Canadian Vending

News
Innovative Insights: Dumb And Dumber

Dumb and dumber


June 19, 2008
By David Murphy

A headline in the Toronto Star on
April 19 declared: “City out $293,000.00 as vending deal fails. No
services at arenas, city sites until October.”

A headline in the Toronto Star on April 19 declared: “City out $293,000.00 as vending deal fails. No services at arenas, city sites until October.”

Our profession – be it in foodservice vending or office coffee service and water – seems to just go farther and farther downhill.

When I read this headline I was not shocked, but more disappointed at just how dumb people can be. There are just too many questions here that need to be answered. We have two areas of concern on this story that should be addressed and both of these issues take equal responsibility for its outcome.

Advertisment

First we have the foodservice company that proposed such a ridiculous bid in the first place at “39 per cent gross sales.”

As recently as my last article I wrote that rebates have to either be eliminated or small enough to cover an inconvenience; for example, a five per cent maximum for use of power, etc. Not only is our profession as a whole in a downward spiral, which will not recover in our generation, but add to this kind of greed? You just greased the pole.

Now we have these so-called educated politicians – an oxymoron if I ever heard one – who accepted the bid it the first place. Add to the mix some not-so-bright bureaucrats who approved the numbers and you have a combination for disaster. No wonder our municipal economy is in financial crisis.

There is a huge lack of common sense in the decision-making, but then again we all know that. So we have two areas of disaster here, an operator who cannot add and a public system that cannot subtract.

In the real world this foodservice downturn is changing slowly for the better.

Just recently in Toronto bids were placed for services for beverages. One of the bidders was supposedly told: “Your bid is unacceptable, so forget it,” only to be called weeks later and asked to return to the negotiating table.

I am also hearing that the education system, which used to get 30 to 40 per cent return on beverage sales, is now down below 20 per cent with no extras.

It is a good thing that some common sense (which means dollars and cents) has returned to the bottlers. I, myself, refused to offer a high premium for an account less than a year ago to new foreign industry account (practise what I preach).

There are many new ways to make vending profitable.

One of the expanding areas is to offer management contacts such as cost-plus. This has proven to be very successful with a limited number of companies in the marketplace.

The account supplies the financial need for equipment and the professional operator does what he does best with knowledge and labour. This can be a cost-plus and set fee or just 10 per cent of sales. The customer keeps the profits.

This is a win-win for everyone and will be the next generation of foodservice in 75 per cent of all profitable accounts. It has been working well in the automotive industry for several years now.

There are several various ways to structure your fees, so take the time and educate yourself or give someone like myself – a consultant – a call and move forward to a new beginning within your profession.

As always, we are professionals and need to use the talents we have. With all the pressure in the marketplace, you need to secure some knowledge. There are many in our industry willing to help and, contrary to popular belief, there is a lot of good business to be had – large and small.

So, educate yourself and sharpen that pencil several times. There is no longer any room for error.

And as we saw in the Toronto case, there will always be a dumb and dumber. Just make sure it’s not you.

David Murphy has been in the foodservice profession since 1967 with mobile, cafeteria, vending, and office coffee. He is now a consultant and broker to the industry. Visit his website at www.davidmurphyconsulting.com ,or call him, toll free, at 866-428-8428.


Print this page

Related



Leave a Reply

Your email address will not be published. Required fields are marked *

*