While the manufacturing sector recovered somewhat in 2010 and 2011, vending operators were quick to point out that the workers in these locations were not as willing to spend money as they were prior to 2008. Like workers in other locations, manufacturing employees were less confident about their long-term employment security. In many cases, factories that recalled workers did so at lower wages than in years past.
Profit protection efforts continue
With sales falling and cost pressures rising, vending operators continued to enact profit saving measures in 2011, although the survey indicated these measures were less dramatic than in the previous two years.
Slightly more operators added staff in 2011 than in the prior two years, while fewer reduced staff, indicated in chart 4a. Fiscal 2011 saw the most stability in staffing in the last 4-year period.
Fiscal 2011 also saw fewer operators opt to simply absorb higher costs, although this remained the second most frequent response to higher costs after raising prices, indicated in chart 6.
The need to absorb higher costs was attributed to the limited options operators had to offset rising costs. In 2011, operators reported higher costs for health insurance, wages, benefits, and products.
The National Restaurant Association (NRA) reported that wholesale food prices jumped 8 percent in 2011, the biggest 1-year gain in more than three decades. The aggregate gain in the last five years was more than 26 percent.
The gain in food prices in 2011 was the second consecutive increase following a 3.8 point decrease in 2009, the NRA reported.
Slightly more vending operators rearranged routes in 2011 rather than reduce service frequency, indicated in chart 6. This marked a shift from the prior three years when more operators reduced service frequency.
Elimination of unprofitable accounts remains at essentially the same level, although it has progressively tapered off in the 4-year period.
Rearranging job roles in order to improve efficiency slipped to lowest level in four years.
Fiscal 2011 witnessed more expansion into new services than any in last four years, indicated in chart 9a. Much of the expansion was in micro markets, although some also occurred in wholesale delivery; delivering product to non-vending accounts.
Investment in technology gains
As operators felt their businesses stabilizing more since 2008, many invested in new technology, indicated in chart 10a. More operators recognized that new tools such as DEX-based management, remote machine monitoring and cashless transaction capability can improve sales and profitability. However, because the technologies require a lot of training and carry a long-term payoff, the rate of operator investment has been slow. Technology providers interviewed by Automatic Merchandiser concurred with this assessment.
Nevertheless, more operators invested in new technology in 2011 than any time prior to the start of the Great Recession. This demonstrates both an evolving understanding of the need to adopt new technology and of the commitment that a cadre of technology providers have made to the industry.
Operators also noted that introducing a new technology, be it a cashless reader or a bill recycler, makes it easier to justify price increases to customers.
Technology providers continued to introduce more products in 2011.
Bill recyclers increased in 2011, indicated in chart 10a. This was driven largely by price points exceeding one dollar. Bill recyclers serve a similar purpose as dollar coins. However, many operators have difficulty sourcing dollar coins.
Operator offered mixed views about the success of bill recyclers.
Some said bill recyclers gave an immediate financial benefit since it allowed them to pull free-standing bill changers that hold large amounts of cash.
Many operators, however, said they viewed the recyclers as more of a customer convenience rather than a sales builder.
Some said bill recyclers increased service calls.
Some also said recyclers are not necessary if they use cashless readers. Others, however, said recyclers complement cashless readers in allowing the machine more versatile payment options.
The percentage of machines equipped with cashless readers also increased in 2011, indicated in chart 10a. The percentage, while small, has increased consistently over the past three years.
The increase is due partly to rising retail prices (which support cashless acceptance), competitive pressure, and a stronger understanding by operators of the benefits that cashless provides.