A logical way to get into pantry service is through Office Coffee Service (OCS). Pantry service partnered with OCS is lucrative because the two help each other thrive. Both pantry service and OCS have the same business model, so if starting pantry service after being in the OCS business, it won't look much different. Products are delivered and/or stocked in the breakroom of a location and offered free to employees. The company location pays for products just like coffee. If it's an existing location, pantry service is a great add-on to increase the ticket.
1 – Start Slow
A good starting point when getting into pantry service is to start with 50 to 60 SKU's. This allows for an adjustment period to become familiarized with a warehouse management system, the new expectations that come with pantry service, and keeping track of stocking the warehouse with an appropriate amount of product.
Starting with a smaller volume of products is also helpful in following the pattern of consumer's eating habits, so that it will be easier to add/switch out products as the location becomes more familiar.
It is also easier to start off with locations that have a smaller employee count. Small to mid-size fast-growing companies with 30 to 40 people are prime candidates. Typically, these companies already have someone performing the same tasks of supplying snacks and coffee, keeping track of how much is spent and consumed, although it isn't their actual job in the office. By offering pantry service, you are not only alleviating this person from doing a job that isn't their responsibility in the first place, but it is also a good starting place for a budget and product recommendations.
On the other side of the coin, it can be difficult to get in the door with larger companies. They tend to go with national service providers, or are locked in a corporate contract in all locations.
2 – Adjusting resources
Once pantry service is on the agenda, there are a few key people and amenities that will help to maintain a successful business. Some additional personnel may be needed for the warehouse, depending on how many locations are being serviced. The delivery person that always went to the location to deliver coffee will now be stocking the pantry, in many cases. In addition to this, customer service representatives will help to answer questions, guide people in the right direction.
3 – Selling points
Pantry service is a way for companies to save money on cafeterias but still have the budget and employee count to support offering convenient food on site.
On the other hand, only doing pantry service with a location is not as profitable as doing both OCS and pantry. The margins on pantry service are not as good as coffee service, according to a speaker at the NAMA show. The labor is harder in pantry service. Consider this if going after a location with only pantry service in mind.
4 – Use your words
Communication with the location is important in keeping a good rapport. One major thing the location will want is transparent reports on how the money is being spent. This includes what's been consumed, spoilage, and staled. Be ready to discuss solutions when a location nears its monthly budget limit before the end of the month. Some solutions to this problem:
- swap out items in the next delivery
- stretch time between deliveries
- increase the budget
Staying on budget is not only important for the location, but it's also important for the operator. Some things that can help with this are maximizing offerings within the budget. What's the best bang for your buck? Carefully consider high-priced items. Some popular items can eat up the budget quickly, such as fresh food. One way to balance high-price with less money is to offer the best array and value. Having a good product spread is better than either spoilage or going over budget repeatedly.
5 – Consider the facts
Pantry service is growing. In the 2017 state of office coffee service report, pantry service was in the top three of revenue generating services at 8.6 percent. Juices and soft drinks made up the second largest share of revenue, but could be added to pantry, driving the percentage up another 11.7 percent of sales.
The economy is also growing. Businesses are willing to invest in benefits. This is especially true as Millennials become the dominating group in the workforce. According to a Pew Research study in 2017, more than 1 in 3 American labor force participants (35 percent) are Millennials. It makes sense to offer food and snacks as a benefit for employees as a retention strategy, not only because of the growing economy, but also because Millennials want more benefits.
OCS and pantry service are a logical pair. Pantry service can be a stepping stone to help an operator flourish, or an add-on to an already well-oiled machine.
