brendamca Posted March 10, 2011 Share Posted March 10, 2011 I visited a potential location today, and would like to get some advice on making an offer. Here are the specs: Luxury Assisted/Independent living facility, # units unknown, but not yet full, opened 2 yrs. ago. 60-80 employees. USI/FSI snack and soda machines in employee break room. Max employee capacity approx. 160. Owner claims $750/month gross, but doesn't keep receipts. He says he only has general spreadsheet records of overall income. The USI snack is a 4-wide Snackmart III 4000 model 3014A with all coils functioning, and the FSI soda is a model 3040 serpentine delivery with 8 can selections set to one price. All DBA's and coin mechs are Coinco. The client told the current owner today that one of the soda slots wasn't taking coins or dollars. Turned out to be a stuck motor, where the can did not roll down to the front gate to be dispensed. Current owner told me that only previous problem with machine was 7 months ago. He has had it for about a year. I noticed rusty water at the bottom of the machine and snapped a pic, but chose not to ask owner about it yet. If I buy this location, and to me it looks like a good one, I'll be replacing both machines ASAP with bigger/better models. Current owner is there 2x a week since it is near his house. Coin mechs only have three tubes, so he's refilling those a lot. I would like to be there 1x a week at the most. Also: he is willing to train me, and to have his mechanic give me a 1-yr warranty on the equipment. So here's where I need help: The guy wants one year's gross for the location, since I'm not buying his whole route. I could see paying top dollar for it if the machines were AP/Crane/DN, etc., and if he could document his income better. How much should I shave off in my offer, if any? Because he doesn't have much in the way of documentation, I'm wondering how to structure an offer that reduces my risk. If he is way off on his numbers, I'd like to be able to pay proportionally less for the location. I think he wants all the money up front, since he's going off to medical school. I don't know whether he'd take any sort of installment plan based on performance, but I'd like to try. My final question: If you were picking up a location like this, what machines (model #'s) would you put in place of the current equipment? Would a glass front be a good choice? This location has good potential for expansion, and down the road I could see adding a frozen food component, possibly on the other side of the break room -- maybe even OCS if they asked. I would also ask the client about adding a machine for the residents. Thanks in advance for any insight you can give. Link to comment Share on other sites More sharing options...
NinnJinn Posted March 10, 2011 Share Posted March 10, 2011 I am not much into the negotiating field, but if you are going to replace the machines, give him a dollar amount and tell him to keep the machines for himself. For the rusty water, it is probably due to the pan corroding. And the drink machine, if it is the type I am thinking of, it isn't really worth a hill of beans to begin with. Just go low on the price offer, if he wants to sell it bad enough he/she will accept it. Since you are planning on putting better equipment in, you are basically interested in the location. Link to comment Share on other sites More sharing options...
dogcow Posted March 10, 2011 Share Posted March 10, 2011 I may get some heat for this but heres what I think you should do... dont pay him anything, try to take the location. look the fact is you are planning to put new equipment there anyway? why should you pay this guy anything?you know where the location is, why not just go to them and offer to bring in new equipment and frozen food. do you think the guy deserves NINE GRAND simply for finding the location?!! maybe this sounds sleazy, but i think its sleazy to charge you nine grand for some junky old equipment. does he have a contract with the location? has he been there for a long time? what if you pay him 9 grand and the management doesnt like you and kicks you out in 3 months? then you have some junky old equipment you paid top dollar for. if you absolutely decide to pay for it, i would start by offering at most half if you have cash,money talks and bs walks. more than half what hes and he finances it. just my 2c Link to comment Share on other sites More sharing options...
mission vending Posted March 10, 2011 Share Posted March 10, 2011 50% of gross plus inventory and mech $ is the "rule of thumb". More if there things that increase value, new equipment, a contract in place, owner financing etc. The snack is fine for now but I`d get a glassfront drink in there ASAP. Do the other upgrades after you`ve been in there a couple of months and you know you have the revenue to justify it. If he is servicing 2X a week you better plan on doing the same, the last thing you want to do is to take over what sounds like a really good location and then reduce service. Not a good idea IMO. Link to comment Share on other sites More sharing options...
