How One Operation Used Technology To Fuel Growth

May 15, 2017

Five years ago, WeServ Inc. had a com- technologies that improved sales and saved fortable market share in Chico, CA. The current owner, Todd White, could have maintained the status quo in the small vending company his father built. It was a great operation dedicated to excellence and built on the reputation of his father’s hard work. However, White had no intention of simply coasting. Instead, he saw a way to grow by adding various time (and money) in the warehouse and deliv- ery. Now White is approaching the $4 million mark in annual revenues, employs 25 people and is rapidly outgrowing his warehouse due to aggressive micro market growth. A lot has changed in 5 years, but not WeServ’s dedication to its customers, which is stronger, and more efficient, than ever.

From grocery to vending 

The White family moved to Chico, CA in 1975. White was a child, but he remembers the family's two grocery stores that catered to local shoppers. Once the large regional supermarket came in, White's father, Ron, couldn't compete. Therefore, he decided to pivot into a new business -- video and arcade service. The family expanded into vending with the acquisition of Glyn Pye Vending in 1979. It was a one-man operation with 10 accounts. With Ron at the helm, the company grew steadily, becoming a Canteen franchise in 2003. 

White joined his father in the 1980s after having traveled and tried a few other careers that didn’t quite fit. He loved working with his father. “He is a great man,” said White. “He ran a route himself into his 60s.” In retirement, White and his father play golf weekly.

It was the succession to the next generation as Ron retired, and evolving consumer needs, that sparked an opportunity to change for WeServ in 2012. White felt very strongly that a vending provider had to “follow the money.” To him, that meant being able to accept any form of payment at the vending machine, especially cash- less. He set about investing in card readers and today has cashless on 80 percent of machines. White feels it is one of the most significant tech- nology investments he’s ever made. “It drives up sales at the vending machine,” said White. “I would rec- ommend putting a card reader on your machines to anyone.”

WeServ uses two-tier pricing, charging a dime for patrons using a debit and credit card. He feels that is a good price to cover fees and cash- less service without demanding to much from vending machine users. All his card reader devices also sup- port mobile payments, such as Apple Pay. This is important as White sees mobile gaining traction in the vending segment. “This year 10 percent of all my cashless transactions were made using a mobile device,” said White. “That is a significant increase over a year ago.”

WeServ services many vending machines in higher learning loca- tions, such as junior colleges and universities. These have a higher mobile payment usage percentage and White feels their habit of buying from a vending machine with their mobile device won’t stop once these students graduate. Therefore, he is ensuring that mobile purchases can be made across his business, including micro markets, by replacing a few early card readers in kiosks that don’t currently support mobile payments.

A new level of control 

Two years after investing in cash- less, WeServ embarked on another technology journey as they added a vending management system (VMS). “VendMAX changed our world quite a bit,” said White. In fact, it was such a large project that White called in long time employee Jeff Schmaljohann to help.

Schmaljohann began his career in vending as a route driver for White’s father in 2000. After show- ing a high degree of technical ability servicing the vending machines and learning about the new technologies, Schmaljohann was pulled off routes to be a full-time technician, being made the lead technician in 2009. His knowledge of the operation and positive attitude about technology made him the perfect person to help with implementing VendMAX. White made Schmaljohann general manager in 2016.

“Without a vending management system, the drivers are in control of the company,” said Schmaljohann. “You are at their mercy, which can be good or bad.” All that changed with the VMS. “With VendMAX, I have complete control,” he said.

The VMS allows Schmaljohann and White to review vending machine service frequency, track product move- ment, account for money collected and much more. WeServ started prekitting using the forecasting tool which saved money and made for more robust routes. However, the hardware used to collect the vending machine data made implementation a headache. “The biggest hassle was handhelds and DEX cables,” explained White. “It killed me. We couldn’t keep up with cables breaking.”

Frustration with the hardware led to a search for a handheld replace- ment. WeServ chose GIMME. “I love GIMME, because the drivers no longer complain about the handhelds not working,” said Schmaljohann who finds happy drivers do a better job. “GIMME allows the drivers to work with an iPad mini instead of the handheld,” added White. “The difference is night and day. Not to mention the benefits of using Bluetooth instead of a physical connection.”

Schmaljohann heard non-stop complaints about the handhelds, from the little touch screens that needed a stylus that would break or go miss- ing to accidentally DEXing the wrong machine. This last caused many errors that affected commissions for the drivers, taxes, warehouse SKU management and a lot more. “If you are on the beverage machine, but DEX the snack machine, your numbers will be way off,” said Schmaljohann. With the handhelds, there would be no way to catch it until the next day.

