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Issue Date: Vol. 41, No. 1 / January 25, 2001 - February 24, 2001, Posted On: 1/25/2001


Silver Linings


Tim Sanford
Editor@vendingtimes.net

Operators who have been in the coffee service business for more than a decade will recall the periodic rounds of belt-tightening among their clientele. Accounts confronting a contracting economy, or an unexpected market challenge, often began the process of pulling up their socks by cutting "freebies" provided to employees. Office beverages usually were among the first of these. Operators could respond by offering any of several coin-controlled options, from soluble coffee dispensers to batch brewers with coin-actuated faucets. Most OCS companies kept a few of these on hand to deal with sudden demand, and knew where to get more when the economy headed south.

We bring this up because it seems to be happening again. The Wall Street Journal reports that many large companies are cutting costs in response to the slowing economy. For example, health insurance titan Aetna Inc. plans to charge some 4,000 staffers in its Bluebell, PA facility for previously free coffee and tea. It expects the action to save $400,000 a year. Other leaders in the new economy drive are Lucent Technologies, Walker Digital and Xerox Corp. - which also is asking its people to make as few copies as possible!

WSJ quotes several personnel-relations experts who consider these moves penny wise and pound foolish. Among them is Rutgers University professor of management and labor relations Charles Heckscher, who condemned "nickel-and-dime cuts" and asked, "How can you be proud of a company that can't even afford coffee?"

The workplace services industry has burgeoned during the past decade, as widespread prosperity induced by the swift growth of new technologies has made the retention of good employees a top priority. Operators always have known that what they should be marketing is a service that will bolster the morale of location personnel, and make workers more efficient by giving them access to quality products on site. The 1990s were the time when this message really began to resonate with employers.

Employer-paid refreshments certainly are an attractive perquisite, and sensible managers know that contracting with a professional coffee service operation to provide premium beverages is not only among the lowest-cost "perks" imaginable, but is valued disproportionately to its cost. The "penny wise and pound foolish" argument is a strong one.

It also is true, however, that there is an ancient opinion in the vending industry that people do not truly value anything they do not have to pay for. Over four decades, we have known a number of vending operators who conduct their periodic "free coffee" customer appreciation days by sending a supervisor or attendant to the location to stand by the coffee machine, purchasing the coffee for the patron. The sound of the coins enhances the customer experience.

This suggests that operators who do not presently have a single-cup fresh-brew program in place for workplace clients would be well advised to add one. An employer who feels the need to tell staff members that they no longer will have access to free coffee might well take the curse off that announcement by adding, "But our operator is upgrading the equipment to offer you premium hot beverages, prepared freshly to your taste, one cup at a time, at any hour of the day or night, at a price that's a fraction of what you'd pay in a gourmet coffee shop." If one has to pay for something, one should have the opportunity to pay for something better.

Once employees have bought into this concept, a number of new opportunities emerge. The service, now self-supporting, can be expanded by adding anything that employees will pay for, and that can be delivered to them efficiently. The end-user becomes the decision-maker, as should always be the case in a free market.

At any historical moment, young industries are growing and mature ones are restructuring or downsizing. In today's variegated marketplace, the prudent operator will find ways to provide services that meet the needs and desires of clients at every point along the business life cycle. Doing this, of course, means making sure that sales personnel are thoroughly educated about each service option on the menu, the factors affecting its profitability, and qualifications for providing it. At the same time, the increased revenue generated by breaking out of the lowest-cost provider trap will more than pay for that sales training, and the technical support.


Topic: Editorial: Vending

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