Located near Silicon Valley, Associated Services has had to be as innovative as the companies it serves. The family-owned OCS operation, headquartered in San Leandro, CA, was an early adopter to single serve coffee long before it caught on in the rest of the U.S.; it began partnerships with local gourmet coffee shops which have now grown to be national brands; and it started offering an extensive pantry service with more than 1,700 SKUs when companies like Google began upping the ante of workplace refreshment services.
Associated Services is always looking for ways to improve and diversify its business and that recently included making investments such as hiring an advertising agency to change its brand image, creating an online ordering feature and placing its name and logo on its vehicles.
The company evolves with the times and does so while providing the same great service that helped it grow to become a recognized leader in the industry.
“Our region is the center for innovation and technology,” said Tom Steuber, president of Associated Services. “Therefore, we strive to provide an innovative and technologically advanced workplace coffee, beverage and pantry service experience for our customers. They expect the best in service and offerings — we deliver on that promise.”
From vending to OCS
Associated Services was formed in 1972 by Tom Steuber’s parents, Hal and Diane. Hal gained knowledge of the industry from his background working in vending at Servomation, where his own father was a founder. After seven years at Servomation, however, Hal set out to start Associated. By then he knew what it would take to succeed. “My father started with one customer and went
door-to-door on sales calls,” said Steuber. “He did all the work and deliveries himself.”
In the 1970s there were a lot of OCS operations in the California area, Steuber recalled. Associated Services grew through acquisitions during that time, purchasing other OCS companies in order to expand locations and territory.
Steuber grew up in the business, working with his parents at Associated Services when he was in high school. But he wasn’t convinced it could be a lifelong career. “I wanted to be something else,” he laughed. Steuber set off for college and worked outside of the industry for a year after he graduated. In 1986, Steuber’s parents approached him to come and work for the business. “I thought I needed to give it a try before I said ‘no,’” he recalled. Love for the customers and the industry persuaded Steuber to stay onboard, working in various positions within the company.
“The day my dad told me he was going to retire and turn the business over to me was a complete surprise,” recalled Steuber. He had grown to enjoy working in the family business and had learned valuable lessons on managing employees. “The best advice I was given by my dad I actually learned when he was saying it to someone else. He said, ‘Be open to new ideas and new things that can add to or transform your business,’” said Steuber. “And that stuck with me.” Steuber became president of Associated Services in 2005.
The company that began with one man and one customer has today grown to 130 employees and five office locations throughout Northern California.
The gourmet experience
The San Francisco Bay Area has a rich history in gourmet coffee, which means Associated Services’ customers know a good cup of coffee when they taste one. In order to compete in such a market, the company has had to be innovative in a lot of ways. This means offering high-tech brewers that are easy to use and deliver a customized hot beverage.
“People like freshness and espresso-based drinks,” said Steuber. Bean-to-cup machines are popular with his customers who want a gourmet experience. To serve this customer, Associated Services uses De Jong Duke’s Virtu machine, which features a touchscreen with branding and advertising possibilities, flexible drink menus and customizable recipes. The company buys the machines and charges a monthly fee to the location. “The machines are technologically advanced and our customers like that. It’s good, on-demand coffee and espresso,” said Steuber.
As popular as they are, bean-to-cup machine placements are the minority of customers for Associated Services. Prepackaged single-cup is still the company’s most prevalent offering and continues to take business away from air pots. Many of the company’s smaller locations prefer Flavia or Keurig.
What consumers really want when it comes down to it though is a similar coffee experience both in and out of the office, says Steuber. That’s a need Associated Services fulfills with its partnerships with local and national brands.
The company was the exclusive Northern California OCS supplier for Starbucks for many years and it introduced Flavia and Tully’s OCS to the Greater Bay Area. “We also partnered with Peet’s Coffee & Tea early on and now they are a national brand,” said Steuber.
In 2014 Associated Services began partnering with San Francisco-based Philz Coffee, a brand in the third wave coffee movement. “People love it,” he continued. “They like to drink at work what they drink outside of work.”
Most recently Associated Services began offering fresh cold brew in partnership with a local company called Black Medicine, which makes kegs and bottles.
It has been these partnerships with innovative brands, expert coffee knowledge by its employees and a service-focused mentality, among other things, that has helped Associated Services increase its reach to 36 OCS routes today.
The company also transforms to match what consumers crave, involving entry into new segments.
Avenue of growth
There was a time, Steuber recalls, when locations offered just free coffee to their employees; today, that’s not the case for many. In the Northern California region, especially Silicon Valley, it has become standard for many companies competing to retain employees to offer more — not just free drinks at work, but free snacks, too.
“Once Google started offering free things, other companies did so as well,” Steuber said. His customers began asking for snacks and soon Associated Services was in pantry service, which has turned out to be a good avenue of growth for the company. “These businesses do not want to run out of snacks, and that means we have to be the best and make sure that doesn’t happen,” stressed Steuber, who says that in many cases his customers are purchasing three to four times more allied products than they used to.
In fact, Associated Services has 1,700 SKUs of snack product in its warehouse. “It’s like running a micro market but the product is free,” he said. “The customer has money to spend and is willing to offer it as an incentive to get employees to stay.”
A unique offering
Locations enjoy being able to choose the snacks that are delivered to the office for their employees. But they also like ordering and receiving those snacks at their own convenience, said Steuber. In order to adapt with the times and keep up with how consumers spend, Associated Services invested in an online ordering feature where customers can place an order from their account on Associated’s website.
“It’s a feature that consumers expect,” he said. “About 25 percent of our orders come from our online feature.” Though it was a necessary feature, Steuber is worried about consumer expectations since companies like Amazon and Staples can offer same-day delivery. “This isn’t traditional competition like it used to be,” he continued. “Where the others can offer same-day delivery, it’s difficult for our company to do. It’s an issue that I’m concerned about and we’re looking for a solution.”
Although it’s a challenge that is front-of-mind for Steuber now, Associated Services has had experience getting creative to pushback against competition.
When bottled water companies began to grow in the 1990s, Associated grew concerned that those companies might extend into coffee service. Rather than wait for that to happen, Associated Services decided it would expand into water, instead.
The company today owns and operates a bottled water plant. “The equipment is simple to operate and is inspected by the state of California,” said Steuber. “It’s a viable source of income for us but it’s not growing.” Rather, Steuber sees his locations switching to point-of-use water and water filtration, something Associated offers as well. “There is negativity surrounding bottled water because of its environmental impact and it takes up a lot of space in the office,” he said. “People also don’t like to change the water jug.”
Water filtration is about 12 percent of sales per year for Associated Services.
The employee difference
Despite its range of offerings and its ability to change in a growing industry, Associated Services’ success has been due to its employees, said Steuber. “All of our employees are experts at what they do,” he said. “They are the reason we grow each year and nothing else can take credit for that.” Steuber points to the company’s low turnover rate. Employees average 10 years with Associated Services. This is, he believes, due to the strong company culture he and his parents have tried to create. “I learned early on that I have to rely on the people I work with and that includes delegating tasks, giving responsibility and trusting employees.”
The company is growing 10 percent each year and Steuber finds there is more hiring and training going on than ever before.
In the coming year, those at Associated Services will continue to watch the competition and analyze ways in which they can transform and diversify the company to remain an industry leader — all while keeping customer focus and service at the center of the operation.
Operation Profile: Associated Services
Headquarters: San Leandro, CA
Number of employees: 130
Number of routes: 36 OCS routes
