For Bradenton, FL-based Snackworks, Inc. hurricanes, thunderstorms and heavy rain are second nature. Depending on the severity of the storm, the vending company — which sits south of Tampa and 10 miles from the Gulf of Mexico — prepares itself for power issues that will most likely impact equipment, kiosks and schedules.
While Snackworks has grown accustomed to handling forces of nature, no amount of planning could have prepared the company for the economic downfall in 2007. Employment decline during the Great Recession was greater than that of any recession in recent decades, reported the U.S. Bureau of Labor Statistics, and the countrywide unemployment rate went from 5.0 percent near the end of December 2007 to nearly twice that amount in less than two years. During that time Snackworks’ revenues declined 30 percent, the drastic shift in the economy nearly crippling the company. Josh and Lisa Leuchter, co-owners of Snackworks, decided to look inward and focus on ways in which they could get their company through one of the toughest storms it had ever faced.
Snackworks made the strategic decision to invest heavily in technology to help create efficiencies, made micro markets a part of its offering and began utilizing partnerships that helped the company realize its own strength. Over the last 8 years Snackworks’ sales have been rebounding to near 2007 levels and in 2016 the company is predicted to have its highest sales year on record thanks to its own reinvention.
In 1991, Josh and several family members purchased a company that was a Tom’s distributorship, with a side vending component. After one year the family disassociated from Tom’s in order to focus on growing their vending and OCS segments. In 1998, seven years after entering the market, Josh and Lisa, who had married into the business, purchased the entire company from Josh’s family members and became sole owners of Snackworks with plans for future growth.
Josh and Lisa always knew the importance of diversification and strategic investments. Throughout the late 1990s and early 2000s, the duo was able to grow the company’s vending and OCS segments by updating its equipment, acquiring other vending operations and continuing in the wholesale business where they sold candy and snacks to little league concessions and independent convenience stores for years until larger wholesale retailers entered the market.
Snackworks’ success and year over year growth stalled in 2007 despite the company’s investments and diversification. In order to get back on track, Josh and Lisa looked deeper into how they could utilize one of their most important investments: technology.
The value of reinvestment
The Snackworks co-owners had made one of their first technology investments in 2000 when they purchased vending management software (VMS) from Rutherford. “We were always interested in efficiencies and all the features that it could bring for better customer service, as well as internal and operational accountability,” said Lisa. “Our mindset is that we don’t sell a product, we sell a service.” With a VMS, Snackworks could track product sales, have cash accountability and manage inventory. Integrating technology within the business did not come without its drawbacks, however. Lisa and Josh saw pushback from route drivers and although there was an increase in revenues in routes after they installed Rutherford, the company ultimately turned over the majority of its route drivers. “It was an accountability issue for them,” said Lisa. “They used to do what they wanted and now technology was helping us hold them accountable and many did not like that.”
In 2009, several years after MEI purchased Rutherford, the Leuchters looked at the investment they had made and were challenged with a decision: stay with the same provider or reinvest in another system. Snackworks ultimately switched to Crane Streamware. “We weren’t keen on reinvesting in another VMS but we knew we needed the increased accountability,” said Lisa. “We are really happy with Streamware nearly seven years later and we have fleshed out almost every feature that they have. It has been hugely beneficial for our business.”
But they didn’t stop there. The company wanted to increase efficiencies even more and so they began to utilize prekitting with LightSpeed’s Xpress system in 2014. “The employees love prekitting, because it saves them one to three hours per day,” said Josh. With prekitting, Snackworks was able to eliminate the rolling warehouse and cut down the number of routes, which led to more overall savings.
While technology helped manage and streamline the company’s backend, Josh and Lisa also wanted to add technology that would benefit the consumer directly. The pair recognized the importance of different payment options at the point of sale, so in 2011, Snackworks made a commitment to offer a cashless option. The company started out with 75 cashless units and monitored the sales. After realizing the significance in increased revenues, Snackworks began rolling out Crane Navigators on nearly its entire fleet. “We’ll never be 100 percent cashless for various reasons, but our goal is to be very close to 100 percent,” said Josh. “For the locations that make sense we will add a cashless component by the end of this year or early 2017.” Today the company offers a cashless option on nearly 75 percent of its machines. “Prekitting and cashless vending combined have increased revenues per route by 25 percent for us,” said Josh.
A different concept
When micro markets debuted in the industry, the Leuchters thought the idea was interesting but decided to monitor the evolution prior to committing to them. But after more education and research into micro markets, Lisa and Josh knew that this segment would be a catalyst to Snackworks’ future success. “As the economy started to find footing again Josh and I sat down and looked at reinventing the company,” said Lisa. “We created a new Website and logo and made changes to impact the company visually and mentally to move forward and micro market integration was a part of that reinvention.”
The company chose Avanti Markets as its micro market supplier because they liked the features of the system and Avanti ultimately became a preferred supplier of another one of their partners, USConnect. This past December Lisa and Josh traveled to the Avanti micro market operator meeting and enjoyed the connections and learning experiences the event provided. “We were able to meet with other operators and discuss similar challenges and opportunities micro markets bring,” said Lisa. It is partnerships like this that have helped Snackworks look forward to the future of the business.
