People & Technology Push Up Profits For Texas Independent

Aug. 7, 2015

Invest in your organization and you will succeed. That is the motto at Accent Food Services, a 240 plus employee total refreshment solution provider in central Texas. In recent years, Accent has remade itself, putting processes in place that significantly impact its ability to gain new business. In 2014, new micro market, vending and OCS service opportunities represented $4.4 million of revenue. Accent saw a 14 percent increase across all segments, the largest organic growth year the company has ever had. The driving force behind Accent’s success is its investment in talented personnel led by a two-man team, Tom Hawkins, one of the original founders of Accent and now chairman of the board, and Josh Rosenberg, current president and CEO.

Born of a merger

“Accent Food Services began in July 1994 when [another operator] and I decided to merge our two small vending businesses,” said Hawkins. The merger formed a 3-route operation headquartered in Austin, TX. Hawkins became president of the new company and grew it into a premier provider of business refreshment services throughout the state of Texas.

Hawkins met Josh Rosenberg when Rosenberg was a vice president of national and regional vending sales at Coca-Cola Refreshment Services. Over the years, Hawkins was impressed with Rosenberg’s ability to understand the needs of his customers and the drive he had to create a solution that worked for both parties. “Josh played an instrumental role in developing a strong working relationship between Accent and Coca-Cola,” said Hawkins. “I was in the process of recruiting a vice president of sales when I heard that Josh was leaving his position with Coca-Cola. I immediately made the call and asked him to consider the opportunity.”

Once Rosenberg joined Accent, he began to put new processes into  place, such as training and investments in technology, which made a significant impact in the company’s ability to gain new business. “The result was the best organic growth year Accent has experienced,” said Hawkins.

In January 2015, Hawkins transitioned to a chairman role and Rosenberg was named president and CEO. “[He] continues to move us forward with better processes and vision company-wide as we enter into our next stage of growth,” said Hawkins about Rosenberg’s appointment.

Rosenberg is honored by the faith Hawkins had in him. “Tom had the confidence in my ability to lead the company after his 27 years at the helm,” said Rosenberg about the transition. He doesn’t regret the move from the supplier side to becoming an operator. Instead, Rosenberg credits much of his success to the diverse background experience he gained from the Coca-Cola System and operator community he came to adore. It helped him accelerate the mindset at Accent. “It couldn’t have worked out any better,” he said. “Tom provided a clear road map, high performing team and the best marketplace in North America to succeed. All I am trying to do is remove the barriers and let our talent go to work,” said Rosenberg.

A profit leader: micro markets

Micro markets have been very successful for Accent, which operates them in more than 250 locations. In order to meet customer needs, Accent uses two different micro market providers. The client might want the ability to calculate nutritional information, be able to pay with biometrics or run various promotions. Rosenberg considers the extra work in tailoring the micro market kiosk with the location as part of what makes the system so profitable. “We see increased basket size, we see increased participation, we see increased connection points with our consumers,” he said.

An additional driver of the micro market segment growth for Accent has been enhanced promotional and loyalty programs. “Our ability to give back, such as ‘buy four get one free’, as well as help our CPG partners get in front of the consumer has proven to be a success model, especially in a grey/blue collar manufacturing world,” said Rosenberg.

Besides customer-facing features, dedicated channel support for micro markets has been imperative. Rosenberg employs a micro market customer care team and has a dedicated IT department just for the micro markets side of the operation. He also has processes for integrating the two different micro market operating systems, which can present a challenge especially when also incorporating a third system for the vending and OCS segments. “Getting to a point of integration with micro markets is the next hurdle,” said Rosenberg. In the future, he hopes new technology will overcome employees needing to understand and operate within three systems.

Despite any difficulties, Rosenberg sees micro markets as a great opportunity. He finds micro markets at least double revenues versus traditional vending at a location. “Micro markets give you the ability to reinvent your existing footprint with fresh and better food, expanded variety in both beverage and snack and health and wellness across all categories. Consumer awareness and their desire to want to touch the product and understand what they are putting in their bodies is very relevant in today’s shopper’s mind,” explained Rosenberg.

Having receptive customers is very important to the success of micro markets. That is the reason why Accent assesses each potential micro market location carefully and has a set of qualifications. “We try to target $40,000 in minimum sales,” said Rosenberg about new micro market installations, “Whether that’s 100 people or 300.” Rosenberg’s focus is on the employees, their access to other eating options and the location’s hours of operation. With certain locations, Accent is willing to place a micro market with fewer people because experience has shown call centers, highly secure facilities and 24-hour locations usually produce a high rate of return on a micro market.

Even with the required minimum revenue, Rosenberg doesn’t believe the industry is close to saturating the micro market segment. “We are growing by 75 to 100 micro markets per year,” he said.

“[As a micro market operator,] we are truly merchandising like a retailer, not for a captive vending audience,” said Rosenberg. Items sell for higher prices because of the variety and Accent’s ability to meet different day parts as well as the melting pot of consumer needs whether that is portion-control items or non-carbonated beverages.

Food sets Accent apart

Accent recently decided to take control of its own destiny by consolidating food production under one roof for both micro markets and vending. Prior to that, distribution was too difficult and using local catering companies wasn’t working.

“We decided that we were going to take the time to invest in the production process of our foods by developing quality control standards and improving the menu,” said Rosenberg. “It’s probably one of the smartest decisions we’ve made in the last few years.”

