[LooTa]

I've got the opportunity to buy 4 vending machines (vending chips, chocolates, drinks) that have been sited at a busy workplace for ~10 years.

Investment will be $15 - $20K, with turnover of ~$2300 a month at a margin of ~60%. (ie ~$1300 profit per month). Clearing and stocking the machines takes about 3 hours a week. It's hardly an empire, but a handy source of passive income.

It sounds to me like a pretty sweet racket - decent returns for fuck-all effort, leaving me with plenty of time to pursue other interests/hustles.

Just wondering if anyone else has taken this road, and whether it's paid off for them?

[Cincinnatus]

Why is the person running this successful source of passive income willing to sell these machines to you?

[LooTa]

(01-14-2013 12:12 AM)MSW2007 Wrote:  

Why is the person running this successful source of passive income willing to sell these machines to you?

They're retired, and want to travel. They say having to tend to the machines is the only thing keeping them from hitting the road right away.

[Parlay44]

Pay some kid $100 a week to restock them for you.

[Teddykgb]

Growing up as a teenager I always thought of this idea and wanted to do it. I used to see them selling brand new vending machines at Costco and have all these ideas of buying and stocking them and making money.

It seems like the biggest hurdle is getting them into good spots and if you can buy into something that already has that established I dont see why it couldn't be a lucrative business if ran well.

[Parlay44]

You gotta watch though. Someone one might whip out a magic dollar
There's a whole scene of vending machine hacking. People post service manuals and unlock codes to make them spit out money. For real.

[kosko]

I see new machines popping out with organic and healthy options this might be a niche to exploit quickly if you can get on it. There is a shit ton of Gyms around in North America that would be more first angle to hound if I were in the business.

[LooTa]

(01-14-2013 12:25 AM)Parlay44 Wrote:  

Pay some kid $100 a week to restock them for you.

I thought about that - problem is you don't know how much each machine is going to make each week, so he could be skimming and you'd never know about it. That's actually one of the major selling points for me though - the taxman has no idea what I'm making either.

[Al Czervik]

Is there anything to prevent the owners of the current location from removing your machines? It would sure suck if the week after you bought them your machines were kicked out and new ones owned by someone else were put in their place...

[WanderingSoul]

(01-14-2013 12:08 AM)LooTa Wrote:  

I've got the opportunity to buy 4 vending machines (vending chips, chocolates, drinks) that have been sited at a busy workplace for ~10 years.

Investment will be $15 - $20K, with turnover of ~$2300 a month at a margin of ~60%. (ie ~$1300 profit per month). Clearing and stocking the machines takes about 3 hours a week. It's hardly an empire, but a handy source of passive income.

It sounds to me like a pretty sweet racket - decent returns for fuck-all effort, leaving me with plenty of time to pursue other interests/hustles.

Just wondering if anyone else has taken this road, and whether it's paid off for them?

How well do you know these people? Seems to me they could easily get double that just based on the monthly income, not counting the cost of the actual machines.

It sounds too good to be true, so do a lot of research. Maybe they just really want to unload them quickly, but unless you know them (I.E. family friends) I would be a bit skeptical and do your due diligence. Not often that someone will let go of a business making $1,300 profit per month at a cost of $15-20K.

[GoodTimer]

Do your research, this could be quite good. If it is, you could likely double the business by buying more machines, then keep adding on. There must be others looking to sell as well.

The numbers look good. People do want to retire and sell their business.

Explore the possibility of buying the machines over some time, a year or two; to limit your risk. Simple milestones, such as you must average 90% of the claimed receipts, for a 3 month period (or so) or you have the right to drop out or adjusted the purchase price. This requires some faith and trust from both parties. If you have faith in the seller, display that they too, can trust you.

I believe small business like this could become big to an individual. Think big. If it works, what are the profits after 5 years in with some diligent work and adding machines. What if you had machines all over the city? Overall, getting a business for $20k that can have some serious upside with diligent work may turn out to be a life changer.

[Beyond Borders]

(01-14-2013 12:46 AM)LooTa Wrote:  

(01-14-2013 12:25 AM)Parlay44 Wrote:  

Pay some kid $100 a week to restock them for you.

I thought about that - problem is you don't know how much each machine is going to make each week, so he could be skimming and you'd never know about it. That's actually one of the major selling points for me though - the taxman has no idea what I'm making either.

Exactly. It's a cash biz, which means it's possible for the previous owner to fudge the numbers too...

If there is any reason to think they might be laundering money through it, the on-paper numbers could be inflated, so watch your step. On the other hand, if they say the cash flow is largely under the table, be even more dubious. Maybe ask if you can help collect a few times to see for yourself.

Not trying to scare you out of a good deal, just be aware these things happen.

