baxsonvending Posted July 27, 2007 Share Posted July 27, 2007 Hi everyone, I must say thank you first all for all the invaluable advice that you have provided for a newbie as myself. I have read and re-read many of your posts, blogs, etc! I finally built up the courage to start my own bulk vending company, and I have had some early success with locating my machines. I stumbled across a few numbers on my way of going into businesses that already had machines placed, and I contacted the owners of the machines. To my surprise 2 out of the 3 I called would like to move out of town, thus sell their routes. Now being very green with everything, 1 week :shock:, I wanted to know how you experienced veterans out there handle pricing existing routes? In my repertoire I have been placing single and double heads, however, the two routes I was interested in taking over are triple head. A little about each route: 1. 26 Routemaster triple heads placed, 13 not on location. Great bookkeeping, claims to net $600 a month. Without him listing with a broker I might be able to get everything for $9,000 - $11,000. 2. 90 1800 vending triple heads placed. Limited bookkeeping, claims $800 net a month. Will allow me to purchase as many locations/machines as I want at $175 a location. The machines from both these routes I am not too crazy about, but is it worth it to buy just to get the locations and jump starting my business?? Thanks in advance, Michol Baxson Vending Link to comment Share on other sites More sharing options...
caserri Posted July 28, 2007 Share Posted July 28, 2007 Michol, Although I have limited experience in buying existing routes I will give you my honest opinion on the choices you have presented. Option 1 - You would get a definite no thank you from me. I'm just not into purchasing locations for a premium. Some will say that proven past performace should dictate the current value of the route however, I feel that a located machine is only worth the cost of the machine and maybe a location fee of say $50 or so. I realize that I am in direct opposition to alot of folks out there in regards to this. I have even heard that a route should be sold for 3 times the annual net revenue. I just can't go along with that. I hope that by me saying that I will coax an opposing view out of the woodwork and spawn some lively debate! Option 2 - While I like the idea of being able to buy a located machine and only that, not future earnings, I do think that $175 is a bit on the high side considering that you can get brand new double head machines bought and placed by a locator for less. Like I said, I like the idea but for that price you should be very sure that these machines are in "like new" condition and that the locations are really secure and profitable. While I dont care too much for 1800vending as a business, they do make quality machines. So as long as the machines are in great condition I would suggest you do the following. Ask the operator if you can tag along on some of his routes. See first hand not only how much these machines bring in but the demeanor of the locations. Are the easliy accessible? Do the locations seem like they are happy with the machine being there? If not, you may find your machine suddenly homeless after you buy it. At least with a professional locator you will get a kickout and performance guarantee. As stated earlier, I have limited experience in this area but I hope this gives you a bit to ponder. All other points of view are welcome! Steve Link to comment Share on other sites More sharing options...
pusherman Posted July 28, 2007 Share Posted July 28, 2007 the first option i doubt his averages are that high, and i know his route is priced at about 5 times what i would consider paying. the second option has way too many locations that suck if that is all the route is making. the machines are still priced way too high for me, with or without the locations. you can get better machines and build alot better route for alot less money Link to comment Share on other sites More sharing options...
caserri Posted July 29, 2007 Share Posted July 29, 2007 you can get better machines and build alot better route for alot less money Pusherman, I concur. I do think that $175 is a bit on the high side considering that you can get brand new double head machines bought and placed by a locator for less. Link to comment Share on other sites More sharing options...
baxsonvending Posted July 29, 2007 Author Share Posted July 29, 2007 Thank you for replying, and I took the advice and met with him this afternoon. He sent me an email to visit about 14 of his locations, which ranged from retail stores to industrial stores like a bolt and nut company. By the looks of what was in the machines, some were doing much better then others! Ok, well our meeting was a little odd he doesn't keep very good books at all!! He has no idea what machines do, he claims on average 15-20 bucks net profit a month but he has nothing to back. He seems to be trying to recoup his costs as he started the most expensive way possible, ie 1800 vending machines, paying a locator, and paying someone to service how route. I offered him $150 a location, but then he threw in there that he would be willing to do that if I purchased routes. Quick explanation on his routes, he has broken up locations by area. So he has about 4 routes, of course there are good mixed in with the bad. He had a valid point that he doesn't want to give me pick of the litter for his locations as he will have a more difficult time selling them later. So my options it seems, pay $175 per location per route, $150 per location for two or more routes, or walk away. He does have some great locations, but it bothers me he never kept any books, has no idea what he is bringing in per location per month, and pretty much I am paying a little higher price for his mistakes he made early on. What do you guys think?? Should I just walk, its hard though because he does have some great locations :?. Link to comment Share on other sites More sharing options...
