Buying a ROUTE - ideas, info, advice

Quote from coolweb:

Its not a bad investment, much better then the quizno/franchise thing.

It is buying a job, but a high hard working paying job, if your brother is hard working, its great.


1) If you buy in NYC routes, do understand you have
a) parking tickets to deal with
b) congestion fees that might appear
c) no parking.


2) probably long island/ queens/ NJ better place to do routes..


3) you can bargain these prices down to a good multiple, cause theres very little market for it.
I mean people got to work for their money!

So if you are a motivated buyer, you can keep bargaining them down to a 1.3 or whatever multiple.

This market ain't liquid.


Overall: its not bad. I would do it if I had nothing to do.
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You are correct, I live in Queens and was looking for something in my borough and Long Island. Manhattan routes are overpriced to begin with and parking/ticket is a big headache.

I think the 64K question is if the numbers are real. Paying 400K for 190K of profit per year is not bad, assuming and this is where the biggest hesitation comes in, assuming that 190K is real number and not a fantasy.

I think the bigger routes come with a helper and both the owner and the helper work together. This is probably how they avoid tickets in the city. As for vacation if one is making 190K a year NYC could be a perfect vacation spot during the weekends.
 
Quote from saxon22:


I think the 64K question is if the numbers are real. Paying 400K for 190K of profit per year is not bad, assuming and this is where the biggest hesitation comes in, assuming that 190K is real number and not a fantasy.
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The revenues are 95% legit, you can check their IRS tax returns and all before buying.


Couple of reasons why you are getting a good return

1) You have to factor in you have to work for your money, unlike stocks you sit around and ejac.

2) It is an ALL Cash deal, I believe some owners will give you owner financing but you still got to come up with 50% or something of that nature in cash.

You ain't getting a bank loan on this , so not many people have $200k lying around.

3) Its not a liquid market, as in lets say you are tired of shipping orange juice, you need to sell it or keep working until you sell it, you can't just take a week off.
The OJ company will revoke your route deal and you are out of $400k.

4) Rain or shine, your ass better be up :D
 
I'm partial to the route that has the lightest product. Fed x or pretzels, etc. Less chance of back injury or still manageable when you are sick.

Buy a small route, if it works out for you, hire someone for the small route and buy a bigger route. Some fed x guys have several routes.

I'm sure you'll see these guys working, stop and ask.

I'm only guessing here, but the biggest part of the price of the route is in the truck. Cost out a new truck, see how much money the route would produce with a new truck payment
 
Hiya Saxon-

For what its worth- a friend of mine has been running a tastykake route for years now. works about 27 hours a week and brings in 90k. Think he paid 50k for it 10 years ago.

He just added a bread route - think he paid $120k - he is on par to make over 90k on that one as well.

Finaly he is almost putting in the same hours as me a week :)

Yeah - its a job - it doesnt run itself - but doesnt seem overly taxing or stressful either - he has his kids go with him and pays them a few bucks.
 
Quote from coolweb:

The revenues are 95% legit, you can check their IRS tax returns and all before buying.


Couple of reasons why you are getting a good return

1) You have to factor in you have to work for your money, unlike stocks you sit around and ejac.

2) It is an ALL Cash deal, I believe some owners will give you owner financing but you still got to come up with 50% or something of that nature in cash.

You ain't getting a bank loan on this , so not many people have $200k lying around.

3) Its not a liquid market, as in lets say you are tired of shipping orange juice, you need to sell it or keep working until you sell it, you can't just take a week off.
The OJ company will revoke your route deal and you are out of $400k.

4) Rain or shine, your ass better be up :D
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I see your reasoning and it is sound. The part where you must deliver the juice rain or shine could be a weight in the future. However, with good help and a nice steady income, this particular problem could be overcome.

What is troublesome is that the company can take your route away from you if you do not perform up to their expectations. I would not commit suicide over a job but letting go of that 400K would not be pleasant.
 
Quote from nutmeg:

I'm partial to the route that has the lightest product. Fed x or pretzels, etc. Less chance of back injury or still manageable when you are sick.

Buy a small route, if it works out for you, hire someone for the small route and buy a bigger route. Some fed x guys have several routes.

I'm sure you'll see these guys working, stop and ask.

I'm only guessing here, but the biggest part of the price of the route is in the truck. Cost out a new truck, see how much money the route would produce with a new truck payment
More...

