Post: #26

I remember 2 different guys in 2 different states going all in and just losing their ass or breaking even and deciding it wasn't worth it. All sorts of unforeseen problems. I asked because I thought it seemed like easy money too. Just be careful. I don't claim to know all the ins and outs, I just know from what I heard I decided against it.

Post: #27

(01-15-2013 07:41 AM)Vorkuta Wrote:  

(01-14-2013 07:15 PM)LooTa Wrote:  I'm going to do the rounds with the owner this week. Got to make sure that the amount of coin he pulls out of the machines roughly macthes what's on the figures.

That's the oldest scam in the book mate. He buys up lots of his own stock out of the machines the day before he takes you on the rounds. He opens them up with you there and shows you the great profits to be made. Be careful.

You have to admit though, that is a great hustle.

A classic.

Post: #28

Loota, I'm not trying to rain on your parade, do your due diligence, check this out very carefully. Vending machines can be profitable IF you know what you're doing.

First of all $20,000 for four machines? These better be top of the line, under five year old Jofemar, Perfect Break Systems or similar type brand new machines, not twenty or thirty year old Dixie Narco, National, Rowe or Automated Products machines that have been refurbished over and over and are guaranteed to break down. You can buy these old ass machines refurbished for $900 each. Sure, part of the sale price of the business is the locations, what else is included? The business plan? The stocking system and statistics? Replacement parts, specialty tools, keys, etc? You better get a good look at the books too and take them with a grain of salt. Four ancient machines plus the inventory is not worth much more than $5000.

You mentioned rent of $90 - $100 a month? Way too high, that's quite possibly all you'll be making on them. $35 or $40 a month tops is a lot to pay to locate your machines unless they are turning a very nice profit. Most places don't charge anything, maybe a few bucks for electricity, they just want a machine in there that is stocked regularly and doesn't break down so their employees aren't wandering off the premises costing them productivity.

Find out exactly what kind of machines these are, make and model, check the condition of each very carefully, ask the owner if he bought them new (if he says yes it's probably a lie) and where he got them from. Are they spic and span clean or dirty and dusty? For the soda machines ask how old the compressors are. For each machine ask when the bill validators and acceptors and the coin mechanisms were last replaced. Make him test every single vend, each soda choice and each snack choice to make sure they are in 100% working order. His answers to these questions and whether or not he's willing to do test vends will tell you a lot about how honest and legitimate he is being with you.

As someone mentioned the owner may try and trick you on the tour by preloading the machines with cash to make it look like they're bringing in big bucks. It's illegal for this guy to tell you how much you're potentially going to make (and a good indicator of a scam if he gives you an exact dollar amount that is not corroborated by the company books), check the books for that but remember it's a cash business, lots of it gets pulled out and is never reported. Also if you pay someone else to collect the money and stock the machines they will rob you blind.

A better way to estimate how much you can make is find out how many employees/customers are in these locations. 50 - 100 people a day is good, under 40 those machines will be lonely collecting dust. Also, like someone mentioned, watch them for a day if you can. Think of it this way, a 35 person office with a soda and a snack machine: on a daily basis 10 people have no interest, 25 may buy a soda, 20 might buy a snack so at @ $1 per sale that's $45 a day x 5 days a week = $225. Now subtract your operating expenses, 5 cases of soda @ $? + 100 snacks x $?. Plus add in the time it takes to buy all the stuff, get it to your locations and load them up. Do a conservative estimate like this for each machine at each location and see if those numbers add up to a profit.

Are you mechanically inclined? These machines will definitely break down. The bill validators and acceptors and the coin mechanisms will jam and getting new parts is not as simple as going to Kmart. You have to order specialty parts that cost a lot and aren't new, they're just refurbished old parts that will eventually break down again. Plus the shipping costs to get them to you. Can you see taking old parts out and putting new ones in? Are you confident enough to change out a broken refrigeration deck in a soda machine? Are you patient enough to learn how to program prices and other things? Are you good with electrical and electronic repairs? Have you ever used a multimeter?

The snack machines have a ton of intricate moving parts, how many times have you seen a machine with a stuck row of snacks? That's time and money making repairs. If you can't do the repairs yourself or aren't willing to learn how to do them you can get a very expensive service technician to come repair them for you and wave any profit you might have goodbye plus additional cash out of your pocket. Plus it will take them anywhere from a few days to a week or more to get to your machines, down time that pisses your customers off and costs you money. When this happens your customer may tell you to get your machines out of there and they will bring in someone else. Do you have the equipment and a truck to move a vending machine? Do you have a place to put an old broken vending machine that nobody wants except a vending ace who will pay you peanuts for it, refurbish it for the 100th time and turn around and sell it for $900 -$1500?

