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.

My partner and i went out and stopped in 6 places in our target area industrial park. We only looked for parking lots with lots of cars, not very scientific but the results were amazing. In 3 we were stopped by the gatekeeper in the front reception who gave us the name of the person we had to contact. the other three all had vending machines but they were totally dissatisfied with their service. They showed us the machines and in all three, there were many empty slots, expired snacks and most all make machine change errors or just keep the money and dont vend. they call for service and in one instance they are waiting a week for service. All 3 are potentials for us and 1 is a done deal. they just need to send the remove equipment letter to the company. We will never pay a locator. Its a numbers game, the peoplein the companies are all nice and cordial and many are dissatisfied with their current service. We're very happy with our first venture into locating for expansion.

Tony

Tony,

Thanks for the update. I haven't actually purchased the vending machine yet, because the more I read this forum, the more nervous I am about using a locator. Most people selling existing routes can't/won't verify their income and the locator I am dealing with doesn't seem like a company, just an individual trying to sell/consolidate a part of his routes. The only upside to this guy so far is that he has agreed to meet with me in person once I buy the machine for delivery, that makes me feel a little better knowing that I am not just dealing with someone through email or over the internet.

This is my downfall. I don't feel that I am a very good sales person. I have never really had any professional training in it, and to be honest I hate being told, "No". I understand that a business refusal is not necessarily a personal rejection, but I do believe that no one will buy my product unless they have first bought me. If someone tells me, "No" I take it very personal most of the time and that is discouraging.

I know that is a fear I have to get over and your motivational words have inspired me. You have in essence just described the Nike slogan, "Just Do It".
I will hold off on using a locator and start pounding the pavement until I get a machine placed. Once I get a deal done, I will buy a machine from one of the many outlets online and see how it goes from there.

Thanks again.

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.

Thanks for this info. I'm already a Sam's Club member and I haven't seen this promotion before, but I will sure ask about it.

Maybe I am not understanding what you are asking. but based on what you are describing, If you get ANY snack machine with the clear glass front where the customer can see the actual product, then you can put anything are heart desires in there. Chips? candy? etc. all you have to worry about is setting the proper price for the item.

Thanks Brassine, I didn't know you could adjust the size of the vending spaces. I thought there were set. Do you or anyone else know where you can get good used snack machines?
Thanks.