One fact we could always count on was that sales performance in convenience services had almost always been linked to employment levels. Take office coffee service: when unemployment rose, businesses served by OCS operators simply had fewer customers, and volume contracted accordingly, and vice-versa.
But that connection between employment and OCS no longer holds. It has been distorted by the ripple effects brought on by the coronavirus pandemic. In only a few weeks after the WHO declared on March 11, 2020, that COVID-19 was a pandemic, millions of American workers, who once commuted almost daily to an office, learned how to work from home. As a result, the nation’s OCS industry came to a screeching halt.
Under these exceptional circumstances, Automatic Merchandiser’s latest State of the Coffee Industry analysis, published in the September issue, shows net sales in the OCS sector down 75% – plummeting from $5.9 billion in 2019 to $1.5 billion in 2020, a loss of almost $4.5 billion.
The OCS and vending industries seldom experienced dramatic changes. We’re hopeful the astonishing events of last year will be remembered as marking the end of one era and the beginning of another. As one operator remarked in their survey response, “the industry is starting from scratch.”
In commenting on the previously published State of the Industry report, which covers vending and micro markets, we reasoned that the 45% decline in that sector, in terms of net sales, will mostly be a blip on the radar, and we believe the same to be the case in the OCS channel.
Recovery in all convenience service sectors is underway, but regrettably with some snags. As we go to press, the percentage of people working full-time from home was expected to decline into the single digits; and many schools, daycare centers and nursing homes to be fully reopened, allowing guardians who had to remain home during the pandemic to return to work, where they might consume OCS products.
However, the delta surge is pushing back the fall office return dates for which operators were hoping, and the argument for remote work options is regaining strength. Looks like COVID isn’t going away soon.
The 2021 State of the Coffee Industry report is the latest in a continuing series that tracks office refreshment sales and product trends. Its results were compiled on the basis of an online survey emailed to leading operating entities. The survey form is kept to a length of 50 questions. We are, as always, aware of the time and effort required to complete it, and we sincerely appreciate the unselfishness of the operators who undertook that task. We are also grateful for the informed cooperation of the manufacturers and suppliers who assisted us.
Nick Montano is editor of Automatic Merchandiser and its online counterpart VendingMarketWatch.com. He can be contacted at [email protected].
