Vending Operator of the Year: Daniel and Mark Stein, Vend Mark Co., Northbrook Ill.

When Andy and Bonnie Stein started Mark Vend Co. in suburban Chicago in 1962, they had one employee, two trucks, and a few dozen machines that dispensed only cigarettes. Fast-forward almost five decades, and the company looks a whole lot different.

Their sons, Mark and Daniel, have built on their parents’ vision and today run a company that uses state-of-the-art technology to create a high level of customer service, which helped them garner the Automatic Merchandiser 2011 Vending Operator of the Year award. Instead of cigarettes, these days their 1,800 machines vend hundreds of different SKUs, with an emphasis on healthy foods and drinks. Cutting-edge tools such as DEX handhelds, remote machine monitoring, automated inventory “pick to light” technology, cashless readers, and self-checkout markets have replaced the old electromechanical machines and accounting books that Andy and Bonnie used when first starting out.

Despite challenges posed by the recession, recent operator consolidations, and a stagnant customer base, the Northbrook, Ill.-based company has held its own in the tough Chicagoland vending market and stands as one of the most technologically advanced vending operations in the country. Industry observers credit the brothers’ success with their willingness to accept change and to adopt the newest tools available.

The brothers are also known for readily sharing their experiences, both good and bad, with suppliers and fellow operators.

“The Steins are proud of their leading-edge business and they are willing to provide other operators an unvarnished peek behind the curtains,” observed Brian Faley, CEO of Unified Strategies Group (USG), the buying cooperative. “Operators from around the country have made Mark Vend a place to stop on their quest to assess and implement the newest vending technologies and practices.”

“They’re a model of what the operator in our industry needs to be,” added John Ochi, president of Vistar Illinois, the Bolingbrook, Ill.-based product distributor. Ochi has known the Steins for many years and sees them as role models for how to treat customers and employees, and use technology to improve service.

Complementary styles

People who have worked with Mark Vend Co. speak of Mark and Daniel’s quite different personal styles and interests, which can lead to some minor fraternal friction but ultimately serve the business — and their relationship — well. While Mark tends toward a thoughtful analysis of issues, Daniel is more inclined to rely on his own visceral reactions and thrives on a lively exchange of ideas.

“I think the two brothers are wonderfully interesting and extraordinary people,” said Mike Hayes, CEO of MEI, who compares Mark to a classic V8 engine and Daniel to a V4. “They’re both in this family business, but one’s engine is high torque and one’s is high rev. Mark and Daniel have the same strong core value set and strong family background. They can go about things in an individual way, but when it comes to really important decisions they’re guided by shared values. That’s why they can stay aligned — because of their honesty, integrity, and professionalism. Both cars are on the same road; as leaders of the industry they have a vision of how it should be done. They strive all the time, they don’t take short cuts. That’s what makes them leaders.”

The brothers have worked together since they were in school. Mark, seven years older than Daniel, focused on operations, while Daniel enjoyed working on customer retention and sales after graduating from college.

Fortunately, the brothers work well together, and from an early age they assumed leadership of the company. In 1989, Andy passed away suddenly, leaving Bonnie, Mark, and Daniel to run the company. In 1996, Bonnie died from a brain tumor just 14 days after diagnosis, and the brothers, ages 37 and 30, respectively, took over ownership of the family business.

Mark has devoted himself to participating in industry organizations, including the National Automatic Merchandising Association (NAMA) and the Better Vendors Association (BVA) buying cooperative, of which his father was a founding member. He was a BVA president and advocated its merger in 2009 with the Vendors Purchasing Council to form USG, of which he is currently a board member.

Bob Yeomans, owner of Central Vending Co., Inc,. in Janesville, Wis., has known the Steins for many years from the BVA. He noted that Mark has been helpful giving input to technology providers and information about the technology tools to vending operators. “(Mark) knows a lot of the people in the industry and he does a good job of using their talents to help the industry,” Yeomans said.

Daniel is immersed in a variety of community outreach initiatives. He sits on the corporate advisory committee of the Consortium to Lower Obesity in Chicago Children, which brings a wide range of partners together to promote healthy, active lifestyles for children. He is also deeply committed to sustainable business practices that reduce the environmental impact of Mark Vend’s operations. He spearheaded a multifaceted sustainability initiative, which includes dynamic routing to reduce the company’s truckloads and eliminate unnecessary machine visits. Mark Vend also installed Crane Merchant 6 machines and Revision Doors from Vendors Exchange International Inc., both of which feature LED lights that consume less energy.

Daniel has become an expert on the Green Building Council’s Leadership in Energy and Environmental Design, assisting local companies with green construction plans. The company’s sustainability initiative also includes broad use of renewable packaging in its products, Web-based ordering, machines equipped with energy-management devices, and compostable cups.

Students of technology

Through industry organizations, Mark developed relationships with progressive operators in other regions and with product, equipment, and technology suppliers. Together they paid close attention to DEX technology as it emerged.

In the meantime, vending management software providers developed programs that relied on DEX technology. In 1990, Mark Vend became an early customer of Streamware Corp., a software company that has since been acquired by Crane Co.

“Once we chose Streamware, we pushed ourselves to get the best out of it,” Mark noted. While the company experienced some growing pains with its first major technological leap, ultimately the brothers found that Streamware helped tremendously with cash accountability and made compliance with the complicated Illinois sales tax much easier.

Still, Daniel reflected, “It’s not always fun being on the ‘bleeding edge.’”

Beginning with DEX-based cash accounting, the company graduated to item-level inventory tracking. DEX also set the foundation for pre-kitting and dynamic scheduling. After DEX-based reporting was introduced, the Steins introduced remote machine monitoring, using Cantaloupe System’s SEED software.

“They (key operating functions) all kind of fell like dominoes,” Daniel said. “We jumped into technology and then had to grow into it. We track the items sold, as well as money collected, through the use of data generated from each transaction completed in every machine.”

The Steins said their routes service 35 to 40 machines per day, allowing their drivers, who are paid on commission, to earn more.

“We also rely on online surveys and analyses of the buying habits of our customers,” Mark noted. “This information allows us to be the best micro-retailers possible, eliminating out-of-stock machines and consistently offering the most popular items.”

The Steins have also been proactive in introducing cashless readers, and they expect to have nearly 1,000 MEI cashless bezels this year. The brothers are optimistic that the industry will find a solution to the debit card fees announced under the Durbin amendment.

Meanwhile, self-checkout markets have emerged, and once again, the Steins are market leaders.

So far, the company has installed five Avanti Markets and have more on the way. The self-checkout markets are serviced by a separate route from the vending operation.

Going forward

OCS has been one of the strongest growth areas in the past five years, the brothers noted. Their Office Java division features a variety of coffee brands, including Flavia, Starbucks, Peets, Dunkin’ Donuts, and Keurig.

The company was confronted with an added challenge in 2009 when Mark was diagnosed with multiple myeloma, a form of cancer. Thanks to the brothers’ strong relationship and the systems they had built, Daniel was able to handle the management until Mark could return to active duty.

The brothers believe technology has made their operation more efficient and client focused. Even so, profit remains a challenge in today’s economy. The Steins believe that the efficiencies they have in place, their strong team and a strong client base will help deliver a better bottom line in the future.

“We’ve made a lot of good choices that are going to help us continue to flourish,” Daniel predicted.