Boarding All Rows!

Ask the average U.S. consumer if they ever saw a credit card reader on a vending machine, and chances are they’ll say no.

But if they’re a frequent flier, chances are they’ll say yes. Airports are exposing more consumers to credit card vending than any other venue these days. Progressive vending operators have targeted airports for credit card readers since these venues have exceptionally high traffic and retail prices are high to begin with.

From the vending operator’s perspective, getting an airport vending contract takes vision. After all, it takes a visionary to invest in cashless vending, especially in today’s economy.

Right now, the conventional wisdom holds that the cost is too high to justify the investment in card readers.

This is why visionaries like Mack Wilbourn, owner of MJW Vending in Atlanta, Ga., are needed. The 64-year-old entrepreneur became a successful fast food retailer by taking risks in the first four decades of his business career. While many veteran vending operators are shy about testing new vending technology, Wilbourn doesn’t wince.

“It has given us a new way of servicing the customer in the airport,” Wilbourn said of the credit card readers and the remote monitoring system that supports them.

Credit card readers: A turning point

The introduction of state-of-the-art credit card readers that prompt the consumer with touchscreen graphics and flash animation marks a turning point for Wilbourn. Investing the money, time and energy to develop this pioneering move, which has captured the attention of some national vend product manufacturers, was made possible with the support of a committed team under the direction of a retail foodservice veteran.

MJW Vending is one of two businesses Wilbourn owns. His older business, Mack II Inc., operates two Popeye’s restaurants, a Checker’s restaurant and an Edy’s Grand Ice Cream parlor, all at the Atlanta airport.

Wilbourn believes that his restaurant experience helped him understand the importance of technology in vending. “I’m big on technology and how we can use it to better manage,” he said.

Technology is bringing new capabilities to various aspects of the vending trade that Wilbourn has already witnessed in the restaurant business. These include computerized inventory control, credit card transactions, and point of sale graphics.

Wilbourn got involved in testing new vending technology almost as soon as he landed the airport vending contract in 2004. The airport became his second vending venture, following a brief stint servicing a Coca-Cola museum in Atlanta in 1980.

While his vending business is much smaller than his restaurant business, in some ways technology is even more important to vending, Wilbourn noted, as it is a more complex business. Vending inventory includes far more stock keeping units, and the equipment contains more changing parts.

Aggressive investment in vending technology

Wilbourn’s airport vending venture, which consists of 54 machines in six of the Atlanta airport’s seven terminals, progressed from DEX handhelds to remote machine monitoring to credit card readers in the course of four years. The venture has also included an experiment with larger video screens on vending machines which has been put on hold for the time being, but will resume shortly.

The road has not been easy for Wilbourn, as the technology takes time to learn and it isn’t cheap. Each one of his software upgrades has cost him tens of thousands of dollars. But that’s par for the course for a man who started out washing windows for a fast food restaurant to become one of the most successful fast food franchise operators for a national franchise chain.

While the vending business is the smaller of his two companies, Wilbourn sees it as having a great future, due to the technology that is creating new capabilities. He is aware of the fact that the vending business is changing rapidly, and he sees a lot of opportunity for it. He also knows that as a vending technology pioneer, he has taken on a lot of risks.

How does he keep tabs on such diverse but equally demanding enterprises? “I’m real quick on my feet,” he explained. “I’ve always enjoyed people. I can make it fun for the customer and the employees.”

A total people person

It’s hard to get through the Atlanta airport with someone as people oriented as Wilbourn. Every two minutes, someone stops him to say hello. When he came to Atlanta in 1971 in pursuit of a new opportunity, he immersed himself in local politics. He became close to former Atlanta mayors Maynard Jackson and Andrew Young, and he remains active in politics and civic activities.

But the interruptions don’t faze him as he makes his way across the airport concourse to his 610-square-foot office on the second floor of the airport’s main terminal. The airport office houses most of his dedicated vending employees. Here, his financial and marketing employees review the daily transaction reports from the vending machines.

“I believe you aspire to do what you want within,” said Wilbourn, a philosophical man whose soft spoken demeanor belies his aggressive and creative merchandising instincts.

Beginnings in retail foodservice

Wilbourn learned to multi task early in his career. After a stint at Jack In The Box, he joined the McDonald’s organization in the 1970s, where he got into the management training program.

At age 26, he and a partner moved to Atlanta in 1971 to open a McDonald’s restaurant franchise, which eventually grew to include four restaurants. Twenty two years later, he sold the restaurants to McDonald’s and went into institutional foodservice.

In 1996, an opportunity became available for a restaurant at the Atlanta airport. Several national chains bid on the contract. Wilbourn saw there was no chicken restaurant, so he explored chicken franchises and decided to submit a bid for a Popeye’s Chicken & Biscuits restaurant. He won the contract.

Success didn’t come fast. Wilbourn’s restaurant opened right before the Valuejet Airlines crashed in 1996, which affected his and everyone else’s business in the Atlanta airport.

