Some reasons for OCS operators to be thankful in 2022

Nov. 15, 2022
OCS operators have been waiting a while for something to be thankful for, and finally, they have some reasons. Based on conversations at the CTW Show in Las Vegas, the office coffee service business is coming back.

In all my years of writing for publications, a column with a seasonal theme always seems to be a hit. In 2018 and 2019, I wrote columns about why convenience services operators should be thankful. I shelved the idea in 2020 and 2021 for obvious reasons.

OCS operators have been waiting a while for something to be thankful for, and finally, they have many reasons to be encouraged. Based on conversations at NAMA’s Coffee, Tea & Water Show (CTW) in Las Vegas, the office coffee service business is coming back.

Check out the list from 2019 that was published just about four months before the world was turned upside down by the pandemic. It gives a little historical perspective on just how much can change in three years. I have added a 2022 perspective to each item on the list.

Operator’s thankful list for 2019 – with a 2022 perspective

2019 item: Be thankful for the increasing value of your company. According to industry business brokers like Mike Kelner of VBB Advisors, following a flurry of mergers and acquisitions activity in 2018, there was a supply and demand issue in 2019 – new players in the game (convenience store companies and bottlers), and valuations were higher than ever.

2022 perspective: As sales rise, Kelner notes that he expects a huge rise in valuations and plenty of M&A activity in 2023. That’s good news and something to be thankful for if you are part of that “tsunami of baby boomers” who have been wanting to sell their business and move on to the next chapter of their lives.

In a recent Q&A I did with Kelner, he says, “As always, you have the national companies. Sodexo is a new player in the market having acquired Accent Foods. They're an active and well-funded buyer. Surprisingly, Aramark is back to buying vending in certain markets, and as you and I both know, they've been in and out of vending a few times in our history, but they're certainly back. We have some private equity-backed groups that are buying. We've also sold businesses to large regional operators.”

When asked, did anyone get out of the game in 2022, Kelner adds, “What I am seeing is that smaller players are not getting transactions done. I think to a large extent, it's very difficult for them to get funding. A smaller operator coming out of the COVID period doesn't generally have the financials to support bank financing. Most of them also coming out of COVID don't have the cash to do it on their balance sheet.”

2019 item: Be thankful for the hot new trend in coffee – prices were down, margins were high and customers were clamoring for local roasters. For operators who are willing to embrace this “fourth wave” of coffee, the opportunity is enormous.

2022 perspective: Prices are now way up, but customers are still clamoring for product from local roasters – more than ever before. Special orders should mean excellent margins for operators.

2019 item: Be thankful for “Selling Convenience Services” – an online course launched in 2020 from NAMA. Full disclosure, it was written and narrated by me. I hope that operators embrace it as the convenience services sales training manual and business development playbook. Packed with about 200 valuable, specific nuggets of information, Selling Convenience Services is designed for operators who sell, operators who have a sales team, sales managers and of course, sales reps – both novice and experienced. NAMA has made a commitment to helping operators develop elite sales reps.

2022 perspective: The course was released, and it is still available for about $300. Use discount code B2B10 to save some money. Those who have taken the course, rookies and veteran operators alike, have given positive reviews. Yet, this deep dive into selling convenience services has been underutilized.

2019 item: Be thankful for tech savvy newcomers – Young investors are being attracted to the convenience services industry. These newcomers aren’t family members of operators, they are part of investment groups who, as Kelner points out, “Can’t resist the opportunity to get in on the ground floor of a technology-driven industry.”

2022 perspective: If there was one takeaway from the 2022 CTW Show, it is about technology and creativity. From advanced water systems to ice machines, to dazzling single-cup solutions, the OCS business is primed for a big comeback driven by technology. Good example: the ansā micro roaster, which provides on-demand, fresh roasted coffee.

2019 item: Be thankful for the improved image of convenience services – Our industry has a tremendous positive buzz now associated with it. Once known for cigarette vending, junk food and sugary drinks, the convenience services industry has a new image that focuses on providing healthier snacks and beverages, sustainability, artisan-roasted coffee and creating breakrooms that reflect a company’s corporate culture. We’ve come a long way as an industry.

2022 perspective: More than ever, employers are recognizing the value and importance of having a reliable OCS and convenience services partner to create an exceptional office experience, as many try to minimize work-from-home and maximize return-to-office (RTO).

Just about every operator I spoke to at CTW in Las Vegas said the same thing regarding return-to-office. It’s happening slowly now, but employers at targeting Q1 of 2023 for a big return of workers, which points to a big comeback for OCS in 2023.

Happy Thanksgiving! 

ABOUT THE AUTHOR

Bob Tullio is a content specialist, speaker, sales trainer and business columnist who advises entrepreneurs on how to build a successful business from the ground up. He also specializes in helping suppliers connect with operators in the convenience services industry - coffee service, vending, micro markets and pantry service specifically. Tullio’s b2b Perspective Channel has developed a loyal YouTube following. 

Tullio delivers this promise to any company that hires him for a 30-minute or 1-hour Zoom call: "One short session with me will elevate the performance of your sales team.”

Tullio can be reached at [email protected] or 818 261-1758.

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