8 replies to this topic

[CRL]

I recently found a vending route of about 50 machines for sale in my city. The owner is getting out of the snack vending business. Can anyone help me identify the traps to look for in this type of situation?

Any tips???

[jblvending]

[quote name='CRL' date='May 20 2008, 06:08 PM' post='3908']
I recently found a vending route of about 50 machines for sale in my city. The owner is getting out of the snack vending business. Can anyone help me identify the traps to look for in this type of situation?

Any tips???
[/quote


If the average is less than $75.00 per machine, walk away, and if one account makes up more than 20% or more of the Sales, runaway.

[Emcar Vending Machines]

See the books.

Why is he selling?

See the books

How old are the machines?

See the books

Are any of the sites contracted?

See the books.

How many hours a week will it take you to service the route?

Did I mention. See the books.

Good luck

[CRL]

Hey Thanks guys,

Your advice was very helpful. Does anyone know by how much the machines depreciate every year? In other words, what is the valuation method of a used machine?

[Seechi21]

Hey Thanks guys,

Your advice was very helpful. Does anyone know by how much the machines depreciate every year? In other words, what is the valuation method of a used machine?

Just to add to what others were saying. I just purchased two additional routes that have been great. I do alot of different investments and always look at cash flow and almost always never spend my own cash. I borrow. So from an investment standpoint, if you borrow money, say 20k and it cost you $300 a month and your route would yield $1000 a month. To me its a good investment. A couple of years ago, I was buying houses and fixing them up and my cash flow on a rental house was less than $500 per month so I figure the route was less money and less risk. I do think that $75 a week might be a little high for an average location or this may just depend on geography. My best location is at a rest home which brings in $250 a week, but its divided among 3 machines. So to me $50 per machine per week is probably more customary. I guess it also depends on pricing and profit margins.

To answer your other question, depreciation will depend on your CPA and how you do your books. How long do you plan to stick with the business? If its for the long term, then you don't want to claim high depreciation expenses too early or you may be stuck in the future. The life of your machine could also have many different variables, is it mechanical? Outside? Used? On the flip side, there isn't much that could go wrong with them, that can't be easily replaced by a tech or yourself.

[jblvending]

Just to add to what others were saying. I just purchased two additional routes that have been great. I do alot of different investments and always look at cash flow and almost always never spend my own cash. I borrow. So from an investment standpoint, if you borrow money, say 20k and it cost you $300 a month and your route would yield $1000 a month. To me its a good investment. A couple of years ago, I was buying houses and fixing them up and my cash flow on a rental house was less than $500 per month so I figure the route was less money and less risk. I do think that $75 a week might be a little high for an average location or this may just depend on geography. My best location is at a rest home which brings in $250 a week, but its divided among 3 machines. So to me $50 per machine per week is probably more customary. I guess it also depends on pricing and profit margins.

To answer your other question, depreciation will depend on your CPA and how you do your books. How long do you plan to stick with the business? If its for the long term, then you don't want to claim high depreciation expenses too early or you may be stuck in the future. The life of your machine could also have many different variables, is it mechanical? Outside? Used? On the flip side, there isn't much that could go wrong with them, that can't be easily replaced by a tech or yourself.

Acutally $75.00 is on the low side, you really are looking to get $100 a machine, but if you can get an average of $75.00 across the board, then your not spinning your wheels.

[Seechi21]

Acutally $75.00 is on the low side, you really are looking to get $100 a machine, but if you can get an average of $75.00 across the board, then your not spinning your wheels.

75.00 a week?

[kevin]

75.00 a week?

75.00 a week is ok if you have the pricing right and the product rotaion is good. Now if they only buy 2 drinks(9 select) or 15 snacks(32 select) and average these numbers then you have alot of slow moving product. $75 is only 3 cases a week of bottles or a little over 5 cases a week can. That is an "OK" account for my specific prices and products if the products very. We have a rule of 5 on our drink machines. We average $5/ case after cost/wages/gas/maint, and that mans these machines will yeild, in my case, about $15-$25 in profit a week. Now thats not much but if the machines are older machines, but good machines, and have quality DBV and mech then I can see the investment. The only thing I would prefer is to have more then half the machines hitting $125+ a week and none less then $75. Also this depends on what they are asking and what you need. I have had competitor/friends buy out routes in sections instead of as a whole. The reason they did this was due to geographic though. Sometimes small accounts can mean alot if you can make more money going to one area by adding a few and saving on gas. I hope that made sense, I swear it did to me! ... Im also taking into account that the machines shouldn't cost to much based on a few years of age and a bit of reasoning.

[jblvending]

75.00 a week?

$75.00 a week, per machine.This is an average, so you may have a drink and a snack machine in one location, you do not want it to do less than $150.00 a week, your looking for $75.00 to $100.00 a week per machine, it's ok if your snack is doing $100.00 a week and the drink is doing $50.00 a week, or vise-versa, the target is your average ,across the board.