Friday, November 17, 2017 | Today's Vending Industry News
Hanging Together, Or Separately

Posted On: 12/16/2009

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Our earliest vending industry memories are of traveling around the country to speak with the first generation of full-line operators in the late 1960s. Over the preceding 10 or 15 years, they had built vending businesses with central kitchens. Most had expanded those businesses from one-person startup enterprises to substantial companies, although some had been established firms doing something other than merchandise vending -- wholesaling tobacco products, operating jukeboxes, running a restaurant, and so on and on -- before boarding the full-line bandwagon in the late 1950s.

The founders of the successful startups also had varied backgrounds, but one recurrent narrative involved a recent college graduate with a few hundred dollars in the bank and a well-used automobile who purchased a couple of used cigarette machines and enough merchandise to fill them, went out and got locations, won referrals from them, and continued to grow by good customer service, prudent business practices and hard work. More than one of them, after telling this story, observed, "But, of course, you can't do that today. Equipment has gotten too expensive, operating expenses have increased dramatically and the market is saturated..."

Over the ensuing four decades, though, we have continued to run into operators who have not known that the market is saturated. They have found ways to start and expand vending enterprises, often by recognizing a niche, an unmet need in their local market area, and finding a way to fill it with a vending service.

There also are small operating companies, almost always family businesses and sometimes run by people looking to supplement retirement income, that are not intended ever to get any larger. Run capably, with close attention to providing good service to local accounts that are too small to attract the attention of more conventional operations, these enterprises can be valuable by taking the pressure off those larger operations. We have known midsize operations that work together with one or several little family firms for mutual benefit. A prospect that has just opened its doors and does not yet employ enough people to be an attractive location for a company that has to meet a payroll often can be served very well by a mom-and-pop business that need only show a profit at the end of the month. If everyone does a good job, everyone is happy, and the larger operation will benefit if the account outgrows the arrangement.

There are other kinds of small operation. Some have been started by college students interested in making a little money while experimenting with a business model. Others have been launched as part-time ventures when an opportunity presented itself and have turned into full-time careers.

We think it's important to keep this in mind at a time of renewed enthusiasm for government regulation. For example, as we remarked last month, the "Affordable Health Care for America Act" passed by the House of Representatives includes the requirement that chains of 20 or more restaurants post detailed nutritional and calorie content information on their menus -- and equates operators of 20 or more vending machines with chain restaurants. The same language appeared in the draft of the Senate bill published just before that measure was formally introduced, and we have no reason to think it's likely to be removed.

Setting aside the question of what any of this has to do with affordable healthcare, we note again that 20 vending machines can be operated by one person. The actual proposal seems to have been popped into the affordable healthcare measure by people who had been working to amend the Food, Drug and Cosmetic Act. We are informed that large restaurant chains favor it, because it would preempt the authority of states and municipalities to enact a horde of incompatible labeling regulations that would impose a burden on restaurant chains doing business in many jurisdictions. Fair enough; but we do not see how those 20-machine vending operators got included. Most of them are doing business in one neighborhood.

Our concern is that some large enterprises have been known to favor anything that raises the cost of entry for prospective competitors, and so may be prepared to look the other way when unjust proposals like this one are made. We think this attitude is (at best) shortsighted.

The vending industry has overcome many ill-conceived tax and regulatory initiatives by organizing effectively and working through its trade associations for the benefit of all operations, large and small alike. Vending always has been a rather specialized business; the average citizen seldom sees a full-line vending bank unless he or she works in, studies at or visits a location large enough to support what is inherently an expensive retailing method. For that reason, the industry is not familiar to the public, and so tends to invite attacks by the evilly disposed.

We believe that the industry still recognizes that solidarity never has been more important than it is now.