CRH Catering: Even Big Players Must Change to Survive

Following several decades of expansion through acquisition, this Western Pennsylvania leader joins the VMI coalition of independent operators to learn to be more efficient and provide greater customer value.

In today’s vending market, operators need to invest more to remain competitive.

Some operators envy those who have the resources to invest. But from the vantage point of a large size company such as CRH Catering Co. Inc., based in Connellsville, Pa., the choices are anything but simple. A company with eight branches doing $35 million in annual sales has plenty of resources, but knowing how to invest them is a challenge not everyone will envy.

In an industry as competitive as vending is today, with profit margins smaller than ever and few growth opportunities, there is no foolproof way to guarantee success.

Brothers Joe and Pete Cordaro, the middle aged sons of founder Guy Cordaro, believe that the business operating model they have followed over the years is being challenged. And while technology offers new products, services and operating efficiencies, many of these innovations, such as cashless readers and remote monitoring, have not been adequately proven.

Meanwhile, suppliers are making life harder by raising prices more aggressively.

And while operator consolidation has reduced the number of players, the strongest have survived, leaving a market place that is more competitive than ever.

Life at the “top” is anything but easy.

In response to all these challenges, CRH Catering Co. has joined the Vend Marketing Institute (VMI), a coalition of 16 regional leaders in non-competing markets who act as a buying, marketing and information sharing organization. For the Cordaro brothers, joining the VMI was almost a necessity. The group has allowed them to focus on addressing the most pressing problems that large independents face.

INDEPENDENTS FACE CHALLENGES

“It’s still viable to be an independent vending operator,” said Joe Cordaro, president, giving thanks in large measure to the VMI. The VMI, as a buying group, has provided some additional leverage with some product suppliers. It has also focused attention on adjusting service levels to improve profits. “Although the margins are thin, there’s still enough left to provide a pretty handsome job,” he added.

In the meantime, the Cordaros believe there will continue to be more operator consolidation. They believe vending companies doing between $500,000 and $5 million in annual sales will be rare. “When there are fewer operators, it’s going to be better,” Joe Cordaro observed.

1967: THE VENDING BUSINESS BEGINS ‘BY ACCIDENT’

Both brothers started in the business shortly after their father, the late Guy Cordaro, established the company in 1967. Guy Cordaro was a successful restaurateur who got into vending by accident. A big industrial customer asked Guy Cordaro to run their two cafeterias because ARA Services (now Aramark) had raised coffee prices from a nickel to a dime.

Guy Cordaro immediately learned that vending is more profitable than manual foodservice, so he began seeking vending accounts in the western Pennsylvania area.

The initials “CRH” in the company name stand for the last names of the owner, his accountant and his lawyer. The term “catering” is a misnomer in the company name; Guy Cordaro expected it would invite fewer truck burglaries than “vending.”

Unlike many startup vending operations, CRH Catering was involved in full service vending and manual feeding from the very first day. Guy Cordaro had a background in both food processing and foodservice, and he understood all aspects of food manufacturing and distribution. He hired vending equipment technicians and experienced route drivers.

The Cordaro family’s restaurants initially doubled as commissaries to provide fresh food for the new vending operation.

“What differentiated us was our freshly prepared food,” Joe Cordaro recalled. This holds true to the present day.