Get Out Of The Price War

Jan. 7, 2016

Did anyone see the news about Burger King’s new deal? They are now selling food for under a $1. Specifically, their 5 for $4 deal lets customers get five items for just four bucks. Why is this relevant to vending? Well, because it is yet another example of the classic foodservice argument – low cost versus quality.

For vending operators and micro market operators, I don’t think it is worth the time to try to lower your costs beyond a certain level. Yes, it is important to operate efficiently. Yes, cut high costs, use deals to your advantage, use reports wisely to limit spoilage, etc., but don’t participate in the low price war. Why? Because you will likely lose.

Today’s consumer

Your end customer, the consumer, has more options than ever for their away-from-home food dollar, from fast food restaurants to convenience stores offering made-to-order salads (in certain areas). Many of these are owned by large corporations with more buying power than vending operators have, and can endure loss on certain products in favor of profits on others. Plus, I always wonder what these foods are really made out of in order to be sold for so little.

Instead, I believe that vending and micro market operators need to use the emerging consumer trends to their advantage. Baby Boomers are looking for convenient and healthful products to fit into active lifestyles. Millennials are looking for items from brands that are hip, interesting and appear to be honest with how they do business. They are also looking for the newest, often healthy food experience. These are trends operators can use to their advantage. Don’t level the playing field, but instead participate in a different sport, one that is more sophisticated and makes the break room a food destination for these consumers who would prefer quality ingredients over cheap ones. For operators, the margins will likely be better.

What service can mean

Office coffee service (OCS) operators have been dealing with this issue of battling competitors’ low prices a long time too. Big box stores and online retailers can sell coffee at lower prices than many operators. However, I hear from successful OCS operators that they can sell service. And service doesn’t have to come cheap.

The addition of service can also help the consumer value the items and higher prices in the vending and micro market segments. For vending, it might mean really sophisticated looking equipment, adding cashless payment acceptance and offering trendy new products that the customer is eager to try.

Micro markets can certainly take service a step further with integrated mobile apps or prepaid market accounts that can give an identity to the consumer and reward them for loyalty and offer coupons. Reports can really help see what a location is buying and likely to buy, maximizing the success of trendy and healthier products.

Fresh food in micro markets is a great place to experiment with these trends and can really help operators differentiate themselves from competitors with great labels, gourmet ingredients and interesting combinations.

Probably the most important piece of service however, is selling it to the customer. There are consumers who don’t understand the value of vending, micro markets or office coffee. They don’t understand how it works and why the products cost what they do. Sell yourself to these end users, explain the advantages, the convenience, the value and taste of what you’re offering with signage, email communication, kiosk ads, social media, digital marketing, etc.

Vending, micro markets and office coffee service operators have been quietly feeding the workforces of America for years. Now it’s time to really promote that service and the benefits it brings to everyone. The more value it has to the end user, the more they will pay the prices operators deserve.