Seven Day Vending Grows With Flexible Apriva Services Menu

Posted On: 10/8/2018

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Seven Day Vending was founded in 1986 by Walter Settles, the grandfather-in-law of its present owner, Richard Royer. Royer joined the company just before the onset of the Great Recession that began in 2008. He started as a route driver, then became a route supervisor and technician, and, four years ago, general manager. He bought the company early in 2017.

"In 2008-2009, our sales slumped," Royer recalled. "We set out to learn what our customers were asking of us, rather than just what we wanted to provide."

As a result of this research, the company determined to add cashless payment capability to its machines. It thus was faced with the choice of making a major investment in the desired cashless capability, or starting by replacing its legacy vending management software. Royer decided that making the move to cashless would make it more competitive and boost its sales. Thus, getting cashless vending up and running took priority over procuring and set-ting up a new VMS.

Recognizing that adding cashless capability would have to take place over time, Royer set out to get good answers to the essential questions: who would provide the card readers? Who would supply the payment gateway? And who would serve as the merchant processor?

Planning For Longevity

"We wanted to source our card readers from one supplier," the Tucson operator explained. "I wanted to find a partner who offered 'futurability,' and I chose MEI." A pioneer in electronics for the vending industry, MEI and its Easitrax software suite, which includes telemetry support, now are owned by Crane Payment Innovations.

That decision made, Royer evaluated gateway providers. MEI described the leading gateway providers and summarized their solutions for cashless vending. After studying the options, Royer chose Apriva because of its emphasis on security, based in part on its long experience with secure communication for government clients, and the flexibility of its vending applications.

"For each form of payment method –whether it be cash, card, closed loop systems, subsidizing, or any other number of electronic forms of payment – Apriva has its own toolbox to give operators exactly what we need to be competitive within and, even more importantly, outside our industry," Royer said.

One immediate benefit Seven Day got from its alliance with Apriva is the Driver Bookmark Card. While discussing the nuts and bolts of cashless implementation with Apriva, Royer explained that his VMS can-not import data directly from external sources like payment processors or hand-held DEX-capable devices, and asked whether there is an effective solution to totaling cash and cashless sales between  machine visits in order to reconcile  sales with withdrawals from inventory.

PROBLEM-SOLVER: Seven Day Vending owner Richard Royer (left) and senior route driver Ryan Ward check out Apriva Bookmark cards in the company’s Tucson warehouse. Drivers swipe the card during a collection; it records the time that has elapsed between the current and the previous meter readings. This permits easy reconciliation of cashless sales with the cash collected.
 


Cash-Card Reconciliation

"The Bookmark Card looks just like a credit card; it is carried by all our drivers," the Tucson operator explained.  "The driver swipes the card during a visit, just as a customer would when making a purchase; and it allows me to pull up and generate a report that reconciles the card sales right up to the exact time the driver serviced the machine. The card gives me a 'bookmark' in the data, so I know exactly when a driver serviced a machine. While we don't use DEX handhelds, Apriva provides us the same accurate information via their backoffice." This has proven to be an economical, efficient solution.

With that question answered, Royer began upgrading equipment in the field with card readers. He started with machines that had onboard multi-drop bus capability, which tended to be in the better accounts – but the very largest clients were not the first to receive the new capability.

"First, we looked for the highest-volume machines in that kind of location," he told VT. "We wanted to test the cashless option on equipment in client sites just under the first tier. We learned how to do it, and we added it to our sales presentation."

Seven Day Vending is growing rapidly. "We have gone from being 100% cash-based just five years ago to having some form of electronic payment on 50% of our machines today," Royer reported. "And that 50% produces approximately 85% of our revenue." The company has not placed any machines that lack cashless and remote monitoring functionality for more than three years.

"Cashless has given us a sales lift," Royer reported. This primarily is attributable to patrons' demonstrated preference for paying with their credit cards. On average, 70% of sales made through cashless-capable machines are made with cards; even patrons in the lowest-volume locations do 50% of their purchasing with cards.

Although Seven Day Vending cannot at present send telemetry data directly into its management software, that data has proven very useful in optimizing machine inventories. "We use our telemetry (sales) data to do a little bit of everything," Royer observed. "On a day-to-day scale, we use the data to see if there is anything out of the ordinary. We can see how a service call affected sales, so we may even learn that some-thing is not working before we get a report from the customer or a driver."

