Podcast: How Royal ReFresh grew from side hustle to regional vending success

No time to listen? Prefer to read? Here is an edited podcast transcript:

Ryan and Bob kick off the conversation by telling us about his co-CEO and life partner, his wife, Michelle, who he described as a key part of the Royal ReFresh team.

Ryan Harrington: More than just the co-CEO, she’s really been the glue that’s held the company together during some of our biggest transitions and growth periods. You know, when we first started scaling Royal ReFresh, Michelle was the one who built our operations from the ground up. She developed the structure. She implemented a lot of the software systems that we use, has managed our vendors, our logistics, and led all of our HR efforts before we had an HR department. And that’s Michelle’s background. She has a degree in human resources and worked — that was her experience with other companies.

Bob Tullio: Where did you guys meet?

Ryan Harrington: So, we actually met at a Red Bull event [at] Portland International Raceway. So, I had been invited because at the time I had around 40 Red Bull vending machines and was selling a pretty large volume of Red Bull, and they invited me to different events. And so I was at this event with a couple of friends. At the time, Michelle worked at Cricket Wireless, and they had a booth there. She was in the HR department at Cricket and was helping with the booth at the races. One of the Red Bull reps had invited her and her friend to come hang out at the event, the tent there. You know, we ended up meeting and got to talking and, you know, the rest is history.

Bob Tullio: That’s great.

Ryan Harrington: Kind of amazing. Two people chatting over energy drinks at a racetrack would eventually become a partnership for both life and business.

Bob Tullio: Well, the industry can do a lot for you, you know. So, tell me how you ended up in Portland. Born in the area? Go to school out there? How did that happen?

Ryan Harrington: Yeah, I am a Portland native, so born and raised. I’ve lived in the area my whole life. You know, a lot of my early business network actually came from friendships that I have from high school, also through local sports in the area. For many years, I helped run the Portland Royals. It was a local wood bat baseball team there. It connected me with a lot of community members and friends that I still have today.

Bob Tullio: So, it’s nice to have roots. Do you think that’s highly beneficial from a business standpoint?

Ryan Harrington: Yeah, absolutely. Still having the roots in an area and having that network and knowing the people in the community, I think definitely help.

Bob Tullio: What precipitated a seven-year career at Micro Design? What was that experience like, and what was that all about? And what was your thought process?

Ryan Harrington: Micro Design was a family business. It was started and owned by my mother and stepfather. That business sold business forms, labels and promotional products to other businesses. And at the time, they had one large client that made up about 90 % of their revenue.

You know, they were really wanting to diversify their client base and grow the company. So, I was in my early 20s, coming off a successful stint at Firestone. I also worked at Les Schwab. So I had a lot of tire experience — tire sales experience. I had been promoted through the Firestone system and was a manager of tire sales. I’d been successful at Firestone and really enjoyed it. And that’s when they came to me and said, “Hey, I know you’ve really done a lot of retail sales, but would you be interested in business-to-business sales? Do you think that would translate?”

They made me an offer, and I thought it was a really good segue for me in my career. That experience at Micro Design, it really did shape how I think about business-to-business relationships and recurring revenue. And I just love the idea of building strong client relationships instead of chasing one-time sales —instead maintaining long-term accounts. And so, in that industry, it’s where I really started offering things like free on-site supply inventories and automated reorders and a lot of the stuff that we do in this industry. It wasn’t really common in that industry at the time, but I really liked having that personal touch and being on-site more often. It taught me a lot about being proactive and being sticky as a vendor, and kind of finding ways to stay essential to your customer's workflow. And so that mindset eventually carried over into how I structured Royal ReFresh.

Bob Tullio: Well, when you think about it, I mean, it really set the table nicely for you. Think of all the people you had the roots locally. You meet all these people in the tire business, many of whom I’m sure ultimately ended up being B2B clients of yours. And then you go to Micro Design, which is B2B and probably selling to a lot of the same decision-makers that you’re dealing with today. So, it was like a perfect minor league organization before you headed into the big leagues with your own company, Royal ReFresh. And what was the thought process behind starting that, or did you buy an existing company?

Ryan Harrington: No, I didn’t purchase an existing company at all. I didn’t even know anything about the vending industry or automated retail. Besides Micro Design, I was dabbling in real estate investing. I did own several rental properties. I was really interested in real estate, and that’s what I saw for my future. But it was sporadic. It wasn’t a steady business. And so, in between projects, I just wanted something else that I could also focus on. That’s where vending machines came into play. I saw some business opportunities out there, and of course, they advertised it was passive income, and it was easy. And I thought, “This is perfect for me!”

