Bread Routes for Sale | How to Buy a Business - How to Sell a Business
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Don’t you love the smell of fresh bread?
It’s almost as good as the smell of money, isn’t it?
A TH-cam viewer wants to know my opinion of bread routes. It’s a simple little business where you deliver bread to local stores on behalf of a commercial bakery.
It makes their distribution easier since they don’t have to manage a fleet and since the delivery people are their own boss, fewer employees too.
So, is this a good kind of business for someone to get into?
Watch what I think of bread routes and other distribution route businesses in this new video I made: • Bread Routes for Sale ...
Learn how to buy a business successfully with my Business Buyer Advantage Program. You can access the course at www.BusinessBuyerAdvantage.com and learn more about how it works from this video I made a few weeks ago: • UK Couple Wants Me to ...
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Definitely on point ! Great insight on this detailed video . Thank you for all the information 🙏
Glad it was helpful!
Thanks David! Right on point! Just wat I was looking for! Super!!! :)
Glad to help!
Hi David, great advise as allways. So far the most your videos are about buying businesses but you have also this building business systems course. I would be very keen to see also videos from this topic as well. Are you planning something?
Thanks for watching. Actually, there are a couple of videos about systems.. th-cam.com/video/tyGDdKOyssY/w-d-xo.html th-cam.com/video/ZJgNWU-sxeQ/w-d-xo.html th-cam.com/video/uU23B69kZkY/w-d-xo.html I will think up some examples though and add them to my video list.
The business systems course is based on my work in trying to help sellers get their businesses ready to sell. The exact same 13 step system works for buyers or business owners who need to get systems into their businesses. If you own a business, you should do it. It can be found here: www.EasySmallBizSystems.com
Hi David, would you mind making a video about the real value of a local moving company?
Thanks David, always great content, sounds similar to the individual network fibre installer type of subcontractor.
Yes, this model has been copied in many industries.
Hello David would you know if the AB5 law over here in California is going to affect independent distributors for bread routes in California? I can’t find anything on that subject right now.
I don't know. What I think may happen, is that California will torpedo their own economy with any remote contractor work suddenly being re-assigned overseas or to people in other states. It's going to be a dumpster fire.
Brilliant. I am a BB and was wondering why so many bread runs for sale when the income appears good. Another thing is the run is usually overnight, it can really take a toll on one's health.
When I was a BB, I would love to get listings with 6-figures discretionary income for a business open M-F 9-5... It would sell in weeks.
Curious if you’ve had any luck hiring an operator for one
Hi can you do a Fedex route? Being that this model is similar but the problem is the ISP model conversion and contract risks termination etc. How to know what to do if they put your route for bid?
I've worked on some of these businesses before. The big danger is the contract. The one that I read was renewed annually. Meaning they could take the business away at almost any time. I advised the buyer to pay for the equipment and make any goodwill sums payable over time and contingent upon contract renewals. I still think that's good advice, however, there are many buyers who just stumble forward and buy the routes without analyzing the potential risks.
So that deal didn't go through then? because there is no way the seller would risk contingent contract renewals. My contract is the same 1 year, I dont know if I want to take the 1million risk and booted out after a year. What do you think on this model absent your structure of contract renewals? can you make a video for all of us interested in this. As some are SBA eligible so 100k you can buy 1m. Now, FedEx does not care, they will bid your contract if your 98% deliverables rate.
It didn't go through yet. The seller said 'no.' The buyer stays in touch and keeps mentioning that he'll buy it under the right terms. The business hasn't sold yet. I see this happen all the time. The seller's ideas do change depending on the length of time on market and the conditions that are motivating them to sell. I saw the same attitude that FedEx shows from the old Sears parcel pickup outlets. They don't care about the value the businesses invests in obtaining the license, they just want their numbers to work. I understand their point of view. There are no guarantees in business that the customers will stay, but in this case there is only one customer! That's big risk. I'll add it to the video list.
can you plz send me more info on buying a snack route.thinking of buying into an stone creek route at 15/1 and im not 100% sure what to pay.plz help.ty
I think most routes are priced for what they make a year. If a route makes 100,000 a year it cost 100,000 over a 10 year loan. Most routes you see online are bad and cost more. People in the warehouse usually get first crack on the route someone is trying to sell. The routes online are mostly routes people already in the business don't want.
Route prices vary by what market they're in. The formula is based off a certain amount of weeks multiplied by the average weekly gross sales. 15/1 or 15.1 means the route is valued at 15 weeks of overall sales. If the route generates $10K a week and that market is valued at 15 weeks, then the asking price is $150K.
