business license (city/county) based on the location where your business is based.  You are not dealing with perishable foods or food prep so the health dept likely will not be involved.   The form of business is up to you (sole proprietorship, LLC, etc). but does not have to be complex to start; it can always be changed down the road.   Keep good books and pay your taxes, the government needs your money and does not like being cheated!!!

Finding a location - first, just keep your eyes open as you move about your community.  Again, the really good spots are probably already taken, but something viable is usually out there waiting.  You want a location with lots of people as potential customers, good visibility, and somewhere that is safe for your machine and for you when you service the machine.  Tire stores, full service car washes, medium size offices (at least 30 employees) like a phone room, small industrial operations... all have good potential.  Stop and ask to speak to the manager or owner and offer your service.  Don't offer a commission unless asked, and if they do ask, be agreeable but let them know the sales prices will have to go up to support their share.  (5 to 10 percent of sales max).  If you see a new business getting ready to open, get in there!  The first vendor in the new door usually gets the location.  Have some business cards to hand out, as it usually takes more than one visit to land an account. 

What to expect:  Working from home and keeping your expenses to a minimum, you have a chance to make some spare money, but don't get too excited.  Let's do some math.  Say your machine is in a fair location and you sell about 3 cases a week (about 10 per day X 7 days).  For easy math, lets say you sell for $1 a can.  So $70 a week in sales.  If the drinks cost you .35, sales tax is .07, and the location gets .10, that means you gross .48 per can or $33.60 per week.  Now deduct the value of your time to go and buy the product and take it to the machine, the gas your car uses, and any other business expenses you run across (licenses, moving fees, repairs) and the price you paid for the machine to start (until it has repaid itself).  So how much do you make net?  Not much to start.  When that machine and a few others are paid off and still earning for you, and you have things well organized you can see a benefit, but it's not an overnight success for sure.  I hope I have not been too discouraging, just go in with your eyes wide open and good luck!

Thank you southeast treats for your reply as well as your tips and recommendations.  I have been looking at used machines on criagslists and other websites. My only concern with that is my knowledge of vending machines is not good. So I wouldn’t know what to look for to ensure machine is still in good condition. I do plan do do everything myself, I just hope any place I find will allow me to refill machine in the late afternoon-early evening and or weekends.  I have also found some vending machine sellers in my area that sell new, used and refurbished machines for fairly cheap as well. Just trying to figure out which way to go. 

Thank you for the info regarding licensing and permits.  I will have to do some more research online regarding what California requires.  I did read somewhere that they require business license and sellers permit.  It wasn’t sure if I needed anything else. 

I live very close to Disneyland, so I am near a ton of hotels and motels.  I am sure they all have vending machines already but I was thinking I might as well try anyway. What would you recommend as the best approach?   Email, call. Or just show up and try to tan to managers?  

I asked AZ this but thought I might as well ask you too. What are your thoughts on buying an existing route from a person that is considering retiring.  He said he has 39 machines half soda and half snack machines and makes around 42k gross. He says it takes him 24hrs per week to do this route.  Of course I would need to check each machine to see how old each is And do my due diligence.  What do you think is a fair price for a route like this.

I also found some other people trying to sell their machine already at a location. Prices range between 2k-5k.  Prices in the higher range are due to newer machines/combo machines.  

Thank you again for your honest reply.  I appreciate it and I am not discouraged.  I understand that anything that may be worth while will come with hard work. I have 2 kids now and my wife and I are considering another so any supplemental income will help. I also want to Teach my children about working hard and how it can pay off.  

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Posted (edited)

Just to add on to Southeast Treats excellent reply, it's true that most if not all suitable locations already have vending machines, but I have been surprised over the years in that solid accounts are sometimes neglected.  And it could also be a personality issue that would lead to a decision maker electing to try a new company.  Point is, it's not a stagnant business ... things can and do change.  Persistence will be key for you in finding locations.

 

As for buying that existing route, I think others will agree that even if it's a legitimate offer it will be too big for you until you gain much more experience.  And it is very possible that it's a dubious offer anyway.

 

When you do find a location and need to buy machine(s) I recommend Vending World in Rancho Cucamonga.  They really know their stuff, plus it's not very far from you.  They can hook you up with a mover and also provide some limited training on how to operate the machines.

 

Best of luck to you.

Edited by Apple Leisure
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If you are ever in Ventura county come by and I'll show you what equipment to operate. 

I'll also let you know who to watch out for in southern California. There is a lot of unscrupulous vendors around here.

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3 hours ago, Apple Leisure said:

Just to add on to Southeast Treats excellent reply, it's true that most if not all suitable locations already have vending machines, but I have been surprised over the years in that solid accounts are sometimes neglected.  And it could also be a personality issue that would lead to a decision maker electing to try a new company.  Point is, it's not a stagnant business ... things can and do change.  Persistence will be key for you in finding locations.

