Revitalizing the industry

The thing that sets Elite Cuisine apart from other operations is a passion for food. Owner Jim Schweppe describes Elite Cuisine as more of a corporate dining business that offers full scale vending and office coffee service options, than the other way around. So when he decided to add micro markets to his business last year, he took everything he knew about food and grew it into a program that’s made him a huge success in the St. Louis and Kansas City, Mo. areas.

In just a year, he added more than 20 markets, all filled with entrées and entrée salads prepared in kitchens under the direction of certified chefs. This attention to quality food sets his company apart from other vendors in the area.

Schweppe first started Elite Cuisine in 2004 as a corporate dining company dedicated to providing an alternative to the cookie cutter vending business. Schweppe built the company from scratch and went door to door soliciting accounts to start. He began to add some cashless payment options to vending machines in 2010, but didn’t want to rush into technology.

When micro markets were introduced more than 5 years ago, Schweppe took an interest, but he didn’t add his first one until 2012. After implementing the 365 retail market system, Schweppe collected data for six months and analyzed the findings. During this time he also lost an account to a micro market, so he knew he had to take the new system seriously. He aggressively started installing micro markets in the second half of last year and currently has 22 up and running.

“Our first priority is always account retention and customer service, but as far as our strategic initiative is concerned, micro markets are our number one priority for the next 12 months,” Schweppe said. “It’s an opportunity to really start making some money for the first time in our industry.”

Micro markets lead to growth

Elite Cuisine has seen 30 to 40 percent organic growth in sales since they began implementing the micro markets, which it calls E-Marts. Schweppe believes that many operators think micro markets will replace vending. However, Schweppe argues that micro markets are an additional channel and help to augment vending costs.

“It allows us to compete with convenience stores by offering convenience store prices,” Schweppe said. “Price sensitive customers will still get the low price points with vending machines, while also getting the tactile benefit that convenience stores have by allowing customers to touch and examine product.”

Schweppe has found that a key strategy to micro market success is adopting a price point that rivals that of a convenience store. “There’s an opportunity for real margins and organic growth if we all manage it correctly and stick to pricing integrity.” In an Elite Cuisine micro market, a 20-ounce soft drink costs $1.49, compared to $1.25 in its vending machines. Schweppe finds customers don’t mind paying the extra money when they realize they can make a multiple product transaction at the micro market. He’s even had personal experience with a customer so impressed by the micro market, that he paid the higher price for a soda, despite a vending machine (that had not yet been removed) behind him that had the product for 20 cents cheaper.

“Micro market customers aren’t vending customers, they’re convenience store customers,” Schweppe said. “This guy wasn’t concerned with comparing the prices to the vending machine, he was comparing it to a convenience store.”

Schweppe has even declined sales opportunities because the client wanted the micro market prices to match vending. “I couldn’t do it,” Schweppe said. “I could not destroy the micro market segment to match vending prices. We’ve got an opportunity to finally make good margins and keep up with inflationary costs that have plagued the industry lately. We have to be diligent.”

Security measures keep theft low

Theft has not been an issue for Elite Cuisine’s micro markets. Schweppe has limited his markets to corporate office locations who can afford to institute the right security measures, such as security cameras to protect them. He’s noticed locations are often self-governing with micro markets because the customers appreciate the market so much, they want to preserve it.

“Our customers and I have an unwritten agreement that if there is a thief in house that they will take care of it,” Schweppe said. “We have an honor sheet that was designed for customer complaints, but we’ve found more customers use it to ensure that their payments go through.”

Vending lives on

Elite Cuisine has a few locations where a micro market and vending machine are both in the sale location such as in large campus-style venues. Schweppe has found that despite the increase in micro market sales, vending sales have not seen a significant decrease. One large location was bringing in $2,100 a week in revenue from vending. Now, a year later, vending sales decreased roughly 10 percent to $1,900 while the added micro market brings in $1,700. Together, the total revenue of the location is now $3,600, a 52 percent revenue increase. “That’s enormous organic revenue,” Schweppe said. “Yes there is a small decline in specifically vending revenue, but with growth of that margin, I’ll take that trade any day.”

Most of Elite Cuisine’s micro market locations have been converted from its own vending business. “Our strategy was to get micro markets into existing accounts,” Schweppe said. “I wanted to ensure our existing customers were receiving the latest and greatest of services available. Now that our current clients are squared away, we’re targeting new business.”

Better staff means better service

Another way Elite Cuisine sets itself apart it pride in its workforce. “We all buy the same products and machines,” Schweppe said. “Our customer service reps that are on the front line are the image of our company and are what make us unique.”

Elite Cuisine doesn’t take hiring staff lightly. There are rigorous background checks and interview processes applied to becoming an employee. Those who qualify are rewarded handsomely, according to Schweppe, with highly competitive wages, 100 percent matched 401K plans, generous health insurance and even tuition reimbursement. Schweppe believes that this process helps Elite Cuisine find employees that are serious about the industry and willing to stick around for a while. He takes pride in the fact that there is almost zero employee turnover at Elite Cuisine.

Health and wellness is trending

Schweppe has noticed a trend over the last six or seven years in corporate America toward wellness. He understands that his target market, corporate employers, are promoting healthy lifestyles within their offices. To fill that need Schweppe has implemented a “better choices for a better you” campaign within his vending machines, micro markets and restaurants that denote healthier choices. These healthier choice items are designated by green spirals and a sticker with the word health encircled by a green apple. Each healthy choice item is approved by registered dieticians and fitness coordinators to ensure their nutrition.

“This has been a real common theme that we’ve been focused on,” Schweppe said. “There’s been a tremendous push toward wellness and we need to do what we can to comply.”

Despite the efforts of Elite Cuisine to provide healthier items to their clients, Schweppe feels it wasn’t entirely his decision. “I think we’re all sort of forced to do it,” Schweppe said. “Some operators believe in wellness a little more than others but there was a time when clients said they wanted it, but consumers weren’t buying it.”

The push toward wellness has started to pay off, however. “We now sell more turkey burgers than cheeseburgers,” he said, “so it seems consumers are gravitating towards the healthier items.”

This push toward wellness is another way Elite Cuisine has been able to compete with convenience store prices, especially in micro markets. “Guests don’t mind paying a premium for a bag of beef jerky, a Clif Bar and a Naked Juice,” Schweppe said. “They’ll go in and spend six or seven dollars on three items without flinching. They’re used to paying that in a convenience store, so it allows us to reach that specific demographic.”

Locally Brewed OCS

For its OCS, Elite Cuisine uses primarily Newco Enterprises equipment. However, lately the company has been emphasizing Keurig K-Cup and Tassimo Pod single-serve coffee in a lot of their locations due to the popularity of single-serve among millennials. Although single serve coffee represents just 5 percent of OCS business at Elite Cuisine, the Schweppe anticipates the segment growing to 20 percent in the coming years in large part due to the boom of millennials in the workplace.

Elite Cuisine also offers a variety of well-known coffee products including Folgers and Starbucks brands. The company also features local coffee brewers in both locations. The St. Louis location features premium coffee roaster, Kaldi’s Coffee, and the Kansas City location features coffee from The Roasterie.

For the foreseeable future, Elite Cuisine plans to continue to focus its attention on micro markets, engaging new clients and continuing to grow its revenue. The company is excited about the success it has seen thus far, and has agreements to install one micro market a week for the foreseeable future.