Cromer Food Service, a 75-route operation based in Anderson, S.C., realized it needed a new strategy for raising prices earlier this year. Given the recent fuel costs, company president Brent Cromer is glad that he assigned one of his managers the task of seeking price increases on a full-time basis. The company has learned it is easier to raise prices in smaller increments on a more frequent basis than the more common method of taking a big jump less frequently.
“You can’t just raise prices without asking permission,” Cromer said. “Most of the time, people are understanding. It (the new system) has been a big plus for us. We should have done it a long time ago.”
New depot, lower commissions
Cromer is also asking for lower commissions in some accounts.
In addition, the company has decided to build a new depot in one of its distant markets — Jefferson, Ga. — where some stops require extra long trips.
Cromer doesn’t think he’s seen the end of price increases this year. So far, the price increases in the machines have not hurt turns significantly, but at some point, he suspects they will.
Vendor negotiates a discount
A.H. Management Group Inc., based in Rolling Meadows, Ill., negotiated a reduced rate with a gasoline station, noted Bob Oplaski, an account rep who oversees the fuel program for the company’s 118 vehicles.
After receiving a promotional mailer from this gas station in Cook County, which has the highest local gasoline taxes in his service area, Oplaski approached the owner and negotiated an arrangement. The station owner agreed to charge the company a per-gallon rate of 5 cents above the station’s cost. “He tells me a nickel over cost is as low as he can operate,” Oplaski said.
This arrangement only applies to those vehicles that don’t leave Cook County, Oplaski said; fuel is usually cheaper in surrounding areas. Under this arrangement, the company normally pays 10 to 15 cents less per gallon than the station’s advertised price.
Oplaski noted that even with this arrangement, his company is incurring much higher fuel costs than a few months ago. He said they are continuously seeking higher prices to offset rising costs, but that the options are limited due to competitive pressure.
Long-term technology offers solutions
Many operators are aware that technology offers new ways to save on fuel, but these are long-term and not short-term solutions. Technology requires an upfront investment.
One technology that many operators have recently added is satellite-based fleet monitoring, known as Global Positioning Systems (GPS), which was examined in the August Automatic Merchandiser. The article noted that more and more vending and OCS operators are using these systems to improve operating efficiencies and employee accountability.
GPS systems save fuel in three distinct ways: 1) They allow the operator to know if unauthorized vehicle use is occurring; 2) They make it easier to determine more efficient routing; and 3) They allow managers to monitor how fast drivers are driving; excessive speed wastes fuel.
McDaniel at McDaniel Snack & Vending has considered GPS, but right now, his company is on “information overload” with its vending management software, and he feels GPS would be difficult to manage.
GPS offers more control over fuel
“The information we’re getting is very valuable about how fast guys are going,” said Jeff Parks, president of CL Swanson Corp., the Madison, Wis.-based vending/foodservice operation serving 10 states. The company has implemented GPS on its routes. Parks said the move definitely reduced fuel costs.
Nor-Cal Beverage Co. Inc., based in Sacramento, Calif., has been looking at new vending software, noted Tim Willbanks, vending director. Rising fuel costs have piqued the company’s interest in a telemetry-based remote machine monitoring solution, he noted.
Remote machine monitoring
Telemetry-based remote machine solutions offer various benefits to a vending operation, including more efficient service schedules. These systems allow management to track machine activity from a distant location. By allowing an operator to poll a machine from a remote computer, the operator can schedule the machine for service when the machine needs it, as opposed to servicing it on a regular basis. This reduces unnecessary service trips.
“We’ve been taking a look at technology to look at how many times we go to a machine,” Willbanks said.