Diversification pays in Upstate NY: full-line vending, amusements, OCS, ATMs

There was a time, some decades ago, when the line between full-line vending and amusement vending was not well understood by the general public. One reason was that operators of what's known as "full-line" — food, candy and beverage machines — oftentimes operated amusement machines, such as jukeboxes.

As both industries evolved, they became largely separate. The expertise required to operate both types of machines became highly specialized. And while both types of businesses were route based, the respective industries assumed their own identities.

But combined full-line and amusement operations have not disappeared completely. Case in point is Valley Vending Service Inc. in Plattsburgh, New York. Established in 1957 as a cigarette vending machine operation with a few jukeboxes, Valley Vending Service is now a highly diversified business under the leadership of President Jeff Prescott, a second-generation owner/operator.

Strength in diversification

One of the benefits of a diversified business is being able to shift focus as business conditions change. Over the years, Valley Vending Service has expanded beyond both full-line vending and amusements to office coffee service, micro markets and ATMs. And the diversity, according to Prescott, has served the company well.

"We're in an isolated market here, so it works for us," Prescott told Vending Times in a phone interview. "We're on kind of a geographic island here. It makes sense for us to do as much as we can.

"Our division lines are pretty blurred here," he continued. "I've got vending guys filling ATMs when they're going certain places. I've got OCS (office coffee service) guys on an ATM route."

Under the leadership of Prescott's father, Robert Prescott, the company first saw the benefits of diversification in the late 1980s when videogame sales began to soften. It was around this time the company expanded into snack, beverage and food machines.

Full-line grows, brings challenges

By the time Jeff Prescott joined the company full time in 1992, the full-line side of the business had grown, representing 40% of company sales, with OCS accounting for an additional 10%.

And while the full-line side of the business had grown, it was a much more competitive business than it is today. There were several independent full-line companies fighting for a limited customer base in Upstate New York.

In addition, full-line vending technology was still in its infancy and the business was very capital- and labor-intensive.

"We were carrying pads of paper to inventory machines and write down what we needed," Prescott said. "They (route drivers) would come back and put it (sales information) in the system. It wasn't what it is today with vending. We didn't even know what a DEX (digital exchange) was then."

2001 brings reorganization

2001 was a turning point for the company. Prescott's father, wanting to retire, sold the full-line division to All Seasons Services Inc., a Braintree, Massachusetts based regional vending/foodservice operation, and sold the amusement business to his son (Jeff.)

It didn't take long for Jeff Prescott to want to get back into the full-line business.

"Number one, I saw the continuing decline of the bar business and the amusement business," he said. "And we felt the vending business was a good fit for what we do. We use the same trucks, we use the same service techs, we use the same counting equipment.

"There are a lot of synergies between the two businesses, and it made sense. I always found it (full-line vending) to be a lot more stable of an income than the roller coaster of the amusement business."

In addition, "We were having customers come to us begging us to come service them again," he said.

Diversification continues

The company re-entered the full-line business in 2006 when its five-year non-compete with All Seasons Services ended.

It was a good time to re-enter full-line vending as the technology was evolving quickly. Vending management software, telemetry and route pre-kitting were all coming on the scene.

"We can do more with less now than we could back then, because of pre-kitting and whatnot, than we do now," Prescott said.

In 2011, Prescott acquired the Plattsburgh operation of All Seasons Services (then operating under the name, Next Generation Vending) and became a Canteen franchise.

"That acquisition just more than doubled the size of the company," he said.

Technology evolves

The company inherited its first vending management software system through the acquisition, and a year later expanded into telemetry and began pre-kitting its delivery routes in the warehouse.

"With today's labor market where everybody's struggling for labor, if we had to be doing (back then) what we're doing now, we'd have to have twice as many people on a vending route to do what we do," Prescott said. "That's huge."

By 2017, he expanded into micro markets.

"We had kind of a regrowth… 2016, 2017, 2018 were really good years for us," he said. Annual sales in those years was around $4.2 million with 24 employees.

Meanwhile, technology also evolved on the amusement machine side.

By 2017, the company introduced a card payment system to the arcade the company operates in a shopping mall which proved popular with customers. It also introduced a redemption counter replenishment system.

And while the videogames and jukeboxes have declined, hotel game rooms have flourished.

In addition, "the cranes have just taken off," Prescott said. "It's essentially been a bright spot in the industry, no doubt." The crane machines go in hotels, bowling alleys, movie theaters and restaurants.

2020: COVID strikes

The company's diversification was especially helpful surviving COVID-19.

The mall arcade closed for eight months and the OCS sales took a major hit.

In March of 2020, the company laid off 21 employees.

But the full-line vending kept the company going.

"It was challenging" Prescott said. "We all would get together in the morning and divvy up what needed to be done, take our trucks out and go fill vending machines.

"We were fortunate enough with the full-line vending to do factory break rooms where we were deemed essential. In a lot of these big factory break rooms, we're serving the medical industries. They stayed open the whole time."

By the summer of 2020 he began rehiring people. Most former employees were rehired.

He estimated 2022 the company did around $3.2 million in sales with 17 employees.

New challenges emerge

But like most employers, Prescott has found labor to be more challenging than ever.

"Human resource management seems to be the biggest challenge any given day," he said. "We've got some great employees, but it's a challenge dealing with the Millennial and Gen Z generations because it's a different mindset."

But this challenge has also created an opportunity for Prescott. Like many of his colleagues in the convenience services industry, he has uncovered a new demand for pantry services, which he provides through the company's OCS division.

"With the labor market the way it is, these bigger companies need something to retain employees, and the pantry service is a nice little carrot for them to give to their employees," he said.

The company's business mix is now 50% full-line vending, 25% amusements, 20% OCS and 5% ATMs. Full-line vending has three dedicated routes, one of which is mostly for micro markets, one dedicated OCS route and a combined amusement machine and ATM route.

OCS, which took a big hit during the pandemic, is now the fastest growing segment, thanks in part to the popularity of bean-to-cup brewers.

Pinball machines are becoming popular in arcades.

All things considered, Prescott sees a bright future.

"We were fortunate to weather the storm," he said, looking back on the pandemic. "We always had the belief that you service your customers and take care of them."

Photos provided by Valley Vending Service Inc.