brendamca Posted March 10, 2011 Author Share Posted March 10, 2011 I may get some heat for this but heres what I think you should do... dont pay him anything, try to take the location. look the fact is you are planning to put new equipment there anyway? why should you pay this guy anything?you know where the location is, why not just go to them and offer to bring in new equipment and frozen food. do you think the guy deserves NINE GRAND simply for finding the location?!! maybe this sounds sleazy, but i think its sleazy to charge you nine grand for some junky old equipment. does he have a contract with the location? has he been there for a long time? what if you pay him 9 grand and the management doesnt like you and kicks you out in 3 months? then you have some junky old equipment you paid top dollar for. if you absolutely decide to pay for it, i would start by offering at most half if you have cash,money talks and bs walks. more than half what hes and he finances it. just my 2c He showed me his other locations about a month ago, and was going to have me sign a no-compete agreement, but decided not to, since he thought I seemed honest. I have no intention of "being sleazy" in any case. Why should I expect the guy to give me the location for free? He's had it, claims to have made money off it, and wants to profit off its disposal, just like any of us would. He wants as much as he can get for the location, and I want to pay as little as possible. A fair price is one where both parties feel they got a good deal, right? If anyone on TVF had an account where they had serviced it well, even with inferior machines, and had a potential buyer steal it out from under them, we'd all pat the poor guy on the back and say, "Wow, that stinks. How awful for you." I don't think it's wise to advocate sleazy behavior. Link to comment Share on other sites More sharing options...
brendamca Posted March 10, 2011 Author Share Posted March 10, 2011 50% of gross plus inventory and mech $ is the "rule of thumb". More if there things that increase value, new equipment, a contract in place, owner financing etc. The snack is fine for now but I`d get a glassfront drink in there ASAP. Do the other upgrades after you`ve been in there a couple of months and you know you have the revenue to justify it. If he is servicing 2X a week you better plan on doing the same, the last thing you want to do is to take over what sounds like a really good location and then reduce service. Not a good idea IMO. 50% was what I thought as well. I don't think there's a contract in place, but I'll have to ask. How much over 50% should I go if he offers to finance it? What kind of glassfront should I get? I'm thinking newer, but not brand new. Do you have a model you like that is reliable? Link to comment Share on other sites More sharing options...
JEREMYTINA Posted March 10, 2011 Share Posted March 10, 2011 My concern is that the nusring home has been open for 2 years and is not at capacity. Those places are better run as a business than almost any other type I've seen. The bed count dictates employee count. They appear to only be half full. If that happened here, they would look at closing it because of a lack of revenue. In Florida employees are schedule like this: 1 cna or aid per 5 patients is the law 24hrs a day. 1 nurse (usually lpn) per hall. 1 rn to oversee lpn's. misc staff dietary, laundry, housekeeping, therapy, admin, etc. Employee count and bed count are close to 1 to 1 during the day shift, almost half that for the other two. Find out how many beds are occupied, and that will get you a true count of how many potential people eat from your machine. Don't forget to include the patients. They go right into the break room where my machines are everyday to buy stuff. His gross seems high. Maybe it's a great location, but I would guess he's at least 25-30% lower. Link to comment Share on other sites More sharing options...
dogcow Posted March 10, 2011 Share Posted March 10, 2011 My concern is that the nusring home has been open for 2 years and is not at capacity. Those places are better run as a business than almost any other type I've seen. The bed count dictates employee count. They appear to only be half full. If that happened here, they would look at closing it because of a lack of revenue. In Florida employees are schedule like this: 1 cna or aid per 5 patients is the law 24hrs a day. 1 nurse (usually lpn) per hall. 1 rn to oversee lpn's. misc staff dietary, laundry, housekeeping, therapy, admin, etc. Employee count and bed count are close to 1 to 1 during the day shift, almost half that for the other two. Find out how many beds are occupied, and that will get you a true count of how many potential people eat from your machine. Don't forget to include the patients. They go right into the break room where my machines are everyday to buy stuff. His gross seems high. Maybe it's a great location, but I would guess he's at least 25-30% lower. an ALF is not a nursing home they typically have far less staff--like 1 nurse for the whole facility in some cases Link to comment Share on other sites More sharing options...
NinnJinn Posted March 10, 2011 Share Posted March 10, 2011 He showed me his other locations about a month ago, and was going to have me sign a no-compete agreement, but decided not to, since he thought I seemed honest. I have no intention of "being sleazy" in any case. Why should I expect the guy to give me the location for free? He's had it, claims to have made money off it, and wants to profit off its disposal, just like any of us would. He wants as much as he can get for the location, and I want to pay as little as possible. A fair price is one where both parties feel they got a good deal, right? If anyone on TVF had an account where they had serviced it well, even with inferior machines, and had a potential buyer steal it out from under them, we'd all pat the poor guy on the back and say, "Wow, that stinks. How awful for you." I don't think it's wise to advocate sleazy behavior. Brendamca, I am not bashing anyone here, but from what I have seen and read, a lot of times, when a member buys, its as low as you can go. When they are selling, they want a premium. And I am with you, If the person takes care of their location I could never bring myself to get them booted out just to have a free location. Unfortunately that is why so many sellers require a potential buyer to sign a no compete contract. Link to comment Share on other sites More sharing options...
