Mid-size Philly Operator Cracks the Big League

Many vending veterans long for the days when independent operators played a bigger role in the industry and were known for providing good service. Years ago, most big cities had scores of independents winning some of the larger accounts.

A measure of that treasured past is returning to Philadelphia, Pa., where Elliot’s Vending Co. Inc., an 8-route operation, has managed to win some of the biggest accounts, due in large measure to a reputation for providing good service.

Elliot’s Vending Co. is the story of an ambitious entrepreneur — Elliot Teitelbaum — who taught himself the business and whose enthusiasm and dedication won the support of a seasoned industry veteran — John Boyle. The team of Elliot Teitelbaum and John Boyle has put this 15-year-old player on the map.

A VETERAN JOINS AN UPSTART

Boyle retired from active duty in 2004, after working for several operations. At that time, he saw an industry in transition, with nationals gaining most of the big accounts and good independents consolidating. The industry was changing, and not in a way that Boyle appreciated.

All of that changed for Boyle in 2006 when he met Teitelbaum, then an ambitious 34-year-old who was as committed to customer service as Boyle himself had been throughout his career.

Boyle saw in Teitelbaum the spark that he remembered from his own youth. It was enough to make Boyle come back to the industry.

“I don’t see the young guys coming in,” Boyle said. “It (seeing Teitelbaum in action) makes me feel good that this industry is going to progress.”

Today, Boyle serves as Teitelbaum’s right hand man at Elliot’s Vending Co. The pair bring the combined talents of a young, ambitious entrepreneur and a seasoned veteran.

“John (Boyle) was a big part of getting to where I am,” Teitelbaum said.

The company has taken its hits with the current recession, and consolidated two of its routes in the last year. But the company has sustained sales better than most; 2009 sales were down slightly less than 10 percent, which was better than many companies.

Teitelbaum expanded into full line vending from amusement machines and remains a hands-on leader.

Boyle, who was a regional executive for Canteen Vending Service before joining his younger colleague, handles sales and marketing.

“We’re a big small company,” Teitelbaum explained. “I micro manage. I touch a lot of things that go on, on a daily basis.” Both of his parents work for him in clerical roles, as does his wife, Elisa Greenberg, who oversees the OCS division.

HUMBLE BEGINNINGS IN VENDING

Teitelbaum didn’t have the advantage of being born into the vending business. His father was an insurance salesman.

As a teenager, Teitelbaum started out operating toy crane machines from his parents’ house. He got into full line vending years later when his amusement vending locations — mostly bars and restaurants — asked him to add soda and snack machines.

Teitelbaum quickly realized that the soda and snack machines require dedicated service, so he hired a driver to attend to these machines. His amusement machine technicians were able to handle the repairs.

2003: AN OPPORTUNITY FOR EXPANSION EMERGES

In 2003, Betson Enterprises, Teitelbaum’s equipment supplier, advised him that a local full line vending operator was looking to retire. Believing growth was limited in the amusement machine business, Teitelbaum was interested in acquiring the full line vending company.

In 2004, following due diligence, Teitelbaum purchased that company, Solly’s Services, a 4-route operation, with a bank loan. The acquisition gave him a 12,000-square-foot space in Huntingdon Valley, Pa., which was more than he had in his previous building in Conshohocken, Pa.

Teitelbaum’s amusement machine business was doing more than $3 million in sales when he acquired Solly’s Services. The two businesses — amusement and full-line — were close in size at the time.

Teitelbaum observed that many full line operators were not giving customers what he considered good service, so he reasoned he could win his share of the business.

“I knew there was growth available if we did the right thing,” he said.

FOUNDATION FROM AMUSEMENTS: 24-HOUR SERVICE

Teitelbaum believes his background in amusement machines was a good foundation for full line vending. Amusement machines require 24-hour customer response. “There’s no such thing as, ‘we’re closed on Sunday,’” he said. All service calls are answered by a live person, not an answering service. “That’s not something in a proposal; that’s real,” Teitelbaum said.

EARLY EXPANSION INTO HANDHELDS AND PLANOGRAMS

While the full line vending business was fairly small at the time, Teitelbaum knew the importance of computerized route accountability, so he immediately invested $25,000 in DEX handhelds.

He also saw the need for snack machine planograms, so he devised two planograms: one for schools and the other for businesses. “I couldn’t have guys (drivers) haphazardly filling machines,” he said.

The national operations are strong in Philadelphia, but independent vending operators are always quick to note that the nationals sometimes fall short offering local brands, of which there are many in the Philadelphia area.

Teitelbaum has done well with brands like Goldenberg candy, Herr’s chips, Tastykake pastries and Wawa coffee.

Teitelbaum also knew the importance of networking, so he immediately became active in the Pennsylvania Automatic Merchandising Association, now part of the Tri State Automatic Merchandising Council. This proved fortunate.

2006: A PARTNERSHIP EMERGES

At an association function, Teitelbaum met Boyle, a long-time vending veteran who was looking for a new career opportunity.

Boyle retired as general manager of Canteen’s Covenco division in 2004. He didn’t want to retire completely from the industry, so he did some consulting for vending and manual feeding companies. When he met Teitelbaum in 2006, he was impressed by the younger man’s drive and his passion for customer service.