As for the collecting, a random kid might be a bad idea, but surely you know a person or two who you do trust that needs an extra few hours a week or an older person who wouldn't mind something to do. I've always planned to get something similar, like a laundromat or coin car wash, and have my mom tend to it in her retirement so it'd give her something to do and extra income and be hands off for me.

Of course, my mom's an extremely hard worker who goes nuts with idle time and she'll also never enjoy much of a retirement financially. So this type of setup would be useful to her.

If you don't come from a poor family, you might not know people you trust who'd be interested in such a thing.

Yet another idea is just to split the weeks between two different kid employees who don't know each other. They're less likely to steal knowing their numbers are being compared...

Anyways, sounds like a good buy if you do your research.

[patron]

I was thinking about setting up a vending machine route in the Dominican Republic. I have never seen a vending machine in this country. I am just not sure how to set the machine to accept pesos.

[germanico]

At first I thought 15k for 4 used vending machines was way too high, but then I realized that he is selling the business operations to you, that is, machines, setup, locations, etc.

Even at 1k profit a month, its a good business, you break even after a year and a half and then its all honey.

Find out everything about the vending machine business before you fork out any money. Even volunteer to restock the machines yourself a couple times "to learn how its done". You have to learn your trade inside out. How much, if anything, does he pays in rent for the area that the machines occupy? What about electricity bills? Is any damage or vandalism to them insured, or comes out of pocket? Is the place locked up at night?

And expand. Look for other locations you could set up more of those. Then you will be building an empire.

Quote:

I see new machines popping out with organic and healthy options this might be a niche to exploit quickly if you can get on it. There is a shit ton of Gyms around in North America that would be more first angle to hound if I were in the business.

This is a great idea. Find out one of those organic companies that are popping out and offer to stock their product if they sell to you at a cost. Thats where your profit is, buying for pennies, and selling for dollars.

Quote:

I thought about that - problem is you don't know how much each machine is going to make each week, so he could be skimming and you'd never know about it. That's actually one of the major selling points for me though - the taxman has no idea what I'm making either.

Of course he does. If the machine has a capacity for, say, 100 cokes, selling each for a dollar, and you give the kid 100 cokes to fill it up again, then he better come back with a 100 dollars, or a 100 cokes.

You know exactly how many products you are stocking, and how much each sells for, so? Let the kid keep any unreturned quarters he might find. you are paying him in quarters yourself...

Quote:

I was thinking about setting up a vending machine route in the Dominican Republic. I have never seen a vending machine in this country. I am just not sure how to set the machine to accept pesos.

The guys distributing the machine should be able to set it up to accept anything you want, even tokens. As far as I know, its bills the ones that are problematic to engineer. After all, all coins in the world are round(ish) and metal, not so with the bills.

[LooTa]

(01-14-2013 09:31 AM)germanico Wrote:  

Find out everything about the vending machine business before you fork out any money. Even volunteer to restock the machines yourself a couple times "to learn how its done". You have to learn your trade inside out. How much, if anything, does he pays in rent for the area that the machines occupy? What about electricity bills? Is any damage or vandalism to them insured, or comes out of pocket? Is the place locked up at night?

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. Also to speak to the site manager/owner, to make sure theres no plans in the pipeline to move the machines out.
Rent has historically been calculated in terms of a percentage of sales, which apparently works out to be from $90-$100 a month, but again, as a cash business, keeping track of the money is all down to my honesty. I'll be seeing if I can get an official contract nailed down, say for 12 months @$100 flat rate per month.

No probs re: security and electricity - they're in a chemical company and a doctors clinic - all among the most secure businesses around, and elctricity is charged to the site. Basically, I need to verify everything he's told me, with my own eyes. If it all checks out, I'm in.

Quote:

I thought about that - problem is you don't know how much each machine is going to make each week, so he could be skimming and you'd never know about it. That's actually one of the major selling points for me though - the taxman has no idea what I'm making either.

(01-14-2013 09:31 AM)germanico Wrote:  

Of course he does. If the machine has a capacity for, say, 100 cokes, selling each for a dollar, and you give the kid 100 cokes to fill it up again, then he better come back with a 100 dollars, or a 100 cokes.

You know exactly how many products you are stocking, and how much each sells for, so? Let the kid keep any unreturned quarters he might find. you are paying him in quarters yourself...

If I give him 100 cokes that sell for $2 a pop, and he comes back with 50 cokes and $100, it checks out. BUT theres nothing stopping him from buying his own bulk pack of coke at 40c a can to cover his tracks. the machine might have actually sold 80 cans, but he just takes the extra $60 and replaces the missing 30 cans from his bulk supply. Maybe I'm being paranoid, but if I can think of a way to scam it, so can anyone.

