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What puts money in your pocket?

Operators share challenges and strategies for success


April 1, 2008
By Erik White

Topics

The New Year’s resolutions of the vending industry aren’t too different
from those of the snack-eating and coffee-drinking public.

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Operators share challenges and strategies for success

The New Year’s resolutions of the vending industry aren’t too different from those of the snack-eating and coffee-drinking public.

Some are thinking about eating healthier – and mostly because their customers are. But some are finding that many of those who pledged to swear off chips and chocolate aren’t necessarily vowing to drop a loonie in a slot for a granola bar.

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Other vendors are focused on how they spend their hours. Some are looking for more quality time with certain aspects of their business. Others want to spend less time in the delivery van running up the fuel budget.

And there are those thinking about the future. Some are wondering if now is the time to expand or the time to sell, and some are thinking about clearing their path to success by taking some of the other cars off the road.
Canadian Vending asked operators across the country to talk about the biggest challenge facing them in 2007 and how they plan to tackle it. Here’s what they said.

Exclusive Vending
Elliott Lehman, owner
Dartmouth, N.S.   •   One employee, about 70 sites

Challenge: “The main challenge is finding product,” Lehman said.
With no warehouse distributors in Atlantic Canada, Exclusive Vending has a tough time finding unique products at Costco and cash n’ carry joints.
“Pops, chips those are standard. Everybody’s got them,” said Lehman. “What I like to do is give my people something different.”
Specifically, he’s looking for packaged muffins, doughnuts and pastries. But as many products have only a two-week shelf life, there’s no point shipping them in from Ontario or Quebec.
Strategy: Until another option presents itself, Lehman is going to try some pre-packaged baked goods from a Quebec distributor that won’t spoil for 30 days.

Pause-Café Alto
Dino Semeraro, co-owner with partner Robert Arnaldi
Montreal, Que.   •   Two employees, about 50 sites

Challenge: Semeraro takes great pride in his company’s customer service, saying it is his primary focus. So, as long as they keep putting their clients first, there should be no problems. But what does worry him are the “fly-by-night” vendors popping up in the local market lately. He said he sees a new face in his supplier’s parking lot every week.
“The way I look at it is very simple: with everybody and their neighbour trying to get into the vending business and not doing a good job at it, it sort of gives us and other vendors a bad name,” Semeraro said.
Strategy: Buy out some of the smaller competitors to clean up the marketplace and protect the reputation of the industry.

Marmax Vending
Brett Bowe, president
St. Catharines, Ont.   •   Three employees, 40 sites

Challenge: “We want to expand our coffee service,” said Bowe. “We just feel it’s an attractive area of the market to be in rather than snack vending.”
What’s attractive, he added, are the lower capital costs. Coffee machines cost much less, require smaller supply vehicles and less warehouse space than food products.
“The changing pace of the consumer too, as we become more health-conscious, we’re getting away from pop and chips. But coffee seems to be one of the vices nobody is giving up.”
Currently, the coffee business makes up about 10 per cent of Marmax, which serves Ontario’s Golden Horseshoe, running from Toronto to Niagara Falls. Bowe wants to double that before the end of the year.
Strategy: “We do offer it, but we haven’t sold it like we should,” said Bowe. “We need to put together a slicker marketing package.”

Gourmet Coffee Specialists
Trevor Westwood, president
Winnipeg, Man.   •   18 employees, undisclosed number of sites

Challenge: “Our biggest challenge for the Winnipeg market is trying to grow in a stagnant economy,” said Westwood, an industry veteran with 30 years experience. With Alberta and Saskatchewan pulling business away from Manitoba, there aren’t many new companies to have lunchrooms to put machines in.
Strategy: “We’re certainly going to be more active in promotion of what we already do. A lot of our business is through word of mouth, which is good because it makes it so it’s not just us doing the education,” Westwood said.
He said Gourmet Coffee has tried conventional advertising, but part of the problem is who to target. “The president, the personnel manager, the office manager, the HR manager; anyone of that group could be making that
decision, so who are you going to advertise to?”
So, Westwood is planning a creative campaign built around word of mouth and networking.

Red Carpet Vending, a division of Van Houtte Café
Doug Hanson, operating supervisor
Saskatoon, Sask.   •   15 employees, about 50 sites

Challenge: Healthy alternatives. The local Catholic school board brought in new rules last year requiring half of the products sold in schools to be healthier snacks, which tend to be more expensive than chips and chocolate bars, but don’t sell as well.
Strategy: Hanson said they plan to continue the 2006 strategy in 2007 — price healthy snacks closer to cost and boost the price of the usual salty and sweet treats by a quarter. Hanson said despite the
difference in price, the less healthy products continue to sell better. But Red Carpet has had some success moving healthier snacks at the university and Hanson said he uses that product line to sign up new customers.
“The healthy alternatives are something I keep in my back pocket for a prospective account,” he said. “If they’re not convinced, I say ‘Well, I can do this’ and they sign up. But after three months when (the healthy alternatives) are not moving, they say ‘Put in what you want.’”

C&W Vending
Wade Zingle, owner
Edmonton, Alta.   •   Five employees, 125 sites

Challenge: Planning the future. Zingle expects that bill validators will soon be the industry standard, after customers get used to them at sites serviced by larger vendors such as hospitals and arenas. “It hasn’t hit quite yet, but it’s going to,” said Zingle, who’s spent the last 31 years in the vending business. “I know it is.”
The trouble is, the last time he priced it out, installing validators would cost between $700 and $1,200 per machine. “I’m looking at $100,000 in the next year and a half just to keep up with technology, just to compete.”
At the same time, with Alberta booming, Zingle figures the business is never going to be worth more than it is now. And his 19-year-old son isn’t sure he wants to get into vending.
Strategy: “I’m really at a crossroads,” Zingle said. “I don’t know whether I should reinvest and continue to grow or put it up for sale and sell to a bigger company.” He expects to decide before the end of the year.

Up Island Vending
Jimmy Newman-Tyler, owner
Victoria, B.C.   •   One employee, 40 sites

Challenge: With gas prices regularly topping a dollar on Vancouver Island, fuel is a major expense for “one-man show” Newman-Tyler, who serves the B.C. capital and its surrounding area in his Ford Aerostar.
Strategy: “The only thing I can do is run my route as efficiently as possible,” said Newman-Tyler, who has always roughly mapped out his rounds.
“But now, say I got a location a little off the beaten track and it’s Christmas when things are a little slow, I might give that one a miss.”o