Faley downplayed the competitive impact of vending management companies on his organization’s members. “Many operators don’t think it’s the greatest of business anyway, due to low margins and many small locations,” he said regarding vending management accounts. “It’s a less than clear issue whether it’s a good thing or a bad thing to be losing this (management company) business.”
BUYING COOPERATIVES DISCUSS MERGING
The BVA is currently in talks with the Vendors Purchasing Council, another buying cooperative, on merging the two groups to improve members’ rebate programs, Faley said. He noted that three years ago, the two groups were negotiating with Sodexho Vending Management, another management group, to form a joint purchasing organization, but those negotiations ultimately ended.
Nonetheless, Faley thinks product suppliers need to be concerned about the health of the independent operator. “The health of the industry in large part is going to be based on the independent operator,” he said. “Overall, it’s not a healthy industry.”
One veteran operator who did not want to be named said he has been able to win business from management companies by presenting customers with statements from the management companies that list how much commission they earn. This can take time, the operator said, because it takes time to get the information in the right person’s hands. He said he got a hospital chain to get rid of a management company this way. The process took nearly three years.
PRESSURE ON OPERATORS VARIES
The amount of pressure that independent operators have felt by the recent Best Vendors’ 2 percent fee depends on the amount of business they have under contract with the management company.
A vending operator in Massachusetts who works with Best Vendors said he ignored the 2 percent request and has not felt any repercussions from doing so. He said this might not be the case for operators who have more business under contract with the management company.
Similarly, the operator has not felt pressured to invest more in his Best Vendors accounts, nor has he seen any shifting of Best Vendors’ business to Canteen in his market.
“We did not have enough business to make a difference,” said another vendor who also ignored the 2 percent payment request but did not wish to be identified.
Jim Brinton, president of Evergreen Food Services in Tukwila, Wash., lost a number of Best Vendors accounts to Canteen, but the majority of them were not accounts that he was anxious to keep. He had acquired this business when he purchased another operation, and only a small number of the newly acquired accounts were profitable.
Brinton, unlike some operators interviewed, said Best Vendors actually became better to work with after it was acquired by Compass Group. He said that in order for the Canteen accounts to earn a fair profit for Canteen, Best Vendors gained a better understanding of operators’ needs.
Brinton was among those Best Vendors’ partners to note that the management company has not followed through with its requests that he equip his machines with remote monitoring capability.
Brent Cromer, president of Cromer Food Services Inc., based in Anderson, S.C., said management company accounts are not among the best accounts. He said the vending management companies are usually not worth the trouble needed to work with them. “They’re out of touch with what’s happening in the vending world,” he said of management firms in general.
ONE OPERATOR’S DIFFICULT STORY
A Matter of Taste, based in Van Nuys, Calif., recently lost Best Vendors business that it serviced since 1990, which company owners Joe and Becky Palazzola blame on the Compass Group’s acquisition of Best Vendors.
A Matter of Taste had been servicing several different retail chains for Best Vendors. Shortly after Compass Group bought Best Vendors, A Matter of Taste was told that Canteen would be taking over all of their accounts. The transition began almost immediately, except for seven locations where the store managers had a say as to who serviced their break rooms.
A few years later, A Matter of Taste was told in November 2007 by Best Vendors that they had to be out of the remaining seven locations by the end of November. The store managers did everything in their power to retain A Matter of Taste, but to no avail, the Palazzolas said. They were told the decision was no longer theirs to make.