Success in retail foodservice

Despite that difficult start, the Popeye’s was a success. He focused on building the breakfast menu, and he made it a point to listen to customers. He tweaked the menu and added items that other restaurants weren’t offering at the time, like bottled water.

Wilbourn’s two Popeye’s restaurants became the number one and number three most successful stores in the chain, winning awards and numerous articles in foodservice and business publications.

He developed a close relationship with Coca-Cola Co., an Atlanta institution. When Coca-Cola Co. opened its office tower in 1979, Wilbourn, curious about vending, got the contract for the snack machines. And he quickly learned that vending required more investment and attention than he thought. “I really didn’t know what I was doing,” he said, and he ended the venture after a year.

In 2004, when Coca-Cola Enterprises Inc. wanted a new vending operator to service their machines at the airport, they contacted Wilbourn. He had established himself as a local business and civic leader who was well acquainted with the airport’s retail operations.

While his previous exposure to vending hadn’t been encouraging, he saw a benefit to operating vending machines at the airport. Operating four restaurants, he already had a support structure in place. He delivered product from a nearby warehouse.

His 20,000-square-foot warehouse/office building near the airport includes refrigerated and frozen coolers for storing the beverages, candy and ice cream. As does the 15-foot Isuzu step-down truck he assigned to vending deliveries. The truck was fitted with customized racks for holding snacks.

With Coca-Cola Enterprises’s support, Wilbourn secured the 8-year contract for the public vending banks at the airport, which includes beverages, snacks and ice cream. The contract does not include employee and outdoor areas.

The 10 banks each have four to seven machines. All are serviced daily; the soda machines twice a day.

Expansion into vending

The expansion did require the hiring of a dedicated vending service manager. Alfred Burse joined the company and learned equipment maintenance. Coca-Cola Enterprises provided training on some of the machines.

He also hired someone to count and bag the change.

All beverages are delivered cold to the machines, so there is no chance of a customer getting a warm soda.

“I’m already here, my team is here, and we can do a good job,” he said, speaking from a conference room that bears a big wall diagram of the airport highlighting all of its retail establishments.

Because vending is a cash business, Wilbourn also realized an obvious synergy: a ready supply of change for the four airport restaurants. He had been paying a financial institution to make change for him. The vending machines supply him the change on site.

He found some additional synergies between his foodservice and vending businesses. He improved his volume-based purchases on items such as bottled beverages that are used in both businesses.

The first change Wilbourn made was to eliminate canned beverages completely. This was a no-brainer for Wilbourn, who saw that travelers need resealable containers.

Being a fast food retailer, he immediately recognized the poor visual presentation of the previous vending banks. He developed colorful headers with Coca-Cola’s logo for the vending banks. “Prior to that, you didn’t know a vending location unless you came upon it,” Wilbourn said. Now it’s evident five gates away.

Investing in software

In 2004, Wilbourn gave another look at vending software and realized it had come a long way since his first exposure in 1980. This was important, since he understood the need for computerized inventory control and the importance of item level accounting from the restaurant business.

He decided to invest in a software system that included a DEX handheld. He began attending vending trade shows and learning about new technologies.

“As I went to vending shows, I started seeing innovative things,” he said.

While Wilbourn’s contract protects him from competition, operating profitably at the airport has its own challenges. The rent is high, and prices, while high, are determined by the location. Hence, technologies that improve efficiency are important.

He recognized the advantages of remote monitoring: real time machine alerts and real time machine inventory reporting.

Handhelds to remote monitoring

After two years, he replaced the DEX handheld system with a remote monitoring system; the technology provider trained his maintenance manager on installing and trouble shooting the cellular transmitters.

The remote machine monitoring system was an improvement, but Wilbourn was impatient for some of the other technologies he was seeing at vending shows, such as credit card readers and graphic touchscreens. His colleagues at Coca-Cola Enterprises introduced him to Isochron Inc., which offered a system that includes a
credit card reader with a small digital touchscreen.

Wilbourn saw that the interactive card reader not only offered a convenient way for a hurried traveler to buy product, but an interactive experience. Being prompted by the easy-to-follow graphic touchscreen was a new and personal experience that customers enjoy.

“I’ve always liked marketing,” Wilbourn said. “That’s what most vending operators haven’t done.”

Isochron’s cashless/remote monitoring system is one of several that Coca-Cola Co. has approved for its machines, noted John Turner, Coca-Cola’s group director of on-premise business and development.

The system reports how much money should be in each machine’s collection bag, by denomination. The totals are compared to the cash collection in the money room. “It’s just so much better (than the DEX handheld),” noted Casandra Harmon, vice president of MJW Vending.

The reports also help manage the product categories in the machines. “We know what our top sellers are and what our poor performers are,” Harmon said.

She noted that snack sales tend to vary among the different banks more than other types of products.

Wilbourn’s decision to invest in the Isochron product just a few years after buying a competitive remote machine monitoring system demonstrates the extent of the benefits provided by new technology.

