VendingMarketWatch Blog

Hiring the right person?  Improving performance?  Helping Managers succeed?  Tell us what keeps you awake at night and we will make some suggestions that will ultimately let you get more sleep!

Hope to hear from you soon!

Regards,

Dave “Mac” McCaffrey

Many vending operators are hesitant to invest in cashless hardware because they are not convinced that they will realize a reasonable return on the investment. This is understandable.

However, as a person involved in selling cashless vending systems, I can attest that there are benefits to vending operators. Vending operators who commit themselves to this over time are realizing a good return on their investment.

Selling your account on the benefits of a credit/debit card purchasing option will allow you to raise the price of your products and if done correctly, the account will be more than willing to pick up part of the cost of the card system.

What are the benefits of credit / debit card program for your customer?

1. The time to purchase an item is significantly reduced, especially utilizing the new “tap and go” cards. The reduced purchasing time allows the lines to move quicker providing your customer’s employees more time to enjoy their meal during their limited break time.
2. Employees are able to purchase a more variety of items even if they do not have the proper cash denominations. The benefit to your customer is increased productivity and morale as employees will stay within the facility for lunch breaks.
3. Verifiable on line sales tracking from total cash and credit sales down to the transaction detail level. Detail transaction information includes the transaction amount, whether the transaction was cash or credit, the time the transaction occurred and the purchased item’s column number. Information that you can provide to your customer if you wish.
4. For the commission conscious account, the sales increase due to the sales of higher end products, the higher amount of sales per transaction, the increase in multiple product purchases per transaction and finally the ability to offer higher prices for all items all comes down to increase commission dollars for the account.

The benefit for you, the operator, is that unlike normal price increases where unit sales go down, with a cashless option, your unit sales should go down less if not stay the same allowing for additional revenue. Unit sales will go up at locations where pricing remains the same. This will help to offset the costs for a cashless system in no commission situations where prices are at proper levels.

Determining which accounts are profitable for a credit/debit card vending program can be done by simple testing and a look at the demographics of the account. The younger generation is a proven user of credit/debit card purchasing options.

Locations where a younger population exists would be college campuses, entertainment venues such as amusement parks and movie theaters. Transportation and hospitality locations such as airports, train stations and hotels have been successful due the fact that customers who use these services are stronger users of payment cards. Corporate offices with a younger, higher than average income could be potentially profitable locations. Finally, health care facilities such as hospitals have also been proven as decent accounts for credit/debit card programs based on the percentage of card transactions versus overall sales. You should find that the percentage of card transactions to total sales will range from 15 percent to 50 percent with an average of around 20 percent.

I am interested in your comments and I would like to answer your questions on how to make a cashless program profitable for you. My background is in vending operations, equipment manufacturing, accountability software and cashless solutions. I look forward to hearing from you.

There is no question that loss prevention has become more important in the vending and foodservice industry. Given the challenging times that operators are facing, the ability to reduce if not eliminate loss is one of the greatest revenue enhancing opportunities that exists.

The good news is that there are more tools available to accomplish this nowadays. Loss prevention is my specialty, and I look forward to sharing my insight with vending and foodservice professionals.

Vending – Cafeteria Loss Prevention has been recognized for what it can be, in company after company: A significant residual Profit Enhancement reducing the Cost of Goods1% to 3% in two to four quarters, remarkable results that has become part of the day to day operating reality and the culture of these companies.

As Pogo once said, I have seen the enemy and he is us. And so it is with the progressive path an incorrigible segment of a Vending company’s employees will climb.

As the AM blogger for Loss Prevention I hope to facilitate the internet discussion on a slice of the business that can transform the bottom-line.

The vending business has changed, and you must change as well.

The need to understand change in your industry may seem obvious. However, companies misinterpret clues and arrive at faulty conclusions all the time. Despite all the talk about the need for organizational agility, an astonishing number of businesses stay stuck in neutral when they need to implement new strategies. It is a business certainty that if you stay in place, the competition will run over you.

Your company needs to be aligned with the changes taking place. You need to have a strategy in place to do this. This is what I hope to accomplish in my blog, “Growth, Profitability and Acquisitions.” You don’t need a history lesson…or maybe you do!

Close your eyes…you’re are in the past, in the room as these events as happening.
As reported in the New York Times:
May 9 1914
Aiming for efficiency a merchandise vending machine, has been put into use and is attracting considerable attention from shoppers patronizing it. Entirely made of steel and electrically operated, it sells merchandise from 6 cents to 25 cents. The machine requires only casual attention from one employee to keep it in operation.

November 8 1948
Machine expansion into soft drink cup machines predicted to be practically limitless. There is strong trend away from bottle vending machines which have a higher source of accidents. Machines have come long but there are still problems when dispensing more than 4 drinks a minute and complicated service procedures. The average gross income to machine operators is 2 cents on every 5 cent drink.

November 30 1949
Vending machine men told taxes are trending towards lower levels. Representatives outlined a new NAMA service that will aid vending machine operators in understanding their costs better. Business is excellent, especially in the cup beverage and cigarette machines.

