How operators are dealing with the new normal in the OCS business

It was a popular post-pandemic line among convenience services operators at the 2022 Coffee, Tea and Water Show: “70% will be the new normal when it comes to office population.” Most operators would be thrilled by that number today. The good news: CNBC reported in September, “90% of companies say they'll return to the office by the end of 2024 – but the 5-day commute is 'dead,' experts say. The debate over whether to return to the office is far from settled – and yet, the push to get employees back to the office is getting more aggressive.” Who knows what the 90% return to the office will really look like.

In the meantime, just as they have over the past three years, OCS operators are doing their best to survive and be profitable. They have shown remarkable resilience and flexibility and will need to maintain that mindset while they wait to see if something resembling what CNBC is predicting will come to fruition.

Operators have shared – during Automatic Merchandiser’s webinars and in Automatic Merchandiser’s Vending & OCS Nation Podcasts – how they are dealing with the new normal in the OCS business, with the office population at about 50% of where it once was.

Retooling

Like many operators, Dan Welch of World Cup Coffee in Portland has tried several things to keep his company strong. “Everybody had to come up with an idea to pay rent. We tried to bolster our online sales and that really didn't work because we were probably six months behind with that idea,” he said. “People were already established, and we were just somebody new trying to enter the market, and it wasn't our bread and butter. We tried C stores and that helped out, but that wasn't really our bread and butter either, and C stores are notoriously poor payers, but it was good while it lasted.”

Ultimately, Welch took the direction that many OCS operators have chosen. “We retooled ourselves to build up our pantry business, and that has helped out because it really took off,” Welch said. “We're also getting better at micro markets. We're learning fast because we're still a small company, and we're taking trips to the NAMA Show, reading all the articles and listening to the podcast to learn from industry experts, because we don't want to make too many mistakes.” Welch added that 365 Retail Markets and Panoptyc have been very supportive.

Service challenges

C.J. Recher of Five Star Food Service said his company is dealing with plenty of new service challenges caused by the fluctuating office populations but believes the key to success comes from communication and expectation setting. “I think that's the biggest key or one of the biggest keys these days with clients – making sure that you understand what they expect of you and then also what they can expect in return from us as operators,” Recher said. “Since 2019, we've got a lot of requests that would never have come before in terms of service, and we have a ‘yes’ mindset first, so we try to figure it out. If it's a net benefit on both sides, we'll make it work,” he added.

Recher strongly believes that operators need to be in specialty coffee, creating that breakroom experience. “We've seen ourselves trying to work our way out of being a commodity. Creating that moment in the breakroom for your clients, employees or their guests is really what we're trying to sell,” he said. “A lot of these folks are asking us ‘How can you replicate or make it better than it was when they were working at home?’” Recher added that if an office is trying to get people to come back to the office, operators need to create a much better experience in the breakroom. “If you know the coffee you are serving isn’t on par with the expectations of the employees or the clients, then you're probably going to end up losing out at the end of the day.”

New thinking required

Associated Services in the San Francisco Bay area is another iconic OCS operation that felt the lingering negative impact of the pandemic and continues to face challenges related to the workplace population. “We’ve had to make a lot of changes, post pandemic,” said Tom Stueber, president. “The problem we have now is that our customers are still adapting to the hybrid work schedule.” For Associated Services, that can make service a guessing game, since some clients aren’t exactly sure who will be in the office and when.

Kimberley Lentz, director of sales and procurement for Associated Services, said the company is often called upon to go above and beyond, adapting to sudden upsurges in employee count and a need for special service. It’s just part of the new normal, and as Lentz points out, “We are here to support our customers, and we can use the incremental jump in sales, which makes it worthwhile.”

Like so many operators, Stueber is not taking any possibility off the table. With a large amount of tech accounts, his company has done well in the pantry service business, but he is starting to see more budget consciousness in that sector, which could require a move into micro markets. “There is starting to be more of a call for things that might not be free – not provided by the employer for free, but maybe provided on a subsidized basis, so we're looking for opportunities in that area,” he said. “We'd like to grow back to where we were before, but it's going to take some new thinking to get there.”

ABOUT THE AUTHOR

Bob Tullio is a content specialist, speaker, sales trainer, consultant and contributing editor of Automatic Merchandiser/VendingMarketWatch.com. He advises entrepreneurs on how to build a successful business from the ground up and specializes in helping suppliers connect with operators in the convenience services industry – coffee service, vending, micro markets and pantry service specifically. 

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