When Jim Bardy began Continental Services in 1989, he had a vision. He wanted to be an industry-leading provider of services to customers. It’s a vision that would turn a small vending and office coffee service operation into a mid-sized food management company noted for its culinary and guest service innovation. The success would be rooted in expanding services in a consistent way to produce a company whose revenue was made up of dining (27 percent), catering/events (22 percent) and vending, office coffee and micro markets (51 percent). Continental would grow to be among the top 50 largest noncommercial contract dining management companies in the country. It would become the company’s mission to delight customers at every meal, every day. Growing larger would mean better utilizing technology within operations to meet the demand of customers and increase same-store sales. It would mean staying dedicated to a superior food experience as it pushed into new segments, such as micro markets. Finally, it would mean remembering how important people are to a company’s success. With that in mind, Bardy would surround himself with people that could grow Continental, such as Jim Belisle, Steve LaPorte and Matt Hubbard.
Building an A-Team
Belisle came on board in 2000. He had been working as vice president in charge of the Little Caesars Pizza Kit fundraising program when the company’s ownership changed direction. He started networking, looking for another opportunity, when he met Bardy.
“I had the opportunity to meet with Jim, the founder,” said Belisle, now senior vice president and chief financial officer, refreshment services group. “He was eager and had a plan to grow the company.”
It would take six months for Belisle to finally join Continental, but it would be a great move. “It’s been nothing but expansion and growth since then,” he said. “A rocketship.”
LaPorte would join the company a year later after making his way from copier salesman to general manager of a large Midwest branch at Aramark.
“I thrived in the GM position at that company,” said LaPorte, president, refreshment services group for Continental. “I thought I would be there for the rest of my career.”
LaPorte’s path veered after meeting Bardy a few times to discuss a client Aramark had just lost to Continental. “He told me his plan, told me what he wanted to achieve, and that was it. I went home and told my wife I was going to work for him,” said LaPorte. It’s been 18 years and LaPorte couldn’t be more satisfied with his decision. “We accomplished everything we set out to do,” he added.
LaPorte and Belisle would be instrumental in building the vending, office coffee service, and eventually micro market segments of Continental. This growth would make Continental an alluring prospect for Hubbard, whom Bardy would recruit in 2014.
Early in his career. Hubbard was a marketing professional at an ad agency when he realized he was developing a niche working with entrepreneurs looking to unlock growth. From there, he ran a large events company related to experiential marketing, eventually leading him to launch and develop a tech company that made training software. It was a varied career, but it led to the chance to be part of something big.
“I saw the opportunity and vision thanks to Jim Bardy, Steve LaPorte and Jim Belisle,” said Hubbard, now corporate president. “Continental had in place all the elements to capitalize on the refreshment services trend – the burgeoning of micro markets. All the dining and event services the company provided were very well-rounded too. It was poised for growth. That was five years ago and it’s been one heck of a ride since then.”
Growing services is key
Capitalizing on the evolving refreshment services trend is something at which Continental Services has excelled. Back in the beginning, it was like every other vending company.
“Everything was traditional,” said LaPorte. “In vending, trucks were loaded with products to fill machines based on what drivers wanted. Office coffee was a small, drop-off business.”
OCS was especially interesting to LaPorte. It was only 5 percent of revenues, but he believed it could be more. He believed by expanding coffee, it would elevate the entire company. “The thought was, we have to do things differently,” he said.
LaPorte put together an aggressive sales team that focused on merchandising and marketing office coffee differently. It wasn’t about dropping off product, but rather delivering what people wanted. It meant figuring out how to do more. “Part of our innovation is being obsessive about the customer experience to the point of making certain products you simply can’t find anywhere else,” said LaPorte. “We came up with the blend called Built & Brewed in Detroit."
Built & Brewed in Detroit is Continental’s extremely popular private label coffee that is roasted locally.
“We originally created these small batch craft blends for a large client who moved downtown and wanted all local products,” said LaPorte. “Built & Brewed in Detroit got so popular we had to up production for the balance of our OCS customers."
