Tuesday, January 16, 2018 | Today's Vending Industry News
Talking 'bout Regeneration

Posted On: 1/11/2014

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TAGS: Vending Times, Vending Times editorial, vending industry, coin-op, vending machine, coin machine business, office coffee service, Alicia Lavay, vending industry stagnation, vending industry change, New Year resolution for vending industry, micro market

Alicia Lavay, vending

As we come to the close of another year, it's natural to reflect on what we've accomplished, where we are going and whether we've stayed on course. While this industry has experienced a profound upheaval over the past decade, its structural underpinnings remain unchanged.

Vending has always been and remains largely an entrepreneurial business, created and led by people who follow the needs of their markets very closely and act imaginatively to meet them. And entrepreneurial businesses have a "life cycle," as companies are born, grow and mature. These may be handed on to a new generation or sold intact. They may be purchased and merged into larger companies, or they may just go out of business.

Over the decades, the loss of operating entities through consolidation or liquidation has been balanced by the addition of new start-ups, so the total number of operating companies tends to remain constant. This stability is the result of market demand. A smaller operation that is acquired by a larger one often brings with it locations that are profitable (more or less) for a company with one truck that the owner drives, but marginal or worse for a 15-truck full-line operation with higher operating expenses. Those locations still want service, and new operators always come along to provide it.

Some day, the large operations may find a way to make money at the low-volume end, too, by means other than comprehensive refreshment service. I remember a downturn in the late 1980s, during which the old topic of profitable small-site vending resurfaced. We asked some successful operators of large independent companies whether they thought they could they make money in a low-volume location.

One of them, a well-respected figure who had built his business from scratch into a major full-line vending and foodservice concern, told us that he was pretty confident in his ability to figure out a business model that would allow him to provide vending services profitably to low-volume locations. "But," he asked, "Why should I? I've built my company to be a dominant competitor in my marketplace. I can get enough high-volume business by bidding successfully against my competitors, and there are still enough large locations around to keep me fully occupied."

My guess is that most of "the big guys" still agree with that assessment. In fact, many large operators have welcomed the establishment of new small ones, simply because they hate to slam the door on a promising prospective client that is successful, well-regarded in the community and very likely to get larger. It wants vending, but it isn't quite populous enough to be profitable as a full-line stop. If the full-line vendor can explain, gently, that the business at present does not fit with his service -- but he has a good friend who specializes in providing personalized service to businesses like that -- then when the location has grown larger, and the smaller operation no longer can provide adequate service, he can go back and be welcomed.

And, of course, some of those new small startups are very successful and grow larger and larger. This has been going on for a long time. Despite recent challenges, the opportunity still exists for the determined entrepreneur. If you're a supplier to this industry, you'll take good care of your existing large customers, but I would not overlook the elusive small operations. They may not always be small.

And as long as this trend continues, Vending Times will continue to speak to readers (large and small), stay the course and support the industry it has served for more than 50 years. Our editorial format has always been designed to encourage the exchange of ideas among the various segments of the industry, whether vending, coffee service, micromarkets, coin-operated entertainment or bulk vending. Once again, we will print 12 issues in 2014 because we know that current information is a necessary commodity to run a business, and consistent time to market and editorial continuity is a valuable asset to readers.

VT's interactive initiatives are also growing rapidly. Our e-newsletters and website have earned sterling reputations of their own while building online readership, and our Web visibility has quadrupled in the past two years. We've just broken through to the rarefied under-100,000 mark on Alexa, a long-lived service that guides its users to sites that interest them, and tracks their searches. (The lower the score, the better.)

As we continue to invest in new technologies that will benefit readers and advertisers alike, we hope you will do the same with your business to keep pace with this dynamic industry. Indeed, the more things change the more they stay the same, so stay true to your core business values -- but always look for ways to improve; "when you're through changing, you're through!" Best wishes for a happy, healthy and prosperous 2014.