For example, he said, "Suppose we look at client X's sales and see that they did 100% cash sales yesterday, when they have averaged a 70%-30% cashless to cash sales ratio. That tells me that there is an issue with the mag swipe on that machine, and it needs to be looked at.

"Or suppose the opposite: the machine has made 100% card sales. Now I know that there is something wrong with the cash payment system."

Remote monitoring also enhances route efficiency, Royer continued. "Week to week, we use the data to pre-kit certain ac-counts we have. Those generally are public 'mass appeal' places with very little feed-back to guide us in changing the products." Pre-kitting allows different menus to be tried and evaluated.  "And on a month-to-month basis, we use it for simple sales-tracking purposes," the Tucson operator said. "We want to see how an account is doing, and which ones might need some re-merchandising to inspire sales."

Efficient Delivery

Making up route orders for cold drink machines also ensures that trucks don't carry more product than they need. Seven Day Vending uses 12-foot box trucks sourced from Penske. Royer observed that a truck able to fit into a normal parking-space prevents friction with locations and makes life easier for drivers, but it does put a premium on optimal loading.

As a former route driver himself, Royer believes that a good field service team is the key to strong sales and satisfied customers. "For a long time now, operators have been searching for ways to drive interest and inspire sales," he said. "The answer has been in front of them the whole time.

"The customer/driver interaction for us is key," the veteran operator told VT. "In-formation obtained from telemetry will not tell me what Joe Customer is looking for. We don't want our drivers to be lifeless robots that just fill machines. Vending is a hospitality business, and we thrive on our customers making requests and suggestions to their driver."

For this reason, Seven Day Vending trains its drivers to merchandise their machines. As they become proficient, they're encouraged to re-merchandise the venders in the accounts they serve, on the basis of as much customer input as they see fit. "What we use the technology for is to make sure that the sales reflect good decisions by the driver," Royer reported.

That information also is used to adjust route schedules to improve driver productivity. The majority of Seven Day's locations can be serviced efficiently with two or three deliveries a week. The largest ac-counts, like 24-hour call centers, require daily service.

Meeting The Market

As public preference has shifted toward cashless sales, the classic vending concern with pricing has become less critical. Seven Day Vending has implemented pricing by category, with three or four categories in each machine. "For example, all our candy might be priced at $1.25," Royer instanced. "This gives the driver flexibility in changing items to accommodate location requests."

Vending patrons today also are receptive to higher-priced items, he added. "People will pay for what they want, and they want a product – not a price," he said. This enables the operator to offer a wider variety of popular items, and has resulted in a steady increase in profit margin over the past several years.

In practice, the operation's management monitors the sales on a route closely while a new driver is learning the ropes. When the route is running smoothly, oversight is maintained by spot checks. "We then let our shelves speak to us," Royer noted. "We see, as a whole, what types of item (i.e. hot, salty, chocolate) are selling, so we know what to look for from our suppliers."

Sales data and continual feedback from drivers also is valuable in optimizing route schedules, Royer explained. "One idea that has worked well for us is that large ac-counts should not have any empty columns. In our large accounts  – $50K+ a month – customers should have what they want all the time."

That principle is modified in lower-volume locations. "At smaller sites, we have found that it's useful let machine inventories get low enough to result in four to seven empty rows in a 40-select snack machine. When those items are restocked, the customers notice the change and are curious to see what's been placed in the empty slots. They also know that the machines have fresh product for consumption." Here again, drivers' good relations with their customers smooths the way.

Royer explained that machines placed in new accounts start out full, and the company draws on its experience to predict the rate of inventory depletion. The initial route service schedule is based on that prediction, and adjusted if the volume between visits differs from the prediction.

With glassfront cold-drink machines, the company strives to select the right equipment and customize the menu so that the machine will require a route stop only when its inventory is satisfactorily depleted, but before anything sells out. "We don't like empty rows," Royer emphasized.