The airport is a unique customer since it is a captive site with exceptionally high vend prices and customers who are predisposed to using their credit cards.

New card reader: high resolution graphic display

MJW Vending was the first company to use Isochron’s newest credit card reader, noted Bryan Godwin, Isochron’s CEO. The new credit card reader features a high-resolution graphic display screen and processes both magnetic stripe and contactless credit purchases.

All MJW Vending machines now have interactive card readers in addition to bill acceptors and dollar coin payout.

Within each bank, one or two machines have an antenna that acts as a “gateway” for the other machines. The secondary or “client” machines send their data to the “gateway” machine, from which the collective data is transmitted via cellular signal to Isochron’s host computer in Austin, Texas. The cellular signal and connection integrated into Isochron readers is offered by way of an embedded wireless technology developed by Sierra Wireless.

MJW Vending did not have to install any software in its own computer; all information is accessed via an Internet Website.

Two “gateways” are sometimes needed because the vending bank header sometimes interferes with cellular signals.

The remote machine monitoring software tracks machine inventory, along with the condition of all of the peripherals, such as the bill validator, coin mech and credit card reader. It provides “retail efficiency” reports.

The graphic touchscreen makes the credit card reader easy to use. At the start of the process, the touchscreen asks if the customer wants to make multiple purchases. The customer then makes their selection on the touchscreen and the credit transactions are authorized individually in real time. The touchscreen then tells the customer how much was charged to their account.

Isochron handles all the credit card processing. The credit purchases include a 5 percent processing charge.

Flash animation offers new benefits

Flash animation graphics promoting certain products are displayed on the touchscreen during the cashless transaction process. The flash animation content was provided by Coca-Cola Co. and by Isochron. Coca-Cola provided the flash animation for the beverage machines while Isochron provided it for the snack and ice cream machines.

Godwin at Isochron noted that the system gives operators the ability to develop their own flash animation content.

Turner at Coca-Cola Co. said that during the last Christmas holidays, Isochron was able to remotely change the content on the screens. Isochron’s ability to change content does not require additional work on the part of the vending operator.

Graphic touchscreens: an advertising opportunity

The remote monitoring has created the opportunity for brand marketers to target locations with specific messages, noted Jeff Busch, a director of on-premise business development at Coca-Cola Co. He said the marketer can develop content for a specific location and send it to Isochron, which in turn uploads it to the machine.

Wilbourn said the response to the credit card readers has been encouraging. About 10 to 14 percent of the purchases are cashless, Wilbourn noted, of which the vast majority are from the card swipe as opposed to the “tap and go” reader.

Because airport news stands began selling beverages around the same time the card readers were installed, he has not yet been able to say how much difference the cashless capability has made in sales.

“A lot of people may have a $10 or $20 and they have to go straight to a credit card, and you can do more than one transaction,” said Alfred Burse, vending service manager for MJW Vending.

Video touchscreens offer promise

Wilbourn has been studying video screens on vending machines for the last few years. “It can tell the story of whatever product you’re trying to promote,” he said. “If you’re flashing that (image), you can get somebody’s attention.”

While the Isochron readers have 3.4-square-inch video screens, Wilbourn thinks there is also a place for a larger video screen on the machine.

Two years ago, he developed 17-inch video screen and player that was placed at the point of purchase of a vending machine. He placed these devices in 22 machines and loaded them with commercials he downloaded from Internet Websites.

He ran commercials for the NCAA Final Four competition in 2007, for which Coke was a sponsor. “It was part of the spirit of Atlanta being the major sponsor, and we supported the brand,” Wilbourn said. “It was a way to welcome people to Atlanta.”

“I wanted to show Coke what I could do,” he said.

He found it difficult to maintain fresh content and he also encountered some copyright issues. That experiment lasted four months.

Wilbourn has since been exploring the SPIO Media Network, a device that dispenses coupons in vending machines. The SPIO system, which has been shown at vending trade shows, is a natural for a vending operator who happens to own restaurants. “I can bounce them back to Popeye’s and Checkers,” Wilbourn said.

Wilbourn has also explored the KRh Thermal Systems machines, which he thought might find a home in the airport’s baggage claim area. He reasoned it would take four years to recover his investment.

Coca-Cola Co. is keeping a close eye on the cashless initiative at the Atlanta airport, noted John Turner, group director of on-premise business and development for the company. “Treating venders like retail stores is a cultural shift that has to happen in vending,” said Turner. “Mack, being a retailer more than an operator in the trade is evident in how he operates. I applaud Mack. He’s brilliant by applying technology to the business.

“It’s a great way to create a new consumer experience with vending.”

Profile: MJW Vending

Headquarters Location: Atlanta, Ga.
Founded: 2004
Owner: Mack Wilbourn
Number of Machines: 54
Number of Vending Employees: 15
Number of Accounts: 1
Main Software Supplier: Isochron Inc.
Main Bill Validator Supplier: MEI
Wireless Network Provider: Sierra Wireless
Annual Sales: Not revealed

Loading