Generally speaking if a route is valued at 20 weeks or more, it's probably in a high-value market. Valuations can vary for different companies in the same market. A long established company in a market will tend to have much higher valuations than a company that is new to that particular market. Your goal a route owner is to build not only weekly sales, but also equity. Therefore, buying an already high value route will not bring you much of a profit when you sell the route. You want to be in a growing market in which after owning you're route for several years, then the company that you're distributing for has raised that market's value up from 15 weeks to say, 20 weeks, hopefully more. That way you'll sell that $10K per week route for $200K with a 20.1 valuation. Of course, through increased weekly sales and inflation, that asking price will be higher. The routes already in high valued market most likely won't make big leaps into an even higher value, maybe a week or two, or it could just stagnate at its current level.
You may or may not get a slightly higher commission for being in a high valuation market, but it's not significantly higher that it makes up for the difference in the cost of your route. Other owners of routes in totally different markets are getting basically the same commission as you. The owner of a 20.1, $200K route in a high market makes basically the same net commission as someone who bought a 12.1, $120K market if they're both doing the very same gross sales per week. The average commission is about 20%, though some pay lower (Snyder's is 15-16%). How commissions are calculated also vary by company: commissioned by wholesale or retail price; full credit for normal price regardless if it's on sale, or is it commissioned from the reduced price because of the sale; credit for damages and stales; etc. - all per company rules.
From your commission you'll pay your taxes and expenses: Route and/or truck payments (unless you've paid one or both off - and getting a truck is your responsibility, though sometimes a seller will include or offer a truck when selling their route); fuel; truck maintenance; business and vehicle insurance; plus whatever fees the company you distribute for requires you to pay (various ticky-tacky fees that aren't much, but still exist). And of course, you'll want to put some of each week's pay into your own retirement fund because that's solely your responsibility as well.
Basically if you're buying a route, do it only if it's in a market who value can only go up, and then go work hard every day to get those sales up. Service your accounts to their fullest and try to generate new clients. The corporate accounts in your territory will come to you automatically, but those independent stores and restaurants - you have to go and get those yourself.
***I know this is an old video, but I'm just trying to help those that find this video in the future when they're considering buying a bread or snack distribution route.
@@positively_broad_st3780 Love the insight thank you for all of that! Do you own a route yourself?
Are their routes available for a one man show? Such as a courier service.
Many of these are. Sometimes a person owns several and uses employees to run them but I'm more familiar with the solopreneur model.
Huge information, I'm thinking of purchasing a route business. Definitely not going to be an independent contractor with a JOB! This really helprd me make that final decision. Thanks David
Glad it was helpful!
Smart move.
Yeah
My dad owns some Weston bakery routes in Canada and I work for him running one. Owning a bread route used to have a lot better return. The thing is, it’s a shit load of work and I mean a shit load. No holiday, going in to the mechanic in your day off, having to do various other things. And the pay used to reflect that hard work. But the big companies that contract these routes are always looking for ways to cut costs and it’s very easy to screw over independent contractors. Theres no union, we’re not organized. There’s no way to go against an army of lawyers from a multi billion dollar company.
If you are interested in buying a bread route I would steer away. Things are only getting worse.
We got kicked out of Walmart and sobeys as a supplier, which cost my dad over $100,000 in route equity and over $1200 weekly income.
And the expectations on independent distributors are unreasonable. They don’t care if you have a family. You’ll work through your wife giving labour.
Dylan, thanks for the inside story on what you see in this business. An eye-opener for many, I'm sure.
What are the smallest deals you'll handle?
Just turned 30, don't have a lot of money, but I do have enough to probably get a loan to buy a $10k - 15k online business.
I'm talking with the seller right now, just signed their NDA. Would this deal be too small for you to work on?
Not at all. People talk to me about deals of all sizes. If you want to do a quick overview of the deal and get my opinions, the simplest and easiest way would be to arrange a call on www.Clarity.fm/davidbarnett
Thanks for your reply. Just wanted to let ya know, I had a look at the site, and it wasn't all that impressive and the way he generated traffic/sales made it kinda risky for me. So I gave that opportunity a pass, when I find something I want to move forward with - I'll be sure to get in touch via Clarity.fm :)
@@DavidCBarnett u still around
Thanks for sharing your thoughts. This definitely sounds more like a job, with some business owner advantages and disadvantages. As an Owner/Operator - it's just you. God forbid something happens like a car accident or you get really sick, then things would quickly fall apart.
Yeah. You'd need insurance for sure.
Hello Mr. David , I'm an ex Oilfield worker who was injured on the job. Unfortunately , I'm unable to perform the labor in that line of worker after a 360 lower fusion.
