Five Star Uses Tablet-Based Technology To Its Advantage

As the micro market industry grows, operators have been able to find cost-efficient ways to provide services to smaller offices.

One such company is Five Star Food Service, which has its headquarters in Chattanooga, TN. The operator has found success in using tablet technology in its services to smaller clients.

Setting parameters for using tablets 

Mark Stephanos, senior vice president of micro markets for the company, said Five Star learned from 365 Retail Markets of the concept of an expanding need in the industry for micro markets at smaller locations or “nano markets” that traditionally may have had a small snack machine or drink machine that was underutilized. 

365 Retail Markets asked Five Star to do a test with the smaller market concept, and that’s how Five Star became involved in providing service to smaller markets, Stephanos said. 

While the vast majority of Five Star’s approximately 1,300 markets are large enough to sustain a regular micro market with a full-size kiosk, the company has 60 small markets where they provide small market tablets for employees of the company client to use, Stephanos said. 

C.J. Recher, vice president of marketing at Five Star, said the company uses tablets at any location that has 50 to 100 employees. 

“We’re seeing an opportunity to grow in those smaller office environments. To date, we’ve grown [what we feel is] slowly to 60 nanomarkets but moving forward that demographic is one of our high priority targets for micro market expansion and conversion,” Recher said. 

Stephanos added that another form of small market that is appropriate for tablet use is when a large market has a small area, such as at the back of a company’s plant or at a separate small building on the company’s property, with a smaller concentration of employees who may want their own micro market.

Stephanos said that while a certain level of sales is needed to justify putting a tablet at a micro market location, the use of a tablet takes less investment than a full-size kiosk. A full-size kiosk might cost 5 times more than a tablet, he said. 

Aside from the added assortment of products, the use of a small market tablet also makes the purchasing process more exciting for employees in smaller office settings.  

“It’s very cool to bring something like that into a breakroom in a smaller setting,” Stephanos said. 

Stephanos said that Five Star will generally consider adding a tablet to a location for a client that has at least 50 employees. The operator will also provide a tablet to even smaller offices if the client is willing to pay a subsidy to ensure sales reach a sufficient amount, especially if cold foods such as sandwiches, salads, yogurt and milk, are requested. 

“We also keep that business model very tight where we don’t add food to a small market concept unless the client is willing to pay for that food. If they don’t hit the certain sales target numbers, there are subsidies that are involved and chargebacks for the waste,” he said. 

Cashless payments 

One limitation of tablets is that they cannot accept cash. Recher said that while the company’s tablet kiosks do not have a cash functionality, most users of their micro markets at smaller offices do not desire to use cash anyway. 

“Certainly there are some accounts where customers still want to be able to use cash, but more and more people are swiping their card or using the Canteen Connect and Pay mobile app,” Recher said. “Moving to cashless-only markets provides a mild concern around customer usage rates, but I don’t think it’s anything that holds us back from using the tablet where viable.” 

Stephanos said the company’s studies show that about 68 percent of their customer transactions are credit card transactions, and that number has continuously risen.  

He added that utilizing tablets within smaller markets doesn’t really support the investment needed for the use of cash-accepting kiosks. Instead, the company’s mobile app offers features like managing an account online and ease of use to the customers.  

The company has also found that average transaction amounts are higher by offering credit card and mobile app payment methods, he said. 

Advice for other operators 

Stephanos offered some recommendations for other operators when making the investment for technology equipment. 

“Keep the parameters extremely tight. Don’t try to offer too many services if you can’t afford it. You don’t want to give away too much and end up having a lot of waste or not enough revenue to be able to justify the investment for the equipment,” said Stephanos. “So make sure you have a business model that makes sense.” 

He added that operators should make sure that when they have smaller markets, the smaller markets should be in close proximity to where they have larger markets so the smaller markets are not far outside the company’s standard footprint, ensuring efficiency. Frequently, small markets will work in conjunction with office coffee services or vending, which is a worthwhile opportunity. 

“Create synergy. Where you stop that truck and it’s worth it for you to stop it is essential to the profitability of a program,” Stephanos said. 

Making services available to clients of any size in a profitable manner is one of Five Star’s goals. It’s a strength for the company and others who wish to succeed in the micro market industry.