Valuation on Bulk Route

[Nash Ventures]

Fairly new to bulk community, have some machines placed for about a year and have been approached by a larger player in my area about buying a bulk route from him. They are 3 head candy machines  

I have read numerous posts and a lot of conflicting information, obviously everyone has their own opinion. The route is a couple hundred machines and he is asking around 12 months gross sales. This is reasonable is it not? Everything is very well documented etc  

I know everyone says to basically pay ‘what the machine is worth’, but if these machines have been placed at an established location, wouldn’t those worth more than an empty unlocated machine? Also, what is everyone’s opinion on the virus impact? Do you think it is going to have a long term effect? Or more short term until everything is back open and people are back out and about? 

Edited June 14, 2020 by Nash Ventures

[gumball guy]

5 hours ago, Nash Ventures said:

Fairly new to bulk community, have some machines placed for about a year and have been approached by a larger player in my area about buying a bulk route from him. They are 3 head candy machines  

I have read numerous posts and a lot of conflicting information, obviously everyone has their own opinion. The route is a couple hundred machines and he is asking around 12 months gross sales. This is reasonable is it not? Everything is very well documented etc  

I know everyone says to basically pay ‘what the machine is worth’, but if these machines have been placed at an established location, wouldn’t those worth more than an empty unlocated machine? Also, what is everyone’s opinion on the virus impact? Do you think it is going to have a long term effect? Or more short term until everything is back open and people are back out and about? 

Right now, more than ever, I would never buy a route based on sales figures. Sales will undoubtedly take a hit compared to the 12 months prior to the virus so be prepared for a much longer ROI if you use the sales valuation method. If the virus returns and surges over the next year push that ROI out even further. Furthermore the bulk vending market has been far more transient in the past 5 years in the sense that locations come and go much more frequently. Chain stores are disappearing and the ones that remain are either already tied up contractually with a vendor or they are not bulk vending friendly so that reduces the pool of high traffic locations available. Now with this virus a tough situation has gotten even tougher. I have been lucky so far and have only lost about 5-8 percent of my locations due to this virus but there are vendors on here that have gotten hit alot harder. I have yet to go out locating since this mess started in March but I can only guess that it will be tough sledding when I head back out in the near future. You need to understand that a HUGE component in bulk vending is locating. The days of a bulk machine staying in great locations for years and years are all but gone. Sure there are still some great locations but they are few and far between compared to years ago. Bulk vending is trending downward for a variety of reasons including the virus and frankly could be all but gone in ten years. It is a buyers market and even so I doubt this guy has a bunch of people beating his door down to buy it, especially in the current climate so you have alot of leverage to negotiate. Now, if you still want to buy based on sales valuation demand to see his tax returns because that is the only way to truly verify the route's income. If he won't let you see them or said he didn't report then you have no way to verify the income and you should walk away. If you decide to buy it based on asset value then we need to know what type of triple machines he has on route. Chinese triples are everywhere and generally are junk. If the machines are Northwestern or 1-800 they are solid but are getting old. LYPC has a triple pod machine that is a clone of the 1-800 machine and though it is also a Chinese import I heard it is decent (I don't own any).

     Bottom line this is a risky time to buy a bulk vending route, Good Luck and let us know how it turns out.