Because GIMME uses Bluetooth, the driver taps the machine to start the data collection process. There is simply no way to DEX the wrong machine, according to Schmaljohann. GIMME feeds the DEX data from the vending machines into the WeServ VMS seamlessly,

allowing for the beneficial reporting, forecasting, etc. A photo of the vending machine, complete with planogram, displays on the iPad making it easy for a driver to restock without having to remember what item went into a sold out spiral or what the correct par level is for every spiral. “I estimate it cuts down on vend visits by 2 minutes per machine,” said Schmaljohann. “When you service 20 to 30 machines in a day, that’s a whole hour of time saved.” Among the other features Schmaljohann likes about the technology is the easy-to-use interface. “GIMME has been really great. I like bring able to change the schedule while drivers are out in the field — something I could never do with a handheld,” he said.

Customers have noticed a difference in WeServ’s service. “We have heard that customers noticed more consistency with products. It is no longer the driver guessing what should be in the machine, it is all forecasted, prekitted and planogramed now,” said Schmaljohann, “and drivers love it too.”

Better service with micro markets 

While continuing to look for investments that would benefit WeServ and better serve customers, White decided it was time to add micro markets. The company placed its first micro market, an Avanti Markets unit, in 2015 and White never looked back. “I like micro markets,” he said. “It lets me play with merchandising, design and offerings.”

White uses his grocery store background to a higher degree in micro markets than he ever could in vending machines. He concentrates on store flow, design, product placement, adding local items and being creative with displays. “There are lots of opportunities for different options in a micro market,” said White. “I think it’s a lot of fun.” However, White warns that you can’t treat micro markets like a vending machine. He explains that a traditional vending machine operator might be tempted to put in a few prepackaged pastry items, common snack and candy options, national brand beverages, etc. Whereas, White contracts with a local baker who makes fresh donuts daily and a caterer who specializes in trendy entrees such as pasta salad and quinoa. White’s dedication to improving the offerings has paid off. In locations where WeServ replaced their vending machines with micro markets, sales increased an average of 50 percent, with some going even higher.

“In our very first account, we replaced four vending machines doing $900 a week with a micro market,” explained Schmaljohann. “Right away, it started doing $500 a day, $2,500 a week. It is now making $3,000 a week.” Schmaljohann believes the micro markets are reach- ing people that wouldn’t use a vending machine, and that results in the sustained increase in sales. Another reason markets do so well is that Northern California is a lot of framing and small towns, so the audience at a location is more limited on other eating and refreshment choices. “They rely heavily on the vending machines, and now micro markets,” said Schmaljohann. This gives WeServ added flexibility around where it places micro markets. “We have some accounts under 100 people that are successful, provided we right size the market,” said White. “We might place one beverage cooler, one food cooler, a 24-inch snack rack and a small kiosk.”

Schmaljohann believes that the most important aspect of the micro market is the grand opening. “Primarily, it functions as the day where I stay and train the customers on how to use it, set up their micro market account, and hear their feedback,” he said. Typically, he holds grand openings on Wednesdays, giving him Monday for equipment drop off and Tuesday to assemble and stock the market. “I stay the whole day, from 7 am to 3 pm,” said Schmaljo- hann. “I don’t want them to avoid using the market because they are afraid of doing it wrong.” Instead he teaches, instructs, helps and just encourages customers to feel com- fortable with the micro market. To encourage use of the micro market and market account, WeServ provides some money in each account as well.

Multiple systems a non-issue 

WeServ uses multiple micro market suppliers: Avanti Markets, Company Kitchen and 365 Retail Markets. White admits that three micro markets systems plus the VMS creates a bit more work for the segment managers, but it isn’t as time consuming as some people believe. In addition, two of the systems do, or soon will, communicate with the VMS to help in management of SKUs.

Bean to cup popularity 

A popular area in the micro markets as well as an independently growing segment for WeServ is office coffee service (OCS). In a location that doesn’t offer free coffee to employees, White likes to offer specialty coffee options in the micro market. “Bean-to-cup brewers have been especially popular for the last couple years,” he said. The new brewers fully automate the process of making a specialty beverage from espressos to mochas to cappuccinos. WeServ offers national brand coffees to customers who ask, but most of its coffee comes from a Chico-CA based cafe and coffee roaster named Has Beans. WeServ delivers it to a local hospital in addition to offices throughout the area.

White isn’t afraid of delivering one of the high-end bean-to-cup brewers to locations that ask for it, provided they are willing to pay for it. “We did a location that had pantry service that wanted an espresso machine,” he said. “I rented them the brewer as they require a lot of maintenance and labor over and above the initial cost outlay.” It was a win for both WeServ and the location.

Credit for WeServ’s continued success is do to the willingness of White to invest in new technology and the willingness of his team, including Schmaljohann, to implement and use it. White bought a great company from his father, and continued to grow it until WeServ became known as the expert service provider in Chico.