How one rural Arkansas independent stays on a fast growth curve

Since investing in vending management software nearly 10 years ago, Mike Kever has been able to build his small but highly profitable convenience services operation successfully over the years.

After working at Advantage Vending and Coffee Services in Searcy, Arkansas for four years, Kever bought the company in 2004, at a time when the company was using traditional operating methods.

After arriving at an account, the delivery driver would first go to the machines to see what product was needed, then go back to the truck, select the products and carry them back to the machines.

Kever knew that other operators were using vending management software and providing their drivers with handheld computers to make the service process more automated, but he didn't think it made sense financially for a small operation.

"The entry point was too high for the size of our company," Kever told Vending Times in a recent phone interview.

Acquisition changes the equation

Everything changed in 2014 when he acquired another operation from a retiring operator that doubled the size of his business.

After studying different management software systems, he decided on a system from a company that was then a fairly new player in the market,?Parlevel Systems Inc., which, along with telemetry devices installed in the machines, allowed him to pre-kit his deliveries and schedule the deliveries when needed as opposed to following a static delivery schedule.

Kever hasn't looked back.

He finished his initial telemetry installments six months after meeting with Parlevel Systems at the national NAMA show and began pre-kitting his deliveries in his warehouse. The telemetry provides real-time access to machine inventory, and the software displays sales per item and creates a pre-kit list for the drivers. This enabled him to schedule his deliveries on an as-needed basis rather than following a static schedule.

The dynamic routing is especially beneficial in a rural market like Kever's since the locations are spread out across large distances, making service costs high relative to revenue. Some stops are 40 to 45 minutes away from the company warehouse.

The telemetry also enabled him to download data directly from credit card readers, so he began to install cashless payment readers, which made it easier for many customers to buy from the machines.

In the next six months, Kever was able to reduce service visits, reduce truck inventory and increase sales.

Expansion into micro markets

The Parlevel VMS also made it easy for Kever to expand into micro markets since the Parlevel VMS includes a micro market module.

In 2017, he expanded into micro markets, which now account for 60% of his sales.

The following year he changed the name of the business from Advantage Vending and Coffee Service to The Break Room Co. to better reflect the diversification of his services, which now include office coffee service and 5-gallon water bottles in addition to vending and micro markets.

The drivers now use mobile phones and tablets to read the planograms for each vending machine and micro market, and Kever's two trucks return at least 95% empty thanks to accurate product forecasting.

He now has one mixed vending/micro market route that is mostly vending, one mixed route that is mostly micro markets and one dedicated OCS route.

COVID creates opportunities

Kever realizes he is lucky that COVID-19 did not devastate Arkansas' economy as it did some other states. In addition, most of his accounts were based in manufacturing, as opposed to offices and service businesses, which were more heavily impacted by COVID.

"We didn't miss a thing and ultimately COVID was good for us because of the overtime that a lot of the companies worked and (when they) had to bring people in when people were out," he said. "We added business that was pretty much a direct result."

One customer that built less than truckload (LTL) and long haul trailers for the logistics industry more than doubled its workforce after COVID began.

"Because of the shortages in the trucking industry they actually ended up adding more lines to build trailers and box trucks faster," he said.

His OCS division was the only part of the business that took a hit from COVID — but, fortunately, it accounted for only 10% of his sales (60% is micro markets and the remaining 30% is vending).

The company grew 40% in 2022 to about $1.1 million in sales, and Kever is projecting to finish 2023 at $1.5 million.

Meanwhile, the OCS business is starting to recover from the COVID setback. Kever mostly uses Newco batch brewers as the demand of single-cup has not been strong in his market.

Being an independent operator, he belongs to the Unified Strategies Group buying cooperative, and he attends the national trade show regularly to see new products and equipment.

He is keeping an eye on "smart" coolers as a possible growth technology.

Biggest challenge: labor

Like most of his colleagues, Kever's biggest challenge today is finding labor. In the last nine months, he has considered seven applicants, hiring two. He relies on Indeed, Zip Recruiter and word of mouth.

"People's attitude about work is much different than it used to be," he said.

He now has two full-time drivers and two part-time warehouse workers, in addition to himself and his wife, Jantha.

Overall, Kever remains optimistic. For one thing, he doesn't feel the e-commerce delivery companies are a business threat — not even for coffee service.

"People like the value in having it brought to them but having a point of contact," he said.

Images provided by The Break Room Co. and Adobe Stock.