Two months ago, I came across this deal. I immediately texted the buyer as if I was about to miss out on the trade of a lifetime.
We talked through some of his locations, but he didn’t seem to know the gross revenue numbers off the top of his head. That seemed a bit odd to me. He suggested I give him some time to get the numbers together and he’d get back to me.
Nearly 60 days went by, and he texted me out of the blue saying, “Hey Blake, I just emailed you those revenue numbers, let me know if you want to get a deal done today or tomorrow.” Hmm… ok, I guess.
The Deal
- Asking Price: $40,000
- Gross Revenue: $31,000
- Machines: 13
- Locations: 7
Asking Price & Gross Revenue
- 1.9x gross revenue.
- At 50% net margin (pretty standard in vending), that's $15,500 net (2.58x multiple).
- It’s not a crazy number. Regardless, there’s a lot more to factor in here.
Location Breakdown (by Revenue)
- Location 1: $10,000/year, 2 machines (32% overall revenue).
- Location 2: $7,200/year, 2 machines (23% of overall revenue).
- Location 3: $6,500/year, 2 machines (21% of overall revenue).
- We’re now at 76% of the revenue between 3 locations & 6 machines.
- Location 4: $5,000/year, 4 machines (16% of overall revenue).
- Location 5: $1,600/year, 1 machine (5% of overall revenue).
- Location 6: ??, 1 machine (cash only).
What’s Good Here?
- Locations 1-2 are close, only a 12-minute drive between both.
- Location 3 is a 20-minute drive south.
- $10,000 gross revenue per year for a location is good, on the higher end of average.
- This breaks down to $833/month, $415/machine/month.
What’s Bad Here?
- The remaining locations are a 50-minute drive south of location 1-2, leading to $7,300 of annual revenue and 6 machines.
- At least 4 of the machines listed are old and do not have card readers.
Additional Costs Nobody Tells You
- Upgrading boards: $300 each.
- New card readers: Another $300 each.
- Activation and transfer fees: $10/month per device, plus ~$150 one-time transfer fee.
Total additional upfront costs: $3,050 plus $120/month.
Overall
All in, this deal would cost you ~$45,000 to get up and running.
If You’re New to Vending
Stocking up on inventory is a process. It’ll cost you ~3 months of net revenue to go from zero to ‘inventory on the shelves’.
What I Considered Doing and Why I Passed
I almost bought this deal for the first 3 locations. However, they were too far north for me, and the headache of getting the rest of the locations in a better spot to sell wasn’t worth it. I always look for locations that have natural expansion opportunities.
Considering Vending?
If you’re new, consider only buying the first 3 locations if you’re near downtown SLC. It’d be a great way to start.
- Proposed Price: $25,000
- Gross Revenue: $23,700
- Machines: 6
- Estimated Net: $9,000 first year after all expenses ($750/month).
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