However , I recieved a lump some of cash and an annuity until 2039. I am 40 yrs old , still able to perform daily duties and was thinking about investing into a bread route here in Houston. I need some advise . Would you help me out please.
Thanks
If you've found a route for sale and you want some help to analyze it, I'd be happy to. Send me an email. dbarnett (at) alpatlantic.com Cheers.
I bought a bread route last year. My route is not that big but do good numbers. I regret not doing this long time ago. After you paid the route you will see more money. I advised to get one that you can grow not a big one that is already doing big number.
Why do you feel like the route owner wouldn’t be able to hire an employee to run the route? I ask b/c this is my plan...to buy multiple routes and hire employees to run them. The routes I'm looking at buying pay apx $100k net.
Thanks
Most of the route businesses that I've seen financials for don't perform that well and when they do, it's because the owner is going the extra mile to get that performance. If it were easy to do with employees, the bakeries would be doing it. That's the whole idea of the video. Think of this from the point of view of the bakery. Why don't they want to do the distribution? This model allows them to offload a huge amount of risk to the distributors. Back when retail square footage was expanding, you could own a territory and end up with more customers. This would be good. Now we're in a retail contraction, it's more likely a person would have store closures in their territory.
Now, an independent distribution and merchandising business that represented multiple brands across a region would be a real distribution/wholesale business adding value to both the manufacturers and retailers. I've examined these businesses before and they sell for high multiples.
The 'route model' is just a controlled outsourcing of the manufacturer's problems while still keeping the distributor firmly within their control.
i have route bimbo for sale in Jacksonville Fl for sale that is 100k+ net
check craigslist ( Bread route ) in search box
If you have employees you have to pay workman’s comp, disability insurance. If they are full time you have to pay they on legal holidays, pay for vacation and some part of health care. If you don’t they will leave the moment they find something better. The bread route thing doesn’t have enough profit built into it to make it a scalable business which is why the companies try and con others into it
Great points Ted.
Personally, buying my chip route has been the worst financial decision I've ever made.
It’s hard to find people who will share experiences of business struggles. Thanks for sharing this.
I think it makes sense for someone who might have money already saved up in case of emergency. My truck broke down 2 1/2 months ago and I've absolutely been hemorrhaging money ever sense. My car is on the verge of repossession, Bill's are all behind and on top of that I have the second largest route in the state of Maine so dont see my wife or newborn son often at all. Since I took up the route in January, despite working 12-16 hour days, 5-7 days a week I havent been able to get to all of my stops in a single week.
The largest route in the state is not the most profitable either not by a long shot and the only way out, besides default is to sell. The guy that sold it to me had it up for sale for 2 years.
I just got an excellent job offer and I feel If I dont default, that I'll miss out on the job that will work best for my family.
Brandon Riordan god bless you
Brandon Riordan interesting. I live in Maine, near Bangor and been debating on buying a Pepperidge farm route for a few months. I have been working for Hannaford for 20 years and always hear from the vendors how much better it is. I even have seen a lot of people leave Hannaford over the years to buy their own route and always tell me they should of done it sooner. Your comment leaves me to pause for a moment and reconsider. You must of bought out one Michauds routes?
@@NicholasStPeter-qr2ckdid you buy it?
Looking into selling a 30 year old small design build firm.
Hi RC. You can find information for sellers over at www.HowToSellMyOwnBusiness.com The online exit planning course will be insightful.. If you'd like to chat about your specific project, I can always be reached at www.clarity.fm/davidbarnett
private contractor VS employee , thats why all these companies are facing lawsuits. Also selling my bread route for 230K cash . have buyer .. how can i limit my tax liability . other than installment payments .
The only ones who ALWAYS win in business are the tax collectors. Talk to a local CPA for options on this and congratulations.
Hi Don! I’m looking into buying one potentially, would you be open to discussion on your pro/cons of the business
What do you think about pool routes ?
Is it an independent business or is there only one supplier? That’s the risky part of a bread route.
David Barnett why is it risky for a bread route?
@@JacobEcret I think because if they ever go bankrupt are out of business. You're stuck with no inventory. If you're dealing with a bigger company I think the chances of that happening are little. One more reason to use as much unsecured credit as possible .
Buying your route sucks no vacation no medical insurance you have responsibilities of everything truck maintenance truck insurance gas it's a bad deal stores could close
Thanks Joe. It is indeed the company downloading employment costs to ‘contractors.’
get Obamacare
Only down here we call it a RAOUT
Yes, I've heard. LOL
Roots or Routes?
You should listen to me say 'Call Roto-Router to Rout out the Roots in your drain tile'
Its rowts not roots lol
My pronunciation of this word has brought more comments than anything else. It's hilarious!
