8 replies to this topic

[Gulf Coast Vending]

I have found a guy that is breaking up his route. He wants to sell some of his machines in their current locations.

He says they average is about $40 per month and wants to sell each for $200 per location. Because I don't have enough money to buy all of them, he is willing to sell one at a time. I am just wondering how you figure how much a location is worth.

If the profit is about $40 per month and he sell for $200, it would take me approximately 5 months before I break even. Is that an average amount of time, or is the price to steep?

Any additional info regarding the ROI in the vending business would be greatly appreciated.

Thanks.

[Rocksolid]

Take a look at my question under " Quick Question " You will get some answers there. Is that 40.00 gross or Net?

[Gulf Coast Vending]

Take a look at my question under " Quick Question " You will get some answers there. Is that 40.00 gross or Net?

Rocksolid,

Thanks for the follow up. I have read that post once before and just got through reading it again. I don't know how it works in the vending business but, it sounds like the buyer in that post is trying to get one over on the seller. They are only trying to buy based on one month's worth of expenses, cash flow, inventory and locations.

In most cases when placing value on a business the general rule of thumb is about 2 times EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
Now going on face value alone because financials can not be verified. We can't figure on the revenue because we were only given the net profit, however, at $200 per month net profit, if I am figuring this right the vending route would be worth about $4,800.

On the numbers given in that post for the national average and grossing only $15 per month on a triple head machine... the route would be valued at $1,800 using the principle mentioned above.

However, and this is where ignorance comes in, I don't know how the value is figured in the vending business. Based on the numbers I was given from my potential seller. If the machine nets $40 per month, that machine would be worth about $1,000 and if he is selling it for $200, that is about 80% below market value and a no brainer of deal. Any fool would be crazy to pass up that offer, but I also subscribe to the theory that if it sounds to good to be true... it probably is.

But, because this is not a "normal" business so to speak and because I am not sure if those numbers of income are correct... I really have no way of knowing what the true value is. Like mentioned in the "quick question" post, it would be crazy to buy a machine only to be asked to leave on your first service visit.

I really hope this post has not went over the top about trying to figure out the value of a route or in my case just one machine, however, I am also open to others' feedback, from new vending business operators to seasoned pros.

Thanks.

[snack dude]

I am not in the bulk vending part of the buisness. But from a snack soda point of view the location is worth what it grosses in a year. in other words if a locations gross sales is $1000.00 a year then that is what it is worth $1,000.00. Again I have never dealt with bulk vending machines so I maybe high. I would want to know is that $40 per month average gross sales, gross profit, net profit what is it. Also I what to see some documentation of the numbers. If this person has a nice size route he should have a spreadsheet breaking down the sales by location and if he does not I would cut the price in half or run like hell. But do not take his word for it. I would ask the seller to show me on paper how he arrived at a $200 dollar per location price. I do not mean to scare you but there are alot of people in this buisness that will tell you heres what your gonna make at this location without anything to back it up.

Good Luck
the Snack Dude

I I have found a guy that is breaking up his route. He wants to sell some of his machines in their current locations.

He says they average is about $40 per month and wants to sell each for $200 per location. Because I don't have enough money to buy all of them, he is willing to sell one at a time. I am just wondering how you figure how much a location is worth.

If the profit is about $40 per month and he sell for $200, it would take me approximately 5 months before I break even. Is that an average amount of time, or is the price to steep?

Any additional info regarding the ROI in the vending business would be greatly appreciated.

Thanks.

[Gabe .Z.]

1) The monthly average per head is $7 gross so $40 is too high.
2) A location is worth what the machine is worth IMHO. You could lose the location next time you walk in the door.
3) Verify that he has records of what the machines gross and net. If he doesn't, offer a low ball offer.
4) Don't feel pressured to make this deal happen. There are lots of deals out there better than this one.
5) Cost of Goods is around 20%-30% depending on what you're vending.

What kind of machines are they and how old?

[Gulf Coast Vending]

Snack Dude and Gabe Z.,

Thanks for the replies. I really appreciate all the help so far. Since I last posted there have been a few more emails exchanged between the seller and myself.

