Old Trafford, Manchester
The Alexandrian Job
The value of the vending market in the United Kingdom is estimated at £1.85 billion annually, with beverages accounting for a majority of sales. Automatic Vending Association (AVA) Chief Executive Officer, Jonathan Hilder, discusses the trends that are shaping the industry and explains why his association is reaching out to facilities managers in an interview with FM Magazine (UK & Ireland Edition).
In May 2013 you announced jointly with the Facilities Management Association (FMA) that your organisations had become members of each other’s associations in an effort to “bridge the gap” between the industries. Why did the AVA consider this necessary?
The AVA has been aware for some time that vending in the facilities management market is not well understood and wanted to work with the FMA to develop better awareness of vending amongst FMs. Vending forms a small part of the overall service offering in this market area but it can be a significant contributor to both revenue and client satisfaction, and it is important for FM companies to understand how they can maximise opportunities. We had been in discussions with Chris Hoar of the FMA for some time and it was agreed that an exchange of membership would be of benefit to both associations.
Automatic vending capabilities can be acquired by purchasing machines from manufacturers, leasing, or renting machines directly or indirectly under service agreements with specialist operators who assume responsibility for their installation, stocking and maintenance. Which option do you recommend to facilities managers?
The placement of vending machines within facilities has always raised funding issues and questions about whether there are sufficient in-house skills to operate and engineer them. By choosing to work with AVA members, FMs can ensure they will receive detailed plans which cater for the requirements of individual sites; in addition to pre-agreed equipment rental terms and a skilled staff base to operate machines and provide on-going technical support.
Agreed profit streams can further ensure FMs acquire the capabilities they seek without tying up significant capital into vending provision. Factors influencing the path chosen for financing vending operations will typically include the size and complexity of the vending provision that is required since, at sites of up to 50 people, revenue will be marginal but as this number grows, installation of coffee towers or branded bean-to-cup machines or even fully automated catering facilities becomes much more cost effective. The high capital cost and requirement for management and skilled labour means that an outsourced provider of vending will probably be the most cost effective route for most FMs.
What factors do property owners and facilities managers need to account for when assessing the suitability of a particular facility or site for automatic vending operations?
Vending operates to its optimum profit potential in well designed, high footfall sites where machines are clearly within view. It should therefore be planned as a “point of destination” that ideally brings aspects of high street coffee culture into the workplace or communal residential area by utilising vending housing and dedicated seating installations. On a practical note, property owners and FMs will need to ensure availability of electricity and water supply; as well as easy accessibility so that operators can bring products to machines. Locating any machine on the sixth floor of a building with no lifts is never going to facilitate the transportation of replacement stock for a cold drinks vending machine!
In the United Kingdom and Ireland beverages account for the majority of vended sales. Has using a vending machine become synonymous with “grabbing” a coffee, tea or soft drink to the degree that it is difficult for machine operators to offer other types of product?
New innovations in alternative products vending are gaining market traction and are likely, in the long term, to alter the current balance between vending options as represented by the following numbers of machines:
Moreover, although coffee remains the major source of vending revenue, there are significant numbers of food machines. As new food preparation technologies found in products such as the Steamplicity system allow fresh meals to be delivered through vending and thereby enable effective competition against staffed canteens, we expect this area to develop more strongly. Other areas where there are developments include office products and industrial tools since both can be offered through vending and provide accountability to those using them. Ultimately, it is only physical restrictions in terms of the dimensions and capacities of individual machines, that prevent the sale of more product types.
Providing in-house canteen and catering facilities is a costly and labour-intensive endeavour for commercial, public sector and institutional organisations. Is it possible to deliver the same quality of food in the same quantities using machines?
Yes it is! We have a number of AVA members who offer food products through their vending offering that I believe to be a match for any canteen. We also have a member who has won a Healthy Living award from the Scottish government as a result of delivering health products and meals using vending. The AVA’s work with third-year undergraduate students from University College Birmingham (UCB) has been a huge success and resulted in the creation of some really interesting meal and snack products that are suitable for vending.
The First Century Greek philosopher and engineer, Hero of Alexandria, is credited as the inventor of the vending machine because his book, “Mechanics and Optics”, describes a contraption that dispensed holy water using a lever and valve when a coin was introduced into a slot at the top of the machine. Has vending technology changed significantly?
I believe Hero would be impressed by what can now be done with vending. Indeed, today, it is even used to dispense Methadone in British prisons using fingerprint and retinal identification technologies. Screen technology is fast becoming an essential part of new vending machines that can even detect the gender and age of users. Payment options now also extend beyond simple coins to banknotes and cashless vending
As a judge of the inaugural Annual Vending Industry Awards in June you interviewed the award winners. Did you identify any common traits or characteristics that might assist facilities managers in selecting future vending partners?
The awards were a great success and have been very well received by the industry. I was delighted to interview staff who demonstrated such passion for their companies and the jobs they do. We were provided with some amazing testimonials from existing customers as to the lengths some staff will go to in order to help them. And I believe it is important for FMs to look beyond the contents of any proposal by physically visiting the sites potential vending partners operate and talking to the businesses they work with. Whilst I understand that profit is what drives businesses, the quality of the service offering can be equally important and this is very true in vending. I would therefore recommend selecting a business that provides excellent support; even if this works out to be more expensive initially. Customer satisfaction will always increases future revenue potential.