Are all routes lucrative?
Hi Jim, Each distribution route would be it's own individual business subject to changes in demand, number of customers and competition. An individual opportunity would have to be examined to see if it made sense for a buyer. If you want to learn how to buy a business, take the online course at www.BusinessBuyerAdvantage.com
Good question! I own and operate a bread/bakery route so I can speak for that more than the other kinds of vendor routes. I'd suggest sticking with the big players that dominate shelf space in stores, especially the big chain stores where sales volume and profits are far greater than the small accounts. In the bread/bakery business the two big players would be Bimbo Bakeries USA and Flowers Food. These two are the Coke and Pepsi of the bread/bakery distribution business. Both companies provide you an exclusive territory with pre-existing accounts where only you can sell these products. With Bimbo you get Sara Lee bread, Ballpark buns, Arnold's bread, Thomas English muffins/bagels, Entenmann's cake/pastry/donuts. With Flowers Foods you get: Sunbeam bread, Cobblestone Mills bread/bagels, Wonder bread, Dave's Killer Bread, Merita bread, TastyKake snack cakes. Wiith Bimbo you might get more grocery store accounts, while with Flowers Foods you might get fewer grocery stores than a Bimbo route but will have more restaurants, schools, jails, prisons, etc. Another company worth mentioning is Pepperidge Farms, another solid player in this industry as they are real strong in certain areas of the country.
As David said, there are a lot of variables that affect profitability. Some route owners are perfectly happy getting up at 2:30 am, going to the depot to load their truck, then go out and work their 3-4 accounts, get done by lunch, go home take a nap and make 900 to 1.400 per week like this. While other guys work longer hours, work more accounts, get home late in the day and make 2,500 to 3k per week. Also, some routes are very seasonal, meaning very slow in winter and go gangbusters in summer, We have some beach routes around here like this, where you might make 1,200 per week in winter and make 4k per week or more in summer months. Also, some routes are big and more labor intensive, meaning you might have to hire an employee and spend more on gas. So now you have overhead expenses meaning after expenses you might end up making same money as guy with smaller route, no overhead, fewer accounts, and who works less hours than you. I know a guy who owns three routes. Two of them are seasonal beach routes. During the summer months he might make 25k per month (from memorial day to labor day). All existing routes have an established track record of weekly sales that won't change much when you buy in. These financials can be provided to you when you start dialogue with a prospective seller.
@MahaVakyas did you get into bread routes? How is it working out? I'm trying to buy a bimbo route in cincinnati that nets $172,000. Nobody believes.a guy putting bread on the shelf makes that much.
I have owned both Bimbo Route and Pepperidge Farm. Ask me any questions. I would be more than happy to answer.
Rhymes with get the f@#k outLOL
Buying a route is the biggest mistake you can ever make stay away
Corey, tell us about your experience or what you’ve seen happen.
@@DavidCBarnett I own a Flower's Bread Route and Corey is right, stay away!!
Flowers Baking Company is constantly falling short: There are times where I don't receive all the bread that I ordered. Other times I've got old dates on my bread. Sometimes they will send the bread to me a day late, but I'll end up with the previous days exp date. Sometimes the truck is really late and doesn't allow me time to get to all the stores before their receiving window is closed. Sometimes they try to send me more bread than I ordered...
Often, Flowers Baking Company doesn't give me the correct data when it come to items on sale so I'm left scrambling to find more bread. Haha, yesterday i received an email stating that we have endcap displays at Target beginning on October 7th, Hahaha that was 10 days ago and I would've needed that information 16 days ago, WTH???
Most of the items have to be ordered 6 days in advance. Some items take over two weeks to receive. The bakery is always talking about "Fresh Guarantee" but then there are times they send me product that was previously frozen.
A lot of my fellow route owners believe that Flowers Baking Company is fudging the numbers from behind the scenes so it takes aways from our Commission.
The incompitence continues...
Luckily for me, I'm the first independent owner of my territory and I'm selling to another route owner after the first of the year. I'm looking forward to getting out of this business and walking away with some cash and my sanity as well...
Wow! Thanks for sharing. This will likely help someone.
@@shelby792 I'm in the process of pursuing purchasing a Flowers bread route and your comments are concerning. Would you be willing to arrange communication offline so I could ask you a couple detailed questions? Thank you.
Jonathan Tewodros, Definitely. Email me with your contact info: frontrowdjservices@gmail.com.
Not Roots it’s pronounced like it rhymes with wow - Routes.
Depends where you’re from Stan. We like our ‘u’s nice and loud around here. 😉
So don’t buy a bread route and go get a regular job ?
Depends on your life goals and plans I guess.