I like Fed Ex but here in NY it presents a special set of problems, namely tickets. I used to drive a yellow taxi to put myself through college and it was so distressing when you would make $150 and then they would get you for something really stupid, and $110 of the above amount would go to the city coffers. I like NYC but I think it would be very easy to get at least one ticket per day doing a Fed Ex route here.

Like I said before, we prefer a OJ or Snapple route. No matter what happens to the economy people will continue eating and drinking. Plus Minute maid, Tropicana and Snapple are established brands and should sell well.
 
Quote from dugan:

Hiya Saxon-

For what its worth- a friend of mine has been running a tastykake route for years now. works about 27 hours a week and brings in 90k. Think he paid 50k for it 10 years ago.

He just added a bread route - think he paid $120k - he is on par to make over 90k on that one as well.

Finaly he is almost putting in the same hours as me a week :)

Yeah - its a job - it doesnt run itself - but doesnt seem overly taxing or stressful either - he has his kids go with him and pays them a few bucks.
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Your message is music to my ears. I have heard of tasty cake and I am glad the guy is making money. This morning,I went to my local Key Food and saw a guy standing next to a Tropicana truck. The truck was huge but he was with his pad and the helper was unloading the stuff. I asked him how was the business and that I was thinking of buying Minute Maid. He said Tropicana is much better and If I have good help and do not mind the monotony, it is great. He told me to get Satelite radio so that the helping guy can be entertained which is important. He also stated that it is not brain surgery.
 
UPS, FedEx and other commercial delivery companies pay a steep price for doing business in New York City, getting an average of 7,000 parking tickets every day and paying more than $102 million in fines in the city’s latest budget year.

http://www.msnbc.msn.com/id/14602712/

Regarding buying sat radio for the helper, Fuck that. I wasn't paying some kid to listen to the radio. I hired this kid and he read the paper and stock books to me while I was driving. (honest he really did, it was in the job description).
 
Quote from western:

I wouldn't trust those profit numbers posted on the website. Some routes are being priced at 2x yearly profit, which imo is too good to be true. 5x is more reasonable. I would insist on seeing full financial documentation for at least the past 3 years before doing anything. And don't forget that any business is susceptible to an economic downturn.
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Correct. Any business that makes a very high net to sales ratio, does so due to trickery, not tdue to a brilliant owner.

I bought a business once. Here are some things to look for:

1) Once you place an offer, have a CPA study the books

2) Business owners are very good at puffing a business up. Things they do to puff up net:

-- Pay workers off the books

-- Pay workers OT off the books

-- Work endless hours, tell you it is absentee owned and pray a person like you will take it off their hands

-- Not pay their last few quarters of taxes. Once you buy it, then the overdue taxes will show up in your mailbox.

-- Not tell you about something like a workmen's compensation judgement, for $20,000. It shows up after you buy it.

-- Claim that you will get such and such inventory, and then it is "missing" the day you take over the keys.

THIS IS WHY YOU ALWAYS BUY THE ASSETS (asset sale). IF YOU PURCHASE THE COMPANY ANY OTHER WAY, YOU ARE THE BIGGEST FOOL KNOWN TO MAN.

They will tell you things like :If we do an asset sale, you will lose certification XYZ or arrangement ABC. Ignore this. Asset sale, or RUN AWAY

3) If you do not have a strong background in the business, you will be amazed at how quickly some to all of your net goes away.

4) 3) If you do not have a strong background in YOUR OWN business, you will be amazed at how quickly some to all of your net goes away.

REMEMBER, THE OWNER ALWAYS GETS PAID LAST. ALL THE UNEXPECTED BREAKAGES, PILFERING, FINES, COST INCREASES, LOSS OF CUSTOMER, ETC. COMES OUT OF THE PROFIT YOU THOUGHT YOU WOULD HAVE.

I will give you an example. Many years ago, my brother and I looked at an existing pizzeria. We did not even get to a purchase offer. Several problems:

1) His payroll looked very small. Turns out he had "forgotten to mention" that he paid the main cook off the books

2) I asked him how many hours he worked. "70". I asked him about his wife. "70"

Of course, none of this was in the business listing for his pizzeria.

Basically,I figured for the agony of owning a business and tying up their capital, the owners were probably grossing about $7 an hour each for their efforts.
 
A friend was buying a food wholesaler. I glanced over the books and found that something like 55% of the sales were to one store. Turned out that store was owned by the seller's brother-in-law. What are the odds that will continue the day after the business was sold?

There were some other problems, but that was a deal breaker IMO. That's why you need a CPA to go over the numbers in great detail.
 
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