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Healthy Vending New York Embraces Change To Stay At Front Of Competitive Market

AHEAD OF THE CURVE : Robert Nadler, who founded Healthy Vending New York (originally ASA Vending) in 1995, sees pantry and coffee service as the biggest opportunity moving ahead and recently established Coffee Management Group to pursue that business. BRONX, NY Healthy Vending New York's recent name change from ASA Vending speaks volumes about moves the company has taken to stay ahead of the curve during a dramatic evolution in the workplace refreshments landscape over the past two-plus decades ...

April 25, 2018 by Emily Jed

AHEAD OF THE CURVE: Robert Nadler, who founded Healthy Vending New York (originally ASA Vending) in 1995, sees pantry and coffee service as the biggest opportunity moving ahead and recently established Coffee Management Group to pursue that business.

BRONX, NY – Healthy Vending New York's recent name change from ASA Vending speaks volumes about moves the company has taken to stay ahead of the curve during a dramatic evolution in the workplace refreshments landscape over the past two-plus decades since its start in the business.

Another telling indicator of the changing times is the company's recent establishment of a division called Coffee Management Group to focus on burgeoning demand for office coffee and pantry services in the greater metropolitan New York market.

"We were a vending company that did coffee, but as demand for coffee and pantry services continues to grow in conjunction with coffee, we're evolving into a coffee company that does vending," said Healthy Vending New York/Coffee Management Group president and founder Robert Nadler. "Everything revolves around coffee in the world, which puts us as a company, and all of us as an industry, in a very good place."

With decades of vending know how under his belt, Nadler credits much of his company's continued success in the highly competitive and sophisticated metropolitan New York market to his firm belief in embracing technology every step of the way, and going the extra mile when thinking outside the box to give customers what they want.

TALKING SHOP: From left, vending route manager Edgar Plaza, Cary Werner and Mark Marciano compares notes on key accounts. Much has changed since the company got its start with a single Snapple vending machine (the original one) more than two decades ago.

Cary Werner, a long-time friendly competitor to Nadler, came aboard a year and a half ago as executive director of OCS operations, markets and pantries to focus exclusively on that business, which has been a rapid area of growth.

Director of vending operations Mark Marciano joined Healthy Vending New York two and a half years ago. He had his own vending company for 25 years, and then was Kraft Foods'/Mondelez International's sales representative for the metropolitan New York market. The industry brought both Nadler and Werner together with Marciano early on, and all have maintained close ties ever since.

"What I've learned the hard way is that you can't be everything to everyone," Nadler said. "Everyone has to know everyone's job, and we do; but it's very important to specialize with a laser focus on providing the best equipment, products and service in each area of our business. Mark's focus on leading vending and Cary's on OCS and pantry has been the perfect fit."

Healthy Vending New York operates nine vending routes in four of the Big Apple's boroughs (excluding only Staten Island). Two and a half routes – and growing – are devoted to Coffee Management Group's OCS, pantry and micromarket business. The Bronx-based company's service radius extends to eastern Suffolk county on Long Island, and into parts of New Jersey and Connecticut. It has a team of 26 employees, operating nearly around the clock, from 2:30 a.m. – when Nadler starts his day – to 7 p.m.  

The Beginning

Nadler and a friend launched ASA vending in 1995 with a single machine at a Queens gas station. Nadler owned a retail meat business and the duo had been searching for a side venture.

"My partner saw a Snapple machine in a gym in Brooklyn," Nadler recalled. "We had only seen Coke and Pepsi machines and Snapple was a new tea company with a wide-mouth bottle. It seemed innovative and unique."

So they contracted with Snapple for $43.25 a month for their first machine and stored their product in the basement of Nadler's meat business.

"We didn't even know how to open the machine at first," Nadler recalled. "I knew someone who was a mechanic at Coca-Cola who showed us how to load the machines. We knocked on doors, and quickly secured more locations throughout Brooklyn."

Before long, they were deploying Coca-Cola venders, which Nadler recalls cost only $21 a month before the beverage giant supplied them free of charge. The addition of snack machines spurred their next round of growth. Before long, their fledgling vending route had grown large enough to require the operators' full focus, and Nadler's brother took over his meat business.