“Micro markets have been an eye opening experience and have helped us look at things in a different way from when we were just a vending company,” said Lisa. In just two years micro markets have grown to make up 10 percent of sales for Snackworks.
Southwest Florida is a service-based economy with many medical and hospitality-focused locations, which has had an impact on the types of products Snackworks sells in micro markets. “Beverages are our top-sellers in both vending and micro markets, but fresh food is also very popular with consumers because they can touch and feel the product,” said Lisa.
Micro markets have helped the company view vending differently, too. “With all of the products that are available with the advent of the micro market, we’ve been doing complete resets on glassfront beverage machines,” said Lisa. “We think of them as micro-micro markets.”
The company increased the variety of beverages they offer; they put teas, energy drinks and different juices into the machines. Lisa and Josh have also continued leveraging relationships with bottlers as well, learning demographic information about what products sell best and where. “We are spending a lot of time meeting representatives from bottlers and discussing what sells; and not just the product but the specific flavor profiles of products, too,” said Josh.
They focus on changing products frequently to keep consumer interest up. Oftentimes they start out with five or six different teas and as they see what a location likes, they will remove some and increase capacity of another. “Customers love it because they see a change in variety,” said Lisa. “And that data has been a positive resource for us.”
“Truly the thought process of how we looked at vending changed for us when we became entrenched with micro markets,” Lisa concluded.
Belief in balance
Micro markets have been a great way for Snackworks to highlight its healthy product offerings, too, which the company has made its focus since the early 2000s. The Leuchters have always believed in a balanced lifestyle and were happy to make that part of their business when they created the Snackworks Smart Selections program in 2000. “A healthcare facility had reached out to us and wanted to put together a vending program of better-for-you snacks,” said Lisa. “At that time the drums were just beginning to beat on healthy, healthy, healthy.”
Their early adoption of a better-for-you planogram gave the company a competitive edge over other operators, but in order to keep that edge, Snackworks has ensured that the company evolves its better-for-you program based on consumer preferences. More recently they adopted USConnect’s The Right Choice … For a Better You program. Without a doubt, Lisa sees their customers requesting healthy snack items and even devoting a larger portion of their machines to better-for-you snacks. “For a while ‘healthy’ seemed like a fad, but there’s no question that people are buying better-choice items,” said Lisa. “Is it a lion’s share of the business? No. But is it continuing to grow? Yes.” She points to the fact that the quality of items has improved markedly over the last ten years. “Originally people would ask for better-for-you items, but they wouldn’t eat them because the taste wasn’t appealing. Now they have nut and snack mixes and bars along with flavored teas and waters that are healthy and great quality.”
Stacy’s Pita Chips and nut mixes are a few better-for-you best-sellers. Snackworks offers two better-for-you planograms for clients as well, so there is choice in offerings and a balance of products. “Our focus is that when it comes to healthy items, we are true to what we say,” said Lisa. “We also believe in balance and offering consumers a choice of many different products, both better-for-you and traditional.”
Inner strength through connections
Both Lisa and Josh credit the success and rebuilding of their company to the partnerships they’ve created along the way. The duo was in the process of investing in technology, creating a new Website and logo and focusing on healthy options and micro markets when they came across Jeff Whitacre’s integrated foodservice network USConnect. “We saw articles and announcements for USConnect,” said Josh. “We liked what we heard from Jeff and saw many parallels between what USConnect was doing and what we were working towards, including an emphasis on technology, customer-driven focus for marketing and promotions, as well as loyalty programs and a more comprehensive better-choice program.”
From a customer perspective, said Josh, promotions are the best feature of USConnect. But internally, the partnership has given the company a built-in nationwide network of like-minded operators who readily share best business practices. “We wouldn’t have had access to some of the insights we get without USConnect operators. It has been a huge benefit driving our business forward,” said Josh. “It’s a pleasure to talk to people who are dealing with the same issues we are and sharing ideas and solutions.”
One of the biggest perks of working with USConnect is the access to a staff nutritionist who creates monthly newsletters on health and wellness topics, which Lisa posts on their Website and sends to clients. “It has nothing to do with vending, but it covers health and wellness and is a terrific resource for customers.” It creates an edge over competitors, too, as it promotes loyalty for Snackworks. Lisa points to one client in particular. “The client likes our dedication to health and wellness so much that they are creating a company Intranet page just for Snackworks, with links to the newsletter and current promotions.”
“In addition through our USConnect rewards program we donate a portion of each sale to charity. We even have the ability to allow customers to select their charity of choice, and that is a feature that everyone enjoys.”
The local story
Snackworks is proud to be able to offer a complete refreshment services package not available from all mid-size, family-owned vending companies. “I think people are surprised to know what we can do,” said Lisa. “They are surprised that we have every feature, benefit and technology that the big guys have and then some they don’t.”
It has been an exciting couple of years for Snackworks, Josh noted, but there is still plenty of work to be done. In the coming year, the company plans to focus on micro market and vending inventory merchandising, along with marketing the company and utilizing more technology. “We are planning more micro market, vending and OCS locations in 2016 and will realize our highest volume in sales. with a full rebound from the recession,” said Josh.
More than anything, Snackworks is dedicated to providing the best in customer service. “We are the local story, we are the ownership, and that goes a long way with our clients. Potential customers don’t know what they don’t have until they talk to us.”