[maestrobaires]

the only person to manage your money in any business has to be - you!

a great and easy business anyway

[Roosh]

1. Are there ways to optimize the business to squeeze more profits that the original owner hasn't executed?

2. Is there room for expansion?

[Duke Castile]

Do not do this. I've known several people who have lost their asses and they were bright. It sounds good and easy but is a pain in the ass. You will wind up selling these machines just like the current person. Probably at a 20-30% loss.

Investigate much further Loota.

Hades, paying a kid 100 bucks a week is a great idea until he robs you.

A good way to find out if these people are blowing smoke is to determine the age of these machines, how much they go for new, and whether or not these people are dropping the price on them for depreciation or if they're trying to get out from under them. If it's a great business they aren't going to want to discount the machines too heavily.

[LooTa]

(01-14-2013 08:54 PM)Roosh Wrote:  

1. Are there ways to optimize the business to squeeze more profits that the original owner hasn't executed?

Aside from getting better prices on product and/or raising selling prices, all I can think of is maximising the selection. ie note which items are big sellers, or have better margin and stock the machine with these. I wouldn't rock the boat until I know it inside out though.

Quote:

2. Is there room for expansion?

The only hindrance to expansion is finding places to site your machines. Ideally you want a site with lots of workers or customers, that isn't selling their own food/drinks and is a reasonable distance from somewhere that is. You can always count on peoples laziness - If it's a choice between walking 500 meters to the lunch bar to buy a coke for $1, or walking 10 meters and paying $2, most people will pay $2. Or at least, enough people will to make the operation profitable.

What you'd want to do is scout locations, and ONLY when they agree to host your machines, do you buy one, rather than buying machines that will just sit idle until you find somewhere to place them.

[Aliblahba]

(01-14-2013 07:24 AM)patron Wrote:  

I was thinking about setting up a vending machine route in the Dominican Republic. I have never seen a vending machine in this country. I am just not sure how to set the machine to accept pesos.

All your vending machines will be gone as soon as you turn your back. That's why you don't see any down there.

We need to set up machines in front of all Mary Kay and Jenny Craig stores. As soon as those fat bitches by a twinkie, a recording of Roosh comes on from a speaker fat shaming. "Real good you fat whore, shove that sugar pill in your hamster looking cheeks!"

[LooTa]

(01-14-2013 09:35 PM)Fisto Wrote:  

Do not do this. I've known several people who have lost their asses and they were bright. It sounds good and easy but is a pain in the ass. You will wind up selling these machines just like the current person. Probably at a 20-30% loss.

*gulp*

What happened?

[Hades]

(01-14-2013 09:35 PM)Fisto Wrote:  

Do not do this. I've known several people who have lost their asses and they were bright. It sounds good and easy but is a pain in the ass. You will wind up selling these machines just like the current person. Probably at a 20-30% loss.

Investigate much further Loota.

Hades, paying a kid 100 bucks a week is a great idea until he robs you.

A good way to find out if these people are blowing smoke is to determine the age of these machines, how much they go for new, and whether or not these people are dropping the price on them for depreciation or if they're trying to get out from under them. If it's a great business they aren't going to want to discount the machines too heavily.

I'm from a pretty small town. If I were going to pay somebody 100 bucks a week to restock it, it would probably be my little cousin who just got his driver's license. I think he's trustworthy.

[maccc]

I owned a vending machine when I was 20 or 21 and in college. At the time I needed to make a quick few hundred bucks because I wanted to go to the Bahamas for spring break. I knew the head of a frat who had said he wanted to set up vending machines with beer in them because they were spending too much money on beer at parties. I found someone who was selling one for $200 with a broken lock. So I made a deal with the frat guy that I'd sell him the machine for $500 and he agreed. A week later when the machine arrived, the guy changed his mind. So I was like "what the fuck do you want me to do with it" and he said I could leave it there and keep the money as long as I had beer in it.

Anyway the machine had all the prices fixed at 75 cents each. So I broke even on the Natty Ice, but then made money on all the sodas. I was also clipping coupons and shit to get the cheapest soda. I made $300 or so a month and it lasted a year and a half until I graduated. I then sold the machine for $600 to the frat.

Funny thing was the machine's lock was broken, so I would get into it using a vending machine lockpick I bought on ebay. None of the frat kids ever figured that out.

[The Fantasist]

(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.

A better way of judging the profits is spending 24 hours sitting in your car opposite a machine of his. See how many people buy anything out of it. It's the least you should be doing before dropping 15K on an idea.

[presidentcarter]

The vending machine guy that comes in and restocks the ones at my office is ALWAYS bitching about how little he's getting out of them. I assume he's the owner since he seems to care so much. It's a fully staffed office, but to be honest most people aren't keeping a bunch of $1 bills on them to get stale pop-tarts every morning. ]

If these are in proven locations and are seeing consistent sales, go for it. Just make sure he's not unloading a liability onto you.