As of May 2014, Accent has been directly involved in producing its own fresh, premium food line. The operation employs an experienced food service operating partner who drives menu creation by following consumer trends. There is also an emphasis on consumer needs, such as gluten-free or vegetarian. Accent tries to tailor menu items based on the time of year as well. For instance, during Lent the company offered vegetarian as well as grilled and fried fish entrees on Fridays. “Our food is our lead,” said Rosenberg.

Coffee service on the rise

On par with micro markets for one of Accent’s most profitable segments is office coffee service. “OCS is moving at the speed of light,” said Rosenberg, who really enjoys this aspect of the operation. The “Starbucks Effect” has created passionate and well informed consumers, leading buyers to purchase differently. According to Rosenberg, the coffee buyer wants more variety and better quality and they are willing to pay more for it.

“You can’t just have a black and a decaf, you have to have flavored creamers, iced coffee, Cappuccinos, etc.,” said Rosenberg. As the economy improves, he sees more employers wanting to bring back this benefit as a competitive recruitment or retention strategy for their employee base because the next employer has it. “We’re playing up on that,” explains Rosenberg. “We’ve diversified our portfolio.” Accent recently added new lines and several new specialty coffee brewing systems, which have also forced the operation to evolve with equipment education and technical capabilities to service all the unique platforms.

In central Texas, Rosenberg finds single cup is very strong. Buyers often have a preconceived system in mind, but Rosenberg presents multiple solutions, including one they may never have seen. “We push towards a whole bean or bean-to-cup solution because it’s the freshest,” said Rosenberg. “There’s nothing like the smell of a whole bean as it is brewed. That gives a wonderful experience for the consumer, the employee.

”However, where there is a strong demand for variety, a single-cup solution is optimal because the systems can bring in 12 to 24 SKUs to meet every consumer palate. “And the quality has caught up, or it’s at least quality enough that they are willing to sacrifice that freshly brewed pot,” explained Rosenberg.

As part of OCS, Accent also does pantry service — food and other items are delivered with the coffee and billed back to the location. Growing out of this idea, Rosenberg has one client that pays for concierge service, where employees can shop online, place an order and Accent will deliver the item, whether it’s a specific type of almond or a certain type of jelly for a PB&J sandwich. “It’s a challenge we’re enjoying,” laughed Rosenberg.

Technology pushes profitability

Accent is able to grow both the micro market and OCS businesses, while maintaining vending, by devoting time and resources to technology. Remote machine monitoring (RMM) is the most valuable investment the company has made. “Our ability to reduce routes, be more efficient and service the customer on demand is our greatest cost benefit to our organization. There is nothing else I can do to strip costs and increase service capabilities than enable remote monitoring,” explained Rosenberg.

It took four years for Accent to reach 100 percent RMM because they didn’t move forward without the right processes, discipline and buy in from the employees. The North Texas division of Accent was the last to be converted, being completed in the summer of 2015. “One thing that helped us succeed where others have failed is we didn’t force it,” said Rosenberg. “We moved out in the marketplace with a strong change management plan, we learned and adapted, before moving to the next route/market. ”Another benefit of RMM is knowing about an issue before the client does. “We can typically react and respond before it becomes an escalated issue that elicits an emotional response to leave us. It’s the best thing we’ve ever done.”

While Rosenberg believes strongly in RMM, cashless is another advancing technology, albeit slowly.

“We are just at 30 percent cashless. We find that we don’t have to cover every machine to get the full benefit. It’s more the 80-20 rule.” Over the next five years, Rosenberg plans to migrate to all vending machines accepting cashless payments. In the meantime, he is balancing his investment in this area and more importantly, the company’s bandwidth in backing and sustaining other processes that will deliver greater synergies or returns.

Offering the total package

In an environment with broad consumer demands and large numbers of locations that are price conscious, it’s important for Accent to sell on the fact that they are a total refreshment solution company. “We do everything we can to focus on bundled solutions to drive total value,” explained Rosenberg. “We have retention management, channel management and our team asks the location to give us everything, not just the coffee. We can usually sell against low price and commission with our total value proposition. And where we can’t, we have to make a conscious decision if we want to do business and whether it’s the right fit.”

Accent’s reputation for excellent service supports the bundled solutions concept. “First and foremost, your clients have to be able to speak for you,” said Rosenberg. Accent has some flagship clients that make very strong references. “We are big on saying ‘Don’t ask us, ask our current partners.’”

Accent promotes tours to allow potential customers to ask questions of existing locations. Rosenberg has confidence in what his existing clients will say in part because Accent has made strategic investments in nontraditional areas. “We have key account retention specialists in every market that are first responders and manage our client portfolios. We have channel management in our OCS and market divisions. [And] we have customer care teams to support immediate response to customer needs,” said Rosenberg.

“We’ve tried to create a culture of inclusion and a model which puts our most important asset first: people,” said Rosenberg. “Our people and our customers are our most valuable assets. And we operate with the highest level of respect and accountability to both.” Its dedication to service fits well with technology, which allows Accent to see real-time data, be nimble and proactively manage the operation.

“In 2014 we added $9 million in sales, 2.5 times what we have ever done,” said Rosenberg. He plans to expand further through acquisitions and organic growth. No need to look elsewhere for profits, Rosenberg is investing in his team’s success to create his own.

 

Operation Profile

Accent Food Services

Headquarters: Pflugerville (Austin), TX

Owner: Investors led by Silver Oak Services Partners

No. of employees: 240

No. of routes: 94

Micro market providers: Avanti and Company Kitchen

Technology: Salesforce (CRM), Cantaloupe Systems (RMM & Cashless)

Annual sales: Not Revealed