Delaware Valley's K&R Market Fresh grows stronger by sticking to core values

When Bradlee Whitson joined K&R Vending 15 years ago, it was supposed to be a short-term commitment to help the Bridgeton, NJ-based family business, which was led by his father at the time. The company had instantly doubled its size after acquiring a local competitor, so he agreed to take the role of operations manager to support the transition.

As fate would have it, he’s still there, now serving as president of the rebranded K&R Market Fresh. As it happened, he joined the vending firm right before the Great Recession (officially lasting between December 2007 and June 2009), a historical period of hardship for the vending industry. But little could have prepared him for the shockwaves produced by the COVID-19 pandemic, except maybe a deeply rooted connection to vending operations.

Whitson, 37, is a third-generation operator whose earliest childhood memories harken back to his time spent at the K&R office or filling machines on a route. The original K&R Vending was founded in 1978 by brothers Konrad and Richard Stutzmann who were working as custodians in a high school before becoming vending entrepreneurs. Konrad, Whitson’s grandfather, and Richard, who died three years ago, purchased 13 machines – a mix of snack, coffee and cup soda venders – placed in six locations. The contract included a seventh location with a Pepsi machine that was leased.

“When I was in kindergarten, they used to pick me up in a vending truck,” Whitson recalled. “I’d fill the bottom shelves of snack machines with my grandfather and grandmother. During high school, I served as the route jumper and helped putting orders away, among other tasks.”

His father, Brad Whitson, was an engineer for the Campbell Soup Co. before he joined K&R in 1988. “The business grew to a point where my grandfather and uncle could no longer manage it themselves. My father said he would come in for a year to help them get through some things. He stayed there to this day, and is just beginning his retirement now,” the younger Whitson said.

The apple falls

After college, Bradlee Whitson sought new experiences outside the family vending business. He took a job selling software in midtown Manhattan, but that did not last too long. In early 2007 he received an email from his father with a copy of a non-disclosure agreement attached to it. K&R had entered a contract to purchase another Bridgeton, NJ, vendor, which would instantly double the size of the family business, adding considerable debt to it, too. “We had dinner that night, he asked me to come on board and I gave him the same line of, ‘I’ll give it a year to help with things and see how it goes’ – and I’m still sitting here today,” Whitson said.

The Whitson duo has more in common than dramatically extending their time commitments. They both embrace technology. “By the late 1980s, K&R was already using a vending management system,” Whitson said. “We used handheld [DEX] computers to start to track inventory.”

The company was an early adopter of cashless vending, remote machine monitoring and automated warehouse order picking. The successful deployment of these technologies led K&R to USConnect. “Now we offer the USConnect loyalty platform and their Savant smart cooler, along with touchless vending options” Whitson noted. “If there’s a technology that’s out there, we’re either using it or have looked at it very seriously.”

Additionally, K&R was among the first independent vending operations to deploy Cantaloupe Inc.’s Seed vending management system across all service platforms – vending machines, micro markets, and OCS and pantry delivery.

“Cantaloupe ended up being the best option,” Whitson said. “As a business owner looking at this, I needed one spot to control all service segments. Before unifying all route types, if I wanted to find out how many Chips Ahoy I’m carrying and selling, I didn’t like the fact I had to log into a vending program and see how all my vending machines were doing. And then I had to log into a micro market backend and see how they were doing there.”

And it could get even more tedious. When working with multiple micro market platforms, as many operators do, data on those networks are managed separately. “Now I have two or three different micro market platforms, separately tracking my Chips Ahoy sales,” Whitson instanced.

“For me, it seemed like there were misses that were happening because I want to see, for example, how I’m doing with Chips Ahoy, but I’m forgetting to pull from different sections or segments,” he continued. “Further, if I want to analyze one of my customers and see how they’re doing, I didn’t want to have to go to one program to see how their vending was performing, another to see how their market is doing and then a third program to see how much coffee I’m selling. That’s rife for problems. The Cantaloupe platform puts everything in one place.”

Dynamic routing

Until recently, the industry’s conventional practice was to separate micro market and vending routes, known as static routing. Today, more operators are combining the two to increase efficiencies, a practice called dynamic routing. For its part, Whitson’s operation is now fully dynamic, combining not only micro market and vending service, but also office coffee and pantry.

