Buying 2 locations - advise

[Gianni]

Hello all and thank you so much for the opportunity to be able to ask a question about getting into this business. I’m totally new to vending and exploring the possibility of starting small.

Initially I was looking to buy one working location, contacted a bunch of posts in Facebook Marketplace. Didn’t have too much luck getting responses, only a couple out of 10 messages that I sent out. I started talking to one of the responders for a machine that is close to my Work (I have a full time), after chatting with him for a while (in Spanish, since he does not speak much English) he let me know that he’s also trying to sell two locations closer to my house, both 5 mins between each other and both 15 min from my house, much more attractive to me. He said he has not posted them anywhere yet and he’s trying to sell these and other locations because he’s getting rid of the ones that are far from his house and keeping the ones close by.

I set up a time to go see them, one location is in a Shopping Mall inside a large department store chain in the break room. This location has 1 large Dixie Narco and 1 National Crown, he states that he makes around $250 profit per month. The second location is a nice office building with the machines hidden behind a wall as you enter the lobby. You have to cross a high traffic area to get to any restaurants or shops. This location has a smaller Dixie Narco and 1 National Crown and he also states that it makes around $250 per month profit.

He opened all the machines and showed me inside, they look pretty good, they were stoked up and the drink machines were very cold.

He wants to sell both locations for 8K with credit card readers, he said it’s nonnegotiable.

I tried to get him to give me sales data, at least credit card information but hasn’t been able to provide any yet. He says didn’t have time, he’s busy with all his other locations and also buying, fixing and selling machines. He said all the credit card transactions go to his account and he doesn’t know how to filter for the machines he’s trying to sell me.

They both look like pretty good locations but would like to get some more data to make a final decision.

Here are my questions, thank you in advance: 1)Does this seem like a fair price? Would you risk getting into this business, maybe he really does not know how to filter data for these locations. 2) How else would I be able to verify the transaction level? 3)How can he proof that these are his machines (he had the code to the break room in one of the locations and also keys for all the machines). He said he bought them from his ex-boss who owned thousands of locations.

4) What would a transaction like this one look like? He wants all cash. What paper work would he have to provide? Who are the key persons he needs to introduce if I go through with it? 5) Any other thoughts?

 

Again thank you for any input!!

 

[Gizmo Vending]

As a new operator you should stay away from something like this.   What you should do is if you want to start a vending business is find your own locations and then buy machines from there. A used/refurbished Dixie narco 501e will cost anywhere from $1500-$2000.   A far cry from $8000 grand.   

   
Red flags:  Inability to provide sales data, which means he’s lying about the numbers.  It only takes a couple of minutes to generate a report for sales.  Even if he ran a report would it be for the machines in question?   How would you know?    The numbers he’s giving you means total sales are around 500 or more a month.  That would mean at least 30 or more cars in the parking lot.   How many did you see?   What were the expiration dates in the chips?   When y’all went to the machines did the employees seem to know the guy?   If he’s their vending guy they would.  While those numbers aren’t the best they wouldn’t be the worst.  You don’t get rid of locations that can do that a month you keep them in your route and expand around them.  What he’s doing is getting rid of the slower locations and hoping to profit from it.  

 

 

[Gianni]

Thank you for all the great info Gizmo Vending! And for sharing your knowledge.

He’s actually trying to sell me two locations, each with a snack machine and a soda machine.

 

Location 1:

1 Dixie Narco

1 National Crown

 

Location 2:

1 Dixie Narco

1 National Crown (a little smaller than the one in Location 1)

 

Both locations for sure had more than 30 cars in the parking lot.

Expiration dates looked good as far as I could see.

He had the keypad code to get into the break room in Location 1. And he talked to a cleaning lady in Location 2 which seemed to know him well, said he’s been servicing this location for 14 years. He also had keys to all four machines in both locations.

 

I’m attaching the photo of the Location with the larger snack machine.

[tblake05]

Looks like nice equipment, if only he had sales data it might be “worth it”.

I donno. If it were me, I might offer 6k for both locations without any sales data. Then at least you could sell the equipment and break even if it doesn’t pan out.

also find out if he owns the credit card readers or leases them. If they’re leased, the company (looks like usatech), may take a larger per swipe percentage.

how is the pricing structure? If it’s low, have him raise them before you buy them so he looks like the bad guy.

[Gianni]

Thank you tblake05!!

I did offer 6K and he didn't budge, he's set on the price. He did say with out the credit card readers he  would reduce the price by $300 for each machine so $1200 less for all four without credit card readers.

That's a good Idea about the pricing structure, would of never thought of that, glad I'm asking questions here, definitely feel more informed now. Thank you again!