The reality is vending is a very gritty business that is almost always half a scam unless you're one of the giant, reliable vending companies that have all the good locations anyway. You can make a fortune if you have a lot of machines in good locations and know how to repair them yourself. You also have to have a stocking system and at least a weekly delivery/service/pickup routine. You have to be good at finding profitable locations and keeping your machines stocked and in service. The last thing you need to worry about is finding cheap soda and snack deals, that's the easiest part of vending.

Most people who get into vending do not have a clue about the nuts and bolts of the business which is the temperamental machines that are always breaking down because they're so old. They sell you on a vending business by making them out to be cash cows that fill up so fast you won't know what to do with it all but the reality is four vending machines in not very good locations could wind up costing you more money than they bring in and taking up a lot of your time for no profit and then you're stuck trying to get rid of them.

Find out the make and model of these machines, see what kind of shape they are in, get a good look at the books, and carefully judge the traffic in the machine locations. It might be something worth doing if you can lowball the guy and get it for between $6000 and $8000, $20,000 sounds awfully high for only four machines in two locations.

EDIT: I re-read your original post, a chemical company could be a good location if it's got more than 100 employees, same with a doctor's office. The owner told you he's making $1300 profit a month for 12 hours work? That means each machine is making @ $82 profit per week which is possible. You need to break that number down by how many vends these machines are making each day/week/month and the cost to fill them. The machines keep daily, weekly and monthly stats, ask him to show you these stats. If the locations have under 50 people I don't see how they could be making that much of a profit. Let's do some more math:

300 vends per week is 30 people at $2 per day x five days a week is only $300 going into the machine before you subtract your operating expenses.

600 vends per week is 60 people at $2 per day x five days a week = $600 before expenses.

Somewhere between these two is what this guy claims four machines are doing, an average of 2,400 vends per week. Sounds good, can he verify these machines are making between 400 and 600 vends each per week? Do these locations realistically have enough traffic to support 60 to 120 vends per day for each machine?

Post: #29

I knew painter would be on this as soon as I say his post.

Post: #30

Wow what a phenomenal breakdown. Is your background in vending or do you just have an insane ability to crunch numbers that quickly?

Post: #31

I have enough experience with vending that it left a bad taste in my mouth, lots of crooks and scammers who basically want to get a dollar from everyone in the world. I've seen a few vending business plans and know how they operate and crunch the numbers. It's a good business IF you have high traffic locations but the competition can be crazy as in one operator sabotaging another operator's machines to get them kicked out of a stellar location so they can move in. Guess what happens when you unplug a soda, snack, dairy, or ice cream machine? Inventory ruined, huge disgusting mess in the machine, large headache and a lot of time to fix. Or they just jam up your coin mechanism or the bill acceptor and put the machine out of service. If you can get at the thermostat of a soda machine and lower the temperature enough all the cans freeze and start exploding and that will destroy the machine if it's not caught in time.

I knew a couple guys who have vending machines and they bitch about them all the time like you'd bitch about your old car always breaking down. Every few weeks they'd whip out a humongous Chicago roll of cash but it's all singles and most of it has to go back into stocking the machines. It's a good side income but these guys know the machines inside out, how to program them, how to fix them, how to move them. They've got a few top notch locations like high schools and factories, places with four hundred or more employees. If anything goes wrong with the machines they're on it in a heartbeat, they have a garage full of spare parts and like I said, they're experts at fixing them.

These guys also swoop in when some sucker who's been scammed has a busted machine, they'll talk them right out of the business, get their machines for peanuts and steal their locations if they're even worth having. Especially in vending, location is the key and anything under 100 people is probably a waste of time but you have to get your foot in the door somewhere.

I know all the horror stories too which was why I got nervous when Loota said the guy was trying to sell him four machines for $20,000. It's easy to scam someone on a vending machine, you walk them up to one and pull out all this cash in front of them and the sucker thinks it's like a slot machine that always pays off. What they don't see is the machine sitting there lonely, gathering dust and totally ignored, selling three or four sodas a day because it's in a low traffic location. Some people get in way over their heads, like $50,000 -$150,000 or more and have no idea about the service requirements of the machines. Do some google searches and you can find all the vending scams people have fallen for. Basically they sell people a bunch of old machines at hugely inflated prices in shitty locations so that it's impossible to make any money.