“Because everything’s under one platform, we are dynamically scheduling all routes,” he said. “We no longer operate dedicated routes, but instead use the same truck to service vending, markets and OCS locations.

“Since we’re using one platform, my drivers don’t have to understand two, three, four or five different systems,” Whitson added. “From a route optimization standpoint, obviously, it’s allowing me to target a geographic area much more closely, rather than having to send three different trucks to touch three different lines of the business.”

Still more, the Delaware Valley operation is breaking down its micro markets into subsections. “Originally, in vending, the old-school mentality held that you’d do an entire bank of vending machines when you stopped the truck at a location. When dynamic scheduling started, we began to think, ‘Well, I’m only going to service the snack machine but not the drink machine.’ Then when micro markets came along, we slipped back into thinking we would restock an entire market every time we’d go out to a location. But now, were stepping forward by breaking markets up into sections and choosing which parts of it need to be filled during a service visit.”

Accordingly, Whitson sends a driver to a location only to top off one or two cold drink coolers and/or a snack section, but nothing else in that market. As a result, route service becomes more efficient without impacting the customer’s experience.

“When we started servicing markets, we had a ton of product. We went out there with a dozen totes of various products, running all over a market trying to fill it,” Whitson recalled. “Now, our drivers get in and get out to the next place, and our customers are still getting a good experience. Without that kind of efficiency, I don’t know how we would survive the COVID period.”

Market Fresh rebrand

This summer, K&R Vending, which recently opened a second office in New Castle, DE, updated its name to better reflect its increasing involvement in self-checkout micro markets, which can offer a wider array of fresh foods. Vital to the new K&R Market Fresh is USConnect’s Bistro To Go self-service market brand. K&R, a founding member of USConnect, has been a part of the foodservice technology group for almost a decade.

Headquartered in Greensboro, NC, USConnect LLC is a nationwide integrated technology provider that manages vending, micro markets, corporate dining, OCS and other foodservice options over a wireless network. It’s part of GlobalConnect, an international network of independent foodservice companies.

“Vending is where we started, and I truly believe vending is always going to be a component of this business, but we realize where we were heading,” Whitson said. “But to say we were just a vending company felt like we were limiting our scope. The concept of K&R Market Fresh shows that all of our offerings – whether they’re being delivered through vending, markets, pantry or OCS, or new technologies like smart coolers – are always going to bring new, fresh and creative products to our clients.”

In addition to micro markets, pantry service was a new area into which K&R was rapidly branching before the pandemic closed many office locations. Still, micro markets are currently experiencing the greatest volume of growth in K&R’s service sphere. Whitson said that markets now represent about 70% of the company’s revenues. The company began operating the self-checkout stores in 2012.

Making connections

“USConnect has been crucial to our business,” Whitson emphasized. “Groups like USConnect, which are giving us new tools like a loyalty platform, charitable donations, cash back on cards and promotions – things that allow me to go out there and sell new benefits to customers.”

Even before the pandemic and the current labor predicament, these perks complementing a workplace food and beverage service were becoming increasingly valuable incentives for employers. In today’s environment, they’re essential tools in attracting new employees and rewarding existing ones who leave remote work behind.

“For K&R Market Fresh, USConnect plays a really pivotal role because it allows us to punch above our weight,” Whitson explained. “We wouldn’t have been able to pull off a loyalty program on our own, or roll out the technology it has. Our membership in a group like that allows us to take another step in a business that otherwise was only restricted to the larger national players.”

The operator network offers the USConnectMe mobile app, which allows customers to make purchases, receive promotions, and earn and redeem reward points.

USConnect allows vend brokers to help create product promotions. “BBI and other broker organizations can meet with the USConnect group and suppliers to put together programs that we would like to run. We can work directly with USConnect and with operators like Bradlee Whitson,” said Mike Kelley, national account project manager and northeast account manager for Burdette Beckmann Inc., a national vend broker. Kelley has worked closely with Whitson over the years.