 

As for buying that existing route, I think others will agree that even if it's a legitimate offer it will be too big for you until you gain much more experience.  And it is very possible that it's a dubious offer anyway.

 

When you do find a location and need to buy machine(s) I recommend Vending World in Rancho Cucamonga.  They really know their stuff, plus it's not very far from you.  They can hook you up with a mover and also provide some limited training on how to operate the machines.

 

Best of luck to you.

Thank you very much for your reply apple leisure.  I appreciate everyone’s honest reply and all the advice everyone is giving.  I’m still in process of getting business license and sellers permit and all that good stuff on the business operations end.

I will definitely check out vending world. I also found a place closer to me called “the vending king”. Has anyone heard of this place.  They sell new and used/refurbished machines. 

Does anyone have suggestions on programs to keep track of inventory and sales. 

 

Thank you again

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1 hour ago, Anacapa Vending said:

If you are ever in Ventura county come by and I'll show you what equipment to operate. 

I'll also let you know who to watch out for in southern California. There is a lot of unscrupulous vendors around here.

Thank you Anacapa I will definitely keep that in mind if I am ever in that area.  Are you on Facebook?  Always great to make new friends in the industry. 

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Busing a route is one way to start, and the seller should be able to help you with at least basics (if you trust them).  However, most people overpay for their first route that way - I sure did.  But in a way I was paying for an education as well, and I still have  few of those first accounts producing for me, so there is that.  There are several ways to value any business for sale - breakup or asset value (what is the equipment worth if you just sold everything) is one; calculating the value of the working business is more complex, especially when you are new to that trade.  I tend to look at 50% of annual sales, plus the value of spare machines and operating equipment (trucks, dollies, etc), the amount of cash (change banks in machines) carrying over, and to a lesser extent any extra inventory (which may be short dated or not selling well, you don't really know).    There are some really good and in depth prior threads here on valuing a vending business, so if you want to go that way dig some of those up first.  The route you are talking about at 42K per year for 39 machines means he averages less than $100 per month per machine, not so very good.  Some locations may be winners but there will be quite a few on the low end of the scale as well.  It may only be worth equipment value, if that.  You would keep the good accounts of course, and try to move the other machines to better locations or sell some of them off.  If he has a bunch of combo machines (or even worse, mechanical machines such as snack time or antares) - do not walk away, RUN away...

Yes, existing accounts do turn over due to neglect or for many other reasons.  Hotels are a world all their own and a good hotel is a nice location to have.  A bad hotel will work you half to death for little if any profit.   Anyone you call on in my opinion, should be in person.  Emails and letters get ignored, and phone calls get hang ups.   Look professional and have your business cards to leave; be willing to come back several times. 

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Thank you very much southeast treats. He was asking 49k for the route and for spare parts and van.  I messaged but never got a reply.   But that can be due to it being the weekend. I will wait a bit longer before I try again.  I’ll try to get as much info as I can.  But for now I’m looking into used machines like everyone suggested. Just need to find a resource I can use to figure out which machines are worth buying and for how much.  I do want machines I can put credit card readers into. 

Thank you for tips on locations too. I’m still in process of creating the business entity and logos,business cards, website ect.....  I will start looking for locations once I get that done.  I’m not in a rush I just want to do this right.  

Thank you again for the info I appreciate it very much

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From the sounds of this route in question, the owner is asking way too much.  The locations are averaging about $1k/year which isn't good and I would imagine that the equipment isn't all that great either.  He's essentially asking someone to pay him to take over his job.  Going into a vending business should be about making a profit and, especially with older machines, you shouldn't expect to net anything over 35% of the gross sales assuming pricing is in line with the market.  In reality, I wouldn't expect his route to gross much over 25% if my suspicions are true and he has older machines.  Given that, an asking price of $50k would take you a solid 5 years to break even.. and breaking even isn't what this business is about.  You should break even in less than 2 years.  Prices get much different as gross sales (and thus, net sales) go up.  A location doing 20k/year can fetch over 10k by itself if you ask me.. but valuing locations, routes, and even machines really depend on the local markets.  The main point is that, while it's great to start off with a small route, the route in question sounds like the price is too high.  I even wonder if his prices are low too and he wants to get out because he's working 3 days each week and only collecting about $200 each week, so he's hoping someone is going to give him a whopping 50k for his route.

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Thank you angry Chris. To be honest I was wasn’t planning on buying this route.  I just wanted some insite on how to gauge how much a route is worth.  42k gross for 39 machines doesn’t sound good to me.  

On another note I have a person in my area selling some used machines.  I haven’t seen them yet but wanted to see if the price is right. I haven’t made any offers yet but of course I will try to get it for less then what he is saying if everything is in working condition and it’s a good deal. 

