Focus on Workers Pays Off Big For Mid-South

Challenging as the times may be for the vending industry, the independent operation is going to survive. Take it from a veteran who spent most of his career with a national operation before moving to an independent 14 years ago.

Larry Pugh, general manager at Mid-South Food Services in Aberdeen, N.C., insists that the family atmosphere at a medium-size company can more than make up for the advantages of an extra large company. He points to the length of service of most of his employees at his 11-route operation (the service manager is a 37-year veteran), not to mention the outstanding quality of dedication which he credits to the family atmosphere that only an independent can provide.

Case in point: Nina Williams, a 12-year veteran and the 2008 Automatic Merchandiser Route Driver of the Year.

Williams, in the accompanying article, cites the support she gets from Pugh and operations manager Jim Loftin for her success.

A NEW ERA FOR INDEPENDENTS?

In fact, in the current operating environment, with many companies cutting corners to save costs, Pugh thinks the independents have more opportunity than before.

“I feel the personal attention you get in a smaller company makes up for whatever prestige you lose,” he said.

“We’ve got a lot more time to be in front of the customers and give them the personal attention that they crave,” he added. “We’re large enough to take charge and small enough to take care. Most customers appreciate quick response.”

NOT AN ORDINARY INDEPENDENT

Mid-South Food Services is no ordinary independent. It boasts the only local commissary in Aberdeen, which is 100 miles south of Charlotte. It is also owned by a beverage bottler that is financially sound.

The vending operation, launched in 1963, shares some overhead with the beverage company, Aberdeen Coca Cola Bottling Co., which began in 1913. Both companies are owned by the Moon family and operate from a 24,850-square-foot building, an adjacent 6,000-square-foot refurbishing facility and another 2,000-square-foot office building.

Pugh recognized these advantages when he opted to leave Service America Corp. in 1994 to come on board as general manager at Mid-South Food Services. At the time, he was a 29-year veteran serving as the Asheville, N.C. district manager. (Service America Corp. was acquired by Compass Group in 1996.)

Pugh, with his background at a national operation, brought some new expertise to what was then a 5-route vending operation. He established the equipment refurbishing facility.

He also recognized the need to diversify the account base since the textile industry was declining. In the past 15 years, textile accounts have dropped from 90 percent to 25 percent of the company’s customers. The company has diversified with light manufacturing, schools, colleges, hospitals and food processing facilities.

COMPENSATION UPGRADE

Pugh also recognized the need to develop a more competitive compensation package for employees. The company pays 100 percent of individual employee health care, dental and life insurance as well as paid vacations and holidays, double pay for holiday work, plus a 401-k retirement plan and profit sharing. “It’s all designed for longevity,” he said.

He instituted a formal 2-week training program for route drivers with two additional weeks followup. After 90 days, he can usually tell who will and will not make it. “I think it takes a special person to be in the vending industry,” Pugh said. “If you like it, you do well at it. If you don’t, you don’t last very long.”

DEDICATED CASH COLLECTIONS

To allow drivers to focus on customer service, the drivers do not collect money from the machines. Instead, there are two dedicated money collectors that handle all cash collections. This not only gives the drivers more time to service the machines and interact with customers, Pugh noted, but it improves sales accountability.

“Our route people don’t collect money; we want them to concentrate on servicing the customer,” he said.

The drivers are supervised by a staff of three salaried “lead” employees who are responsible for checking on the condition of vending banks. The company prefers not to use the term “supervisor” since it detracts from the team spirit.

The goal is to give the driver the opportunity to take ownership of the route. Pugh did not wish to reveal numbers for print, but the route driver’s commission rate is higher than the industry average for operations that pay drives based on commission.

“Our main requirement is that all of the food machines have to be worked before the morning (meal) breaks,” Pugh said. “As long as they can meet the criteria of having all food machines filled prior to break time and customers don’t object, we allow some flexibility in start times.”

“In this job, you can really shine or you can look bad,” said Jim Loftin, operations manager and a 17-year company veteran. “You’ve got to enjoy what you do.”

ACQUISITION OPPORTUNITY ARISES

Pugh said that the company was not looking to acquire another business when the owner of Central Carolina Vendors, based in Brisboe, 45 miles away, approached Mid-South Food Services. Pugh said his boss first turned down the offer, but was impressed by the fact that the owner was interested in finding another operation that also had high service standards. The companies did not view each other as competitors since their service areas hardly overlapped and both had Coca Cola franchises in previous years.

“We weren’t looking to expand, but the owner of Central Carolina Vendors wanted us to have it,” Pugh said. “They were doing a good job as far as service was concerned. They were well trained. It was a very smooth transition.”

Mid-South Food Services currently serves a 100-mile radius; the farthest location is 60 miles away.

The company offered jobs to all Central Carolina Vendors’ employees. Three of six route drivers came on board, and two of them are still with the company. “They welcomed the chance as far as being able to make more money,” he said.

The route driver remains the backbone of the vending operation, Pugh said.

Drivers empowered to select product

Mid-South Food Services does not have a planogram. Instead, drivers are responsible for selecting product from the warehouse. Drivers inventory their trucks once a month.

The company has a new product display in the warehouse to highlight what’s new in addition to healthier alternatives.

While Pugh thinks the company gives excellent service, he recognizes that an account can never be guaranteed. Decision makers change, and in cases where a decision maker has a relationship with another vending operator, even the best service will not necessarily keep the account.

Pugh has made it a point to inform his employees when accounts are lost that it isn’t necessarily anyone’s fault. When an account is lost, the company works to recover it.

POINT OF DISTINCTION: FRESHLY PREPARED FOOD

The company takes great pride in its commissary and the fact that close to 90 percent of all of its food is prepared from scratch. There are six full-time and two part-time commissary employees who also provide catering services.

“We take a lot of pride in the way our food is assembled and handled,” Pugh said for the commissary. “I eat a lot of the food myself, so we’re first to know if there’s an issue with it.”

Pugh said they only have frozen prepared food because there are some popular frozen products. These include some Hispanic frozen brands that are popular with the increasing ethnic customer base.

The commissary has helped support the company’s growing catering business. There are currently four full-time catering employees. The company can cater everything from sit-down dinners to community festivals.

Post-mix cup drink machines

Mid-South Food Services is one of the few operators to still operate post-mix cup drink machines, but Pugh said these are only being provided on request. He said these machines aren’t as profitable as can and bottle beverage machines to a bottler.

The bottler services its own beverage machines in the immediate area, Pugh noted. Mid-South Food Services services the machines in the surrounding areas.

The rising cost of fuel has caused many of the customers to reduce their operations from five to four days, Pugh said. “That’s had some effect on sales,” he noted.

But there are positive signs as well. More attended living facilities are being built as more people move South to retire and the company continues to obtain new accounts as new clients realize the value of what it can bring to their associates.

Pugh said unemployment in south central North Carolina area is below the national average, so finding good employees is an ongoing challenge.

CHANGING CUSTOMER DEMOGRAPHICS

The company is getting prepared to introduce its first cashless machine at an education account, Pugh said. The cashless is in response to a customer request. He expects that cashless will increase over the years.

Mid-South Food Services demonstrates the unique benefits of the independent vending operation, even in a changing operating environment.