The main advantage to a network like USConnect, according to Kelley, lies in the collection of channel-specific data that brokers can present to the consumer-packaged goods manufacturers which supply operators. “All other foodservice industries had some type of telemetry or reporting system that allowed them to show manufacturers what consumers were buying,” he observed. “So, in the past, any programs we presented to manufacturers and operators were based on retail or convenience store data. Thanks to USConnect and Cantaloupe, we now can show manufacturers what’s selling in the workplace … this is what people are actually eating and drinking when they’re sitting at their desks.”

And it’s not just what they’re eating, Kelley pointed out, but USConnect can provide data on what sizes they’re buying and the times of day they’re buying. “It’s just very valuable to have that information for an industry that’s expanding and changing,” he said. “We never knew this before; we were always going off of what people are buying in other sales channels.”

COVID days

“I’ve never had to work harder for a dollar. Having bought a company right before the Great Recession of 2008, I thought I knew adversity and what it was like managing a business in difficult conditions,” Whitson told Automatic Merchandiser. “But When COVID hit, it made managing through the Great Recession seem like an entry-level class.”

The K&R president said COVID tested every premise of the business and challenged him to find a new way to do things. A nursing home client at the start of the pandemic lockdown, for example, initially prohibited K&R from entering the building. A week later, however, the vending client reached out for help: “Our employees are getting incredibly upset because we’re not letting them leave, but there’s no food and drink left in the building for them. What can you do?” Whitson recounted.

Amid the panic and confusion at the pandemic’s onset, K&R came up with the only rational solution. “We set up a service that involved building pre-kits, driving them to a location and dropping them off with a set of vending machine keys on top of the box,” Whitson said. “Then we used Facetime with employees in the building to teach them in real time how to fill vending machines. If three years ago I suggested, ‘Hey, I’ve got an idea. I’m going to take a set of vending keys and hand them to a customer,’ you would laugh me off the stage. But when COVID happened, we started doing things we never dreamed of doing.”

Like all vending operations during the height of COVID, K&R Market had to make hard decisions and adjust on the fly. “Whereas we used to send out a plan, for the next day, to our managers, during COVID the joke was we’re going to switch the agenda for the day to the plan for the next 15 minutes,” Whitson quipped.

“Using a white board, we tracked accounts that were closing or reopening, which ones were letting us in, and which required test results,” he continued. “We constantly pivoted and reshaped ourselves”

COVID-19 dominated 2020. In January that year, the World Health Organization announced a mysterious coronavirus-related pneumonia in Wuhan, China, and news stories about disease’s alarming levels of spread and infection began to propagate. Just before the WHO declared COVID-19 a pandemic on March 11, 2020, Whitson was attending an annual USConnect meeting in Florida where fellow operators were speculating “is this a real thing, should I be worried?” he said.

Whitson related: “I remember watching press conferences about restrictions. The governor of New Jersey announced it would take two weeks to flatten the curve … but a couple of months later, the business segments that were once robust all dried up. Office coffee is gone; many micro markets are gone. Locations shut down. What do we have to do? When will people start coming back to the office, and how do you operate a micro market that used to serve 700 people now only needs service for 20?”

Still, thanks to micro markets, K&R ended 2020 better than expected. While the company’s vending and OCS sales were down 20% and 50%, respectively, its micro market business began to take off again in the second half of the year. Whereas K&R’s education and healthcare business suffered throughout 2020 and into the first half of 2021, new micro market business at logistics accounts, especially Amazon fulfillment centers, enjoyed robust growth.

As online shopping surged in 2020, Amazon and other online retailers added millions of square feet to their fulfillment center space. Amazon said it increased its network capacity by about 50% last year. K&R Market Fresh was among the operators across the country that benefited from this trend that is likely to stick around.

Supply chain challenges

And as office locations are coming back online, business for operators is not exactly booming, as product shortages in the United States pile up. “Although our current COVID challenges are – knock on wood – not quite as bad, disruptions in the supply chain are proving to be almost as tough,” Whitson noted. “People are starting to come back to our workplace locations, and they want to buy stuff, but I have no product to sell.”

Not unlike most foodservice providers today, K&R Market Fresh is navigating the pitfalls of a food desert, a far contrast from March 2020, when operators had too much inventory and had to discard tens of millions of dollars’ worth of products because their locations shut down. Whitson advises other operators to do the best they can to fill their shelves. ■