Werner's industry background spans nearly three decades. He founded his own vending and office coffee service in 1997 and ran it for 11 years. He credits industry veteran Dick Hall of Regal Coffee (East Northport, NY) for teaching him everything about OCS, from repairing machines to running water lines, the A to Z of water filtration and instilling a passion in him for the business.

He sold his OCS operation to Van Houtte in 2008 but maintained the vending portion of the business, which generated about $1 million in sales.

"But with technology advancing, especially with credit card readers becoming necessary, I had to make the decision to spend the money to invest or join the big guys," Werner recalled.

He decided in 2009 to sell his vending business to Answer Vending (Farmingdale, NY) and joined the metropolitan New York vending powerhouse as regional director for its corporate operations. He played an integral role over his 10 years with Answer Vending in growing its coffee service segment to $2 to $3 million in sales, while overseeing 21 of its 80 routes.

Werner's and Nadler's first introduction and start of their business relationship was 20 years ago, when a mutual friend in the industry introduced the competitors because he thought they might want to consider swapping some of their business.

"It made sense, so Rob and I made a simple handshake deal to trade his Long Island business for some of my Queens and Manhattan business," Werner recalled.

The two remained friendly, and a year and a half ago, an opportunity arose for Werner to join Healthy Vending New York to apply his passion for coffee and pantry services and keen focus on shifting trends.

Bean-To-Cup Boom

One of the most pronounced, he says, is a shift from single-cup capsule systems to bulk-loaded bean-to-cup machines. "At one point, everyone wanted Keurig, but two things happened over the past three to five years that paved way for bean-to-cup machines to come back in with a vengeance," Werner said.  "One is the price point of 50¢ to 75¢ a capsule, and the other is that the millennial community is focused on being eco-friendly reducing the environmental footprint."

Bean-to-cup machines reduce the carbon footprint by 70% to 90% over nonrecyclable #7 plastic K-Cups, Werner pointed out. And they produce a fresher quality cup of coffee, and for only 25¢ to 30¢ a cup. The majority of Coffee Management Group's bean-to-cup clients opt for micro-roasted coffee beans from its roaster For Five, based in Maspeth, Queens, NY.

Another concern that bean-to-cup machines eliminate is the pilferage associated with single-cup portion packs, which can rack up the bill substantially for employers who provide them as a workplace amenity.

"A lot of corporate offices want a quality cup of coffee for their employees. Having two baristas per block in Manhattan is definitely driving the trend to bean-to-cup," Werner said.  "People want quality and if you give them quality coffee, they'll pay. They realize the value that an average bean-to-cup of coffee costs 30¢ a cup versus $4 to $5 at a local coffeehouse."

Coffee Management Group's bean-to-cup equipment of choice are De Jong Duke's Nio 20.3 and Cafection's Total 1.

The Nio machine is unique in that it has two bean hoppers and two grinders – one for regular coffee and one for espresso.  A piston capable of high compression allows different pressures for regular brewed coffee and true espresso with authentic crema on top.

Cafection's Total 1 uses a reverse French press brewing process. Both machines have soluble product hoppers that Coffee Management Group fills with Peet's-brand true vanilla flavored drink, 100% skim milk and Nestle's hot chocolate mix, which can be mixed and matched dozens of ways by the consumer via a touchscreen display for a plethora of specialty hot beverage options.

For single-cup enthusiasts, Coffee Management Group offers Massimo Zanetti's OC system. Its cartridges are made from a #5 recyclable plastic. "They are more competitively priced than Keurig and Flavia, with less of an environmental footprint," Werner said.

Still, some locations opt for airpots, which remain the most economical solution. "But fewer and fewer locations want to assign someone to making the coffee and cleaning the pots and people want to choose their own strength and variety," Werner added. "That's why the bulk of the market has reverted to bean to cup."

Beyond hot beverages and pure water, sparkling beverages are fast becoming part of the mix expected by employees, and increasingly are provided free of charge by employers in today's breakrooms.

FREE FOR ALL: At its largest account, Coffee Management Group serves 1,000 millennials on 11 floors. Above, Cafection Total 1 and DeJong Duke Nio 20.3 coffee machines and Lavit cold beverage system and gravity bins filled with goodies deliver free refreshments around the clock.  In right photo, custom-built drawers, three rows high under center island, provide easy access to single-serve snacks.