pusherman Posted July 29, 2007 Share Posted July 29, 2007 just know going in to it that you are going to have to relocate alot of these machines it seems. if he has alot of good locations and is only netting $800 from 90 machines what are the avg locations doing? $4? how many machines do you have out right now? i have bought machines in lots for as little as $20 each for 50 machines. they were not in the best of shape but they were usable. you can get deals on good used machines for $50 alot of times. you just have to keep looking for good deals. just weigh wether or not the machines without locations are worth $150 each because you may be relocating alot of them yourself. Link to comment Share on other sites More sharing options...
baxsonvending Posted July 29, 2007 Author Share Posted July 29, 2007 Well I have placed 4 machines myself as I started last week. I have seen so many prices for existing routes, all sorts of astronomical prices. I just wanted to have something that I could utilize that was already existing, and at the same time build up my business. You make great points though, perhaps I should steer clear of purchasing so many of his routes as he is clueless as to how they are peforming. And my greatest fear is paying so much for a location then having to move it because it only brings in $5.00 a month :X. Link to comment Share on other sites More sharing options...
caserri Posted August 6, 2007 Share Posted August 6, 2007 How goes the battle Baxson? How is your route shaping up? Give us an update. Steve Link to comment Share on other sites More sharing options...
baxsonvending Posted August 7, 2007 Author Share Posted August 7, 2007 We finally came to an agreement, so I had to call every owner/manager of the locations and let them know that we will be transferring service people. It worked well to say that rather then saying changing ownership, no one wanted to kickout the machine. Actually they were looking forward to someone actually coming to service their location. The words change of ownership made it seem like we were a business, which we are, however both myself and the previous vendor utlized the same charity! So it was only natural to let them know I will be servicing their machines more often then he ever did and willing to listen to them. Which is something he obviously did not do! We close the deal tomorrow, so I will be looking at an additional 22 locations to add to the ones I currently have. I am going to sit for awhile and see how these locations treat me then I will begin to get back out there and locate more machines. Link to comment Share on other sites More sharing options...
caserri Posted August 7, 2007 Share Posted August 7, 2007 Wow, Thats great! I think you did the right thing about the "change of ownership" thing. There is no sense in making your newly acquired accounts uneasy about their service. Especially if they were receiving poor service to begin with. I am going to sit for awhile and see how these locations treat me then I will begin to get back out there and locate more machines. Good move there. You really have to wait for the dust to settle before you see what you really have. Well congrats Baxson and please keep us updated on your progress. If you need anything don't hesitate to PM me. I would be glad to help you out in any way I can. Steve Link to comment Share on other sites More sharing options...
joehop Posted May 8, 2008 Share Posted May 8, 2008 HOW MUCH IS YOUR AVERAGE INCOME PER MACHINE Link to comment Share on other sites More sharing options...
Bravo Duck Posted May 8, 2008 Share Posted May 8, 2008 Sometimes people dont care to discuss specifics about their business, but here is some published data that might help you. http://www.vendiscuss.com/forums/view_forum.php?id=32 Link to comment Share on other sites More sharing options...
Outlander Posted August 19, 2008 Share Posted August 19, 2008 Hopefully, one of these days I will be able to click on that link and see something, lol Link to comment Share on other sites More sharing options...