[AngryChris]

I'm not recommending you buy the location necessarily but if he would sell them for $6800 without the readers I think that is better than $8000 with the readers.... The reason for that is that it can be difficult to transfer readers and sales will continue to flow into the previous owners account until the transfer is complete.  The downside is that, despite being pretty simple to an experienced vendor, you probably don't know how to install the readers.  Perhaps you could ask him to install them if you reach a deal.  You'll still be out 8k but 1200 will be in readers you bought direct and 6800 will be to him.

I think 8k is a reasonable price IF his figures are accurate.  To make 250 profit requires about 500 in gross sales.  That's about 6,000/year per location or 12,000 combined.  Now, do they generate that much?  I don't know... but 6,800 for equipment (not including readers) is pretty fair I would say, even if the locations are bad.  You don't want bad locations, but the fact that this guy has decent equipment with decent prices (from what I can see) and with card readers on tells me he's a serious vendor.  Going totally on my gut here, he sounds honest and fair.  And, if he is honest, you should make your money back in less than 18 months which is good.

It's not enough sales to allow you to do much but it's a good way to get started.

[tblake05]

4K per location. I donno, I’d prob be interested in taking the gamble myself providing he owns the card readers and fills out transfer paperwork to you. Otherwise they are worthless to you.

[cvending]

In the pic it looks like there is an asset tag from Coke on the machine. It may not be his machine but a Coke loaner. Also it is a can only machine so don't think of converting it to bottles. I weould get the asset number from the tag, call Coke to see if it belongs to them before offering to buy it.

[tblake05]

12 minutes ago, cvending said:

In the pic it looks like there is an asset tag from Coke on the machine. It may not be his machine but a Coke loaner. Also it is a can only machine so don't think of converting it to bottles. I weould get the asset number from the tag, call Coke to see if it belongs to them before offering to buy it.

I didn't even notice the tag.

But its can only?  Looks like a DN 501e?  Arent they multiprice stackers?

[AZVendor]

That is a can and bottle machine based on the coin return chute and it's a Royal machine, so probably a G3.  Also, I have no idea where they came up with the National Crown name when it's a National/Crane machine.  Nothing like a vendor that doesn't know what they are selling.  Without devoting time to reading the whole thread, it sounds scammy OR it's a disillusioned newer vendor trying to get the money he was scammed out of, back.

[cvending]

I was going by the size of the delivery port opening.  It looks like it is small and for cans.  I may be wrong

[AZVendor]

The label on the port also says to open bottles slowly.  If it's not a G3 then it would be a G2 which is garbage.

[cvending]

Dang, youy got some good eyes AZ

[Gianni]

Thank you for all the info and the attention to detail! This is a great way to help me make a good choice.

I stopped by Location 2 today and took a picture attached. Noticed that there is also a Pepsi Bottling Group asset tag on the soda machine.

What is the best way to find out if these are loaners? Or if the seller indeed owns them? I'm sure the answer (and already suggested in this thread) is to call them, which I'll do.. any specific department I should ask for? Any keywords I should use when talking to them so I don't get blown off?

 

[AZVendor]

Ask for Third Party Vending.

[tblake05]

Do you have serial numbers for the machines for them to check?

Plus the 276e, I’m looking for one of those right now.

good luck!!

[AZVendor]

So I read this in more detail and I have some more insight for you.  The retail breakroom may be through a vending management company that he isn't telling you about.  Most major retail chains use vending management companies and they are the ones that arrange the vending.  You didn't talk about any contracts he might have (probably doesn't) or what commissions he pays (which he probably does.)  I agree to have him take the card readers off so you can arrange your own.  If you don't do that and decide to transfer them to your own account you'll have to disable them until you can do that for the reason that Chris mentioned.  I will also bet that he doesn't own the soda machines, especially in the retail location as the management companies often prefer bottler machines in their accounts.  

[Gianni]

Thank you all for the comments and input, this is really helpful. Here’s a quick update..

So, I called Pepsi and Coca-Cola, using the asset tag numbers, after being on hold and calling back a bunch of times, they both gave me the same name for the third party vendor. I called that third party and confirmed that they don’t have vending machines at the addresses of the locations that I’m looking to purchase. which confirms what the seller told me, that he bought these machines from a large vending company. He also had keys to the machines and the code to get into the retail break room location and also seemed to know other workers there.

Thank you AZVendor for the post, I went through the initial text messages from the seller and indeed he mention 15% commission for the retail location and no commission for the other location. So that is something to consider in terms of profitability.

Thank you all again, just wanted to provide a quick update and hopefully anyone reading this can benefit from my experience.

[AZVendor]

You probably still have bottler-owned machines since the bottlers referred you to the same vending company.  Did they say that they were SOLD to that third party or that the bottlers do not own them?  If not then they are probably still leased or loaned to the third party.  Regardless of where the assets are, they would then still belong to the bottlers.  You probably need more clarification from the bottlers.

[Gianni]

Thank you AZVendor!

I spoke with the local offices for both Pepsi and Coca-Cola, was told they don't own them and was given the third party's information.

[AZVendor]

Cool.  Have fun.