Buying an Existing Vending Route
OK, in order to not become vending road kill, don’t believe anything the seller is telling you. Sure the vending machine route is making $40 per machine per location. Sure the seller is just looking to unload what may be the most profitable vending route ever in the history of vending. Of course, when you actually ask to see IRS tax filings proving their legitimacy, they won’t be able to provide it. Don’t believe any spread sheets or book keeping forms they may offer to provide, these can all be faked. This isn’t meant to imply that they are trying to rip you off or that they are lying but consider that they are selling an asset and trying to get the best price possible. You, as the buyer, are also trying to get the best price possible and more likely than not, the seller is overpricing the vending machine route.
How then can you determine what the route is worth? The single only way to determine a route value from a buyer’s point of view is to only place a value on the used vending machines being sold. Yes, the locations do have value, the good will of the business has value, and the age of the vending accounts also have value, but not for our buying purposes. We are essentially buying a business with unknown variables. We don’t know what the machines are actually making. We don’t know if the businesses where the used vending machines are located are happy with the prior vendor (the seller). We don’t know anything about this business except how many machines are being sold and this should be checked and verified. It is possible for a thoroughly unscrupulous person to sell someone else’s machines but usually these will be stolen from a location and not still in place.
When making an offer on the vending route, ask the seller if you can go on a servicing run with him to check out the state of the used vending machines. If a route is very large, you would most likely just do a head check to see that the machines exist. But it is best to watch the seller service a few machines to see how the business owners react to him and gauge the value of the locations. Even though we are not placing any value on the locations for our buying decision making, the locations can give you an overall feel for how much future work will be required to turn this route into a money maker for you.
Another thing to keep in mind when making an offer to buy is how many different brands of machines are on the route and what kind of quality are they. When building a route, obviously you want to grow fast and keep your expenses low and used machines are a great way to do just that. But once your vending machine business starts to become rather large, a variety of brands can become a liability. You will have less compatibility of parts for when things break down and buying replacement parts sometimes isn’t worth the money. With vending heads going for about $60.00 brand new, a new coin mechanism for $25.00 doesn’t seem practical. And believe me when I say, used vending machines are going to break down. Another small thing to consider with multiple machines is the sheer volume of keys you will have to keep track of and organize. This may seem like a small consideration, but think about having separate keys for the top and sometimes separate keys for the back and multiply that by twenty. When you’re trying to zip through your route, organizing your keys is just one more thing to slow you down.
Lots of great deals are to be had on vending machine business routes. Craig’s List is a great source for both routes and used vending machines. Like I covered in the biz ops and scams section, lots of people get ripped off early in their vending careers and never fully recover. If you shop wisely, you may find vending gold. There are people who have bought neglected vending routes and upon servicing the route the first time have made the buying price back essentially making the purchase free. While I hope you have the good fortune to find such a deal, even if just heed my advice to only consider the value of the machines in the route being sold, you will avoid getting ripped off.
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