Startup Wins with Unique Products

Highland, Ill.-based S&O Vending proves vending persists as a viable business opportunity for creative entrepreneurs. Co-owner Jeff Shapiro, being an experienced high-end restaurant manager, has a unique view of how to run a vending business. As the director of operations for Carmichael’s Chicago Steak House in Chicago, he uses personal service, new equipment and products tailored to account demographics to wow the customer. With the help of his current partner, Steve Kritz, S&O Vending is growing into a serious player in the highly competitive Chicago market.

PART-TIME START UP

S&O Vending began on a whim. Shapiro was working in the restaurant business when he decided he wanted to own and operate a vending business. He saw vending as a great second job opportunity that would provide additional income and be fun to do. “I didn’t see one or read an article or anything, it was just an idea I had,” he said.

Shapiro started the business in 2004, with a partner, Richard Oleff, who sold his half of the business to the current partner, Steve Kritz, in 2007, when the commitment became excessive for the returns.

S&O’s first machine was a soda vender at a friend’s facility. Shapiro bought the machine with his credit card. Jim Carbone, then a manager at a local equipment distributor, sold Shapiro the machine, but didn’t take him seriously. Most people didn’t just start a vending company; they bought a machine with accounts or bought an established operation. Shapiro’s business thrived, however, and Carbone, who has since gotten into the operating side of the business himself, became a key knowledge source for Shapiro.

Oleff shared the day-to-day responsibilities with Shapiro, working around his public relations/advertising job to cover appointments while Shapiro was at the restaurant.

Shapiro serviced the routes in the beginning, using his pickup truck to deliver product to locations a few hours before work. “I was very driven. I didn’t want any empty coils, especially if I had more of the product just sitting in my garage or warehouse,” said Shapiro. “I made changes every few days.”

Shapiro grew up in the Chicago area and used his friendships to gain clients. “People would rather do business with people they have a relationship with rather than someone they don’t know,” said Shapiro.

From the accounts he gained, Shapiro realized that many existing vending banks weren’t giving customers what they wanted. The equipment was often old or damaged. The customers didn’t always want the products that were in the machines and there were often empty spirals.

Shapiro saw an opportunity to set himself apart by giving the customer a better quality vending service. He installed new machines and kept them stocked. He encouraged customers to call if a spiral was sold out. And
he focused on unusual products.

FOODSERVICE BACKGROUND OFFERS A BENEFIT

“My foodservice ties opened the door to products not available to the vending channel,” said Shapiro. A few years ago, he found single-serve hummus with pita chips in small bags. It was not available in vending yet. He put it in white collar accounts and watched it sell.

He was vending individually wrapped pickles and tuna kits before other vending operators, giving him a reputation for having unique products.

Shapiro continues to attend food shows for the high-end restaurant he manages, and it opens his eyes to innovative products he can bring to his vending machines.

While Shapiro and Kritz use vending supply houses, they are currently buying two-thirds of their top products from foodservice supply houses.

AN ‘ACCOUNT-CENTRIC’ APPROACH

Because S&O has a mix of different vending accounts including municipalities, car dealerships, schools, offices and factories, it tailors its product offerings to the account.

The process begins with assessing what was already offered by the previous vendor. Shapiro or Kritz visit the account two or three times before taking it over to see what people buy or what they are saying. They may ask the location manager about the sales volume or send out an email blast or questionnaire for product requests.