Micro markets, acquisitions position Treasure Valley Coffee’s rebound

Micro markets are the growth engine for convenience services nowadays, a trend that even a setback like COVID-19 hasn't tempered.

One convenience services company, Treasure Valley Coffee Inc., exemplifies this fact as the Boise, Idaho based multi-service provider recovers from its 2020 customer location closures.

Suzanne Boyer, president of Treasure Valley Coffee Inc., thinks the pandemic has even helped convince a number of customers to want micro markets since they keep employees on site for meal breaks. As a result of COVID, a number of customer locations that previously had cafeterias have opted to replace them with micro markets.

Micro markets, one of the company's more profitable services to begin with, suffered less fallout compared to vending, coffee service, coffee roasting, water service and pantry service from the pandemic.

Where coffee service took a 40% hit from the pandemic, the company only closed five of its 125 micro markets.

"We closed in the 'green' in the markets," Kelly Brown, marketing director, said for 2020.

An aggressive approach

Treasure Valley has taken an aggressive approach to micro markets since it began adding them in 2009.

While most convenience services operators targeted larger accounts for micro markets when they came on the scene in the mid-2000s, Brown recognized that the micro markets could be successful in locations with less than 200 people. Treasure Valley installs them in locations with as few as 60 people.

"We know we're going to increase sales and increase our margins," Brown said, when installing a micro market versus a vending machine bank. He said a location doing $60 a week in vending sales is likely to do $200 a week with a micro market.

Finding a reliable food provider was a key step in making this happen. Three years after introducing micro markets in 2009, Treasure Valley found such a supplier in Simple Bites in Meridian, Idaho.

In addition, equipment manufacturers have been able to make smaller equipment for micro markets, Brown said, such as the Minus Forty dual temperature freezer.

Pre-kitting routes in the warehouse was also an important move.

Boyer and Brown admitted they were late deploying pre-kitting in 2017. When they began pre-kitting, they separated the coffee ordering from vending/micro market ordering. They began pre-kitting in the Boise warehouse, then added it in the Twin Falls and Blackfoot warehouses.

Acquisitions prove helpful

Acquisitions also played an important role in positioning the company for profitable growth.

The same year they began pre-kitting, the company acquired a vending operation, Service Vending in Idaho Falls, a Canteen franchise.

The following year, it acquired Canteen corporate's Boise branch.

"The very best part of the merger were their employees that came over," Boyer said. "They had some people that had been with them for almost 30 years. We brought on almost everyone."

One condition of the Canteen Boise acquisition was to become a Canteen franchise. Boyer and Brown admitted there was some concern about giving up the company's independence, but becoming a Canteen franchise proved beneficial, especially during COVID-19.

"It's really hard when you're battling the big guy all these years and you're gaining ground, and now you're going to purchase them and become a franchise," Brown said. "Our concern was, 'what about our independence?' Are we still going to be able to run as an independent? We were assured we were."

Canteen's help was especially important when COVID-19 struck.

"Within a very short amount of time, they started giving us flyers to put up educational things for the employees, just information that you need to know," Boyer said. Corporate Canteen also provided guidance on safety procedures, personal protective products and how to find new supply options.

"It was so helpful not to have to create the wheel and bring all of those programs together so I could give my attention to operations," she said.

As a result, the company weathered COVID-19 better than many others.

Responding to COVID

When customer locations started to close, the company switched to four-day work weeks for a while but did not lay off many employees, Boyer said. A total of five routes in Boise merged with other routes.

Several customers asked for touchless equipment. Fortunately, the bean-to-cup coffee brewers and sparkling water dispensers introduced touchless upgrades that allowed customers to order using an app.

The micro market providers also offered ordering apps that allowed customers to select food without touching a touchscreen.

Some locations wanted to remove thumbprint scanners, but this was more the exception than the rule.

"There wasn't a huge migration over to it," Brown said for the touchless options. "If the option isn't there, they're not going to walk away and not use it."

The company was able to recover some of the lost business from home bottled water and coffee deliveries.

Business began improving as early as May, Boyer said, and people are still returning to worksites.

An Amazon distribution center opened in Boise this past November, which has boosted the economy.

There are currently five dedicated micro market routes in Boise while Twin Falls and Eastern Idaho, which serve more geographically dispersed accounts, has combined vending and micro market routes.

Pre-COVID, the company operated 61 routes in Boise, 13 in Twin Falls and 11 in Blackfoot with 203 total employees. There are now 31 routes in Boise, 12 in Twin Falls and 11 in Blackfoot with a total 185 employees.

The coffee business, both OCS routes and roasting, which fell the most, has recovered half of its losses.

"We all believe there is going to be tremendous growth and expansion in 2021," Boyer said. "We're going to set new records in 2021."