Monday, January 22, 2018 | Today's Vending Industry News
It's Time To Rock The Boat

Posted On: 3/7/2014

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TAGS: Vending Times, Vending Times editorial, vending industry, coin-op, vending machine, coin machine business, office coffee service, vending machine operator, micro markets, Alicia Lavay, vending equipment ownership models

Alicia Lavay, vending

The topic of location-owned equipment seems to be surfacing once again, and has aroused concern within the operating and manufacturing community. I have addressed this subject matter before, but it keeps coming up in new ways. Ignoring it won't make it disappear.

Back during the full-line vending revolution of the late 1950s and '60s, a number of large manufacturing concerns ran their own vending services. They bought the machines, made the food, inventoried the products and so on. In some cases, they hired a former vending manager or independent operator to run their self-operation as a sort of stationary route. Some large firms still do this, and many educational and healthcare institutions do, too. Many of them did and do pay their dues; they belong to their local and national trade associations, attend our trade shows, get on board vending legislative action campaigns and recognize that they have a stake in our industry.

Self-operation actually is a logical extension of corporate and institutional foodservice, a diverse business in its own right. The short form of the vending narrative is that the postwar economic boom created an opportunity for entrepreneurs to launch contract foodservice management companies that offered a large client an attractive value proposition. They would free the client from the need to retain, train and compensate its own in-house dining staff by contracting with a specialist organization that did nothing else. That organization offered a wider career horizon, and so attracted the most talented people. When vending machines for coffee, cup soft drinks and fresh food became available, some of those foodservice management firms became vending operators, too, and the new, fast-growing full-line vending companies acquired most of the others.

This state of affairs did and does not bother most vending operators. They may think a prospective client is making a mistake by choosing self-operation, but it is not competing with them for new business, and there always is the chance that the self-operation will come to its senses and ask them for a proposal.

And there are opportunities for profitable cooperation. During the financial turmoil of the late 1980s, it was not unusual for a client (often a hospital) to get a directive from higher up requiring it to start running its vending machines itself, rather than contracting for the service. A number of operators recognized that the foodservice director who had been instructed to implement that directive had a series of problems that the vending specialist could solve: acquiring and servicing machines, replacing equipment, even purchasing product in economical quantities. This led to the offer of a new value proposition, and kept the door open for a return to contract service if the situation changed again.

A vending machine, or a coffee brewer, or a micromarket is an appliance, and there is no legal constraint on anybody's owning one. The operator exists to give businesses in other lines of work a convenient way to turn over the burden of investment in equipment, staffing, training and logistics to an organization that does nothing else, and so can do them more efficiently. Sensible people may hope that an organization that's decided to run its own equipment will wake up one day and say, "We're making a mistake; our business is making frammises, not fixing coffee machines. Let's talk to some operating companies."

Operators can make this more likely with excellent service through equipment that's "clean, filled and working," and so building strong local reputations and burnishing the industry's image. But they also must recognize that there are respectable organizations that will choose to "self-operate." Freedom is only possible when it defends the right to be wrong.

Warehouse retail chains have been selling vendible products direct to operators (or anyone else who wanted them) for years. It is important to keep in mind that it is not illegal or immoral for a vending supplier to sell product to these chains, or for a location to own a vending machine. In fact, a manufacturer or supplier who refused to sell to a creditworthy customer willing to meet its price might -- nowadays, probably would -- face legal action.

Large retail outlets not only sell product, but also vending and amusement equipment. Because it's so readily available, a lot of it is owned or rented by locations today. If the location knows what it's doing, it protects its investment by contracting with a professional operator for technical support and consultation.

This issue has been with us forever, and it won't go away if we just refuse to admit that it exists so as not to rock the proverbial boat. We will do well to talk about it, recognize the opportunities it offers and encourage operators to explore them. In the final analysis, all an operator really has to sell is excellent, responsive expert service. There always is a demand for that.