November 15 1951
The time is approaching when vending machines will outnumber retail sales people. A new giant vending machine has been developed which is capable of selling 25 different packaged items, it has adjustable pricing and can give change.

February 18 1953
The increasing conditioning of American people to wait on themselves is significant. Items sold through machines will quadruple within the next few years. Low cost, impulse items offered in high traffic locations are best. Chewing gum sales are heaviest in the morning and evening rush hours when people are nervous.

January 3 1956
While growing in popularity vending machines are still supplement to cafeterias. Many factories report that they had cafeterias and mobile carts for food but also use vending. More and more companies are using vending machines to feed employees.

October 16 1957
A major marketing shift maybe shaping the carbonated beverage industry with vending machines possibly dispensing beverages in cans. The problem has been the need for a can opener that will sterilize itself.

January 6 1958
Industry tops 2 billion for first time. Machine sales of coffee continued to gain.
A true robotic restaurant capable of delivering on-a-plate meals from frozen storage to ready to eat in 20 seconds may be achieved by 1960.

June 21 1959
Formerly at work beverage was offered in barrels sawed in half, washtubs or other large vessels. Now there are 2 types of beverage vending machines in use, bottle and cups. The ratio of cup to bottle sales will continue to increase.

October 21 1962
The machine displayed at a merchandising convention is 9 feet high, 5 feet wide and 5 feet deep and is billed as the world’s largest vending machine. The machine makes possible the automatic vending of refrigerated foods, sundries, housewares and textiles. It is called the dial-a-sale.

February 19 1964
Stockholders of a major vendor of cigarettes were told that the surgeon generals warning about the danger of cigarette smoking probably would not affect cigarette sales. The spokesman said he is very optimistic and expects continued growth in vending sales and income.

March 15 1964
Search for safe smoke picks up. There are indications that the sales decline is leveling off and that a rebound to pre surgeons general report levels is in the making.

January 15 1967
A record amount of new equipment was shipped by vending machine manufacturers, more than double the shipments in 1955. Shipments of single cup, fresh brew, coffee machines and canned beverage vendors are up. This indicates the healthy growth of the American vending industry.

September 2 1965
Servomation reported record profits. The continuing trend towards full service installations which provide meal service and coffee is reflected in financial statements.

(Note: Macke, Interstate, Wometco, Zabo and Automtique, also had a good year)

August 18 1980
Beleaguered by factory layoffs and a downturn in the economy, the vending industry is predicting a plunge in unit sales. Plants and factories count for 47% of vending sales. Some vending companies, with sales off as much as 40% are laying off employees for the first time.
As you examine this chronology of events what goes through you mind ?

How could they have been so wrong ?

Couldn’t they see it coming ?

What could have been done differently ?

What can we learn from it ?
They were on the right path all along, they lost their audience ?

What happened: 4 major factors which brought about the decline of an industry

• Deindustrialization: factory and plant locations gone, smaller accounts
• Legislation: cigarettes gone, school vending now limited, taxation
• Competition: bottlers as competitors, pouring rights agreements, convenience store encroachment, intensity of vending companies chasing fewer accounts to survive
• Economy: end users have less discretionary income and spend less, increased costs of fuel and product

What’s next?

The natural life cycle of all products and services flows and ebbs with emerging technology and the often fickle needs of the marketplace.

Telephone booths, typewriters, polaroid cameras, fall by the wayside to be replaced by Ipods, e commerce and blackberries.

Where the vending industry now must be accepted as the normal evolution and progression of things, it has not or will not fall by the wayside. It will continue into the future as a new and much improved delivery system for those who embrace change.

Human resources remain one of the most critical aspects of successful operations in the vending industry. Much has changed in product, equipment, technology, and operations, all of which have raised the bar on the capabilities required of the people working in our businesses.

Finding and keeping the right individuals for all positions is an area that requires utmost attention.
Most companies rely on resumes and interviews to find top performers - the best person for the job. But, according to the Michigan State University’s School of Business, using these methods only produces a quality employee 14 percent of the time. Not only are those poor odds, but the cost of this “bad hire” comes out in lost wages/benefits (paying the employee for not doing the job) as well as any lost revenue (lost clients, theft, etc.) associated with the poor hire. Add in the drop in productivity that results when the position again becomes vacant.

Which brings us to the subject of the first installment of my blog: What can operators do to improve their hiring?

“Use a 6 Pak….of hiring tools” because use of interview only yields a 14% likelihood of obtaining engaged employee.

1. Interview (you want to hire someone, they need a job: no wonder there are bad hires)
2. References (many companies reluctant to provide much information)
3. Background Check (imperative to confirm data represented on resume or application)
4. Learning Skills (difficult to determine in interview but critical to long term success)
5. Behavioral Traits (candidate on best behavior during interview; what will you find after 60-90 days?)
6. Occupational Interests (lack of matching interest in job will turn up 60-90 days after hire as disinterested, un-engaged employee)

Use of the whole 6 pak yields a 75% likelihood of obtaining an engaged employee. More likely to be engaged, which will increase productivity and decrease turnover.