Operators: We Can Make It

The current business scenario forces the vending operator community to search its soul. Veterans note that no time has challenged the vending operator as much as the present, as costs rise, the customer base shrinks and consumers are reluctant to spend money.

The recession has accelerated pressures that have been at work since 9/11, giving new urgency to the need to assess the future.

For some, this means selling the business, assuming they can get a reasonable offer. For others, it means outlining their business goals more clearly than they have in the past and having a formal strategy for achieving them.

Most operators in recent months have, on some level, asked themselves the question: is this business worth the time and trouble it requires?

For some, the answer is “no.” For others, it is a qualified “yes.” One point that most agree on is that the effort required is greater than it was when they first got into the business, whether it was 10, 20, 30 or more years ago.

Automatic Merchandiser has frequently observed that vending remains one of the last entrepreneurial industries. Where many industries, such as office products, supermarkets and mass merchants, have consolidated, vending is one of the few in which an
individual can, with relatively limited resources, establish a business that is profitable enough to provide a good living. This has been the case since merchandise vending became a recognized industry early in the last century. Based on recent interviews with operators of varying ages in different sizes of companies, Automatic Merchandiser maintains that the axiom still holds true today.

All operators interviewed agreed that the industry is changing in a way that demands a higher level of professionalism. Most believe that technology will facilitate this professionalism and give it a better reputation among the buying public.

One of the more positive observations is that the current challenges are weeding out the less capable and committed players. Some operators welcome the current “survival mode” intensity as a catalyst to accelerate positive change.

“A bad economy is actually going to force some of those things to accelerate,” said Mike Mosakowski, the Kansas City, Mo. general manager for Aramark Refreshment Services. Mosakowski said the future is great because technology will reduce operating costs and maximize sales.

WIDESPREAD BELIEF: TECHNOLOGY IS CHANGING THINGS

Where rising costs and limited growth opportunities have stalled investment in new technologies, recent interviews reveal a widespread acceptance that new technologies, namely cashless readers and remote machine monitoring, will become commonplace. Many said they believe that return on investment for these technologies will be more favorable in the future.

Many veterans view the current recession as another business cycle that needs to be weathered by all industries and all segments of society. Those who voiced this view noted recessions remind them of some of the advantages that vending has over other businesses.

As a service provider, a vending operator can review his sales strategy and target new customers. He can redeploy assets in more lucrative locations and/or reduce capital outlay. Hence, vending offers a business owner more strategic options than owners in many other industries.

This versatility, however, comes with a price. It demands constant review of financial results in order for an operation to remain profitable and grow. Hence, operators that do not maintain reliable financial information and review performance regularly have less of a chance to succeed.

Rick Matthews, owner of H & L Tom’s Distributors Inc. in Virginia Beach, Va., was able to change his operating procedures to improve his profitability four years ago. As a result, he’s making more money today even though his same store sales are down 10 percent. This was accomplished by replacing step vans with more fuel efficient cargo vans, and moving from a static route schedule to a more flexible schedule. He also pre-kitted the trucks.