Locations Say: We Want Vending

The basic benefit that vending provides locations — convenience for employees and customers — remains the leading benefit that account decision makers cite when asked what’s important about vending.

But as consumer preferences have become more diverse, nutritional options have taken on greater importance, and energy efficiency has become a bigger issue, account decision makers are increasingly recognizing there is more to consider in choosing a vending provider than “clean, filled and working.”

Since most account decision makers have other areas of responsibility besides vending, most also recognize that a vending service provider who offers products that employees and customers want at a reasonable price — reliably — is a great asset.

The traditional mantra, “clean, filled and working” continues to guide most account decision makers in selecting a vending service for their location. The desire for high quality, affordable refreshments on location remains as important as ever among U.S. businesses and organizations.

A recent, informal survey of location managers indicates that while vending is rarely their top priority, having a reliable service provider is not something most take for granted. While only a minority of location managers are aware of new technological capabilities — such as guaranteed product delivery, cashless transactions and remote monitoring — awareness of these capabilities is increasing.

Recognition of the complexities of vending has, in large measure, resulted in the development of vending management companies. While many vending operators view management companies as parasites who exist to maximize location commissions, account decision makers who work with management companies say their expertise is needed to ensure a problem-free vending service.

The fact that most account decision makers are not aware of the more recent technological capabilities indicates that operators have an opportunity to improve this audience’s appreciation of their service. As noted by many observers in recent years, educating customers about new capabilities gives an operator the ability to minimize the importance of commissions.

Commissions were cited as more important by government and institutional account decision makers than private businesses. Vending contracts put out for bid by government entities typically require commissions.

A TYPICAL DECISION MAKER

A typical client perspective was offered by Randy Gaston, general manager of Learned Lumber, a lumber supply store in Hermosa Beach, Calif. with 28 employees. The store has a snack and soda machine for its employees. Gaston said he switched vending providers about a year ago when he was approached by an operator who offered more modern equipment. The soda is 60 cents for cans and $1.00 for bottles.

Learned Lumber does not pay any commission, and as long as there are no complaints about the service from his employees, Gaston said he is happy with the service. “I know that they (employees) have requested things, and he (the operator) changes them. It’s not anything I have to maintain,” he said. “As long as the employees are not complaining to me about it, I’m happy.”

Gaston said employees can also buy lunch from a mobile catering truck. He said the prices in the vending machines are lower than what the mobile caterer charges for similar products.

Dominion Plaza Apartments in Arlington, Va. has snack and soda machines for residents and employees. Management is most concerned about having fresh product, full machines and “reasonable” prices, according to Lawana Zink, property manager. When asked about commission, she said there is a 10 to 15 percent commission, depending on product type, but this is not a key concern.

Sonic Automotive Inc., based in Charlotte, N.C., operates auto dealerships in 15 states. Jeff Wilhoite, director of purchasing, said it’s easy for location managers to take vending for granted until they have a problem. “It’s a very emotional and personal item; you don’t know how much value it has until you’ve had an experience where it starts to affect something in a negative manner,” he said.

At Sonic Automotive stores, cold beverage and snack machines serve patrons in the waiting areas and employees in the employee areas. Wilhoite said it’s important to have good quality refreshments available to both groups of people — at reasonable prices.

“It’s not a matter of if they (the individual stores) will have a problem or not; it’s how they resolve it,” Wilhoite said.

This is why Sonic Automotive opted to work with a vending management company at one point, only to change course and return the responsibility to regional managers. When they gave a management company a national contract, stores reported high levels of dissatisfaction with the vending service. “I don’t think a national contract is the way to go,” Wilhoite said.

The coffee service, on the other hand, is handled through a national contract.

In situations where locations have committees to evaluate the vending, more thought typically goes into what the service provides and who provides it. A case in point is Green Bay Packaging Inc., which has 122 employees in Fremont, Ohio. The company offers 15-minute breaks for the hourly employees, meaning the vending bank is the only source of refreshments.

Green Bay Packaging formed a committee two years ago that came up with some new requests, and as a result, a new vending company was hired.

Sandy Clark, human resources manager at Green Bay Packaging, said the committee was concerned about a cold cup machine, which was often dirty. “In the spring you’d have fruit flies,” Clark said of the postmix cup machine. The committee also wanted to see more product variety.

When a competing vendor offered more product variety and some new technology, the committee opted to switch operators.

The new operator provides a frozen food machine in addition to the hot beverage, soda, snack and refrigerated food machines.

Instead of a cold cup machine, the new operator provides bottles in addition to cans, bringing more beverage variety. Clark noted that many of the younger employees like things like vitaminwater, which is only available in bottles.

The new operator also provides a debit card that the employees can add value to using a revalue station.

DRIVER PROFESSIONALISM ALSO COUNTS

New technology and products aren’t the only criteria, Clark noted. The route person must be professional. “That route person can make or break an account,” she said.

As already noted, the complexities that have emerged in recent years have caused some customers to hire management companies. And while operators overall resent management companies, it is often the management companies that introduce new technologies, such as remote machine monitoring.

Lowe’s Home Improvement has found vending management a beneficial resource, noted Ron Morton, procurement manager. Vending serves both public and employee areas. He said about two thirds of the vending machines serve employee areas. The vending management company was instrumental in equipping the vending machines at Lowe’s store with remote machine monitoring, which is now mandated in the operator contracts.

Morton said the contracts vary by geographic region. The company surveys employees to decide what products to offer. He said the offerings are designed to be competitive with what’s available at competing outlets, such as convenience stores and fast food restaurants.

For the employee vending areas, Morton said Lowe’s wants employees to have the option of staying onsite for meals. The vending areas have refrigerated food, snacks, beverages, and in some cases, ice cream.