So I bought two Red Bull vending machines, found a couple of locations, delivered the machines to the locations, and set them up and collected the money. And it was a lot less money than they promised it would be. And it was a lot harder than I thought. I still stayed with it and just kept adding more Red Bull machines and eventually got up to around 40 machines. Yeah, just kept growing the Red Bull machine business and learned a lot about sales, service and logistics. And it was just a really hands-on business, but the upside was exciting.

I grew the vending side over time, really learned the business the hard way and kept reinvesting the profits. And over time, it became a little less of a side gig and more of a full-time obsession for me.

Bob Tullio: I saw your post on LinkedIn about the fact that this is just not easy, and people think it’s easy. But I think everybody finds that out pretty quick once they decide they’re going to get serious, don’t you think?

Ryan Harrington: I think they find it out pretty quick, yeah. And I will say, in the early days, I paid a whole lot of money for my first two Red Bull machines and I, you know, I paid a lot of money for this business opportunity and realized pretty quickly myself, the numbers weren’t what they said they would be and it was a lot of hard work. The good thing for me is that there was a whole lot of other people in the area that also purchased this business opportunity, and it was failing. And so, I would go on Craigslist and find all of these brand-new in-the-box Red Bull machines in people’s garages for a fraction of the cost that I paid or they paid. And I just would rent a U-Haul truck and drive all around the Pacific Northwest and purchase Red Bulls for nothing and bring them back home and start putting them out on locations, and just readjusted my expectations of what the sales would bring in and wrote up a business plan, and it worked.

Bob Tullio: Yeah, and of course. You had the ability to place the machines, and that’s the fundamental problem with a lot of folks in these business opportunity deals. Here’s the machine. The checks don’t just start coming in the mail. I mean, you got to actually place the things. That’s what I think people miss, without question.

Ryan Harrington: Yeah. Sales is a big part of starting a business and scaling it. That just happened to be something I had a lot of experience in.

Bob Tullio: Talk to me about the scope of services that you have now, and how that’s changed over the years.

Ryan Harrington: Yeah. Today, we offer a full-service break room solution. So, we have self-checkout micro markets, office coffee service, filtered water, pantry programs, and we even do some light catering for events. And we’re just really trying to deliver a better workplace experience, no matter what size of the team our customers have.

Bob Tullio: Micro markets is where your focus is though, isn’t it?

Ryan Harrington: Yes, Micro markets make up the majority of our revenue.

Bob Tullio: And you don’t do vending at all?

Ryan Harrington: We used to have several hundred vending machines. Now we are down to around 60 machines. So, hoping to have that be zero soon.

Bob Tullio: You’ve really made quite a transition. There are a lot of micro market operators out there. What do you really do to set yourself apart, would you say?

Ryan Harrington: Yeah, it’s true. There’s been an explosion of micro market operators over the last decade. But for us, you know, standing out has never been about chasing volume or cutting any corners. What we feel sets us apart is kind of the intentional way we approach every customer relationship.

Still to this day, at least in the Portland area, I still personally meet with every new client, even as we grow. That one-on-one approach really helps me really understand what each workplace needs, not just from a product standpoint, but culturally as well. And we don’t just drop in a market and walk away. You know, we design solutions that feel like an extension of the company’s brand and values. You know, we take time to get the product mix right. And we talk through subsidy models, how the space will be used and how it fits into the employee experience. So, you know, from that service standpoint, we’re very meticulous. Our team is trained to treat every market like it’s their own. And if something needs attention, you know, we’re on it quickly and professionally every time. And I think clients can feel the difference between just a vendor and a true partner.

Bob Tullio: How important is pantry service to your company?

Ryan Harrington: I think it’s very important. You know, pantry isn’t just about stocking snacks, but it’s about helping companies take care of their people.

It does require more communication and customization than traditional services. Definitely important to the well-being and culture of our customer locations. I will say, in Portland, there are fewer companies offering true pantry programs than before the pandemic, but the opportunity is still there.

We’ve also had great success with hotel pantry services, which is definitely a growing segment for us where we’re managing the hotel store lobbies that you see, and we take care of everything from inventory delivery to merchandising for those hotels.

Bob Tullio: So, you really mean hotel micro market, basically.