Big Things, Small Packages

Coffee Management Group recently began installing New York City-based Lavit LLC's chilled still and sparkling water dispensers. The machine accepts 100% recyclable aluminum "EcoCap" cartridges to produce still or sparkling flavored drinks. Lavit beverages, available in 40 varieties, contain no or low sugar and are naturally flavored, with 10 calories or less.

Werner said the system has been extremely well-received as a less expensive, more environmentally friendly alternative to canned seltzer, which is also enormously popular among its clients.

"Counter and storage space are at a premium, especially in Manhattan, and the bulk of our business is there," Werner pointed out. "It's big advantage that Lavit is very compact and fits easily in limited space."

Coffee Management Group placed its first Lavit Cooler Water Cooler at its biggest client, which has 1,000 employees.

"The minute it was on the counter, it sold itself. They lined up out the door ­– all millennials," Werner said. "I knew it would be a hit. We're always looking for the next big thing that's health-conscious, and it's extremely eco-friendly, so it's a win win. We had trouble getting products fast enough."

The capsules cost around 55¢, in line with the cost of a single-cup coffee capsule.  Clients are attracted to the fact that the aluminum capsules are produced with one-seventh as much aluminum as a 12-fl.oz. can. "When you think of the amount of aluminum I'm piling into a two-door cooler ­– about 500 cans – it takes a truck to transport. Meanwhile, I can fit the same amount of Lavit drinks in a little grocery shopping cart. It's a massive difference in the amount of an impact on the environment."

Werner said the machine also appeals to employees because they enjoy the experience of being a "cold beverage barista." For the operator and the location, another advantage is the minimal labor and storage space required compared with canned drinks.

Going Green

To satisfy growing demand for eco-friendly breakroom supplies on the part of the majority of its pantry customers, Coffee Management Group offers a full line of Emerald Brand products that it procures from Paradigm United Supply (Syosset, NY). These include "Tree-Free" bath tissue, cutlery, cups and plates made from rapidly renewable agricultural fibers like bamboo and wheat straw.

"It costs about 15% higher than average, but pricing has come down tremendously," Werner said.

MEASURABLE RESULTS: Coffee Management Group provides its clients with an annual impact statement like the one above that quantifies how purchasing "tree-free" bath tissue, cutlery, cups, plates and other breakroom supplies reduced their environmental footprint.

Emerald Brand provides Coffee Management Group with a report for each of its clients that purchase the products (see example above). "We print it out for them," Werner said.  "All major corporations love to show off these impact statements showing how much their efforts save in waste in landfills and trees."

Everything But The Kitchen Sink

Coffee Management Group's biggest account, in which it placed its first Lavit machine occupies 11 floors, so the operator has attendants onsite day and night to keep the breakrooms stocked.

"We do all their coffee and eco-friendly paper goods, Lavit, cold brew, snacks, cans, kegerators, fruit, tomatoes, hummus, guacamole, peanut butter, jelly, bread," Werner said. "It's a far different world than in the old days of coffee service."

Coffee Management Group added cold-brew coffee to the mix at that mega account when Werner learned it was trying bag-in-box cold brew coffee from another supplier. The coffee veterans jumped into action and offered a trial of their own fresh cold-brew coffee from their roaster plus a kegerator.

"We filled our truck with nitrogen cylinders and kegerators, and had six of us there with a keg on each side of the room," Werner said. "When we asked for their reaction, 100% of employees wanted us. They've gone through a dozen kegs a week in the winter! We try to do some kind of product change every two weeks with OCS and pantry service. People love new, even if it's just one thing. At one client, we added freezers with ice cream."

Pure And Simple

Water filtration may not be in the spotlight with all the sizzle surrounding coffee and pantry services, but it has become a significant and profitable piece of Coffee Management Group's business. Filters play two roles: as a means of delivering pure water as customers move away from five-gallon jugs, and protecting brewing equipment and the integrity of the coffee.

"We put a great filtration system on every coffee unit we put out," Werner said.  "It assures great taste and protects the machine, which minimizes service calls. It's almost a whole other division to our business, the service and job of putting filters on thousands of machines. We have people doing it every day; it's very profitable."

Nadler pointed out that New York has great-tasting, high-quality water but many buildings have old pipes, which can necessitate more frequent filter changes than the norm.