Gwen Posted August 30, 2008 Share Posted August 30, 2008 I have never purchase a route before. I just did wed just 5 machines located and one in good condition not placed and one in parts. She didn't keep records she was asking for 750 in the ad then she said 725. I told her seens there weren't any paper I could only offer 125 a piece per located machine. I told her I wouldn't commit to buying it until I see the locations. She took me and introduce me as a potential buyer that was nice. I saw that 4 of the locations were right on my route. Bingo, I got 6 machines, one for parts for 625. My plan I have 5 1800 machines left to place I will place them in this route. Take the other machines (I think they are metal ultravends) and sell them. This way I get most of my 625 back. She is trying to sell 3 more plastic machines for 100 each but I try to stay away from plastic. They are bran new in boxes if someone wants them let me know I can tell her to contact you. She also made a Introduction letter just in case. I can show it to the location owner as evidence that I bought the route from her. That was nice too. Gwen Link to comment Share on other sites More sharing options...
rjpapageorgio Posted August 30, 2008 Share Posted August 30, 2008 I agree with Steve that those prices are too high. Especially since the 1-800 vends are averaging under $10 a location. You can get those averages with most accounts in the beginning stages. However I don’t agree that your business is only worth “the price of the machine and a finders fee for an account.†In that case, what you are telling me is that the business I am building is going to down in value because my machines are depreciating every year. I like to look at businesses in terms of Return On Investment (ROI), and that requires you to factor in how much the business is producing every month/year. Now don’t get me wrong, I think it should be based on consistant numbers (at least 12-24 months worth). The exception would be inexperienced operators who bought into a business scam for 3 months and decided to get out. The bottom line, in a slow economy like we are in now, you get what you can for it. However under normal conditions I feel you should get at least double of what your route is producing annually. A two year return on an investment is a great deal. RJ Link to comment Share on other sites More sharing options...
caserri Posted August 30, 2008 Share Posted August 30, 2008 RJ, Thanks for the opposing view on this old post! Unfortunately, I just cant agree that a machine is worth any more than when it was originally placed just because you can prove it's income. Since this original post, I have looked at routes for sale. Instead of actually purchasing the routes, I simply bought and placed my own machines in the locations that the seller was trying to sell. That way I was able to replicate the most desirable locations for a fraction of what the seller was asking. I find it very easy to place machines where one already exists. Within a month or two, the selling vendor was gone anyway, leaving me the very same location that I would've paid way too much for. Bottom line, for me anyway, I will never purchase something for a premium that I can make myself. Steve Link to comment Share on other sites More sharing options...
Jay-Son Vending Posted August 30, 2008 Share Posted August 30, 2008 As a relative newbie, I have learned a lot fom the folks here..I have seen this question asked a lot here(by me at least once)..the answers are all over the board..but the most consitant has been around 70 % of the annual income(not sure if that is gross or net) This is approx. to what I have decided nis best...around 6-8 months of income to cover the cost of the machines/route...LESS is always better. Paperwork is a must... For the most p[art tho...I agree with Steve..I am purchasing my machines from e-bay/craigslist and having them placed or putting them in myself... Link to comment Share on other sites More sharing options...
alyssamma Posted August 30, 2008 Share Posted August 30, 2008 Well, I'll add my 2 cents here. I currently have 18 machines placed and another 3 that should be placed next week hopefully. 10 locations we paid Midwest for (they still owe us 2). 3 locations we found ourselves and have another we should be able to move the machine into next week. The rest were from a route we bought. I bought an existing route that had 7 machines placed and an additional 4 not placed. In addition there were 4 condom machines...3 placed and 1 not placed. The machines were a combo of Vendstars, XYZ Bulk, and Amerivends. The seller claimed the route grossed $150/mo, but after going with him to service the machines I believe they are making about $100/mo. Additionally there were spare parts and 19 bags of candy. We paid $850 for this. We are looking at purchasing other routes and here is my thinking on this... 1) Going with someone to service the machines is a good thing to do. You don't know when he last serviced them, but can get somewhat of a feel for that. If the client is surprised to see you for instance Also, it is easy to see the condition of the machines, etc. 2) Pay no more than 70% of gross. I've decided I will now pay $100 for a location. This is basically Steve's theory - the cost of the machine ($50) + cost of location ($50). 3) A lot of people selling their routes haven't kept them up. You might go to a location only to find you are being kicked out. That is why it is important you see all of the locations and go with the seller to service them. Anyway, I'm still a newbie here so lots to learn, but that is what I think so far. Kevin Link to comment Share on other sites More sharing options...