Ryan Harrington: Yes, but we don’t put a kiosk there.

Bob Tullio: Oh, okay. Cause they’re checking out at the register.

Ryan Harrington: Yep. Nothing changes for the hotel. They still operate with the same model they have before, in many cases. And we just basically run the whole store for them, and all they have to do is sell the product.

There is some technology out there for 365 Retail Markets to offer hotel self-checkout as well.

Bob Tullio: Sure. So, how big is the company right now? Whatever you want to share, routes, revenue, number of employees, whatever you’d like to give me.

Ryan Harrington: Yeah, we’ve got over 30 employees today and we’re running about 12 routes. Last year was the first year that we surpassed 1$0 million in annual revenue.

The energy on our team is strong. You know, we’ve grown a lot, but we really feel like we’re just getting started, and these are the early chapters. We’re really hoping to keep that fast growth going.

Bob Tullio: What was the vision for the company when you started it?

Ryan Harrington: Well, at first it was just a side hustle for some extra income. Then it became a part-time job, and then eventually a full-time job. And then it became a team, and really, then a real company.

Now it’s growing into, we hope it’s growing into something regional, maybe even national one day. But, the vision changes every time we hit a new ceiling. We just have to figure out how to break through it.

Bob Tullio: Tell me about your role at the company. Do you find that your own job is evolving with the industry itself?

Ryan Harrington: My role is definitely evolving, not only with the industry but with our company, you know, as it scales and grows, responsibilities grow as well. But I do still lead all the sales in the Portland area, and I still attend every single sales meeting and new customer walkthrough. I’m also assisting in Las Vegas although we have our business partner, Sean Rybar, who is leading that charge. I speak to Sean on a daily basis. And I’ve even spent this last month in Las Vegas on and off helping with strategy and meeting with some clients out there as well.

Bob Tullio: Now, is that your sole expansion right now is to Las Vegas outside of the Portland area or are in Seattle as well?

Ryan Harrington: We are not in Seattle. We service a large footprint in the Pacific Northwest in Oregon and Washington. But our first expansion outside the Pacific Northwest is Las Vegas.

Bob Tullio: You’ve dealt with more than one pivoting experience over the years. Let’s talk about how you dealt with the whole COVID situation. What did you learn from that experience?

Ryan Harrington: Well, in our area, it came fast. It hit us early on. We started having accounts close up immediately. And so, we saw it coming early and made some really difficult decisions very fast. Unfortunately, we had to lay off much of our office team. We operated with a skeleton crew for a long time, but we kept all of our route drivers on. And as things slowly reopened, we just rebuilt.

During that time, we also took advantage of our downtime to rebrand — rebranded from Royal Vending to Royal ReFresh. We redesigned our logo, we updated our website, and we rolled out a whole new marketing plan. So, it gave us a clean slate and a strong runway for growth post-pandemic.

We also resisted the temptation to chase new gimmicks like “breakroom in a box” or “e-commerce snack portals” during the pandemic. We really stayed focused on what we do best and trusted that the demand would return.

Bob Tullio: How have you adjusted your business, especially OCS, to deal with the fact that you’re serving a smaller office population than you served, for example, in 2019?

Ryan Harrington: Well, we started combining services, and we rarely offer a standalone coffee service anymore unless it’s a very high volume account. Micro markets are bundled with our water and coffee.

The subsidy model has been huge for us as well. So, companies subsidizing part of the product costs to boost employee morale.

Bob Tullio: Is that particularly on the micro market side?

Ryan Harrington: Yes. So about 40 % of our micro markets are subsidized.

Bob Tullio: Oh, that’s great. I think that’s fantastic. Do you think smart coolers are the next big thing?

Ryan Harrington: I definitely think they’re coming. For us, we’re just not quite there yet. You know, the ROI has to make sense. If a smart cooler setup cost is $10,000+ and takes three years to pay off, that’s really risky for us. So, tech evolves fast. And if the system is outdated before we even break even, we just don’t feel like it’s a great investment for us at the time. The product capacity, reliability and service model all have to align.

Bob Tullio: Who are your key partners, especially on the tech side?

Ryan Harrington: Technology is everything for us. We use 365 Retail Markets for our micro market kiosk services, and then part of the 365 family, Parlevel for our VMS, and Lightspeed Automation for our pre-kitting in our warehouse. We also use OptConnect for our wireless connectivity with our micro markets, and we have TriTeq for our health cooler locks.