Teitelbaum, for his part, recognized Boyle’s vending expertise and his reputation within the industry. Boyle came on board as vice president of sales.

He immediately took Elliot’s Vending Co. into the big leagues.

Boyle oversaw the production of a professional, 4-color sales brochure. “That brochure has opened a lot of doors for us,” Teitelbaum said.

The brochure, with its colorful graphics, also served as the foundation of an improved Website. Customers and prospects can now learn a lot about the company’s products, equipment and services from the Website.

The Website, for instance, explains a rebate is available to customers from the Dairy Farmers of America for having a dedicated milk machine.

Teitelbaum has become so proud of the Website that he pays e-commerce specialists to optimize its ranking on Internet search engines.

Boyle also oversaw an aggressive push on pricing in his first year at the company.

And he brought contacts with some of the area’s largest accounts that enabled Elliot’s Vending to win some of them. “As they (the big accounts) came in, he (Boyle) knew what to do with them. He knows every situation,” Teitelbaum said.

Boyle recently helped land the break area for US Airways’ 1,700 baggage claim employees at the Philadelphia Airport. Elliot’s Vending put in 70 new machines, complete with area treatments.

CUSTOMER APPRECIATES GOOD SERVICE

The location manager at this account appreciates having the route driver’s cell phone number. “I don’t want any old machines because I don’t want machines breaking down,” the location manager, Tim Dumont, said. “We have a very good relationship.”

Boyle also had longstanding relationships with some of the area’s most prominent manual feeding contractors. As a result, Elliot’s Vending Co. was able to win the vending contract for an international, high-tech account in partnership with one of these foodservice contractors, Brock & Co.

PARTNERING WITH DEDICATED FOODSERVICE CONTRACTORS

“Any opportunity I have to use Elliot’s, I will,” said Jerry Guthridge, district manager at Brock & Co. “I will leave vending to the vending experts.”

Elliot’s Vending uses the USA Technologies’ VendingMiser energy saving device at this account.

Boyle also won some automotive accounts, although it recently lost some of this business due to the recession. In 2009, the company consolidated 10 routes into eight.

The company maintains a focus on customer service by reminding customers that someone is on call to respond to service issues 24 hours a day.

They also offer on-machine promotions, including promotional coupons and fuel cards attached as prizes on candy packages.

Elliot’s Vending invites all of its customers to an annual holiday party held at a restaurant. The company spends about $25,000 on this party, which draws from 200 to 300 people. Pictures from the party are posted on the company Website.

The company also hosts special events, such as parties and golf outings, for certain customers.

FOCUS: HEALTH CARE AND EDUCATION

This year, the company is focusing on health care and education business; accounts that aren’t as likely to be affected by the recession.

School accounts are challenging since they have strict nutrition rules, Teitelbaum said. He lost some school accounts to a company that promoted itself as a healthy vending specialist.

Elliot’s Vending Co. launched its own “Eat Smart” program in 2005, targeting schools. The program color tags products that are 7 grams of fat or less per serving and 3 grams of fat or less per serving.

“It’s not a healthy vending machine,” Teitelbaum’s wife, Elisa Greenberg, explained. “It helps consumers make a better choice.”

Greenberg came on board a year before the Solly’s Services acquisition to develop the OCS business. Bringing a background in pharmaceutical sales, Greenberg oversaw the company’s expansion into private label coffee and upgraded to thermal servers and single-cup systems.

Single-cup has been facing new competition from office supply retailers, Greenberg said. Hence, she is keeping an eye on the newest type of single-cup systems; manual pod brewers.

Teitelbaum wants to hire more mid level managers to take the business to a new level. He expects he will have to acquire other companies to achieve this goal.

If and when he can reach the $10 million annual sales level, he will gain the economies of scale that will provide greater profitability. He noted that even belonging to a buying cooperative does not grant him the same pricing that companies with $10 million in annual sales enjoy.

One thing that has been helping lift same store sales has been glassfront cold drink machines. The beverage bottlers have been providing Elliot’s Vending Co. more glassfront machines which showcase more variety. These venders have lifted sales in some accounts.

NEW VENDING TECHNOLOGY: A SLOW APPROACH

Some of the bottler-owned beverage machines the company operates have SEED remote machine monitoring devices from Cantaloupe Systems. Teitelbaum said this technology has been a good selling tool for him, but he has not yet used the technology to manage his business since he has some concerns about the information’s accuracy. While the remote monitoring tracks spiral turns accurately, he said he cannot be sure what products have been placed in the machine.

For the same reason, Teitelbaum has not tracked item-level sales with his DEX handhelds. Instead, the DEX handhelds have primarily been used to improve cash accountability.

Being a company with eight routes has its unique challenges, Teitelbaum noted. The company has overhead costs similar to much larger operations.

For instance, Teitelbaum has a full-time person overseeing the DEX data.

Internal theft has also been a cost not easily absorbed. The company uses satellite tracking to monitor service and delivery vehicles.

With technology evolving, Teitelbuam believes it is important to keep abreast of new management tools. This is one reason he makes sure someone from the company attends the National Automatic Merchandising Association (NAMA) national expo every year.

He also finds it helpful to attend NAMA to interact with his suppliers face to face, which he considers important. By meeting with suppliers in person, he can be sure that he is getting the best value from them.

Elliot’s Vending Co. proves that medium size players have a place in today’s vending industry.