Royal 804 multiprice coke branded for $1075

AP 6600 for $750

vendo multiprice Pepsi branded $975

AP 113 for $1000

AP LCM for $1100

national 147 for $1100

national 167 for $1990

thanks in advance

 

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On the list of machines, the Royal 804 is a big, very high capacity machine and is too tall to get thru most doors.  Not at all fun to move.  It's best in a high volume location with exceptional access, like a garage bay.  I think coke liked them for a while because they held so much the service interval could be extra long.   The newer Vendo's (V21 series) are not too bad, not too confident in the older units. 

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42 minutes ago, Southeast Treats said:

On the list of machines, the Royal 804 is a big, very high capacity machine and is too tall to get thru most doors.  Not at all fun to move.  It's best in a high volume location with exceptional access, like a garage bay.  I think coke liked them for a while because they held so much the service interval could be extra long.   The newer Vendo's (V21 series) are not too bad, not too confident in the older units. 

Thank you southeast treats.  I’ll take this in to consideration when I go see the machines.

What do you usually check for when buying used machines?  I’ve read in other post that I should obviously check if the machines vend properly. Check if it gets cold for beverage machines.  Make sure coils turn in snack machines.  Check bill validates. And coin dispensers.  Should I be checking for anything else?

In your opinion what snack machines are the best?

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Too expensive if they are used and not refurbished.

For refurbished machines with warranty that is about right but used machines should be half those prices, especially in SoCal.

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1 hour ago, orsd said:

Too expensive if they are used and not refurbished.

For refurbished machines with warranty that is about right but used machines should be half those prices, especially in SoCal.

Thank you orsd.  I just contacted him again and he said the prices he gave me are actually for refurbished machines not used. And he that he has  used machines That he is selling arleady places at locations too. But thank you. Now I kinda know price ranges to look for. 

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If you can get 167s for $1000 please PM me ORSD. I want a few thanks

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7 hours ago, Anacapa Vending said:

If you can get 167s for $1000 please PM me ORSD. I want a few thanks

The 167s were the one exception on that list.

 

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51 minutes ago, orsd said:

The 167s were the one exception on that list.

 

So I take it the 167s are the better models out there

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A lot newer and can run credit card readers.

Some 157s can as well.

147s need a retrofit board (3-400) to be CC capable.

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On 3/13/2019 at 11:40 AM, Jackie Le said:

In your opinion what snack machines are the best?

I'm in a strange position with snack machines, where a lot of people here have AP's, I have a lot of older USI's and on the other end brand new Crane Medias.  I will say the USI/ Wittern machines are not bad units, but you run into a zillion variations, and the older control boards usually can't be updated.  They do have a very good tech support team. 

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On 3/11/2019 at 4:29 AM, Jackie Le said:

Thank you angry Chris. To be honest I was wasn’t planning on buying this route.  I just wanted some insite on how to gauge how much a route is worth.  42k gross for 39 machines doesn’t sound good to me.  

On another note I have a person in my area selling some used machines.  I haven’t seen them yet but wanted to see if the price is right. I haven’t made any offers yet but of course I will try to get it for less then what he is saying if everything is in working condition and it’s a good deal. 

Royal 804 multiprice coke branded for $1075

AP 6600 for $750

vendo multiprice Pepsi branded $975

AP 113 for $1000

AP LCM for $1100

national 147 for $1100

national 167 for $1990

thanks in advance

 

I don't see any great pricing here and you should note that most of the snack machines will not take CC readers as they are not Mdb capable. Beware of the older Vendos as they have many problems after ten years. Southern California is loaded with used equipment.  My advice would be to secure a location first and then decide which machine works best for that space.  If your plan is to go cashless, then you'll need much newer snack machines but most of the multipriced soda machines will accept the CC readers

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On 3/13/2019 at 8:40 AM, Jackie Le said:

Thank you southeast treats.  I’ll take this in to consideration when I go see the machines.

What do you usually check for when buying used machines?  I’ve read in other post that I should obviously check if the machines vend properly. Check if it gets cold for beverage machines.  Make sure coils turn in snack machines.  Check bill validates. And coin dispensers.  Should I be checking for anything else?

In your opinion what snack machines are the best?

Probably the best snack machine out there today is the AMS brand out of West Virginia.  Unfortunately AMS has not made it's way west yet and you'll see very few of them for sale around here.  A&M out of Georgia seems to have the best selection of refurbs if you don't mind importing one - this would need to be a potentially great account to warrant the expense.

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3 hours ago, Southeast Treats said:

I'm in a strange position with snack machines, where a lot of people here have AP's, I have a lot of older USI's and on the other end brand new Crane Medias.  I will say the USI/ Wittern machines are not bad units, but you run into a zillion variations, and the older control boards usually can't be updated.  They do have a very good tech support team. 

Thank you for your feedback southeast. I would prefer to have a machine where I can upgrade to credit card reader so I will definitely be looking for the models that have that capability

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