Judy Chick, general manager of two Comfort Inn hotels in Alexandria, Va., said her company has also found it beneficial to have a vending management company. “Our primary goal is to sell rooms,” she said. “We don’t have time to spend on it (vending).”

If it weren’t for the support of a vending management company, Chick said she doubts the company would even offer vending. While the hotels get a commission, Chick said, “We’re more concerned about customer service.”

IRREGULAR HOURS CREATE SPECIAL NEEDS

The Sun Sentinel, a newspaper in Orlando, Fla., relies on vending for off hours feeding for its 1,300-plus employees, said Christine Palermo, a senior buyer for
the company.

In the past few years, there have been complaints about the rising prices in the machines. However, Palermo said the company recognizes that costs are rising and she believes the vending operator is doing his best to maintain fair prices. As long as the operator gives advance notice of the need for an increase, she is willing to allow it. “The convenience of being in the office and having something there; there’s a value to that,” she said.

Other important factors to Palermo are the professionalism of the drivers and responsiveness to product requests.

Some accounts place a lot of value on knowing their constituents are happy with the product offerings. American Intercontinental University in Weston, Fla. surveys students every three months to gauge their satisfaction with the vending, noted Scott Scheaffer, vice president of operations.

Scheaffer said he asks the vending operator to provide regular sales reports.

The operator also provides a commission to support student activities.

SOME RECOGNIZE CONVENIENCE HAS A COST

Schaeffer was one of several location managers who said he recognizes that vending prices cannot be lower than those in other retail outlets. As a result, he allows the operator to raise prices when a need is shown. “You’re paying for the convenience,” he said.

Scheaffer said the professionalism of the driver is very important. He wants the driver to behave diplomatically with students who might get in the driver’s way when he’s doing his job. He also want the driver to look people in the eye when spoken to.

Scheaffer was one of many interviewed who said the working relationship that gets established over time is important in deciding which operator to work with.

Schools and hospitals were the most concerned about wellness options.

At the University of Akron in Akron, Ohio, vending supplements the manual foodservice. “It’s fairly important,” said Ed Hainrahir, director of marketing and retail operations. The school’s main criteria for selecting a vending operator are equipment reliability, product variety, energy efficiency and commission.

While many accounts want a commission, they also recognize that the income from the commission will not amount to much if the machine does not offer what people want at a reasonable price.

“If we don’t have products the students and faculty want, we’re not going to get a return on our contract,” said Shirley Darr, assistant auxiliary director at the University of Alabama in Tuscaloosa, Ala. “We see it as a convenience and a supplement to foodservice on campus.”

Darr said 50 of the campus’s 250 soda machines also enhance the aesthetic environment after the operator agreed to customize the fronts with pictures of the university grounds.

Darr said vending sales have increased recently as a result of the machines being able to accept campus ID cards for payments.

VENDING HELPS WITH NUTRITION NEEDS

In many secondary schools, vending machines have helped foodservice directors meet nutrition requirements. When the obesity epidemic first began making headlines in 2003, many public officials blamed vending for making kids fat. Since then, more districts have recognized vending as a tool to help educate kids about nutrition.

“We all know that access causes one to choose or not to choose (a particular product),” said Anita Finch, director of nutrition services for the Seattle, Wash. Schools. “It’s our job as educators to be gatekeepers.”

Baptist Hospital System, based in Jacksonville, Fla., operates four hospitals with 4,400 employees in South Florida. Vending is very important to the emergency room staff and other employees who work when the main cafeteria is closed. Several years ago, a hospital dietitian worked with the vending operator on a wellness program.

While the hospital gets a commission from the vending, Scott Kleier, general manager of dining service, insisted that the commission is not a top priority and he would never switch providers on account of commission. Kleier places a lot of value on the relationship.

PUBLIC ACCOUNTS WANT COMMISSIONS

Public entities generally mandate commissions in contracts, but many location overseers are quick to point out that the quality of the products and service are equally if not more important than commission.

Vending is very important to the Alleghany County Port Authority in Pittsburgh, Pa. since bus drivers work all hours of the day, said Kimberly Zelen, contract administrator. A 2-year vending contract is awarded based on bid. While the current contract includes a commission, the authority pays careful attention to the vending operator’s response to service calls and complaints about products.

“You have recognizable brands in there,” Zelen said of the vend products. “We don’t see any ‘off’ brands or generic products.”

Vending is especially important to the Colorado Department of Corrections, noted Jack Laughlin, service division manager for the correctional industries, which is a financially self sustaining organization. One reason it’s important is that visitors are not allowed to bring food into the prisons when visiting inmates.

COMMISSIONS SUPPORT EMPLOYEE BENEFITS

Jerome Scott, contract administrator for the Metropolitan Transit Authority in Houston, Texas, said the revenue that the vending service provides is very important since it supports employee benefits, such as holiday parties and scholarships. “It’s a source of income. We have the machines to boost morale,” Scott said.

The transit authority wants the beverage and snack prices to be reasonable since the employees rely on them for refreshments, especially during times when there are no restaurants or stores open. While the $70,000 to $90,000 in annual vending revenue is important, Scott recognizes that the 28 percent commission paid on gross sales is not the only important factor in maximizing the revenue from the machines.

Overall, locations continue to value vending as an important source of refreshments for employees. As more employees work irregular hours, the need for vending in many locations is more important than ever.

At the same time, new consumer tastes, mandates for healthier options, and new benefits brought by new technology have all resulted in a service that is more complex for account decision makers to manage than in the past.

Accounts continue to rely on commissions, but they also realize that a service that does not deliver the consumer focused benefits compromises its commissions.

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