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Help on route for sale


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Thanks for all the help from everyone. Ninn Jin you are spot on except that  I moved the service days out to create 10 days averaging $700.00 a day instead of say 15 days making 500.00. The average still comes out to 350.00 a day because I am not collecting a full 20 days.  I now have 10 days open to fill up so I can get the company profitable. The goal is to have everyday average 1000.00 per day like the experienced would say. The problem is I am losing an average of $4000.00 not $3000.00 because I just received Septembers numbers :'(.  I probably would be closer to break even if I was an owner operator. It cost me in expenses because I am paying for someone to run the route.

Coinvestor brings up a great point about some of the other costs assosiated withbuilding  a location. Based on the $20,000.00 for the 2 locations,  it will actually cost 85% to build. Any building of locations that gross less then $20,000.00, then you are paying greater then 85% to build. It can 150% of gross on weak accounts(I can show you some of those) :o. So for me, the value of the route is equal to 85% because of the point coinvestor brought up about $500.00 to install, $500.00 for the change, $2000.00 to stock, and then the 10,0000.00 for 10 machines plus $4000.00 for the locations( $400.00 per machine) equals $17000.00. Divide that by the $20,000.00 gross and you have 85%.

The good news is he accepted 70% of gross which is $14000.00. I am wondering now if I paid less then 70% because I did not calculate the stocking and change which if he gives me should put me in at paying 67.5 %. I am very happy with this purchase, yes like Mission says there are better deals out there but  67.5% of gross is not a bad deal. On top of that he is going to introduce to me a new location where the cafeteria was shut down because he like the fact I did not try to low ball him too much. Thanks to everyone that is helping me!

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Thanks for your advice Mission I think without you and others including Blue Moose ect... I would eventually go out of business. Even though I am losing right now I am able to see the light in the tunnel from quotes like  "you have to build faster then you lose accounts" or "anything less then $1000.00 is not worth sending a route driver out to collect" or "50% is a starting point when trying to purchase a route". These are a few points that give a newbie the foundation of what you need to know in order to become a successful full time full line vendor. Thanks again!

Dog cow,I would have to do a count but I would say I have 50 soda 20 snack and 200 bulk 3 headers on route.

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Congrats on the new locations. I would have bought it based on what you told us. Whatever you agree on with the stock and money in the machines is fine, but make sure it is talked about with the offer. Don't wait until closing day to figure it out or you will both be disappointed.

JD

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  • 2 weeks later...

Yes, I closed on the 2 locations and it did include the product and coin mech change. So it was done at about 67% of gross.

I am looking at another route and wanted to get some opinions. It is a health food vending route.

Established "YoNaturals" vending route for sale (you can check out the concept at "www.yonaturals.com") 8 locations with recently extended location agreements. Locations include 6 large capacity combo vendors (vends drinks and snacks) some with credit/debit card processors and 6 separate drink machines(5 leased from pepsi). Route is grossing $2,000 - $2,500 monthly and can be run in less than 2 days weekly. This is a part time business at this point but the potential to grow it are very good, especially with schools going to healthier vending options. Owner needs to relocate in coming months and needs to sell. Asking price is less than the original equipment cost and locations are up and running over 2 years.

Would you stay away from a health food route? I can get this done for about $19,000.00(67% of gross). It includes the coin mech money and the products in the machine. My goal is to extend the service dates from servicing twice a week to servicing once a week so I collect more and service less days. Is that possible to do with combo machines? What is the price tag on this route? Thanks!

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Rich, YoNaturals has a history of over charging on the machines.  That doesn't mean the machines are not worthwhile, it means they were way over priced when your seller purchased them.  Look at equipment costs on this route.  Check the pricing on used equipment in the same shape.  Remember the Pepsi machines will not have any asset value to your company. They will generate some income which is included in the gross sales reported to you.  So base your offer on gross sales only and don't bring those machines into the calculations. 

There is room in the market place for healthy vending but as everyone is finding out the market is only about 40% compared to normal products.  The ideal situation would be to buy those machines, switch around some of the products to 50/50 healthy and bump up your sales. 

If these are newer machines I would offer 50% of one years gross as long as that amount is close to the equipment value.  Unless the current owner kept good books or paid taxes on this income it is hard to confirm the income.  So I suggest doing two things, check the asset value of the equipment (not including leased Pepsi vendors), confirm the annual gross income and offer 50% of gross if the gross figure is close to the asset value to your company.  If 50% is higher then the equipment value, adjust your offer. In the end the only thing you will truly have if everything else goes wrong is the equipment, you can take that to the bank.

Poplady

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Royal, what poplady said about those machines is correct. If you recall, I mentioned purchasing 5 AMS combo machines a few months back, those were yonaturals branded machines. The poor sucker I bought them from paid 55K for them, ran them for about 18 months and sold them to me for 5K. The aggregate total sales on the 5 machines for 18 +/- months was less then 20K. So to be polite... he was bent over and..... :D

The fresh healthy vending is a similar concept, only it is set up as a franchise. The have only been selling franchises for 4 or 5 months and according to the e-mail alerts I get from them there are selling quite a few of them. It will be interesting to see how many are still standing a year or two from now.

As for the healthy vending idea.... Do you remember the mandate for all 100% healthy stuff that was imposed on my city of San Antonio vending contract that I mentioned a few months back? We have a different standard, but sales have suffered considerably since the changeover. Additionally, I've kept two of the yonatural machines out in the field to learn and experiment with this new market segment( 100% organic and natural). I think it has legs and for those willing to work in this niche it seems to have potential. However, I am not convinced about 100% organic and natural dedicated machines unless you are in some very large high volume accounts.

Basically what you will be doing if running two businesses side by side. Your product will be ordered from UNFI, the primary distributor for Whole Foods. The products will cost you 20-100% more than similar products from Vistar or Sam's. Again there are minimum order amounts to reduce delivery surcharges. Putting "nonhealthy" stuff in the healthy machine won't work because that is not the branded machine is about and what the customers agreed to. In my admitted limited experience so far some of the "healthy" items will sell in "nonhealthy" machines but the accounts where I am having success is limited, but where it is working it is working well and I am providing something for my customers that NOBODY else in my area is.

Knowing what you have been kind of enough to share with me about your operation I don't know that this would be a good fit for you. If you really are seriously considering this call me and lets talk some more pros and cons before you make a final decision.

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