Anyone who's been in the vending machine business for more than a few years is basically a smooth talking scam artist who would rip their grandmother off for a dollar. You look at the websites selling machines, parts and service and they will tout "30 Years Experience" and all kinds of bullshit, but there's no name on it because the name is associated with fraud, bankruptcy, scams and other criminal activity and many are using fake names so you can't google them and see the crimes they've been convicted of.

I'm a cynic, though, there are small operators all over who have a few machines and are honest, hardworking people and there's also the huge operations with 300 - 500 employees, but between those two extremes there's a lot of scumbags. The industry is changing, these new machines coming from Europe are very nice and modern and versatile but also expensive and the old guard scammers still have a stranglehold on the machines and parts that have been around for the last 30 years.

For anyone interested in vending machines take a look at this website I found that has some free manuals on common machines. This will give you an idea about how complicated the machines are and you can judge if it's something you think you can do or are interested in learning:

http://www.vendingworld.com/information/manuals.php

Loota, let us know how the tour goes, what kind of shape the machines are in and what the locations are like!

Post: #32

I once saw an old man at the store. He had cases and cases of cheap soda in his cart. I asked him what all the soda was for. He didn't want to tell me at first but I pressed him and he finally looked around, lowered his voice, and said.. "machines". We talked about his business. He said he inherited dozens of machines from his uncle and then acquired a bunch more. He claimed to be making 200k a year. He said he turns down new opportunities because he doesn't have time.

He told me it was a pain in the ass. He said the most important thing was learning how to repair the machines. He said they break down alot and if you can't repair them you will be paying 120/hour to have the repair guy come do it.

He said to be there when the money gets counted because people will steal if they can get into your machine.

Post: #33

FTR, I'm not going ahead with this. The seller was quite evasive when I wanted to talk about servicing, plus the site is undergoing refurbishment in about 6 months time. At the very least I'd need to take the machines away while work is being done, and I don't like the chances of getting them back in there once the work is completed. Thanks for your input though guys.

Post: #34

Loota, good thing you checked that out. Sounds like the guy had old machines he wanted to dump before the location gave him the boot. I'm sure he didn't even want to take you around as soon as you started asking questions that sounded like you knew what you were talking about. This is still a viable business if you can get high traffic locations.

Post: #35

There are these new vending machines that make fresh pizza in less than 3 minutes. I really hope these become huge one day since I would love to use one.

Anyway - if I was looking for a business in this area I would definitely investigate these:

Post: #36

(02-19-2013 11:45 PM)cardguy Wrote:  There are these new vending machines that make fresh pizza in less than 3 minutes. I really hope these become huge one day since I would love to use one.

Anyway - if I was looking for a business in this area I would definitely investigate these:

I wonder how much they cost. If I had the money I'd buy a few and put 'em around a few local bar districts for sloppy drunk fuckers willing to put a thousand calories ontop of all the alcohol they drank throughout the evening. There'd probably be lines at the damned things every night after the bars close.

Post: #37

I first read about them about 3 years ago. I was hoping they would be pretty popular by now. But I still haven't heard much more about them.

I have no idea what the hold up could be.

Post: #38

These pizza vending machines are even more specialized than a regular vending machine. They're not stand alone money makers, you have to put a lot of time and effort into them. Cleaning, loading, making sure all the moving parts work correctly. With the laws in America you probably need a restaurant license even though the "oven" is just a simple heating element.

One screw up and the machine is out of commission until you fix it. Some drunk comes along and gives the machine a shove and it shuts down. The calibrations to make a pizza have to be pretty precise and if something goes wrong it could not cook them enough or burn them all then you have pissed off, hungry people smearing pizza all over your machine.

What climate are you in? These machines can't be placed outside. They might work in a bar or some place where management can see the thing the whole time so people don't fuck with it and if there's a problem they can fix it, but then it's probably easier just to have a kitchen.

The reason you don't see these everywhere is because they probably don't work so great. Definitely not something you could set up and come back a week later and collect your money. Ever see inside of a coffee vending machine? They are disgusting. Imagine how gross the inside of that thing is after a couple days cooking pizzas: cheese, pepperoni and sauce droppings cooked to gunk, full of bacteria and bugs flying around.

Might as well eat one of those disgusting 7-11 microwave tacos, at least you know where that thing's been.

Post: #39

(02-20-2013 05:28 AM)painter Wrote:  These pizza vending machines are even more specialized than a regular vending machine. They're not stand alone money makers, you have to put a lot of time and effort into them. Cleaning, loading, making sure all the moving parts work correctly. With the laws in America you probably need a restaurant license even though the "oven" is just a simple heating element.