Built & Brewed in Detroit now represents 90 percent of Continental’s bean-to-cup business and 60 percent of its frac pack service. The company recently launched pods for single-cup brewers as well. Single-cup pods and 12-ounce pre-ground packs of Built & Brewed in Detroit are currently available in micro markets for guests to purchase and enjoy at home.
“When you look at retention, no one in the area can offer Built and Brewed in Detroit. It’s a great way to protect our customer base, and it’s one great cup of coffee,” said LaPorte.
How coffee is brewed in the workplace
has changed a great deal since
LaPorte entered the business in 2001.
“It still amazes me today how much single-cup coffee is still out there,” said LaPorte. “It’s not the cheapest coffee, yet there’s a large amount of single-cup business: bean-to-cup, pod brewers, flat-pack brewers. We’ve come a long way from traditional coffee stops.”
LaPorte attributes the change to the fact that now companies want to build an experience and that is something Continental can help them do. “It helps the conversation be less about price per pound, and more about the culture and philosophy the client wants to create,” he said.
A natural extension of helping customers create an experience in their break room led Continental to add pantry service. This is where clients subsidize specialty food and drink items to be stocked and offered free of charge to employees. While initially it was a small segment of OCS, the pantry service has continued to grow as more and more companies in Michigan want to elevate the breakroom for their employees.
“At some accounts, we have an onsite concierge service manned by our employees who work there daily and deal with fresh items,” said LaPorte. “Other accounts enhance offerings with fresh fruit, sandwiches and salads.”
LaPorte feels with pantry service the opportunity is almost limitless for companies who can adapt and properly manage it. One of the challenges Continental has experienced is that most companies want to order item level products, not bulk, when using pantry service. Many of the items are perishable like milk, yogurt, fruit, etc., which require careful management of the logistics of warehousing and delivering.
Continental is changing what it offers as well. When the company began pantry service, clients could request any items they wanted. It got very difficult to properly stock and manage all the different items in the requested quantities. To try to solve this challenge, Belisle says the company is in the process of creating a pantry-specific catalogue.
“We are working to create a product catalogue in order to deliver consistent quality versus everyone being custom,” Belisle said. “The balance is ensuring enough products are available, a great variety to choose from, while also standardizing them.”
Pantry service isn’t just for large locations, either. Continental has many pantry services in locations with a small footprint. “It really increases your prospective base,” LaPorte said.
While pantry service products are usually paid for in full by the company, LaPorte sees a future where the cost is shared, something that is perhaps part pantry and part micro market.
“Maybe the employer pays so much and the employees pay the rest,” he suggests. “Maybe there is an iPad on the counter. The need and technology is out there. We just have to figure out how to make nano markets work seamlessly with convenient ways to tender.”
One of the current challenges with small micro markets systems is that many don’t accept cash, explained Belisle. “We want to utilize all forms of tender,” he said.
Any small or hybrid solution that includes paying by employee account also has to be simple to manage. Continental is exploring payroll deduct systems that aren’t as labor-intensive for the employer. “We want to find a better way,” said LaPorte.
Reassessing and investing in vending
Expanding services and finding a better way is not limited to OCS. Through the years, Continental has also taken a look at the vending side and decided it needed more accurate data in order to improve sales. In 2009, the operation invested in a vending management system.
“You can’t just use price to increase revenue,” said Belisle. “You need to know why one product is selling out and then that it’s only at 5 percent of accounts.”
With this sort of item-level information, Continental is able to add top-selling products to more machines and pull slow sellers. LaPorte credits Belisle for doing an analysis of the “value of a turn,” which helps clarify the need for product tracking. “An extra two turns in a week can provide astronomical value,” said LaPorte.
Item-level tracking also delivers a better customer experience, says Hubbard, “We want what the customers craves at 3 pm to be there,” he said. “It can only be done with technology.” He credits the VMS and accompanying analysis of the data to growing same-store sales.
Optimizing delivery & selection
“You have to go machine by machine in order to optimize product levels and service levels,” he said. Belisle called it very time-consuming, but ultimately worthwhile. “It ensures you have the right size service structure,” he added.
