Operators Plan to Add Smaller Micro Markets in 2019

December 10, 2018

In the next year, micro markets will downsize – not in quantity, but in design in order to meet lower employee counts.

Two women purchasing coffee with a smartphone app

Joe Hessling, CEO of 365 Retail Market said in a recent Automatic Merchandiser article that the number of new smaller micro market locations, those catering to 150 or fewer employees, would double in 2019 compared to 2018. This equates to about 3,000 more locations across the convenience services segment. While traditional micro market locations, with more than 150 employees, will also be added, the challenges of making smaller locations profitable requires additional planning. Focus on this area is an important goal for operators who want to stay ahead of the competition.

With tight budgets and low unemployment, in the year ahead more and more companies will want to offer employees a foodservice benefit that doesn’t cost them much if any money, such as micro markets. Many of these locations don’t have huge employee headcounts. The answer is in tailoring the micro market for the smaller location. Here are some tips from those who have already embarked on servicing smaller accounts.

Go mobile

Five Star Food Service, a full line vending operation based-in Chattanooga, TN, started utilizing a Bluetooth dongle and micro market app to eliminate the heavy cost burden of a traditional kiosk on smaller accounts. C.J. Recher, vice president of marketing for Five Star, calls it Canteen Connect & Pay. It allows end users many options, including scanning product bar codes using their smartphone and paying using their global micro markets account. Mark Stephanos, vice president, micro markets at Five Star called it an honor box for the 21st Century. Stephanos plans to add these kiosk-less micro markets to capture business in areas where there is a concentration of small locations that its delivery vehicles pass when servicing other micro market locations. The close proximity and low investment cost are how Five Star hopes to make smaller accounts profitable.

Create a premium mix of products

Patrick Connaughton, owner of Cleveland Healthy Micro Markets in Cleveland, OH, has the smaller account market cornered in his area. He says that his small accounts, those between 125 and 135 employees, can actually produce more revenue than larger accounts. He is focused on providing high-end snacks – a perfect balance of healthy and traditional items. The healthy is what locations really want for their employees, but it’s not enough. There has to be a mix of items so employees have a choice and can make their own decisions about snacking and what is healthy.

Beside brand name and specialty snacks and beverages, Connaughton adjusts the food offerings in smaller micro market as well. He provides premium, but prepackaged food items from large manufacturers who can offer a longer shelf-life as well as some locally made offerings. He said the customers with these types of products don’t mind paying a bit extra for the better taste and quality of premium products.

Optimize data

In a smaller micro market, knowing the end user is more important than ever due to the small area in which to offer products. The space to sales has to be maximized. Steve Orlando, co-founder of Fixture suggests using technology to watch buying habits and regularly share findings with the location in order to open a dialogue that will allow more flexibility in what goes into the micro markets. It’s a technique large operators are already using.

Joshua Rosenberg, president and CEO of Accent Food Services in Garland, TX, leverages data from all micro markets. He not only uses that data for space to sale management, to forecast scheduling and manage waste, but also for promotions. He looks at day part usage, for example breakfast versus lunch versus afternoon, and then pairs it with manufacturer programs or new product introductions to increase the amount micro market consumers purchase.

Use a hybrid model

Ryan Harrington, co-CEO of Royal Vending in Portland, OR, finds that his standard micro market design and product offerings are well suited to the right location even with as few as 90 employees, such as those open 24 hours. For even smaller accounts, he utilizes a subsidy model. The location put $20 a month on the employee’s market cards to encourage them to use the micro market. This keeps the location costs at a standard rate and gives them a benefit to provide employees, while also driving use at the micro market to keep it profitable for Harrington.

As micro markets become more well-known to businesses throughout the country, demand will grow. Operators can be ready by using mobile technology, premium offerings, analyzing data and hybrid or subsidiary models to maintain profitability in 2019 and beyond.