VendingMarketWatch Blog

A difficult business climate can challenge one’s commitment to quality, which is something everyone in our industry claims to focus on. I recently had a conversation with a product supplier about the impact the economy is having on his business. He commented that the recession has made refreshment service operators more aggressive price shoppers than any time in recent memory.
I argued that coffee service operators have learned from history the importance of not “commoditizing” their product, which is why coffee service sales have held up better than vending sales in the current recession.
During the 1970s, many coffee service operators switched to lower pack weights to save costs. Their sales suffered, and it took years before they learned to focus on quality. Once they did, their sales and profits recovered.
Coffee service operators, I claimed, recognize the consumer’s demand for a quality coffee service and know they must provide high quality products.
The supplier responded that coffee service operators, as a rule, will change their buying plans if they can get a lower price.
I, in turn, responded that operators always want the best value for their money, but based on all evidence available, they have not “traded down” to lower quality products. I further suggested that because a lot of coffee service today is provided by vending operators (as opposed to dedicated coffee service operators), these operators are less quality focused.
I maintained that dedicated coffee service operators are not trading down en masse, evidenced by the fact that coffee service sales have held up much better than vending sales during the recession.
I suggested that it may be difficult for a supplier to see the distinction in behavior between dedicated coffee service operators and vending operators who do coffee service.
We continued our discussion for a few minutes more and ultimately he did agree with my observations.
But I wondered: Operators, like their suppliers, are facing a more cost conscious customer these days. Some customers are asking for new options to save costs.
Operators and suppliers alike need to realize the demands are more diverse than ever, and this calls on them to listen to customers more carefully.

Back on 11-18-09, I asked vending operators to give me one good reason why they don’t belong to a national or state vending association. Not one operator offered a reason.
Association membership has hit an all-time low, and supplier members are picking up a disproportionate share of  the tab.
If any operator remains unconvinced of the need to support their associations, the Tri-State Automatic Merchandising Council meeting in King of Prussia, Pa. last week gave some strong reasons. Several speakers updated attendees on some critical national and state initiatives that have major consequences for vending operators.
Pam Gilbert, manager of the National Automatic Merchandising Association (NAMA) eastern office, gave an update on how NAMA is trying to make the calorie disclosure rule in the national health care bill manageable for vending operators.
Any operator who hasn’t paid attention to this requirement, which is expected to become law in some manner, has had his head in the sand.
Tom McMahon, former NAMA chief counsel who is now working on retainer for the Tri-State council, reviewed efforts to change the 48-inch vending machine access rule in Pennsylvania. This rule has already been enforced in newly-constructed buildings and it has the potential to become a major headache for all Pennsylvania operators if it isn’t resolved.
With legislative and regulatory issues like these to contend with, vending operators need to reconsider their apathy about joining associations.
Operators are struggling financially, but they haven’t seen anything yet if these issues aren’t resolved.
And it isn’t going to get done without associations.
Most operators consider themselves ethical business people.
So I ask: is it ethical to allow a minority of operators foot the bill for everyone else?
Do your part now!

Over the past two weeks, a veteran vending operator presented his doubts about vending technologies introduced in recent years. Dominic Finelli, owner of Custom Vending Services in Beltsville, Md., expressed doubts about pre-kitting, remote machine monitoring, item level reporting, tracking column sales and cashless vending.
Based on the number of podcast downloads, many of you listened to what he had to say.
Some of you – operators and technology providers alike – asked me why we hosted these interviews.
If technology is important to the industry’s future, shouldn’t we all support it?
Why should VendingMarketWatch give a forum to a skeptic?
My answer is twofold:
1) Dominic Finelli is an experienced, successful operator who pays careful attention to his financial information, and he is not convinced the products being marketed will deliver the promised results.
2) He is not the only operator who believes industry forums have not done enough to challenge the claims that technology providers make about their products. Many operators hold this view.
I do not agree with the second point, but I realize many operators believe it, so I feel an obligation to discuss it.
New technology tools are expensive, and they take a lot of study.
Depending on a company’s operating procedures, introducing technology can require changing established procedures. There is usually a lot of training involved.
Introducing technology also relies on good communication between the provider and the customer. 
During the podcast interviews with Dominic Finelli, I invited all technology advocates to come forward if they want to answer the questions raised. Several providers took me up on my offer.
They are preparing their responses.
In the meantime, if there are other industry issues anyone feels need further exploration, please let me know.
These podcasts are educational for all involved.

Adversity is part of being in business, but some people in our industry recognize it as a fact of business life. Talking to these people can invigorate you.
I checked in with my old pal, Charlie Ray of Ray Coffee Service in Savannah, Ga. Charlie turns 69 this month and he’s operated his two-man business since 1970 and he’s weathered the ups and downs over the years.
Charlie was on a roll last year before the recession pulled the rug from under his feet. His biggest account decided they no longer wanted to provide free coffee. Charlie had just placed a lot of single-cup brewers at this account. Then they decided to cut expenses. Charlie’s only option was to install payment mechanisms on these machines. This meant an added expense with the understanding that sales would be cut in half.
The customer wanted to offer payment cards to employees so they could cover some of the cost of their office refreshments.
Charlie studied up on his options. He learned about prepaid card systems from Vendors Exchange International Inc., Microtronic US, and Multi-Max LLC. He ended up investing six figures in prepaid card systems.
And the big customer has loved it. It has also helped Charlie recover some of his sales and given him something new to offer his other customers.
Getting into cashless wasn’t easy. Charlie is turning 69 and he isn’t the most technology savvy guy in the industry. But he knows the importance of educating himself. He was one of the first coffee service operators to introduce single-cup brewers in Savannah.
By listening to customers, Charlie also learned that many of them want to be able to place orders online, so he recently launched a superb looking Website, http://raycoffeeservice.com.
What’s great about guys like Charlie is they prove how great our industry can be. There are always new and better ways of doing things that allow an operator to be the solution provider for his customers.
Times may be tough, but opportunity abounds.