Regional Startup has Progressive Concept for Vending

Vending industry observers have long predicted the vending operator base will consolidate as operating costs rise and economies of scale become more critical to profitability. The vending industry, some believe, is destined to follow the fate of others, such as the office products industry, where a handful of large companies control the majority of the business.

Given that the factors that support consolidation — such as limited growth opportunity and rising operating costs — have brought new pressures to bear on operator profitability, might a new era of consolidation be under way?

Still another factor is that new technology — such as telemetry-based remote machine monitoring, cashless transactions, coupon-based promotions and video screens — are creating new opportunities that will make vending a better value to consumers, but will require the resources of a high volume operation.

Dave Mac Isaac believes that day is arriving. He and a group of partners have established a company over the past two years, Next Generation Vending and Food Service, Inc., based in Canton, Mass. Next Generation has acquired several refreshment service businesses in the past year and a half and now claims to represent $120 million in annual sales, with plans to expand.

A VENDING/OCS VETERAN RETURNS TO THE INDUSTRY

Refreshment services industry veterans will remember Mac Isaac from a previous vending and OCS entity that set out to establish nationwide operations through acquisitions: USRefresh.

USRefresh was established in 1999 following a reorganization of U.S. Office Products Inc., a publicly traded company that included a host of businesses: office products, vending, OCS, travel services and print services. Established in 1994, U.S.O.P. acquired numerous businesses through the 1990s, including vending and OCS operations.

In 2001, debt-burdened U.S.O.P. declared bankruptcy and sold USRefresh’s OCS business to Montreal, Canada-based Van Houtte Inc. (which owns Westwood, Mass.-based Filterfresh Coffee Service Inc.) and its vending business to Brockton, Mass.-based, now-defunct All Seasons Services Inc.

After leaving USRefresh, Mac Isaac joined a company as CEO in the laser printer cartridge business, Clarity Imaging Technologies Inc. in Waltham, Mass. While building that company, he met John Ioannou, who had worked for IBM and had led various technology companies. Mac Isaac and Ioannou shared a passion for technology, and they agreed that technology was destined to change the vending industry.

A NEW TEAM EMERGES TO FORM A COMPANY

The two men put together a management team and in October of 2007 acquired certain assets of All Seasons Services Inc. with the intention of developing a new refreshment services company. Mac Isaac is chairman and CEO while Ioannou is president. Joe Rogan, who was chief financial officer (CFO) of USRefresh and worked with Mac Isaac in the printer cartridge business, is the CFO and chief operating officer at Next Generation.

Mac Isaac said he noticed over the years that vending operators were not using the technology that was available to improve the customer’s experience and allow for more efficiency. As time progressed, he came to believe that the need to use technology had become more important.

GROWTH THROUGH ACQUISITION

In early 2008, Next Generation acquired selected routes in Rochester, N.Y. from a manual foodservice
operator and the assets of Integrity Management
Services, a Binghamton, N.Y.-based vending and foodservice operation.

Later in the year, Next Generation became a Canteen franchisee and acquired the assets of Canteen’s operations based in Albany, N.Y., and Middletown, Conn.; Loose Ends Vending, Inc., a Canteen franchisee based in Batavia, N.Y.; and the Massachusetts and Rhode Island assets of A & B Vending Co., Inc., a Canteen franchisee based in Wakefield, Mass.

Next Generation has four regions, each managed by a vice president and staffed with sales directors, general managers and account managers overseeing route personnel.