Five Star Bolsters Cashless Push With Promotion Focus

Posted On: 10/12/2018

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Five Star Food Service, a Canteen franchise based in Chattanooga, TN, deployed its first round of USA Technologies' G9 card-only and G10 mobile-enabled ePort cashless readers in 2014. In 2016, the company expanded its cashless capability to 9,000 more of its machines, equip-ping them with USAT's ePort Interactive device to take advantage of the marketing capabilities offered by its touchscreen display, which it also uses to provide nutritional information to consumers. The company currently has 15,000 machines in the field, and the number accepting cash only is down to 3,000.

"It made sense to push marketing and promotions through vending, with 9,000 machines equipped with the devices in the field," said Five Star's chief revenue officer Gregory McCall. "Now that they've been deployed for two years, we're really seeing the potential and are focused on expanding our use of their capabilities."

McCall explained that the company was inspired to extend cashless payment to its vending machines by witnessing customers' enthusiasm or cashless purchasing at its micromarkets, the first of which the company opened in 2011. Five Star also observed the higher check averages resulting from cashless transactions.

Blurring Boundaries

"We saw that employees loved using cashless payment in our micromarkets; 40% to 50% of sales were cashless," McCall told VT. "When USA Technologies came in to talk about expanding that technology to vending it made sense. So we put the card readers on 70% of machines –and we saw a double-digit same-store sales lift in the first year." Since then, cashless payment has increased to upwards of 40%of sales at most machines, and continues to grow. Moreover, cash sales average$1.05 while the average cashless transaction is $1.40.

"We prefer that they use credit cards," McCall said. "It covers all the associated costs and puts more on the bottom line."  

The Five Star executive recalled that be-fore adding the ability to conduct promotions on video displays, it was difficult for Five Star to execute them. Without the programmable screens, a promotion required drivers to affix decals to each machine and manually change the price. "Then they had to touch the machines a second time to remove the decals and reset the price, which really slowed them down," he recalled.  "It's been nearly impossible in vending, so we tended to not do it. Digital screens transfer control to the marketing department, taking the burden off the driver."

Remotely managed digital merchandising also gives Five Star the flexibility to segment promotions by specific machines, and to customize them accordingly. An ad can be displayed on all Pepsi or Coke machines, for example, or in accounts targeted for specific audiences (such as blue- or white-collar employees) – and, once it's developed, USAT rolls it out when Five Star pushes the button.

In addition to providing nutritional information and advertising Apple Pay as a payment option, Five Star uses the screens on its cashless payment devices to spotlight one particular product, then another, with no promotional offer attached. This has proven to lift sales of the featured item by 5% to 10%. "We will simply feature a product, like Doritos Nacho Cheese, suggesting that customers try it today," McCall explained. "This engages with them and reminds them to come to the machine. It works."

Five Star has designed a corporate charity, Feeding the Future, which it plans to pro-mote on its vender screens. The operation is working with USAT to roll out the program, which will flash ads describing Feeding the Future and inviting customers to make a contribution toward alleviating hunger simply by paying at the device.

Engineering Offers

Also in the works are plans for Five Star to work with product manufacturers to offer patrons a promotional code or other discount mechanism, in order to reinforce engagement and sales growth.

"Consumers will see that Snickers are 25% off today, for example, if they enter a promotion code to apply the discount. We plan to take it to that next level," McCall instanced. "Manufacturers are excited about vending, and want to give us discounts to promote their products to our customers. It will be very powerful to have discount promotions on the screens of 9,000 of our vending machines." Five Star currently runs similar promotions in its 1,000 micromarkets.

"Now, if Pepsi wants to promote Mountain Dew, for example, we'll be able to extend the promotion across the whole plat-form, including both micromarkets and vending machine screens," McCall emphasized. "It's powerful to give the manufacturer that extra bang for the buck. Again, we're working to build the digital platform so promotions are implemented from the office  – not from the field."

Five Star vice-president of marketing CJ Recher emphasized that, from the standpoint of today's customer, cashless payment is all about the experience: fast, frictionless transactions. This is demonstrated by the growing use of "mobile wallets" like ApplePay.

"Mobile payments make transactions easier; promotions and rewards create excitement and interaction to create a draw," said Recher. "Employees talk about promotions, and all this makes client and customer relationships 'stickier,' helping us to retain their business."

Five Star displays decals on its machines and runs ads on its digital screens publicizing ApplePay acceptance, and these have spurred its use. Currently, mobile payments account for about 10%of the company's cashless vending transactions.

The big kicker, McCall added, is that Five Star has seen a 30% to 35% transaction increase over credit card purchases with digital wallet transactions, which now average $1.70 to $1.75.

"The further the consumer gets from cash – and then from credit card – the more they spend," he observed.

Incorporating a loyalty program at Five Star's vending machines is the next step in its plans. This initiative still is in its early phases.

"We're very interested, but we have not yet determined exactly how we will do it," McCall said. "If you offer 'buy X number of products, get another X number free,' we feel like it's a push for one product or a reward for buying a product they're buying anyway, so we're looking to establish something different in our approach."

When it's ready to roll out, the solution will work through a Canteen app, powered by Troy, MI-based micromarket maker 365 Retail Markets. Called "Canteen Connect and Pay," it can be used in a location's vending, micromarket and cafeteria installations through 365 Retail's Connected Campus concept.

"It lets customers use their phones to pay and get points," Recher explained. "It's all about the smartphone being the control point of the universe for consumers; it's where they want to be. They can use one app and pay for everything, everywhere, and be rewarded." Five Star recently went live with the Canteen Connect and Pay app at a Kia manufacturing plant in West Point, GA, and at Asurion's headquarters in Nashville, TN, and sees great potential for its use in running promotions.

The vending company is also pushing the envelope on deploying leading-edge payment technology by offering Washington, DC-based Vagabond's vīv app in a few of its corporate dining facilities in the Nashville area. Five Star is currently limiting its use of the app to vīv's Order Ahead functionality, which is similar to a convenience that Starbucks, Panera and other fast-casual restaurants offer their customers.

Employees in the building can download the vīv app and order lunch from their office and pay for it on their mobile devices, then walk to the café and pick up their orders.

Additionally, every week, Vagabond's on-site nutritionist puts together a "healthier" meal bundle – "Esther's Choice" – that's available for order-ahead on vīv. It rotates every week, and Esther works with Five Star's kitchen teams in the cafes to develop the featured meals.

"From what I've heard, it's been well-received locally by our clients," Recher commented. "Vagabond is a very innovative company that has a lot offer an operator with a large base of business in metropolitan areas that's looking for mobile-order and mobile-pay options. Vagabond is challenging the industry to think outside the box – insert vending machine pun – and capitalize on the mobile revolution that's going on."

BEYOND PAYMENTS: Five Star Food Service chief revenue officer Gregory McCall (l.) and vice-president of marketing CJ Recher are leading the Canteen franchise's charge to leverage loyalty and marketing and facilitate payment at the point of sale in new ways to engage today's consumers, whose lives center around their smartphones.