Bob Tullio: Great, any non-tech suppliers, people that you’d like to recognize?

Vistar has been a great partner with Royal ReFresh, Pepsi and Coca-Cola, for sure, Lavazza with their Flavia coffee system, Newco and OmniCube for our truck refrigerators.

Bob Tullio: So, looking at the Las Vegas market, it’s definitely a different market compared to Portland, I would imagine. What are some of the distinctions between the two markets that you’ve noticed right off the bat?

Ryan Harrington: You know, I think that we’re really sticking to our plan in Las Vegas, and we’re using our same strategies for growth, our same service method and been successful here in the Pacific Northwest. Sean Rybar, who is leading the charge in Las Vegas, has deep roots in the community. He’s using his network to spread the word about what we do, and it’s going really well. We’re installing many new locations. It’s happening a lot faster than it happened for me when I started out in the Pacific Northwest. And we’re just really utilizing everything we’ve learned for that market, and it’s working out so far.

Bob Tullio: How do you think selling convenience services has changed over the years from a direct-sales standpoint?

Ryan Harrington: Well, when I started, we were selling vending to facility managers or warehouse managers. And today, we’re meeting with HR departments and wellness committees. So, our services have now really become part of a company’s culture and their employee benefit strategy. The process is more consultative and it takes longer, but it’s also more rewarding, because we’re making a real impact on people’s daily lives. Cold calling is something that I used to do a lot of. It’s how I built the company in the early days. And really, we’ve shifted that mindset to marketing and having a social media presence.

As it sits today, based on all of the advertising, the marketing, the online presence and the word of mouth that we have, I haven’t cold-called for over 10 years.

Bob Tullio: Don’t you miss that?

Ryan Harrington: Not at all.

Bob Tullio: Congratulations, by the way, on the NAMA Show. I know you were involved. I thought it was a great show. The industry should be proud of it, and you should be proud of the job that you did. How important is NAMA to your organization?

Ryan Harrington: NAMA has been one of the most valuable resources for me personally and our company. The connections, the education, the insights: It’s really helped me grow not only as an operator, but as a business leader myself. Being on the trade show advisory committee this year opened my eyes to how much thought goes into our industry’s biggest events. If you’re not involved in NAMA, you’re missing a huge opportunity to learn, connect and grow.

Bob Tullio: Tell me about your four-day work week strategy that David Marler was so excited about.

Ryan Harrington: So, our route drivers work four 10-hour shifts instead of the traditional five eight-hour shifts. That gives them three days off each week, which they love. And it also gives us more time each day to make deliveries.

From a business standpoint, we get more hours out of each truck and more flexibility with route scheduling. And we feel our customers benefit too. They get multiple drivers on the same route, which creates a built-in quality control system.

Bob Tullio: Well, a lot of it has to do with, I’m sure, there’s less and less people in the offices on Friday these days.

Ryan Harrington: That’s true. And so we have less routes that go out on Friday.

Bob Tullio: I know you’re having fun as an operator at this point because you’re in your growth mode, you’re doing some exciting things from an expansion standpoint. But what do you love about the convenience services business?

Ryan Harrington: I still love walking into a new client site and seeing people enjoy what we built.

I definitely love coaching our team and watching them develop.

And I also love helping other entrepreneurs enter this industry and sharing what I’ve learned.

I’m definitely having more fun now than when I started.

Bob Tullio: You ran the newcomer session at the NAMA Show. What’s the best advice that you have for the many new operators entering the industry?

Ryan Harrington: Focus on the long game. There are a lot of people online saying vending in markets or passive income, and they’re not. It takes real effort, real systems and real customer care. Learn from people in the industry, build something solid, and your growth will come.

Bob Tullio: What does the future look like for Royal ReFresh? Should we expect more offices in more cities?

Ryan Harrington: Definitely more growth, more cities and more partnerships. We’re already in Las Vegas, and we’re actively exploring other regional markets, but we’re going to grow the right way: With purpose, with structure and with the same level of service that got us here.

Bob Tullio: What’s the secret sauce at Royal ReFresh? What’s made your company successful?

Ryan Harrington: I definitely, I don’t think there’s any real secret sauce. Caring deeply about the people we serve, and really, always be willing to learn.

We never think we’ve figured it all out. And I think that’s what keeps us improving all the time.

Bob Tullio: That’s it for now. Follow Vending & OCS Nation on your favorite podcast platform, and you will never miss an episode. Thanks for listening.