brendamca Posted March 10, 2011 Author Share Posted March 10, 2011 My concern is that the nusring home has been open for 2 years and is not at capacity. Those places are better run as a business than almost any other type I've seen. The bed count dictates employee count. They appear to only be half full. If that happened here, they would look at closing it because of a lack of revenue. In Florida employees are schedule like this: 1 cna or aid per 5 patients is the law 24hrs a day. 1 nurse (usually lpn) per hall. 1 rn to oversee lpn's. misc staff dietary, laundry, housekeeping, therapy, admin, etc. Employee count and bed count are close to 1 to 1 during the day shift, almost half that for the other two. Find out how many beds are occupied, and that will get you a true count of how many potential people eat from your machine. Don't forget to include the patients. They go right into the break room where my machines are everyday to buy stuff. His gross seems high. Maybe it's a great location, but I would guess he's at least 25-30% lower. Dogcow is right that this isn't strictly a nursing home. It's a blend of 55+ apartments and assisted living. This location doesn't take dementia patients, IIRC. And it's high end. The place looks like a hotel. Swanky with a capital S! The break room is downstairs from the resident floors, on the same level with the parking garage. I don't know how often the residents would go down there for snacks, which is why I'd like to approach the location in the future about a machine or two for the residents. But you do bring up another question that I had, which was how to evaluate the financial health of the company. I'm still somewhat concerned about the vacancy rate. This facility is part of a larger chain with locations in multiple states. I should see if I can get an annual report. I was planning to approach nursing homes near my house about their vending, so the metrics you provided will help a lot when I evaluate potential locations. Link to comment Share on other sites More sharing options...
JEREMYTINA Posted March 10, 2011 Share Posted March 10, 2011 Dogcow is right that this isn't strictly a nursing home. It's a blend of 55+ apartments and assisted living. This location doesn't take dementia patients, IIRC. And it's high end. The place looks like a hotel. Swanky with a capital S! The break room is downstairs from the resident floors, on the same level with the parking garage. I don't know how often the residents would go down there for snacks, which is why I'd like to approach the location in the future about a machine or two for the residents. But you do bring up another question that I had, which was how to evaluate the financial health of the company. I'm still somewhat concerned about the vacancy rate. This facility is part of a larger chain with locations in multiple states. I should see if I can get an annual report. I was planning to approach nursing homes near my house about their vending, so the metrics you provided will help a lot when I evaluate potential locations. It was my fault for not paying attention to the type of facility. We have a lot of the apartment/condo style facilities around the Tampa area, and those never seem to fill up all the way. They do change hands every few years, but the are very nice places. We even have some set up like college apartments where there is a shared living area for 4 people, but everyone has their own bedroom. Link to comment Share on other sites More sharing options...
brendamca Posted March 10, 2011 Author Share Posted March 10, 2011 No problem. Link to comment Share on other sites More sharing options...
mission vending Posted March 11, 2011 Share Posted March 11, 2011 He showed me his other locations about a month ago, and was going to have me sign a no-compete agreement, but decided not to, since he thought I seemed honest. I have no intention of "being sleazy" in any case. Why should I expect the guy to give me the location for free? He's had it, claims to have made money off it, and wants to profit off its disposal, just like any of us would. He wants as much as he can get for the location, and I want to pay as little as possible. A fair price is one where both parties feel they got a good deal, right? If anyone on TVF had an account where they had serviced it well, even with inferior machines, and had a potential buyer steal it out from under them, we'd all pat the poor guy on the back and say, "Wow, that stinks. How awful for you." I don't think it's wise to advocate sleazy behavior. One of the things that gives this industry a bad image is how vendors treat each other, dirty tricks (vandalizing equipment) and employing tactics that are at best unethical. Taking the high road can be hard at times but over time being honest and ethical in your treatment of your customers and competition will pay dividends. Link to comment Share on other sites More sharing options...
mission vending Posted March 11, 2011 Share Posted March 11, 2011 50% was what I thought as well. I don't think there's a contract in place, but I'll have to ask. How much over 50% should I go if he offers to finance it? What kind of glassfront should I get? I'm thinking newer, but not brand new. Do you have a model you like that is reliable? As you yourself said, whatever amount you can reach agreement on that you both are OK with. Without more detailed info, especially sales and contract status I would not go much over the 50% mark. IF the info is forthcoming and all looks good upwards of 70% of gross would not be unreasonable. For the machine I'd look first at the DN. Link to comment Share on other sites More sharing options...
