Jump to content
CarlinT

Need help valuing Vending Route

Recommended Posts

Hi I’m new to vending (these would be my first 3 machines) and I’m considering buying a route. It’s composed of 3 machines in 3 locations 10min or less from eachother. All 3 are Seaga HY2100 equipped with cards readers, Apple Pay, Google Pay, etc. Owner says before COVID avg. revenue was $600 monthly for all 3 machines. He’s valuing the business at $8,000. Is this too high? Without putting any value on the location or revenue I think the machine alone would be worth about $6,000. What are your thoughts? 

Share this post


Link to post
Share on other sites

A good rule of thumb would be 10 months of the gross sales. However the Seaga’s are horrible machines. If the machines were decent like National snack and Dixie Narco or Royal sodas I would offer $6k at the very most. 
What you are looking at is 3 small locations with junk combos. 
As it stands I wouldn’t pay more than $2500. 

Share this post


Link to post
Share on other sites

Run away as fast as you can. You want American machines, not Chinese imports or anything from Seaga which are made of Chinese parts.  They also have high prices on any parts they stock, give poor tech support and will never disclose any wiring diagram for any machine they have ever sold.

Share this post


Link to post
Share on other sites

200 a month locations are nothing special.

Really, I would not value this route much at all. Those machines are not great, and tech support and parts are hard to find.

Plus, locations are not guaranteed and are much less stable due to COVID fears. You could get kicked at any time. If you are starting out I would pay maybe 2k for this route. The CC readers are worth 800 bucks. Machines you could dump on eBay for another grand.

Share this post


Link to post
Share on other sites

Good answers above.  These machines are averaging $50 a week if the numbers are correct.  Out of your $600 in sales, product cost will be between 50-60%, the card readers will run anywhere between $8 to $15 a month each plus swipe fees, and also deduct sales tax if not already figured in.  So your gross profit will be about $ 150 a month before figuring your other overhead.  Even assuming no other overhead (repairs, business licenses, insurance, bank charges, vehicle expense to service the machines, etc) you will need 4 1/2 years to break even at that price.  Small accounts with small machines are just too hard to make a profit with if you overpay.  

I start valuing at 50% of annual sales for a route, so that would be $ 3,600.  Imported machines and combo machines are a negative but the card readers are a positive.  $50 a week is a bottom level account, not worth any premium.  So I might offer $ 3,000, which may not even pay off his debt on the machines if he still has any (likely), but I would NOT go any higher.   Maybe start with Allen's 2.5 and let him counter you a little bit.  Be humble about making the offer, and don't be surprised if he is insulted, but don't let that guilt you into overpaying.  Leave the offer on the table and wait for the callback if you want it. 

  • Like 1

Share this post


Link to post
Share on other sites

Chinese junk machines run for your life.

Share this post


Link to post
Share on other sites

Just had a guy turn down my offer for 1 times actual 12 month sales, including impact of COVID-19.  Claims he sold it for 2x 6 month sales before COVID hit...  I agree with you guys - purchase has to be very conservative in order to make any sort of money going forward - but the seller I was dealing with (decent enough guy) was able to get very strong money for his route without a lot of effort.  Just FYI... My hunt continues - in same boat as CarlinT - money on sidelines.

Share this post


Link to post
Share on other sites
On 7/10/2020 at 11:25 PM, Lanzz said:

Just had a guy turn down my offer for 1 times actual 12 month sales, including impact of COVID-19.  Claims he sold it for 2x 6 month sales before COVID hit...  I agree with you guys - purchase has to be very conservative in order to make any sort of money going forward - but the seller I was dealing with (decent enough guy) was able to get very strong money for his route without a lot of effort.  Just FYI... My hunt continues - in same boat as CarlinT - money on sidelines.

Where are you looking?

 

Share this post


Link to post
Share on other sites

Charlotte, NC - would like to start with something already established - maybe 10 to 20 machines and grow it a bit from there.  Tough to find and they go quick for strong money - I am an all cash buyer, but that doesn't seem to carry much weight either.

Share this post


Link to post
Share on other sites
On 7/10/2020 at 11:25 PM, Lanzz said:

Just had a guy turn down my offer for 1 times actual 12 month sales, including impact of COVID-19.  Claims he sold it for 2x 6 month sales before COVID hit...  I agree with you guys - purchase has to be very conservative in order to make any sort of money going forward - but the seller I was dealing with (decent enough guy) was able to get very strong money for his route without a lot of effort.  Just FYI... My hunt continues - in same boat as CarlinT - money on sidelines.

I am a little confused, he said he SOLD IT BEFORE?  But he has it for sale again?  Same route?  HMMM...  If so, and it's such a good route, why did he get it back?  Or am I just up too late and not making sense more than usual?

Share this post


Link to post
Share on other sites

Sorry - I wasn't that clear.  He was able to sell the route to someone else (instead of me)  for 2 times the 6 months sales prior to COVID-19.   I couldn't get my head around paying that much for it, since I think some of his locations will take a very long time to recover.  (medical offices probably recover quickly, but professional offices will take a whole lot longer)

Share this post


Link to post
Share on other sites
2 hours ago, Lanzz said:

Sorry - I wasn't that clear.  He was able to sell the route to someone else (instead of me)  for 2 times the 6 months sales prior to COVID-19.   I couldn't get my head around paying that much for it, since I think some of his locations will take a very long time to recover.  (medical offices probably recover quickly, but professional offices will take a whole lot longer)

That makes sense, thanks.  Always better to let someone else overpay than to do it yourself.

  • Like 1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...