There’s an old story, familiar to anyone who has attended enough sales training seminars, about two competing shoe companies that each sent a salesman to a remote island. Upon their arrival, they found that the inhabitants all went barefoot all the time. One salesman called his home office and said, “This is a really lousy territory. Nobody here wears shoes.” The other one reported, “This is the greatest territory I’ve ever seen! Nobody here wears shoes!”
I think of this story whenever I hear someone describe the vending and coffee service market as “mature,” or when I see a place that obviously could benefit from our industry’s professional service but does not have it. I work out at a small privately owned gym in my home town, and know the owners personally. They opened the club about a year ago with a limited budget, and so they have been making improvements slowly.
They know I also run a business, and we sometimes compare notes. When I’m asked for my opinion about their plans, I’ll give it, but otherwise I keep my mouth shut. After all, it is supposed to be my time to decompress! A few months ago, I noticed that someone had installed a bulk vending machine stocked with Mad Dog Energy Products Chocolate Chews. I thought to myself: Now they’re thinking! I told the owners that I consider it a terrific product and the gym is a great venue for it. I asked them who was operating the machine. They told me it was owned by one of the gym members and they would pass along a copy of Vending Times. I figured that, if they or the machine owner were interested in knowing more about vending, they could read the magazine.
Last week, I was weight-training with the owner, and one of the members wanted to purchase a bottle of water. The proprietor had to interrupt our session to handle the transaction. She grumbled, “If the girl at the front desk had shown up for work today I wouldn’t have had to interrupt our workout.” I replied, “if you had a vending machine, you wouldn’t need someone on your staff to sell bottled water.” Her feeling was that a machine would probably malfunction and she would have to go to the store to buy the water anyway (I’ll take up the question of “industry image” in another column). “But,” she added, “some clients have been asking for coffee, so a brewer might be a good idea.”
I went on to tell her that I had noticed her sending her employees out to the store to buy water, paper towels and toilet paper. “Did you know that you could contract with an operator to supply these things, so you could spend your time more productively running your business and selling gym memberships?”
My trainer obviously needs an education in vending and OCS because she believes she can handle hot and cold beverage sales, and paper goods supply, better herself; or perhaps that no one is interested in making a proposal to do it for her. But who am I to tell her how to run her business?
What puzzles me is whether any local operator is calling on this gym, and on a great many places like it. I know it isn’t a high-volume stop, but it is has about 400 members, is open weekdays from 6 a.m. until 10 p.m., and from 7 a.m. until 2 p.m. on weekends. It conducts four to six classes each day, averaging about 10 participants each. It is not a price-sensitive kind of location, and the very limited variety of cold beverages it requires – bottled water, certainly, and perhaps a small selection of sports and energy drinks – all command prices well above the average for the usual business-and-industry soft drink mix. These could be accommodated by a classic closed-front machine that, with some attention to adjusting space to sales, might be serviced once a week. I don’t see how this wouldn’t be a money-maker.
I think, too, that a coffee service operator might come up with a mutually satisfactory program here. A coin-controlled single-cup brewer backed up by a point-of-use water treatment system that also delivered chilled drinking water, well-merchandised to highlight its extreme purity, would more than pay for itself; it would offset the cost of the paper goods that such an operator also could supply. And an operator with both OCS and vending capabilities (which describes most operators in my market area) could put together a program offering the advantages of both.
I wonder whether much of the present problem results from a generally weary and narrow-minded perception of the business we’re in. Three decades ago, our then senior editor Tim Sanford interviewed videogame pioneer Nolan Bushnell. Of course, the question of the “vanishing street location” came up. Bushnell suggested that operators thought there was no new business available, because any place that did not already have games installed obviously was not a game location!
Vending and coffee service operators seem to use this criterion too. Both industries started out serving a very wide variety of locations, most of them small. Yet it seems as though today’s operators have been conditioned to define their specialty as providing low-priced convenience items in high-traffic stops. But we all know that this is no longer the case. Operators have adapted creatively to smaller average workplace populations, but many seem to be suffering from a real sense of loss, mourning the end of the Golden Age. Things may be harder today, but the tools are better.
Why not look at the rise of new kinds of locations with customers who want service – and are willing to pay for it – as an opportunity (like the shoe salesman with the great territory)? The way I see it, selling 50 cups of coffee at $2 each produces the same gross profit as selling 200 cups at 50¢ each. A few operators have figured this out. They approach new business by determining the revenue they need to meet their profit goals, then design varied programs to provide that return while addressing the needs of different kinds of client. Unfortunately, this approach is not exactly sweeping the nation.
Our industries have spent half a century inventing and perfecting ways to serve the away-from-home market. This market today is huge, and its needs have not yet been met. So the next time you think there are no good locations out there, reevaluate your strategy and take a second look at the market as it is today, not as it used to be. A therapist once told me, “If you wait to ‘find yourself,’ you’ll wait a longtime. What you need to do is create yourself.”