Seeking advice on a route purchase.

[jwhite]

Here is the deal.  I spoke with a lady today who has 150 1800's.  She has 120 placed and the route is broken into 8 routes.  She took the biz op route 2.5 years ago and spent 40G's on the machines and a locator for all the machines.  Everything is in excellent condition and locations serviced every 4-6 weeks like clock work.

She is interested in getting out of the business.  It sounds like she doesn't have to work, from what I gathered.  She was thinking to sell everything for $10,000.  I am sure that price is negotiable.  She did not have the exact revenue numbers when I spoke with her on the phone.  She had exact numbers on her spreadsheet at home and is going to show me her taxes on the business.  I thought it was alittle odd she did not know the total revenue off the top of her head.  Or at least an approximate number.  Is it doing $500/mo gross or $2000??? 

None the less, I am pretty interested in this deal thus far.  Any feedback you folks can provide? 

Thanks again!

[mainor5251]

At under $67 a machine with 120 located sounds like a good deal even if only half the locations are good.  Is she financing or you paying for them out right.

[cavity]

BUY IT!

[sterling]

It's been gone over here a lot, but consider this. A 1-800 machine is a good machine $50 for one is a fair to good deal. Your time locating and whatever stock is in them is certainly worth $17.

You have to make sure the locations are real. Maybe pay a portion and check on the route and make some sort of payments.

The gross take won't make much difference at that price, seem legit that she just wants out. You do have to ask yourself do you want and can handle a 100+ route. Keep in mind many locations would probably need work and or replacing. Bulk vending is a location game. You must always be working on locating and relocating, so you should be able to do it yourself.

Let us know what you decide.

[cavity]

Offer 8K for the whole kit and kaboodle.  See what she says.  Show her and pay with $100 bills.  Even if she doesn't need the money(especially if she doesn't need it), I'm going to bet you she'll take the cash!  At less than $60 each. you can't go wrong.  Seems as if she really just wants out.  Plus, it's difficult to get rid of that many machines if she sells 1 by 1 or even in lots of 10.  She won't want to deal with that hassle. 

Make her aware of that as well....  "Wow, that's a lot of machines you have, not many people have that much money to throw around, esp. to buy vending machines!  Plus all the time and labor to service them all"  Lay it on thick man. 

                                                                                                          BUY IT!

[lurtsman]

Agreed with Cavity. I'd try to get the price down, but even at 10k that is a good deal. 67$ per machine with them already on location (even if you relocate half, that's 60 you didn't have to deliver, they already have candy in them, your return starts immediately). You can change out some of the products to improve the profitability. Since many machines are not placed, those give you heads to work with for changing out any poorly performing products. This is an excellent opportunity. 80-90% I say no thanks, but this one sounds good. I don't have the cash on hand for something like that--but if I had this offer in front of me I'd be looking for ways to raise the capital. I own over 50 of the 1800s now, and I love them. Keep in mind, with 100 locations, her business should be doing at least 1500/month. Less and she has many awful locations. Doing average would be around 2400/month. You would be looking at a very quick payback period.

[jwhite]

Thanks guys.  I hope to talk with her in the next few days to find out exactly what the business is bringing in.

Mainor:  I would most likely buy the machines outright.  Or I might talk to her about paying half up front and then payments as I service the routes.

Sterling:  What do you mean by the "gross won't make difference at that price"?

I think I could handle 120 locations.  My wife and I both have a few days a month to commit to this type of route.  My only concern is that I recently purchased 50 used doubles and 40 of them are sitting in my garage.  I am placing them as we speak.  Now, I potentially take on 150 triples and add another 30 machines in my garage for a total of 70 dust collecting machines.  Not too excited about that particular scenario.

If this deal goes thru, I would perhaps unload my doubles and unload 1/2 of the non-placed triples.  This would give me 130 locations (120 triples and 10 doubles) and 15 triples in my garage for extra canisters.

I will keep you posted.