One screw up and the machine is out of commission until you fix it. Some drunk comes along and gives the machine a shove and it shuts down. The calibrations to make a pizza have to be pretty precise and if something goes wrong it could not cook them enough or burn them all then you have pissed off, hungry people smearing pizza all over your machine.

What climate are you in? These machines can't be placed outside. They might work in a bar or some place where management can see the thing the whole time so people don't fuck with it and if there's a problem they can fix it, but then it's probably easier just to have a kitchen.

The reason you don't see these everywhere is because they probably don't work so great. Definitely not something you could set up and come back a week later and collect your money. Ever see inside of a coffee vending machine? They are disgusting. Imagine how gross the inside of that thing is after a couple days cooking pizzas: cheese, pepperoni and sauce droppings cooked to gunk, full of bacteria and bugs flying around.

Might as well eat one of those disgusting 7-11 microwave tacos, at least you know where that thing's been.

Yeah, I was going to say those things must be disgusting.

Post: #40

I saw a vending machine at hospitality expo that made hot mince meat pies a few years ago and thought it was a great idea. Wouldnt be too messy as its all in packaging. Never took off though, probably too costly to operate.

Post: #41

Great posts in this thread.


One way to solve this problem which you find in many business sales is to ask the owner to finance the purchase secured solely buy the assets. If he really believes this will work then he can finance it, make interest in that financing and have a security interest in the assets in case of default. Owner gets cash flow plus interest and the new business owner gets in but has less skin in the game.

Seller financing is common.

Post: #42

Reaper -

some of the biggest scams in the vending industry were perpetrated exactly the way you describe. They would promise big money and financing, sell people machines and locations for a huge down payment and then monthly payments after that. Some people were investing hundreds of thousands of dollars thinking all they had to do was fill up the machines every week and pull out the cash.

The reality was they got sold old machines in shit locations, like a soda machine in a tiny store in the middle of nowhere that sells 3 soda's a week if you're lucky. It's a scam as bad as buying a used car where they just size you up, see how much money you have and talk you out of it and when you can't make the payments anymore you lose all the money you put in and all the machines and they line up another sucker to ripoff. So many people got burned the feds had to step in and one of the laws that came out of it is that it's illegal to tell someone how much money they'll make if they buy a vending business (not that that stops anyone from throwing out numbers).

They still have seller financing and it's still pretty much the same scam, they just can't make the outrageous promises that suckered a lot of people in. The thing with vending is that 99% of all the good, high traffic locations are already taken, schools, manufacturing plants, hospitals, etc..., places with hundreds of people on a daily basis are where the real money is made and you will pay a lot of money to own those locations because they're worth it.

Start looking at vending machines closely. If they're in crowded, high traffic places you'll notice they are brand new or newer, clean, and in good working condition. The less traffic, the lower grade the machine you'll find. A profitable location gets good service and is owned by an experienced vending pro, usually a huge vending company with hundreds of employees, an unprofitable one gets shit and is usually owned by an amateur looking to get out of the business.

Like I said in another post, if you google vending stuff the top websites that come up are almost all guys who've been ripping people off for decades. A good way to judge them is if there's no name on the website or it's just a nickname, you can bet they've been involved in scams and ripping people off. Finding an honest vending machine dealer who uses their full legal name is like finding a pot of gold at the end of the rainbow.

Post: #43

Thanks for the analysis on the pizza vending machines I mentioned earlier.

I never considered the issues you mentioned. This might be one of those ideas which sounds nice but doesn't work so well in reality.

Post: #44

(02-23-2013 08:18 AM)painter Wrote:  Reaper -

some of the biggest scams in the vending industry were perpetrated exactly the way you describe. They would promise big money and financing, sell people machines and locations for a huge down payment and then monthly payments after that. Some people were investing hundreds of thousands of dollars thinking all they had to do was fill up the machines every week and pull out the cash.

The reality was they got sold old machines in shit locations, like a soda machine in a tiny store in the middle of nowhere that sells 3 soda's a week if you're lucky. It's a scam as bad as buying a used car where they just size you up, see how much money you have and talk you out of it and when you can't make the payments anymore you lose all the money you put in and all the machines and they line up another sucker to ripoff. So many people got burned the feds had to step in and one of the laws that came out of it is that it's illegal to tell someone how much money they'll make if they buy a vending business (not that that stops anyone from throwing out numbers).

