As mentioned previously, vending providers are in business to make money. In our experience, and negotiating with vending providers, we have learned what matters to them:
1. Headcount at your facility – The ideal headcount depends upon the size of the vending provider. For example, if the vending provider’s average size client facility has 75 employees, and your facility has 100 employees, your facility is considered a “good account” and therefore, you have more room for negotiating. However, if the vending provider’s average facility size is 150 employees and your facility has only 75 employees, then your leverage for getting added concessions is comparatively weak.
For instance, you'll probably find that, when you have 50 employees or less, it will be very difficult for a vending provider to justify installing a cold or frozen food machine.
We have generally found that, when selecting a new vending provider, this matching of your headcount with the “sweet spot” of the vending provider is important for ensuring consistently good service. This concept also applies if your facility is too large or too demanding for the smaller or solo provider (an owner-operator type situation).
2. Initial product prices (and control over prices) – If a vending provider is asked to price the products in the vending installation at less than market value, it makes it very difficult for them to be flexible when it comes to meeting your other vending installation objectives.
In addition, if the vending provider is blocked in their agreement with you from changing prices as the market and economy changes, a situation that started out as good for them can turn into a loss situation. For example, as fuel prices go up, a vending provider feels the financial impact full force because their trucks are out on the road full time.
If the vending provider is not allowed to adjust the vending product prices, your service can be directly impacted because the vending provider will reduce the service frequency in order to hold down fuel and labor costs. Although this often makes a bad situation worse because sales will start to fall, this is what can happen in the vending industry.
3. Commission (also known as “vending rebates”) – When the vending provider is required to pay commissions to you, this has a very direct impact on their willingness to be flexible in other respects, particularly in equipment and product pricing.
4. Equipment requirements – If a vending provider is allowed to install used or refurbished equipment, their investment is lower and therefore they are more apt to be flexible when it comes to commissions and pricing.
5. Competition in and around your facility -- competition comes in many forms:
a. eating establishments close to your facility
b. free or deeply discounted coffees, teas, sodas and even filtered water offered at your facility; free food given at parties, events, etc.
c. competing vending installations at your facility
d. employees bringing in food from home
e. employees ordering food delivered from outside (“take out”)
f. a cafeteria at your facility
The less competition the vending provider faces, the more money they make and therefore, the more they value your business. It’s important to keep the vending provider in mind when offerings are considered at your facility. Introducing new competition directly impacts the provider and can have a negative impact on service.
6. Contract term and security – Relationship security is very important to the vending provider. From their perspective, the longer the agreement, the better. With all the costs associated with doing a new installation, if the vending provider knows that you are committed to them for the long term, they are more inclined to work with you on your requirements.
The more “Easy Out” provisions (30 day notice, etc.) in the contract, the less secure the vending provider feels.
7. Blue collar vs. white collar (also known as concrete environment vs. carpet) – On the one hand, production environments where employees are given short breaks and where they often eat their meals from the vending machine are considered excellent business opportunities from the vending providers perspective. On the other hand, an office environment is considered a comparatively weak business opportunity because lunch breaks are typically longer so employees leave the facility and eat at restaurants close by. Plus white collar employees are more health-conscious generally and therefore, less likely to eat their meals out of a vending machine.
The one area where the office environment is considered advantageous over the concrete environment is in coffee service. Office workers commonly consume lots of free coffee; that is, coffee for which the client is billed. Although not all vending providers offer office coffee services, those who do get excited when a vending project also involves office coffee services.
8. Healthy Vending Requirements – To learn how to understand the vending provider’s perspective so you can accomplish your healthy vending program objectives, click here:
What It Takes to Do “Healthy Vending” – Why It Seems Your Provider is Resistant