Ragans Merge OCS and Office Products

Joe Ragan's Family Of Companies, based in Springfield, Va., has proven not only that the one-stop-shop concept combining OCS and office supplies can work, but that it offers one of the best models for today's highly-specialized, high-investment OCS business. The one-stop-shop model remains rare in today's OCS industry, but there are a handful of successful exceptions.

The company offers office supplies, OCS, bottled water, business furniture, printing services and packaging services, and is enjoying double-digit growth annually.

Overall, office products and OCS remain separate industries, and most observers believe this will not change due to the different requirements involved in the respective businesses. Office product companies that attempt to expand into OCS face difficulty with the service requirements. Some OCS operators who attempt to add office products face issues with inventory management.

Joe Ragan's Family Of Companies is unusual in that it has mastered both disciplines.

Joe Ragan is a first-generation OCS operator who was fortunate in that his son, Dan, joined him at a time before the office products industry consolidated and opportunity still existed for people willing to learn the business. Dan, now president, spearheaded the expansion into office products, which accounts for 40 percent of company sales.

Being able to combine office products with OCS has created a large customer base which has allowed the company to introduce new and better products as they emerge. Today, single-cup coffee is the fasted growing segment of the multifaceted company.

Humble beginnings

Joe Ragan went into business for himself in 1966 in the one refreshment service that he does not currently provide, ironically: vending. After working for several years for Marriott's hotel restaurant division and ARA's education division, he decided to devote himself full-time to a beverage and snack vending route he had launched as a sideline.

In the late 1960s, OCS was emerging as a new service, and young Joe Ragan saw the potential. He hired his first full-time employee to focus strictly on OCS. "That part of the business grew much faster than vending, and it didn't require as much money," he recalled. The vending mainly served as a support service to OCS and was eventually divested.

In 1971, Joe Ragan was among the founding members of the National Coffee Service Association (NCSA). He was among the cadre of operators who realized that sharing information on products and business practices would result in faster growth.

The first major challenge was the coffee freeze in Brazil that nearly doubled green coffee prices in the 1970s. To preserve margins, many OCS operators sought lower pack weights, which eventually resulted in a lower quality product.

The Brazil coffee freeze creates a challenge

Ragan remembers this as one of the most challenging periods in the OCS industry's history. Competitors in the D.C. area were selling 1-ounce packs. Ragan claims he was among a handful of operators that didn't succumb to this pressure to "commoditize" OCS, even though it was difficult.

The cost crunch of the 1970s did have one saving grace, in retrospect. It taught OCS operators the importance of doing taste tests with customers, Joe Ragan noted. He claims he was able to save accounts by demonstrating the superior taste of a heavier pack weight.

The company moved to its current facility in 1981, taking the first of several suites in the business condominium complex. The nation was in a recession at the time, but OCS was still a fairly young industry and established operators were able to grow.

Ragan did not roast his own coffee, which was a disadvantage against operators who did. To compete, he sought out other product lines, and in 1985 he decided to add office products.