One way Seven Day Vending avoids them in higher-volume stops is by in-stalling two cold-drink machines: a glass-front model that displays extensive variety, and a closed-front machine with high capacity. Royer is very fond of the Dixie-Narco 522E for the latter role: it is a six-select vender holding products in double columns, so it can accommodate as many as 21/2 cases of 20-fl.oz. bottles. These capacious machines are stocked with the most popular, fastest-turning products.

Seven Day Vending buys its own machines rather than obtaining them from the bottlers, so it can stock them with whatever mix of brands the location desires. As those preferences become clearer, the glassfront machines can be set to double-face the best-sellers, dispensing from each facing alternately. This helps to avoid empty rows.

Route Driver Is Key

The principal agent in Seven Day Vending's continual observation of customer preferences and location purchasing pat-terns is the route driver, and Royer is proud of his team. "Our drivers are unique," he said. "They're generally between 20 and 30 years old; they're not 'career' drivers. They care about the customers." A typical driver with these characteristics will stay with the company for four or five years.

Seven Day Vending compensates its drivers on a straight salary basis. Royer pointed out that paying drivers commission on sales is unfair to those who are assigned lower-volume routes, and paying an hourly wage provides no incentive to take the time that's sometimes necessary to do the job correctly.

The drivers are encouraged to interact with their customers, he explained, and this has worked well. They also are educated in the economics of a vending operation, and schooled in making the most efficient use of their time. For example, a driver who encounters a malfunctioning machine is taught to recognize the failure and make a spot diagnosis: can I fix it in two or three minutes? "Maybe five or 10 minutes, if it's a long route," Royer added. "But a driver who can't make the repair quickly should call me."

Seven Day Vending stays alert to new concepts in workplace services, and has the ability to provide the ones that meet the needs of its clientele. Micromarkets, for example, seem to offer attractive opportunities today, as they're oriented toward a white-collar workforce. However, the long-time Tucson operator said, white-collar workers in his market area usually are not the ones who actually use the onsite food and beverage service. The company's tests with micromarkets were successful and have given it the skills needed to operate one, but at the conclusion of the tests, it was agreed that vending was the better choice. That might change at any time, and the operation is ready if it does.

Refreshment Service

Similarly, classic office refreshment service has not been a priority for Seven Day Vending, Royer continued. The company has had one client to which it has pro-vided coffee service for the past 15 years, and OCS is a service method that the company understands.

Seven Day Vending has had good success with full-sized coffee venders in its market area. The company uses the "winner" feature offered by these machines to encourage sales and keep interest up. In locations that wish to make free coffee available to their employees, a hot drink vender can be set on free vend for regular and decaffeinated coffee while charging for gourmet and specialty hot beverages.

The cost of the free coffee is deducted from the monthly commission. This service has proven popular, and the operation is seeking to expand it.

Full-line vending machines available over the past two decades offer a number of promotional capabilities besides the "winner" option on hot drink venders. Seven Day Vending offers location management a program based on tokens that the company purchases from Hoffman Mint. The token carries a face value of $1 and is accepted by the operation's machines. They are sold in lots to location management at a unit cost of 80¢, and given out to employees as incentives and rewards for meeting or surpassing goals and similar morale-building initiatives. Royer reported that patrons who receive these tokens often use them to buy products that they otherwise would not try.

Apriva Support

Seven Day Vending's desire to accommodate its customers, bolstered by Apriva's flexible support systems and Tucson's climate and demographics, has proven appealing to market segments like nursing homes and car washes.

"Before we install, we confer with location management to ask about their preferences," Royer told VT. "We ask whether they want more dietetic selections, and some do. We then watch the sales." Since the drivers relay patron re-quests, the mix of products in machines conforms to the location's clientele. For example, items like peanut M&M's have proven extremely popular in nursing homes, and the operation's willingness to tailor its menus is appreciated. The company gets many referrals from nursing-home staff members who change employers and remember the service they got from Seven Day Vending.

While traditional full-line vending sometimes is viewed as limited in variety and customer appeal, Royer observed that Apriva's versatile set of tools can help operators correct this erroneous belief. "And one thing I haven't worried about is security," he summed up. "With everything that's going on with cybersecurity today, it's a relief not to have to think about my role in it. I know that Apriva is my silent bodyguard, taking care of it."