From Vending Market Watch AUGUST 10, 2018
5 LESSONS IN GROWING YOUR MICRO MARKET BUSINESS
When running a business, it can be difficult to know just how to grow. Especially in the vending, micro market and office coffee service industry, it is easy to get stuck in day-to-day operations — handling service issues, scheduling routes, ordering products, hiring, firing — and overall managing the business in a reactive way. If this is where you are, you are in good company. However, if you want to increase revenues and enhance your business, here are five lessons from successful micro market operators who have been in your shoes.
ASSESS THE SALES, NOT THE EMPLOYEE COUNT
Accent Food Services operates more than 250 micro markets in the state of Texas. Josh Rosenberg, president and CEO of Accent, has called micro markets a great sales opportunity — the segment contributing over $4 million in annual revenue to his company’s bottom line. His take-aways from installing micro markets are not to put undo importance on the number of employees at a location. What operators really want are good sales, so instead, look at access to other eating options and the hours employees are at the location. Rosenberg’s target is $40,000 in minimum sales for micro markets, and he achieves that with accounts as small as 100 people, along with the right mix of fresh and better food as well as expanded variety in both beverage and snack products.
DON’T BE AFRAID TO ADD FOOD
The ability to offer a wider selection of products to consumers drew All Star Services into micro markets in 2011. The move was a great success drastically increasing sales, 20 to 25 percent in some locations, that were previously being served by vending machines. Duncan Smith, vice president of operations, says the company’s food sales alone jumped from 8 percent to 16 percent with the addition of micro markets. Food is part of the expanded options All Star Services offers and it adds to the bottom line. Smith will tell you that food items in micro markets sell better than food items in vending.
ALIGN THE EQUIPMENT TO CUSTOMER NEED
When Imperial Co. launched micro markets in 2013, Lance Whorton, president and CEO, felt late to the segment and wanted them installed fast. The result wasn’t as well thought out, efficient or profitable as the vending side, forcing Whorton and his team to reevaluate. What resulted was a unique approach to micro markets that included placing units from three different micro market suppliers.
Needs of the customer location drives Whorton to consider certain factors of each micro market supplier, including cost, reliability, downtime and what he calls true enhancements, such as being progressive with promotions or tying multiple channels together, such as foodservice and micro markets. It requires more work for his team to use three different systems, but ultimately he wants to create a impactful experience for customers, identifying them and providing a more convenient way to offer them what they want.
CONSIDER MICRO MARKETS A SEPARATE, RETAIL BUSINESS
The management team at Five Star Food Service, Inc. didn’t see micro markets as just another service extension, but a retail concept. Greg McCall, vice president of sales and marketing, shared how they designed a retail company within the vending company in order to keep the businesses separate. The company created a dedicated operational infrastructure with around 65 employees. Part of that team feeds the promotional needs of the micro market concept. It requires more work than providing a coupon for a free beverage, but creation of full retail-like promotions with loyalty discounts and chances to win high-value prizes. With more than 400 micro markets installed, it’s a high-revenue segment for the Chattanooga, TN-based company.
MELD SERVICES TO CREATE NEW SOLUTIONS
For Sterling Services, located in the Detroit, MI area, micro markets are the lead revenue generator in the unattended side of it’s business. Ray Friedrich, co-founder says that a good micro market route brings in $1.5 million in revenue, much higher than a vending route. However, he doesn’t want to stop there. Sterling Services started working with micro market and point-of-sale supplier Digital Checkouts because of the flexibility of its kiosk. During peak times, the kiosk can be operated by a cashier ringing out customers. Then, during all other hours, it operates as a self-checkout, providing a hybrid of foodservice and micro market. Friedrich says this concept has been successful because companies in Detroit are willing to spend a certain amount of money per employee to attract and retain talent. However, they also like the cost savings of an unattended refreshment solution. This meets them in the middle and shows being flexible in how you think of services can pay off.