Tomorrow's Pantry: Associated Services, Lincoln County Vending share insight about the road to recovery

Pantry was a growing convenience service segment in 2018 and 2019, as reported in Automatic Merchandiser’s State of the Industry survey and the National Automatic Merchandising Association’s Industry Census. Clients were sold on the value of stocking the breakroom with premium refreshments to attract and retain employees during the strong economic period with low unemployment.

As with every segment of the convenience services business, COVID-19 has certainly had an impact on office coffee and pantry services; perhaps hitting these two channels hardest.

Tom Steuber is president and owner of San Leandro, CA-based Associated Services, a pioneering Bay Area office coffee and pantry services provider founded by his parents, Hal and Diane, in 1972. He has been hit hard by the pandemic. With most of the employees of Associated’s clients still working from home, many of the operation’s pantry and coffee services have ceased for the time being.

Associated Services ran 65 routes, serving more than 5,000 customers throughout northern California pre-pandemic. Pantry service had been a booming segment, growing at more than 20% annually since the concept began in the high-tech Bay Area market, where employers have pulled out all the stops to attract and retain talent.

But that growth began slowing to 5% to 10% in the fourth quarter of 2019 as the economy began to contract. A few months later, Gov. Gavin Newsom issued California’s stay-at-home order on March 19, 2020.

The second-generation operator recalled the devastating impact of that order. “The majority of customers stopped buying from us because they’re not in the office.,” Steuber saiod. “We have a large high-tech base that still has only skeleton crews in the office at best.”

Thankfully, he added, the exception has been healthcare, biotech and essential services like banks.

“The vast majority of even the clients who have strong businesses still are working from home and their offices are closed,” Steuber said. “Of those who are back, new safety protocols are in place, and they see more employees staying in as much as possible throughout the day as being safer.”

That’s where Associated’s pantry service continues to shine, by adapting to meet safety concerns while providing an array of refreshments to keep people onsite. One big shift has been from shared, bulk-dispensed products to individually prepackaged items and adding face masks and hand sanitizer to the mix.

“I talk to lots of customers who plan to reopen. When that will happen is a moving target,” Steuber said. “They expect more employees to work from home with at least some reduced headcount going forward.”

The convenience services operator emphasized that widespread vaccination, and achieving herd immunity, will be critical to reestablishing pantry and OCS, as will the reopening of schools in the Bay Area, where K-12 buildings have been closed for the entire school year.

“It affects parents’ ability to work even if their offices open if their kids are distance learning,” he noted. “Companies I speak with intend to keep OCS and pantry but it’s hard to know what it will look like a year down the line. It will be a long road back to figure out what the workplace of the future will look like, but there will be lingering impact.”

To bridge the gap, Associated Services created a snack box program. Its @Work boxes consolidate a location’s previous snack program into personal-sized boxes for employees to enjoy at their desks and its @Home boxes are individualized to employees’ preferences and delivered right to their doors.

Many operators report that manufacturing has fared better than other sectors and this has helped Canteen Lincoln County Vending, based in Fayetteville, TN, weather the pandemic. Founded in 1995, the six-route operation serves a largely industrial base with vending machines, office coffee and water services and, most recently, pantries.

“Manufacturing sales have normalized and are even up in some locations,” reported Lincoln County Vending operations manager Kevin Posey. “Vending is doing well. White collar, OCS, pantry and water are still struggling to come back. The key is to adapt to each client’s needs.”

The company, which operates 35 micro markets and 600 vending machines, ventured into the pantry space in spring 2019 when it gained a client at a new building that already had the service at its locations in other parts of the country.

Posey said the location had 100 employees pre-COVID and many are now working from home. Still, enough are onsite to support a pantry well stocked with chips, candy and beverages, along with yogurt, carrot sticks and nuts, among other offerings. Like Associated Services, Lincoln County Vending has shifted from providing shared products like bulk milk and creamers and bulk bins of snacks to individual packs in response to its clients’ concerns to reduce the spread of the virus.

While that site remains the company’s only pantry account, Posey is optimistic that as people make their way back to the workplace, pantry will grow.

“When I started 20-plus years ago, we paid locations to have a vending machine,” he recalled. “With micro markets, there’s no commission and some companies supplement micro market purchases because they see the value for their employees. Pantry is all free and we bill the customer. I see it as the evolution of the industry, with more focus on the benefit for the employees.”