Snack Dude,
Don't worry about scaring me, the reason I joined the forum was to get the unbiased truth about what to look out for in the business. It's amazing to see what kind of GOD honest truth you will get when the other party has no monetary interest.
He has not been able to provide financials and in fact when I asked for them, the following was his response.

"... the excel sheet would not help because those machine averages are mixed in with a bigger route."

This immediately raised a red flag with me, because I would want to know what each machine is doing seperately, which leads me into my response for Gabe Z.

Gabe Z.,
The machines are the Vendstar 3000. Here is another response this seller gave me while emailing back and forth.

"My machines are averaging 47.77 per unit a month according to my excell spread sheet. I have a few machines doing 80+ dollars a month and some doing 20+. The national average is much lower because some people are lazy and leave their machines in 8...yes 8 dollar a month locations.I know some. To cheap to pay a service. I will never understand that."

He doesn't try to lie about the national average being much lower, he just claims that if his produce less than $20 per location for more than 3 months, he moves the machine.

So in that statement above, he is saying that his average is $47.77, some do $80+ and some do $20+. If he has a spreadsheet figuring those averages... shouldn't he also be able to tell me how much the one he is trying to sale me makes... I would think so.

I told him I would have to get back with him on a decision. This "deal" is sounding more and more shady as I move forward.

At this point, I think I will take the advice of Gabe Z. and the forum to pass on this deal and look for a better one.

Thanks again to everyone who has posted.
I will keep you updated with my progress.

[Islander]

Snack Dude and Gabe Z.,

Thanks for the replies. I really appreciate all the help so far. Since I last posted there have been a few more emails exchanged between the seller and myself.

Snack Dude,
Don't worry about scaring me, the reason I joined the forum was to get the unbiased truth about what to look out for in the business. It's amazing to see what kind of GOD honest truth you will get when the other party has no monetary interest.
He has not been able to provide financials and in fact when I asked for them, the following was his response.

"... the excel sheet would not help because those machine averages are mixed in with a bigger route."

This immediately raised a red flag with me, because I would want to know what each machine is doing seperately, which leads me into my response for Gabe Z.

Gabe Z.,
The machines are the Vendstar 3000. Here is another response this seller gave me while emailing back and forth.

"My machines are averaging 47.77 per unit a month according to my excell spread sheet. I have a few machines doing 80+ dollars a month and some doing 20+. The national average is much lower because some people are lazy and leave their machines in 8...yes 8 dollar a month locations.I know some. To cheap to pay a service. I will never understand that."

He doesn't try to lie about the national average being much lower, he just claims that if his produce less than $20 per location for more than 3 months, he moves the machine.

So in that statement above, he is saying that his average is $47.77, some do $80+ and some do $20+. If he has a spreadsheet figuring those averages... shouldn't he also be able to tell me how much the one he is trying to sale me makes... I would think so.

I told him I would have to get back with him on a decision. This "deal" is sounding more and more shady as I move forward.

At this point, I think I will take the advice of Gabe Z. and the forum to pass on this deal and look for a better one.

Thanks again to everyone who has posted.
I will keep you updated with my progress.

Gulf Coast Vending.......... Just for grins & giggles, ask the seller if he would take you around and see the machines/locations or try to find out where they are and go look for yourself. I myself would never buy a "pig in a poke."

[Gabe .Z.]

Brian, I just want to give you a heads up. If the vendstar 3000 machines are in locations doing $40 a month, they will not last! These machines always have problems since they are all plastic. Vendstar 3000s can be found on ebay and craigslist for between $20-$40 all day long. Don't buy.

[markvend]

Brian,

Did you follow through with buying the machines? Don't forget when figuring how long it takes you to pay for your machines that you figure your NET PROFIT then divide that into your cost per machine and that will give you the time to pay for the machine IN SERVICE CYCLES. The profit margins on vendstar are much lower becuase of the use of mostly candy which has lower profit margins.

If I'm going to buy a vendstar, I would want to pay in the $30 range already placed so I can pay off my investment quickly and not worry about having to replace the broken machines. I have bought two routes of vendstars this way and have come out well. My routes are not even doing what you are quoting, yet I was still able to pay for the machines quickly and integrate them into other places on my route where candy made a logical choice.

Mark