Hubbard sees another advantage to the investment. “It minimizes bring backs,” he said. “As items are repeatedly handled, more items are broken.” It also allows for a better customer experience.
Implementing with a select few
After setting product and service levels, Vending and OCS Vice President Mike Boylan took charge of getting drivers on board with prekitting.
"Drivers have always been critical to the customer experience," says LaPorte. He points out that Continental shifted its fleet parking indoors. "Our drivers contend with all kinds of extreme weather, and in a climate-controlled environment, they can spend more time cleaning and merchandising to ensure machines are accurately stocked."
Indoor parking is one of the many perks it offers drivers and illustrates how important it was for Continental to get buy-in by the group that would benefit from prekitting. Belisle looked carefully at who would be most willing to try it and decided to ask newer drivers to be among the first.
Belisle says the company started with younger drivers who were more comfortable with technology in general and less experienced in servicing a route. The company gave them handhelds and started prekitting those trucks for the drivers.
“It takes 15 minutes to prekit a route through LightSpeed,” said Belisle. “It is a huge operational booster.” Drivers loaded the totes into the truck and left. When they returned, the totes were empty and there were minimal inventory updates to make. By comparison, drivers who were servicing machines the traditional way with a rolling truck inventory spent an extra hour and a half first ordering, then loading and inventorying the items after that day’s routes.
“Seasoned drivers were seeing these newer staff come in and go out without all the loading and inventorying,” said Belisle. “That got them interested in prekitting too. It made for a much better transition.” He even goes so far as to say that the prekitting gave some of their best drivers a few more years in their careers. “For some of the veteran and tenured guys, it extended their careers five years with just the reduced wear and tear on their bodies,” said Belisle. “It’s a hard job.”
Prekitting and using handhelds also made training new drivers easier. There was no longer a need to explain product ordering and proper rotation on the truck or how to do truck date inventories. For now, Continental is using mostly handhelds to prekit, but it is testing mobile and smart glasses technologies and validating the return on investment these might offer.
Customer focused touchpoints
“Drivers are the face of our company and that’s never going to change and we never want that to change,” said LaPorte. That is one reason the company has primarily continued with a static schedule, which keeps drivers going to locations regularly rather than dynamic scheduling which can change a driver’s route daily based on need. The time saved by prekitting in the warehouse is better spent on cleaning and filling the machines, taking that extra care to merchandise product and ensure a good experience for the customer. Drivers become an invaluable customer-company liaison.
As the company expands, LaPorte says consistent communication is critical. “It was much easier to have informal meetings with everyone when we were smaller,” said LaPorte. “However, it’s important as we grow that we make open communication an priority. We utilize digital boards celebrating birthdays and highlighting new products that are coming in and going out, for example.”
The company also holds town hall meetings where the employees are filled in on the status of projects and where the company is headed. Continental creates focus group to investigate more efficient processes and analyze new opportunities. “We do a darn good job of making everyone, drivers especially, part of the success of this company,” said LaPorte.
Drivers are paid hourly with quarterly performance incentives based on measurables such as cleanliness, volume, velocity, vehicle cleanliness, vehicle maintenance and even spoilage.
Stocking micro markets
Servicing one of Continental’s 330 micro markets takes much longer than servicing a vending machine. There are 300-plus SKUs to manage inside a traditional market, including fresh food. The open environment also means effort needs to be taken to display the products. As the driver, also called a merchandiser, is onsite longer, it means more interaction with customers as well.
“We emphasize to merchandisers to walk the store, stage the products and handle the fresh food with care,” said LaPorte. “We ask them to look around and see if this is the type of store they would want to shop at.”
Micro markets: A fast climb
Continental’s journey into micro markets began eight years ago when the company converted an existing vending facility. It almost tripled the revenue. That success spurred the company to add another, which saw a saw a similar lift in same-store sales. “We had all the core competencies to make the micro market concept really take off and we developed our own brand called Market Twenty 4 Seven,” said LaPorte.
Because food sales make up such a large portion of revenue for micro markets, 30 percent for Continental, it helps that the company has such a strong food culture at its core.
