What a fair $$ to purchase a bulk route?

[zanygames]

Hi,

I know this is a vague question, but I am trying to get a feel for what the standard is for purchasing an existing bulk vending route.

I am in NW Atlanta GA and just starting out, but one day I would love to expand and during my journeys if I do happen across a route for sale I would like to have a feel for what it is worth.

I figure there are a few things to take into account:

1. Monthly Net

2. Condition / type of machines

3. Locations (commission rates, length of placements)

Overall I think what the route makes a year is really the figure I need to look at, independant of what the owner paid for the machines.  I really don't want a U-Turn account that the owner wants $500 a location for that makes $5 a month per location.  I see most routes for sale this way.  20 U-Turns for $6k average $5 to $18 a month.  To me they should just have a $50 machine at that location.

So do you offer six months, or 12 months net to purchase the route?  Do you pay a down payment and then monthly to the owner to make sure the figures they told you are correct?  The biggest thing I want to avoid is buying a route that I am told makes X amount a month, just to pay the guy and then a month later find out it makes much less.

Thanks,

Steve

[dperry]

A route is only worth the cost to pay a locator for the location, and the cost of the used equipment.  No more than that.  I don't know what the price is to secure a location for a triple head machine because I don't use locators, but I would pay no more than $50 per location and no more than $80 for a 1800 machine, or $30 for a vendstar/saega-style triple.  So for me, I would pay in the range of $80-$130 per location, but no more than that.  Don't pay for extra candy or product, cuz that's usually just old and stale.  Anything more thant that, like extra parts or vehicles can be negotiable.

[lurtsman]

Be very careful with net income estimates. The condition of the machine must be considered. I have some fairly good accounts with crappy machines in them. Uturns are def not worth 500. I would not want to pay 100. I'll pay for a location, if it looks like it will really do great numbers I'll give them as much as 40-50$ for it. That's how much I'd pay Jackie or Rob to get me a guaranteed location. If I pay for 40-50, I want that payment delayed for 3 months, and cancelled if I get booted. (Since then I need to spend the money on a locator to get me a new location for the equipment)

[JPVendCo.]

only thing i would say is definitely try to buy it on contract. give him 20-30% down, and make payments over a few months up to 6. (unless the route is huge) if the owner balks at this, it might be because he is afraid the route he is selling you wont support the payments. I bought a route cash in hand, and by time i had went around I had 5 machines in my garage. 

[sterling]

Stay away from U turn machines. Especially a route. They are cheap pieces of Golpher and extremely hard and time consuming to service. I have 1 that I got for free and 1 for $19 from the two I got one to work. For 8 heads it does about the same as any of my 3 head venstars. The kids spin it and the quarters fling out of thoses little collection. Servicing becomes a nightmare not only do you have to take the whole thing apart but then you have to dig and pinch to get each thrown quarter out of the bottom. I would never ever want to do a large route with all U turns it would take an eternity to service. Plus if it has 8 heads you'll have so much candy going bad it would be ridiculous. $500 each I wouldn't give him $5.

[BluePlate]

All the answers above are sound.  But, sometimes the best decisions are from your gut feelings.  If you walk into a pizza place on a Friday night and there is no one in there - the gumball machine is most likely not doing any business either.

I was in a local pizza place 2 weeks ago.  The place was busy as heck.  There was an area where the full service restaurant met the bar and the take out pizza area.  there was a 4 head U-turn there.  In my 45 minutes of eating pizza with my son, I counted $5-$6 of quarters going into that machine.

I got the phone number off the machine, it was a company I never heard of before.  I called the guy and offered him $200 for the location.  He laughed at me.  He said he has 2 locations and between the 2 locations he pays a good piece of his mortgage. 

Anyways, the morale to the story is, in a route you could have a diamond in the rough.  But, like no other business I have been in  - this business it is very easy to lie to yourself.