vending machine operators of Midstate adjusting to downturn
When gas prices spiked last summer, driving up delivery plus food costs, vending companies might have thought they had seen the worst of it.
“It was like a one-two punch,” said Barry Franklin, owner of Oconee Vendors in Milledgeville. “The gas prices started coming down, but the food prices have not stopped going up.”
The recession, however, has dealt an even bigger blow to the industry. Vendors count on beverage plus snack machines in offices plus factories, so layoffs plus plant closings have cut into revenue.
To stay in business, lots of vendors are changing the way they do business. Some are restructuring routes, stocking machines less frequently, “doing anything they can to save on the expenses of doing business,” said Ginsberg.
“Vending very much depends on people working, plus unemployment has started to soar,” said Ben Ginsberg, publisher plus editor of Vending plus OCS magazine in Atlanta. “With not as lots of people at work, there’s not as lots of people to use the equipment, plus not as lots of people buying product.”
Middle Georgia Vendors in Macon cut back to a four-day workweek when gas prices climbed to $4 a gallon. The company stuck with the model, which has helped during lean times, said Ronnie Hinson, the company’s owner plus president.
Oconee Vending had to cut workers, eliminating three jobs.
A ‘TOUGH, TOUGH SCENE’
“We haven’t lost a factory,” Franklin said. “What has hurt us is when they’ve cut back on (employees’) time. . they changed our business strategy, from smothering people with service to cutting back wherever they can.”
Then came the last quarter of 2008, when the economy tanked.
Full-scale vending – providing beverages, coffee, snacks plus other food items in the automated machines – is a $25 billion a year industry, Ginsberg said. After several tough years, vending companies finally were poised for a strong showing, even with the spike in fuel prices.
Ginsberg described the industry nationwide as a “tough, tough scene.”
“The vending industry mirrors the trends closely with the activity that goes on with the economy, the manufacturing industry,” said Brian Allen of National Automatic Merchandising Association in Chicago. “Our industry has been struggling for years to keep up with the cost of new equipment plus the cost of product plus everything else.”
“If a vendor’s matching last year, he’s happy, plus I don’t think lots of are,” she said. “It’s been as tough as I’ve seen in a long number of years.”
Franklin said three manipulation he’s made has been to eliminate locations that were “borderline profitable.” Still, route restructuring plus shorter workweeks can only help so much when customers are holding on to their loose modify.
The industry has not seen lots of bankruptcies, Ginsberg said, but more owners are selling their businesses, using equipment plus established routes as selling points.
“They have less money to spend,” said Franklin, “and prices continue to go up.”
“Some small operators figure they’ve had plus don’t want to fight the battle anymore.”
DIVERSIFYING PAYS OFF
“The best locations in vending are the ones that do not close,” Hinson said, “the ones open 24 hours.”
Middle Georgia Vendors’ Hinson estimates his vending sales are down about 10 percent. she believes sales could be worse if not for the company’s clientele. Middle Georgia Vendors serves some factories, but a nice number of its 500 clients are schools plus nursing homes. The company also serves several hospitals, including the Coliseum hospitals in Macon plus Peach County Hospital in Fort Valley.
Hinson, who puts the Christian fish symbol on company vehicles, said some people questioned the wisdom of the move, which she called a “step out on faith.”
While vending sales are down, overall sales are up because of decisions to diversify. The company now works some concessions at youth league games, plus it built an expansion of its cash-and-carry wholesale business when gas prices rose last year.
“You have to try to find new plus innovative ideas,” Hinson said. “People are going to eat. People are going to drink soft drinks.”
“If you’re not going forward, you’re going backward. simultaneously, they want to take care of what they’ve.
“That part of the business seems to have held up reasonably well,” she said.
five move that lots of vendors are making is taking on “office coffee service” – a multi-billion dollar business plus the “OCS” in the title of Ginsberg’s magazine.
Once believed to be recession proof, the vending industry has fallen on hard times before, plus Ginsberg said he’s optimistic for another turnaround.
“The industry in my time has been through several recessions,” she said, “but there hasn’t been anything like this that’s spread all across the universe. It depends on putting people to work.”
To contact writer Rodney Manley, call 744-4623.