“Our culture is built around food,” said Hubbard. “Every day we ask, ‘How do we get the most delicious foods in the hands of our customers?’ We are students of food.”
However, it is not just the food that helps Continental excel; it is also being able to create great food consistently and in volume. "If someone doesn’t have a great experience, you lose them for life,” said Hubbard. The company motto, “Delight Our Guests, Every Meal, Every Day” reinforces the company’s commitment to providing that great experience day after day, especially in micro markets.
Higher design investment
Another way Continental makes its micro markets distinct from competitors is by spending more on in-house design and merchandising. “We invest significantly more in opening a micro market than the average operator,” said Hubbard. “However, our micro markets perform 2.5 times industry average.” He says they are more than a place for refreshments thanks to food and displays that are on par with a retail environment.
To really ensure micro markets were treated and executed differently, Continental tapped Brent Basch, a foodservice industry veteran, to head up the division rather than a vending person. Basch was someone used to managing the profit and loss of food items and enhancing the guest experience.
“As we looked around, we saw some micro markets that were essentially vending machines on steroids,” said LaPorte. “It doesn’t give the kind of experience you get from an upscale deli, which is where we wanted to go.”
To complement the upscale look, Continental uses stainless steel food coolers, high-end cabinets and new flooring. Most importantly, the company acts as a consultant.
“We walk through the space with the customer, coaching and advising on proper store layout,” said LaPorte. He explains that might mean the designated area is too small or does not have adequate power supplies. Sometimes it just won’t have the effect the customer wants.
“As the experts, we educate them,” said LaPorte. “We say, ‘You want to make a space that employees will talk about, gather at and collaborate in and to create this culture that will retain employees, right?’ We think this is how to do that. Then we show them some ideas.”
LaPorte says that every market is a custom build starting with computer-aided design (CAD), sometimes a rendering, and different levels of investment. Six months ago the company built a showroom to showcase the different design elements available to customers in the markets. “Some clients co-invest, if they want particular finishes, types of slat walls with cool pendant lights, or specific cabinetry,” said LaPorte. “We find they are willing to invest.”
All this advanced design takes time, but creates an experience and integrates Continental with the customer location through color, design, upgrades and co-investments.
Ensuring food safety
Since fresh food is at the core of a successful micro market, food safety is extremely important to Continental. “We have refrigerated trucks with a straight refrigerated unit in front, not a cooler box,” said Belisle. He explains that the unit maintains a 38 to 40 degree temperature at all times and allows the cold food to be separate from the dry items. “Safety of food at every moment is important. Many others are not paying attention to quality maintained through their delivery process,” said Belisle.
The fresh food in the micro markets is also unlike what customers will find in Continental’s vending machines, a point LaPorte thinks is crucial. “We recipe each food item in the micro markets, select the protein, use bread baked in our Proof Baking Company and add quality ingredients, so when people buy a handmade sandwich wedge, they feel good," he said. “It’s an emotional thing for us and that’s why we are not like most operators.”
All the preparations and effort that went into the micro market division has paid off. “In 2019, micro markets will produce more revenue than our vending business,” said LaPorte.
Despite being 2,200 employees and counting, Continental has retained its ability to quickly evolve to the needs of customers. “It’s an interesting time for the business,” said Hubbard. “Customers are asking us to look at our services differently.” He explains that this might mean putting a micro market together with a deli or making hot food and bringing it to the client under pantry service. As Continental, it’s all about expanding the experience it offers customers by offering them other services as well. “Consistency and breadth of options is very important as 80 percent of clients use three or more of our services,” said Hubbard. It has allowed Continental to double in size in the last three years.
“Growth is only relevant if you are able to develop and keep deep relationships with customers you have,” added Hubbard. “In maintaining those relationships, the success we’ve had is a consequence of 2,200 associates delighting our guests, every meal, every day. We love the word ‘delight.’ It might mean merchandising a market or presenting a perfectly plated filet at a catered event. ‘Delight’ speaks to that idea of consistency. We have millions of transactions a year and it’s a commitment to deliver with consistency and excellence. We pay a lot of attention to that, culturally, and it really pays off.”