Independent vendors

[bakers2030]

Hi,

I have been talking with alot of refurbishers latelky and recently spoke with one about where vending is heading. He seemed to think that all of the business is going to big companys and the smaller independent owner is being pushed out.

Any thoughts on this would be appreciated. I want to know that there is hope for someone who wants to get started in the vending business.

[AZVendor]

Welcome to the forums.

While no one can guarantee that there is hope for everyone, all you have to do is read the postings from all the different people here and you will see that it's very obvious there will always be a place for independent vending companies. The small vendors don't generally "get pushed out" unless they make mistakes or are not professional. I think that you are just hearing the refurbishers lament the loss of a lot of business that they used to have. They don't realize that they may also be scaring a new customer away from the business.

While it's true that vending company acquisitions have been increasing, you have to realize that it is the giant companies gobbling up the big companies. The major player in this is Canteen Vending Services, a national vending and foodservice company that is owned by The Compass Group, a gigantic European company with very deep pockets. Canteen isn't the only one buying vendors up, it is also the large regional vendors, too. Each acquisition is different - some are to gain market share between competitors, some are to enter a new market, some are taking an existing company and simply making it a Canteen franchise. It is just the way the market is now.

I have been in the industry for 28 years and have seen this happen in spurts, though this spurt is ongoing. The reason the small vendor will always have a place, is the large vendors don't want to trouble themselves with small locations, or even large locations in distant areas that they don't have a presence in. There will always be the independent vendors of various sizes from single man to multi-route operators who will be able to secure some of the best locations because they are a good operator, in the right place at the right time, had the best sales pitch, was liked better than the other bidders, etc. You see, there are no rules written saying what must happen in this business. Everyone goes out and makes their way in the world and gets a piece of it for themselves.

We are seeing contraction in vending due to the economic state of our country but I don't ever see vending getting as strong as it was in the past. There are fewer locations, fewer companies to service, smaller companies to service, fewer employees in locations, employees in locations with less money, higher expenses and taxes, health care considerations, etc. There is also the move from vending services in large locations to micro market setups, but this is something the large vendors are doing. The plus is that all of this loss of vending means there is a glut of used machines on the market, giving small vendors access to newer equipment at more affordable prices than in the past.

Don't be afraid of the business, there is still plenty for the small vendors to get. You aren't going to get a 500 person account right off the bad anyway, are you? Take a lot of time and read these forums. You will see tons of valuable information, great advice, even better examples of others' experiences and then you can decide what might suit you best.

[Golfdogs]

I am a small independent vendor. I started four years ago with one account and two machines. I now have 28 accounts with 55 machines. I don't plan on going anywhere but up from here.

I feel there will always be a place for the independent. I service accounts the 'big boys' probably don't want. My customer service also sets me apart from them. This has won me several accounts and will earn me more.

[mission vending]

I totally agree with AZ's comments. Some more info for you.

Overall industry sales are down by about 4B from the high in 2000 which reflects on AZ's comments

From NAMA in 2010 75% of operators were less than 1M in sales so there is still fantastic opportunity for a small vendor.

To further expound, IMO, due to the overall loss of revenue industry wide there is tremendous pressure on all for survival. The larger companies (1M+) are trying to maintain revenues any way they can, if they can't get the account they buy the operator. Very small guys ( up 100K in sales or micro businesses) are getting squeezed by the demand from their better accounts for newer technologies and better variety and selection of products. They are hard pressed to buy from sources other than Sam's and can't really afford the better equipment either so their survival will be dependent on providing outstanding customer service.

Those in the middle (100k-750K) that are willing to stay in the fight for the next 3-5 years will be well positioned for long term opportunities as the shakeout from the recent recession continues. Even the smaller (micro businesses) guys that focus on service, service and more service will have more opportunities than they can handle.

I've said it before, customer service is our biggest advantage as small operators, if you are not not fully committed to providing the best customer service experience in your market you are in for a bumpy ride, more so today than a few short years ago.

[bakers2030]

Thank you all for your replys. They are much appreciated.

[AngryChris]

It's hard not to write a huge post about this topic so I will try to sum it up nice and easy.

Many of your smaller operators (but not all) are old-timers who have been in the business for some time and have never really made any significant gains with their business. They may add one or two small accounts each year. These accounts are often so small that they only warrant old outdated equipment. In order to compete with larger operators (relatively speaking), these smaller businesses have to keep their prices lower. Ultimately, their profits are lower, they do not have the cash flow to upgrade, their service isn't all that great, their selections are very limited, and they have almost no room to grow without some sort of financing. These small operators simply cannot compete with larger operators and they are beginning to fall apart as older machines are becoming more expensive to repair and replace.

On the flip side, we have the really small operators who only operate maybe 1-3 accounts. They often resort to things like 16.9 oz bottles or 12 oz cans. While they may do okay in managing these small accounts, they usually never have the resources to update their equipment or offer a variety of products. Ultimately, these vendors get frustrated with how much money the business seems to consume upfront and they opt to sell out to other vendors so that they can focus on other things. When vending businesses are being listed to sell, the two most common reasons for selling are "Retirement/Health" or "Wants to pursue other ventures" or something along those lines. Again, either they are old-timers who simply have outdated equipment not worth updating or they are too small to be able to expand.

By the way, these small businesses aren't necessarily being pushed out by the larger businesses, they are also being pushed out by people like me -- small, rapidly expanding businesses that offer better technology and better service.

I haven't gotten lucky enough to find a great opportunity for a much larger route to purchase like some other members have here. I am simply riding on my business knowledge, my vending experience, my technological knowledge, and hard work. When the opportunity comes, I will jump on it and hopefully that will catapult me into direct competition with much larger companies and I will start to push THEM out of business.

[dogcow]

RJT was very succesful with taking accounts from canteen and other large vendors. i would

not be afraid to solicit there accounts if they came up for bid. he claims operationally they

are a mess in many areas. I would not be surprised by that at all. Some of the bigger operators

in my area fall short in many accts especially the ones where for a small operator like me it would be a big "get"

but for a larger operator it would be a middling account.

you just gotta be persistent, and keep knocking on doors , do your follow ups