Initially, Friedrich and Peppo utilized an ice cream subcontractor for ice cream. When Automatic Products introduced its glassfront frozen machine, they asked their subcontractor to use it, and when he refused, they decided it was time to get into the frozen machine business. "That's a big investment in infrastructure, but you add revenue. It didn't cannibalize anything else," Friedrich said. They offer both ice cream and frozen food in these machines.
Growth by acquisition
As the company grew, Friedrich and Peppo faced the challenge that many growing companies face; fewer available locations. They realized that acquisition offered a good way to grow. In 2000, they made their first acquisition, HAV in Southfield, Mich. They were able to improve the density of their routes.
The hardest part of the acquisition was getting the new employees to accept new ways of doing things. Sterling Services pays drivers on commission, and also uses planograms for beverage and snack machines that mandate most of the facings.
Technology brings benefits but also raises questions
Friedrich and Peppo also kept an eye on the increasing benefits of vending software. They recognized the importance of using category management for managing their snack and beverage machines, and they have utilized these programs for designing their machine planograms.
They use handheld computers in their warehouse, but not on routes. They continue to rely on manual meter readings. "You spend money to collect the data, but does that translate into a benefit?" Friedrich asked.
As for cashless vending, they are using Debitek's closed system in two captive locations, but they are not ready to expand into "open" systems with credit card readers. "As that technology gets less expensive and more cost effective to deploy, that's a real good thing," Friedrich said.
And while they are pioneering new technology with their "Fast Track Convenience" initiative, they have yet to expand into remote machine monitoring. "We love information and technology, but nobody's made a good enough argument to make the next leap," said Friedrich.
Need for new services arises
As the company grew, Friedrich and Peppo realized they needed to provide manual foodservice to win larger accounts. Even though both had spent years working in restaurants, they did not feel they had the expertise needed to provide a high quality foodservice program.
The partners spent a year researching contract foodservice. They visited cafeterias, queried corporate foodservice managers, and read foodservice trade publications.
They realized that the local contract foodservice market was saturated, even more than vending. There was no choice but to try to win customers from competitors.
They also knew that the leading complaint about existing services was "menu fatigue"; customers knew what to expect every day and were bored. "We've seen some incredibly ‘blah' looking cafeterias," Peppo said.
Their first step was to partner with foodservice operators. But in observing various companies, they did not feel they wanted to partner with any on a permanent basis; none of the companies they worked with was particularly outstanding.
The partners decided to hire a veteran corporate chef to establish their own foodservice program. In 2004, they approached Bakim Pellumbi, who brought 20 years experience as a restaurant chef. Pellumbi and his partner, Joe Hessling, operated a retail deli, Abe's Deli, and did corporate catering. Pellumbi and Hessling signed on as partners in the company.
A restaurant approach to on-site foodservice
What distinguished Pellumbi from other chefs was not only the quality of the food, but bringing a restaurant approach to corporate dining.
Friedrich and Peppo asked Pellumbi to develop signature brands. They came up with the name, "Global Cuisines." "Global Cuisine is a very diversified entrees menu," Friedrich said.
The basic idea behind "Global Cuisines" is to take a high-end approach to foodservice. "Our approach is truly different; we're actually cooking," Friedrich said.
Friedrich and Peppo operate most of their cafés on a profit and loss basis or on a subsidy basis.
Every day, the café offers a new theme. Every café has four to six employees under the direction of a chef. "We don't operate cafeterias; we don't like that word. We want restaurant quality food," Friedrich said.
The café employees wear black jackets, and the prices are higher than in other manual foodservice sites.