They still have seller financing and it's still pretty much the same scam, they just can't make the outrageous promises that suckered a lot of people in. The thing with vending is that 99% of all the good, high traffic locations are already taken, schools, manufacturing plants, hospitals, etc..., places with hundreds of people on a daily basis are where the real money is made and you will pay a lot of money to own those locations because they're worth it.

Start looking at vending machines closely. If they're in crowded, high traffic places you'll notice they are brand new or newer, clean, and in good working condition. The less traffic, the lower grade the machine you'll find. A profitable location gets good service and is owned by an experienced vending pro, usually a huge vending company with hundreds of employees, an unprofitable one gets shit and is usually owned by an amateur looking to get out of the business.

Like I said in another post, if you google vending stuff the top websites that come up are almost all guys who've been ripping people off for decades. A good way to judge them is if there's no name on the website or it's just a nickname, you can bet they've been involved in scams and ripping people off. Finding an honest vending machine dealer who uses their full legal name is like finding a pot of gold at the end of the rainbow.

well yeah the huge downpayment part is the part to avoid.

Post: #45

I've got your answer dude ...Medical Marijuana Vending Machines

http://money.msn.com/now/post.aspx?post=...e91acf5250

Post: #46

This vending machine will take your old phone. And give you cash for it. There and then.

Post: #47

Not sure why the link didn't go up before. Here it is...

http://www.youtube.com/watch?v=I0WOWP6T9ZQ

Post: #48

I automated a bunch of routes for a client in the Biz in Boston a few years ago...

Rule #1 all vending routes - even if just a hand full of machines in one or two locations - sell for 100 times weekly net profit after maintenance of machines and costs of stocking of product including paying the Stocker laborer.

Rule #2 NO ONE ever pays ALL cash up front in case the seller gigs and gags you on inventory or bad old machines scam - you normally work the machines yourself for four to eight weeks and look for seasonal ups and downs in the weekly books take - after 8 weeks you can extrapolate the cash flow.

Rule #3 Pay only 10% down and monthly payments till paid in 24 to 36 months to leave you enough profit for your time or worker bees time and gas etc to stock the machines.

Tip #1 - This is Golden for every Location he had the major US Bev Cos that Also Owned Minute Maid Juice and or Veryfine Juice Drinks would put out an extra machine once a month NO cost just to be on his contracted Locations (Make sure you have at least a 10 to 20 year contract to provide machines to that location). If enough volume they would replace with new coke and or pepsi machines and Dasani or Aquafina pure RO water as well.

Drivers would bird dog new locations to make more money - ideal to have at least one decent 7 hour route per day 5 days a week.

The value with one or two new machines per location would double or triple in the 100 times weekly net model and the big Bev Cos would pay for the Insurance on their machines and cash and inventory as well.

Snacks and Candy machines he would have to supply himself but always easy to squeeze in one or two manchines... Would leave a Suggestions email and number on the machines and would stock special snack soda and bev requests as well.

Built an $2m Annual Cash flow with 40% Gross profit after labor and stocked goods - all cash and never told the tax man anything - had several family members biz he would move the cash through and hid the rest to buy new machines...

Tip #2 When he got a route doing an extra $750 to $1K a week he could not handle he would sell the route to professionals looking for a cash plan B weekly supplemental income as long as they bought wholesale form him to increase his volume discounts.

Tip #3 - he would sell his weekly rolled coins to Chinese Restaurants for large currency bills who saved the banks Coin count and Rolling fee of 12% and he would sell his daily $4k worth of $1 bills to a local Bus depot for $100 bills that he would hide till he needed to buy new machines to add to his upgraded routes or the routes he would sell for legit 100 times weekly net cash flow Plus costs of any new machines he placed after cost of goods stocked. Was a small 3 man operation did over $300K+ profit a year living large and selling extra routes every 3 to 6 months for an extra $50 to $100K as he accumulated new locations and put out new machines.

Figured less non family employees involved less could rat him out to the IRS and State Taxes div - so why he sold routes as he accumulated new locations. Solid biz but have to be tough when the local competition try to intimidate - he was a tough bastard who used to collect book sports bets for the local wise guys so no one effed with him. Even rattled the Coke and Pepsi guys cages on occasion. Always had a written Bill of Sale on all machines serial numbers listed AND all his locations he bought/accumulated so he "owned" the exclusive right to service those locations.

Post: #49

Private ATMs make a killing as well - in doors only for cash in Pizza Parlors convenience stores Chinese restaurants etc etc.

Post: #50

Excellent writeup Deepdiver! That's the vending machine business, part legit, part scam. Sounds like this guy had a shitload of machines in top notch locations.

I don't know anything about the ATM machines but that always seemed like a gold mine.