[sterling]

I mean by gross is, when people are selling a route they say the route makes X. They are talking in gross not your profit also when they say X it is usually X/2 or 3 or 4 or 5, ie they may be overstating it by 2-5 times the actual sales.

[jwhite]

I spoke with her earlier today.  The 120 placed machines are doing $1120.00/mo.  Eventhough I am new to business, that stinks like a rotten fish.  Bummer!  Way below what the machines should be doing.

She seems very honest.  She said some of the locations are really good and some are really bad (not to difficult to figure that out).  She has wanted to get out move machines, but she doesn't like trying to locate, so she has just left them.

She said I could see her track sheet that shows what each location is doing.  That would give me an idea if 75 of the machines totally suck or 100.

What are your thoughts on this route now?  It certainly is not worth 10G's with that type of revenue.  And it is not for certain the $1120.00/mo is accurate.  It could be more like $900.00/mo.

Thoughts??

[cavity]

Offer 8K, and buy it. 

Clean and jazz up the machines a bit, relocate a few, and keep some of the candy in them and you'll do fine.  If need be, sell some to recoup a grand or 2.

[lurtsman]

Kelly and I both agree with Cavity. That's three people who have been vending all seeing the exact same thing

[mainor5251]

Also look at what is being vended at the slower locations and you might be able to save them with a different selection.  This deals still looks like it has a ton of potential.

[whaletail116]

Sounds like you have yourself a good deal here.  Now lets try to skin him alive!

[jwhite]

Update:  Spoke with the CFO (wife) last night.  She is not on board 100% with taking $8,000 out of our savings to invest into this route.  I see the potential, she sees the savings balance. 

I need to formulate a plan to purchase this route on payments and I am not sure if that will fly with the owner.  Have you guys ever heard of paying a percentage (30%) down, taking over the route and making payments from the NET generated from the route? 

This would be ideal, because I would be out $2500.00 cash and then just my time to run the route for the next 6-8 months.

Any feedback on this plan? 

[cavity]

I know some people don't like to do it but, what about a family member or friend to loan you the money.  It's just about a sure thing you will make back the initial investment in less then a year.

[Quarter Master]

Jw,

             I think the first thing you should do is to request to see the route and the machines. I can tell you I have a route for sale but then you find out it's located in timbuck two. While going on the route with the person, if your satisfied, then you can talk numbers and come to an agreeable price and terms. What I'm saying is don't buy a "pig in a poke". You need to get off the phone and go see what she's got.

[whaletail116]

I'm sure you could also convince him to sell you only a portion of the route, say 1/4th.  I generally frown upon borrowing money at all, but even more so with friends and family.  It usually just dampens relationships.  Plus, why would your wife be willing to risk the money of family members but not your own?

So I say, talk your wife into letting you use 10K, looking into purchasing only a portion of the route, or pass this deal up.  There will always be good deals and you will always have opportunities to grow.

Lastly, if you do somehow convince your wife, you better make sure you have all your "ducks in a row" and that she is with where you two are financially, or she'll be breathing down your neck every other day.  Money comes and goes but she is there to stay.

[jwhite]

I am going to meet with her next week to see the route and some of the machines. 

Borrowing money from a friend of family member is not an option.  We have a decent size savings balance, so we have the money.  The problem lies with my wife not wanting to risk it. 

Whaletail:  Your advice is very sound.  I might be getting in over my head with 150 machines all at once.  The seller told me she would be willing to sell a portion of the route.  This seller is not actively trying to sell the route, so the route is going to be there for awhile.  I would probably be smarter to buy pieces and parts of the route over an extended period of time. 

I will update once I meet with her next week.

[whaletail116]

Sounds like a good idea.  Some people dive right into vending with a 10K investment and end up selling thier machines for next to nothing or not at all as they become abandoned.  Just remember that vending is supposed to be a blessing on your life. 

[sterling]

Excellent buying stratedgy. If the seller truely wants out and has no other buyers you could do that type of deal for sure.

When I decide to sell my route one day that is how I'm going to finance the buyer. This way they know they aren't getting taken for a ride and I won't be fire selling it to someone looking to "steal" it.