Elite Cuisine LLC's micro markets, called E-Marts, are the driving segment in its vending business.
The thing that sets Elite Cuisine apart from other operations is a passion for food. Co-owners Jim Schweppe and Steve Closser describe Elite Cuisine as more of a corporate dining business that offers full scale vending and office coffee service options, than the other way around. So when they decided to add micro markets to the 10-route operation last year, they took everything they knew about food and grew it into a program that’s made them a huge success in the St. Louis and Kansas City, Mo. areas.
In just a year, Schweppe and Closser added more than 20 markets, all filled with entrées and salads prepared under the direction of certified chefs. This attention to quality food has set their company apart from other Missouri vendors.
Schweppe and Closser first started Elite Cuisine in 2004, as a corporate dining company dedicated to providing an alternative to the cookie cutter vending business. “It gives us a competitive advantage,” Closser said. “We’re retail-minded thinkers — we think a little differently than your average vending company.”
They built the company from scratch and went door to door soliciting accounts. They began to add some cashless payment options to vending machines in 2010, but didn’t want to rush into technology.
When micro markets were introduced more than 5 years ago, they took an interest, but didn’t add their first one until 2012. After implementing the 365 Retail Markets system, they collected data for six months and analyzed the findings. During this time Schweppe and Closser also lost an account to a micro market, so they knew they had to take the new system seriously.
They aggressively started installing micro markets in the second half of last year and currently have 22 up and running.
“Our first priority is account retention and customer service, but as far as our strategy, micro markets are our number one priority for the next year,” Schweppe said.
Markets lead to growth
Elite Cuisine has seen 30 to 40 percent organic growth since implementing its micro markets, called E-Marts. Schweppe and Closser believe many operators fear micro markets will replace vending. They argue that micro markets are an additional channel designed to help augment vending costs.
“If vending doesn’t adopt micro markets it’s going to be a problem,” Closser said. “The vending model doesn’t really work with the younger generation. We have to change with the times.”
Elite Cuisine uses vending machines for price sensitive customers, but, with micro markets, customers have the opportunity to get the tactile benefit that convenience stores have by allowing customers to touch and examine product.Additionally, micro markets allow for a price point that rivals a c-store.
“There’s an opportunity for real margins and organic growth if we all manage it correctly and stick to price integrity,” said Schweppe. In an Elite Cuisine E-Mart, a 20-ounce soft drink costs $1.49, for example, compared to $1.25 in a vending machine. Customers don’t mind paying extra money for a multi-product transaction at an E-Mart.
“Micro market customers aren’t vending customers. They’re convenience store customers,” Schweppe said. “[They aren’t] concerned with comparing the prices to the vending machine, [but] comparing it to a convenience store.”
Schweppe and Closser have even declined sales opportunities because the client wanted the micro market prices to match vending. “We couldn’t do it,” Schweppe said. “We could not destroy the micro market segment to match vending prices. We’ve got an opportunity to finally make good margins and keep up with inflationary costs that have plagued the industry lately. We have to be diligent.”
Security measures keep theft low
Theft has not been an issue for E-Marts. Schweppe and Closser have limited their markets to corporate office locations that can afford the right security measures, such as cameras.
“Our customers have an unwritten agreement that if there is a thief in house that they will take care of it,” Schweppe said. “We have an honor sheet that was designed for customer complaints, but we’ve found more customers use it to ensure that their payments go through.”
Vending lives on
Elite Cuisine has a few occassions where an E-Mart and vending machine are both in the same location such as in large campus-style venues. In these cases, Schweppe and Closser have found vending sales have not seen a significant decrease. One large location was bringing in $2,100 a week in revenue from vending. Now, a year later, vending sales decreased roughly 10 percent to $1,900 while the added E-Mart brings in $1,700. Together, the total revenue of the location is $3,600, a 52 percent revenue increase. “That’s enormous organic revenue,” Schweppe said. “Yes, there is a small decline in specifically vending revenue, but with growth of that margin, I’ll take that trade any day.”
Most of Elite Cuisine’s E-Mart locations have been converted from its own vending business. “Our strategy was to get E-Marts into existing accounts,” Schweppe said. “I wanted to ensure our existing customers were receiving the latest and greatest of services available. Now that our current clients are squared away, we’re targeting new business.”
Better staff means better service
Another way Elite Cuisine sets itself apart is pride in its workforce. “We all buy the same products and machines,” Schweppe said. “Our customer service reps that are on the front line are the image of our company and are what make us unique.”
Elite Cuisine doesn’t take hiring staff lightly. There are rigorous background checks and interview processes to become an employee. Those who qualify are rewarded with competitive wages, 100 percent matched 401K plans, generous health insurance and tuition reimbursement. Schweppe and Closser believe this process helps Elite Cuisine find employees who are dedicated to their work.
Health and wellness is trending
Schweppe and Closser have noticed a trend toward wellness in corporate America over the last six or seven years. To fill that need, they have implemented a “better choices for a better you” campaign that denotes healthier products. Each healthy choice item is approved by registered dieticians and fitness coordinators.
“There’s been a tremendous push toward wellness and we need to do what we can to comply,” Schweppe said.
The push toward wellness has started to pay off. “We now sell more turkey burgers than cheeseburgers,” he said, “so it seems consumers are gravitating toward healthier items.”
Locally Brewed OCS
For its OCS, Elite Cuisine uses primarily Newco Enterprises brewers. However, lately the company has been emphasizing Keurig and Tassimo single-serve coffee due to the popularity of single-serve among millennials. Although single-serve coffee represents just 5 percent of OCS business at Elite Cuisine, Schweppe and Closser anticipate the segment will grow to 20 percent in the coming years, in large part due to the boom of millennials in the workplace.
The company also features local coffee brewers in both locations. The St. Louis location features premium coffee roaster, Kaldi’s Coffee, and the Kansas City location features coffee from The Roasterie.
Elite Cuisine plans to continue to focus its attention on micro markets, engaging new clients and continuing to grow its revenue. The company is excited about the success it has seen thus far, and has agreements to install one micro market a week for the foreseeable future.