2024: The year we acknowledged the new reality of OCS

NAMA reimagined the 2024 Coffee, Tea and Water gathering for good reason. The coffee service business has changed forever, and from all indications, it means more opportunity than ever.

This change was documented in this column throughout 2024. In this year-end finale for my Best of OCS colmn, I will explore some insights and comments that are worth a second look.

This one strategy is the best thing an OCS operator can do in 2024

I have spoken about the most powerful business sales tool — storytelling — at the NAMA Show and written about it. It is the topic of the March 19 episode of the Automatic Merchandiser and VendingMarketWatch.com podcast.

Despite what the experts tell us to sell books and secure speaking gigs, storytelling is not that complicated. But, it is absolutely essential: a communication skill that operators, their sales teams and their customer service people need to use. Storytelling expert Todd Dewitt agrees.

"Business is about relationships,” said Dewitt. “We're wired as a species to understand stories. We must learn how to deal with spreadsheets, charts, graphs, numbers, and everything involved in big data these days. We can learn those, and we have to learn those, but if you want to move someone, if you want to create change, you can't just logically appeal to others. Stories matter in business because innovation and change rest on tapping people emotionally, and that's what stories do.”

With a slow recovery underway, now is the time to ramp up the OCS sales effort

It was a common theme at the 2024 NAMA Show: OCS growth is slow; pantry service growth is steady and micro market growth is explosive. As we explored in our post-NAMA show podcasts, these conditions present an excellent opportunity for OCS operators that extends well beyond coffee service.

As industry consultant Orrin Huebner pointed out, “It is a slow slug back. If you're at 60, 70% of what you had, that's probably the max at this point,” said Huebner. “If you're new to the industry, and I always say this to people, that 70% is what you need to work with. If you were in business pre-COVID, and you are down 30 to 40 percent, you're looking at it as a negative. Instead, ask how you can build the business and don't give up on it. We need to adjust our mindset.”

“It's more profitable, believe it or not, a lot of people won't say this, but it's more profitable today at that 70 percent than sometimes it was at 100 percent. The definition of OCS is different than it used to be. It’s not just 40 bags of coffee with a cream and a sugar canister. It’s pantry service, premium point of use water, ice machines, cold brew, and those things. It's pantry service, water, ice machines and much more. Enjoy it. Make it work. That is what I am advising my clients to do,” Huebner added.

While pantry service is a natural “add-on” for OCS operators, it is time to jump on the next big thing

An increasing number of OCS operators have added pantry service to their offerings, especially since office population growth is slow and steady at best. What’s next? My take: Smart markets will be the next big thing, and we explored that in July.

Here is an excerpt from the article “An operator’s guide to the fast-changing smart market landscape" in Automatic Merchandiser. It’s a must-read, and while researching and writing it, I became a true believer in smart cooler technology.

“I would define a smart cooler as a system that can manage its own inventory, sales, and take payments, which funny enough, sounds a lot like a vending machine,” said Evan Jarecki, co-founder of Gimme, a leading industry software company that builds management, delivery, and invoicing tools for micro markets and vending operators. Unlike vending, noted Jarecki, smart coolers can mitigate theft using weight sensors or video technology and customers can touch and inspect their selection before they make the purchase.

One thing you will learn in that article is that there are currently plenty of smart coolers to choose from. The article features 365 Retail Markets, Cantaloupe, Micromart, AVS Companies, Shekel, Instant Systems USA, Kooick and Due North.

Capture the territory while you can. For an OCS operator, smart coolers and smart markets (soon to be more common, featuring ambient temperature compartments and even hot foot capability) offer a tremendous opening to a new revenue stream and a new business opportunity. While those who are already highly invested in vending and traditional micro markets take their time and “kick the tires” before jumping in, progressive operators and even newcomers to the industry, should seize the opportunity to capture as much territory as possible by adding this incredible new technology to their arsenal.

A positive outlook and valuable insights made this OCS webinar a must-see for OCS operators

During our State of the OCS Industry webinar in September, the entire panel agreed that today’s OCS operator must be prepared to diversify their offerings to solidify their client relationships and at times, it can be challenging.

Linda Saldana of Seventh Wave Refreshments was asked about her company’s bold move to add coffee bars with baristas in major accounts. “For us, what coffee bars really do is provide the cherry on top in addition to all the other services. Where we have these coffee bars right now are locations where we are offering pantry service on five of the floors,” she explained. “If you want to go upstairs for that specialty coffee experience, then we are there. I think once we decided to take that step it was because we knew that employers were willing to spend on experiences.”

Other advice: Take advantage of the “honeymoon period." In training salespeople today, Arthur Sillar of Evergreen said his company is emphasizing the importance, without blowing the deal, of pursuing every possible revenue opportunity in a location. “We emphasize this strongly. The way our mindset is, early on is the best time to gain every piece of business and every opportunity possible,” Siller said

Sustainability goes beyond green products. Judson Kleinman from Corporate Essentials said sustainability has a deeper meaning today than just coffee origins and recyclable products. “It’s about how you treat your employees, how you interact with the community and what you give back.”

Kleinman also said that he is excited about the industry and the recent news that Amazon is bringing employees back five days a week. “Hopefully, we will see more of that because I kind of feel like we've been a little bit in a holding pattern with where we're at with employees coming back to the office. Just imagine where we would all be if everyone was back in the office. Man, would that be a beautiful thing!” he said.