For Those Who Deliver, a Good Take
By Douglas Martin
Five years ago, Lois O’Neill found herself at a dead end. Her life had come down to a divorce, an unrewarding office job and three children to put through college.
So, she took a small inheritance and bought a bread delivery route in Bergen County, New Jersey, for $18,000. She began going to work at 1:00 A.M., seven days a week, wearing a sweat suit rather than the high heels to which she was accustomed.
It paid off. By dint of hard work, she increased her number of stops to 45 from 20, thereby raising her annual income to $80,000 per year. She is now trying to sell the route for $110,000 so she can move to Arizona.
There has been just one drawback, the social one. “You don’t meet the president of I.B.M. delivering bread at night,” Ms. O’Neill says.
Big Business in Routes
Truth to tell, she may have made some wiser economic decisions than I.B.M., considering how fast things are changing in this crazy economy. Some of the most unlikely folks are popping up in this arcane precinct of entrepreneurship—the delivery of much of the merchandise you find on the shelves of grocery stores, delicatessens, and even auto body shops.
“With so many people laid off and so few new job opportunities, men and women are now clamoring for routes,” says Kenneth Sussman, president of Route Brokers, Inc. a Great Neck, L.I.-based company that has made a business of matching buyers and sellers of routes.
The Route Brokers, which employs nine agents in three metropolitan area offices, sells about 150 routes a year at an average price of $89,000, for which it earns a 10 percent commission paid by the seller. A buyer can expect to make $800 to $1,200 a week before taxes, and considerably more if he hustles to sign up more stops or more sales at existing stops.
In the last 5 years, Mr. Sussman says, more than 40 percent of the routes have been bought by people who previously had white-collar jobs. Women, who rarely used to be in the business, now account for one-tenth of route purchases.
“If you’re a sales-oriented person, you can make a small fortune,” Mr. Sussman declares. Routes can sell for as little as $25,000, or as much as $500,000, he says.
He cites the success of a Long Island man whose brothers owned profitable Pepperidge Farm routes. Instead of following suit, the man took a chance on a Martin’s Potato Rolls route in his native Brooklyn. He paid $39,000 for the route, then built its income to more than $1,200 a week through aggressive salesmanship. He sold the route in five pieces for a total of more than $200,000.
A List, a Territory, and a Truck
What you get when you buy a route is a list of customers, often a protected territory, usually a small truck of some sort and the right to pick up merchandise from a company like Coca-Cola, Ben & Jerry’s Ice Cream, or Wise’s Potato Chips. But what you can almost never get is bank financing: sellers usually take a sizeable down payment, with the remainder in a personal note.
There are an estimated 7,500 independently owned routes, mostly in the food business, in the New York metropolitan area. Each month, Mr. Sussman, or his staff hears from 250 owners interested in selling. About 125 turn out to be serious.
Companies began selling routes to independent drivers in this region in the mid-1960's, Mr. Sussman says, prompted partly by desires to escape vehicle maintenance and insurance. More important, a route owner has considerably more incentive to increase sales than an employee who is drawing a salary.
“If you have a personal stake in what you’re dong, you’ll do it a lot better than somebody who doesn’t have that stake,” says Neil Churchill, director of the Center for Entrepreneurial Studies at Babson College in Wellesley, Mass. “You can build a business with low capital, some ingenuity, and a lot of perseverance.”
Daniel J. Feld, the owner of the Saratoga Potato Chip Company, a 5-year-old maker of gourmet snacks, studied a number of distribution systems before deciding on owner-operated routes. Initially, his approach was to give the routes away. Since then, some original owners have made profits by selling parts of their ever-more-profitable routes.
“This is the only way to make these routes work,” Mr. Feld says. “It’s a funny kind of arms-length, but very close relationship.”
Some see another aspect to the decision by some companies to sell routes. Audrey Freeman, an independent labor economist in Manhattan, says the practice is driven by companies’ desires to shun unions, avoid wage and hour laws, and save on benefits. “Anything at all they can do to avoid having a permanent employee on the payroll, they’ll do,” she says.
You Can Hustle
There are many roads to the route business. Frederick Berryhill of Freeport, L.I., worked for 11 years in sales support for the Xerox Corporation. He left Xerox in October to buy an auto tool route for $30,000, and began operating it in December. He enjoys not wearing suits, but even more, he relishes being his own boss.
“You can hustle,” he says. “That’s the whole idea.”
Yamira Lopez, a 22-year-old mother of two who lives in Sunset Park in Brooklyn, used $39,000 from a jury award after an automobile accident to buy an Italian bread delivery route. She makes a pretax income of $1,000 a week, of which $200 goes to a part-time helper.
Her work days start at 3:00 A.M. and end around 11:00 A.M., when she returns home to ride herd over two preschool children. She hopes to sell the route in a year or so and buy a bigger one.
“I love having my own money in my hands,” she says.