mission vending Posted March 11, 2011 Share Posted March 11, 2011 It was my fault for not paying attention to the type of facility. We have a lot of the apartment/condo style facilities around the Tampa area, and those never seem to fill up all the way. They do change hands every few years, but the are very nice places. We even have some set up like college apartments where there is a shared living area for 4 people, but everyone has their own bedroom. These type of facilities are usually private or insurance paid, medicare/medicaid does not get involved until its a true nursing home which would help explain why they don't fill up. At least that's how I understand it. Link to comment Share on other sites More sharing options...
brendamca Posted March 11, 2011 Author Share Posted March 11, 2011 As you yourself said, whatever amount you can reach agreement on that you both are OK with. Without more detailed info, especially sales and contract status I would not go much over the 50% mark. IF the info is forthcoming and all looks good upwards of 70% of gross would not be unreasonable. For the machine I'd look first at the DN. Thanks for the info. Do you mean the BevMax 3? There's a BevMax with the robot arm; I think that's the 3, and the earlier models were bottle-drop type. Do I have that correct? Link to comment Share on other sites More sharing options...
mission vending Posted March 11, 2011 Share Posted March 11, 2011 Thanks for the info. Do you mean the BevMax 3? There's a BevMax with the robot arm; I think that's the 3, and the earlier models were bottle-drop type. Do I have that correct? Yes, the 3 or 4 are both good machines. Link to comment Share on other sites More sharing options...
brendamca Posted March 11, 2011 Author Share Posted March 11, 2011 Yes, the 3 or 4 are both good machines. OK, this gives me something to go on. What snack models would you recommend (<10 yrs old)? Link to comment Share on other sites More sharing options...
mission vending Posted March 11, 2011 Share Posted March 11, 2011 OK, this gives me something to go on. What snack models would you recommend (<10 yrs old)? If it was me I`d leave the existing machine its up to the task. No need to fix what`s not broken. Save the $$ for the next location. Link to comment Share on other sites More sharing options...
brendamca Posted March 11, 2011 Author Share Posted March 11, 2011 If it was me I`d leave the existing machine its up to the task. No need to fix what`s not broken. Save the $$ for the next location. So you're thinking I don't need a 5-wide there? Link to comment Share on other sites More sharing options...
mission vending Posted March 11, 2011 Share Posted March 11, 2011 So you're thinking I don't need a 5-wide there? Based purely on the numbers IMO probably not. A typical soda snack location splits 60/40 on the revenue. At the stated (inflated?) gross of 750 month that`s a little more than 300 a month for the snack. Again, my opinion, I like a 5w to generate 500+ a month. My suggestion, get in there and give it month or two, see where the real numbers are and do what you think is best for your situation. Link to comment Share on other sites More sharing options...
RJT Posted March 13, 2011 Share Posted March 13, 2011 Maybe I missed something but he wants $9500 for the account with a USI 3014 and a FSI drink? The USI 3014 is a good machine that drink machine is awful. If you accidently stick the wrong drink in the wrong slot you have to unload the entire row to get out the drink. The machines are worth about $800 to $1200 tops for both. I am sure their are people selling these that are asking much more but that is what they are worth because I have bought 3014 machines for $500 or less. The drink vendor you could not give me. I would think his revenue could be close but I have my doubts. I have a 200 employee nursing home that does an average of $100 a week in the snack machine. With his average the drink vendor would have to do $100 and the snack around $85. I am with mission that I would not give over $4500 at the most and I would have to really want it to even pay that. If its me I would walk away.... Link to comment Share on other sites More sharing options...
brendamca Posted March 22, 2011 Author Share Posted March 22, 2011 I found out that the location is 9 mos into a 2-yr contract that is automatically renewed if the location is happy. Link to comment Share on other sites More sharing options...
mission vending Posted March 22, 2011 Share Posted March 22, 2011 I found out that the location is 9 mos into a 2-yr contract that is automatically renewed if the location is happy. So by the time you transfer the account and get the new equipment in you've basically got a year left. With no verifiable sales figures I'm not terribly impressed. If I was going to pay anything substantially over the value of the equipment there would have to be more on the table for me. I don't mind buying a location with no contract or short term remaining because it won't have a dramatic impact on my business if I do lose the location. I also have had enough experience and am confident enough in what I can do and provide to my customers that in many cases I can keep them well past the original contract term. Link to comment Share on other sites More sharing options...
brendamca Posted March 22, 2011 Author Share Posted March 22, 2011 OK, I'm a little confused because I thought having it under contract would be a good thing. So, if I understand you correctly, having a year left is bad because I will have spent $$$ on a better soda machine, and will not have a positive ROI at the end of the contract term. Anything I'm missing here? Link to comment Share on other sites More sharing options...
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