rjpapageorgio Posted August 30, 2008 Share Posted August 30, 2008 Hey Steve, My previous business was a franchise/distributorship, so our business was based on sales. The more your route produced the more it was worth. It didn't matter how many acounts you had it was all based on numbers. So I guess that's how I approach the candy machine biz. Let's use this as an example: Candy machine route A: Has 100 brand NEW Beavers all located producing $700 a month with great accounting records for the last 24 months. Candy machine route B: Has 100 brand New Beavers all located producing $1400 a month with great accounting records for the last 24 months. Are you saying that route B has to sell at the same price as route A because the equipment is the same? No route B is clearly worth more. You mentioned charging a premium for locations. Okay, but you would have to create a formula based on sales per location in order for this to happen. We can agree to disagree, but at the end of the day you can ask whatever you want for your business price wise. However the market will always end up dictating it's actual value. RJ Link to comment Share on other sites More sharing options...
caserri Posted August 30, 2008 Share Posted August 30, 2008 We can agree to disagree, but at the end of the day you can ask whatever you want for your business price wise. However the market will always end up dictating it's actual value. Agreed! Steve Link to comment Share on other sites More sharing options...
Outlander Posted August 30, 2008 Share Posted August 30, 2008 There are many diverging opinions on this subject and each has it's own merit. Every business deal has to be weighed independently. Revenue and condition of equipment that makes that revenue possible are the two main factors as I see it. Good records and a visual inspection are the only ways to verify the previous. If the route owner has not made a concerted effort to maintain good records and verify by deposits, pricing had better be at "Fire Sale" levels for me to even consider. Many vendors, especially in bulk do not keep records or claim income for tax purposes, this is a bad thing for many reasons, and they can expect not to get the level of sale price they would have had they maintained documentation of their revenues. Some vendors will "Salt" their machines prior to a sale to make them appear they are producing well, this is a lot harder to do when there is documentation backed by deposit evidence. To me ROI is the important factor, without documentation, I would only pay a used price for the equipment and nothing for the locations unless agreements are made that over a specified period of time the route would generate a certain $ in gross revenue and withhold a portion of the purchase price in escrow that would be forfeited by the seller if this revenue was not met. Attorney fees are pretty high to make this type of agreement so in most case this i not an option for a newcomer. If I was starting up right now and had another source of income, I would determine my startup capital, buy used equipment from Craigslist and Ebay and use one of the reputable locators recommended on this forum or place them myself until the startup funds ran out, then I would re-invest all revenue into buying more equipment and placing it until I achieved what ever level I desired. I would not borrow any funds to start, Interest will eat up the profits. Just my .02 Link to comment Share on other sites More sharing options...
rjpapageorgio Posted August 30, 2008 Share Posted August 30, 2008 Could not of said it better myself. Very good! I agree 100%! RJ Link to comment Share on other sites More sharing options...
nepavend Posted September 12, 2008 Share Posted September 12, 2008 As someone who has purchased three routes to get started, I can tell you that recordkeeping is something that is a rare commedity these days. My first purchase to start I basically took it on the chin, but I stayed positive and learned from the experience and then stumbled upon the second and third routes, which one was dirt cheap and the other was a little bit of a reach but that is where nearly all of my good locations came from ($50 per service and better). But the best ROI and feeling of accomplishment came for me when I got cheap used equipment for $20/head or less and located it myself or my partner did it with machines I had built. Just imagine picking up a rack with 2 50 cent vends on top, and three 25 cents on bottom, a wing on the rack with another 50 cent vend on the right, and a sticker machine with 4 columns on the left, in a chinese buffet, located yourself, making $500 minimum per service, and at a cost of equipment of..... $250 or so? Very sweet margins and ROI, even with a 30% commission on gross! Joe Link to comment Share on other sites More sharing options...
NVLINC Posted November 7, 2008 Share Posted November 7, 2008 Another thing i would like to add, When buying a route, ITS EXCELLENT to get to say hello to the manager or owner, and let them know your there, When building up my own personal route, there was a few instances where i would walk in and someone else had there machine empty or ants all in it and wont answer there phones or disconnected and so on, that the business owner would have me contact the other vendor and have him pick that machine and i would put mine in there, I see this every week not every now and then even when im not scoping out a new location, you always see empty machine's or dirty machines that dont belong, so after all my blabbing on When buying a route do not take the owners word, go with him and check out the locations, say hello shake a hand and run that route better then the last guy did Rocky- Nationwide Vending Locators Link to comment Share on other sites More sharing options...
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