"The pipes can kill the lifespan of filters," he said. "Sediment, rust and lime become a problem, especially if construction shakes things up. Machines have electronic valves that need to be protected, and we want to assure quality for our customers. They want the same and are willing to pay for that assurance."

Vending Trends

On the vending front, just as in OCS and pantries, the company that built its business on soda has seen sales of traditional regular and diet soft plummet while sparkling low- and no-calorie alternatives have taken off.

"We sell a tremendous amount of flavored seltzer; people want bubbles but not soda," Nadler observed. "The percentage of our beverages that are soda is a one-digit number. If we sell 50 cases of beverages, seltzer and water are 40% to 45% and then maybe two cases are Coke, two are Diet Coke and one is Sprite. There's also big demand for Bai and other alternative drinks; flavored waters that are not caloric are huge now."

Meanwhile, in Healthy Vending New York's snack machines, it seems the more things change, the more they remain the same, according to Nadler.

"Despite the healthy focus everyone sees everywhere, including at our pantry accounts, when people go to a vending machine, they want Snickers, M&M's Peanut, Doritos and cinnamon rolls. That is still the case," he said. "We do sell more 'healthy' products than ever and we meet the requests and wellness initiatives of our customers but it's still a minimal percentage of our vending business."

Leveraging the latest technology is critical to meeting the demands of today's customers and maximizing efficiency and profitability, Nadler emphasized. Healthy Vending New York uses Crane Co.'s Streamware route management system, and has been testing Cantaloupe's Seed logistics and cloud technology for the past year. All of its machines are equipped with VendScreen credit card readers that display nutritional information for every product. The company streamlines its warehouse operations using LightSpeed Automation's pick-to-light system.

CROWD PLEASER: Healthy Vending New York's nine vending routes operate across four of the Big Apple's boroughs. Pictured above is its bank of machines at 32BJ, the largest property services workers union in the country, at its union hall in Manhattan, which houses some 400 to 500 employees.

The Bronx vending company was a micromarket pioneer when the technology was in its infancy. "We put out eight to 10 of the early micromarkets with RFID tags on the products seven or eight years ago," Nadler recalled. "We couldn't figure out how to handle the theft, and all these SKUs, with only so much room in our warehouse. It was the early days of micromarkets; it was hard to source product, and it was a process of learning as we went."

He recalled that Kraft sent six people from different divisions and put in 43 SKUs in the company's micromarkets to show what could be done that couldn't be done in a vending machine.

"We did $1,100 a month with vending machines and $1,500 a week with micromarkets," Nadler summed up. "It was exactly how they sold it. Food is the whole thing, which makes micromarkets a whole other division than vending, handled very differently. It's retail, with fresh food involved, and different inventory control."

For that reason, Nadler opted to concentrate his company's efforts and resources on vending and on growing its pantry and office coffee service business; it has only a few micromarkets remaining in operation.

Opportunity Knocks

"The good news is there's enough business out there to go around," he said. "Vending is more cut-throat in our market and coffee is more friendly competition, because literally everyone is a coffee customer, but not everyone is a vending customer. Micromarkets and pantries are definitely cutting into the vending business, which is why providing both puts us in a good position."

Looking ahead, Nadler has concerns about how the pronounced trend of consolidation and fewer new entrepreneurs coming in will impact the industry as a whole.

"The large companies are buying everyone up and there's no new blood in vending, and we're in New York, a major metropolitan area," he reflected. "One after the other, people are disappearing. My kids are not likely to come into the business."

On the bright side, the veteran operator sees enormous opportunity for operators who think outside the box and adapt to the desires of the millennial generation that's the driving force in the workplace.

Meeting this cohort's demands for freshness, quality and ever-changing variety, in the world of social media has a ripple effect, for better or for worse, which Nadler emphasized gives operators even more reason to set the bar high.

As a case in point: one of Healthy Vending New York's accounts is Twitter's Manhattan offices, which has 700 employees. "You'd better believe they tweet – they're Twitter!" he remarked. "If they love you, they tweet to death. If they hate you, they will really tweet you to death. We can live or die by social media.

There's an unprecedented opportunity for us to deliver them an endless range of products, and to be heroes to employers who want to keep them engaged and happy in their work environment."