BRIDGETON, NJ -- K&R Vending doubled its size overnight when it acquired longtime competitor B.W. Stetson. The owners of the three-generation New Jersey operation agreed to keep the deal hush-hush until it was consummated on a Friday, making for a busy weekend spent moving trucks, products and people to ensure its newly acquired routes were running smoothly on Monday morning.
The two companies, located at opposite ends of this southern New Jersey community, had gone head to head for years before B.W. Stetson approached K&R Vending in 2007 with an offer to sell its six routes to its long-time rival.
photo | DOWN TO BUSINESS: K&R's three generations include (standing, from left) Bradlee Whitson, Rich Stutzmann and Brad Whitson. Seated, from left, are Lauren and Silvia Whitson. Established in 1978, the company has enjoyed solid growth through innovation.
"My dad emailed a reply containing nothing but an attachment agreeing to purchase B.W. Stetson," recalled Bradlee Whitson, who represents the family's third generation in the company that his grandparents and great uncle founded. "I was working in New York City, selling financial software. The next night we had dinner, and two weeks later I was moving back to work in the family business full-time to help manage the much larger company and solidify our strong position in the southern New Jersey market."
Brad Whitson, Bradlee's father, noted that K&R is known for moving quickly on investments that are right for the vending operation. "We are okay when it comes to taking the lead," he said, "which we demonstrate in our early adoption of technology. That has had a lot to do with our success."
photo | BOTH SIDES, NOW: At left, from left, Brad, Lauren and Bradlee Whitson show off snack vender equipped with remote machine monitoring technology, LED illumination and positive delivery assurance sensors, now standard on the company's vending equipment. Remote machine monitoring has boosted route efficiency, and the addition of card readers is underway now, with the goal of offering cashless payment on all K&R machines within three years. The company also has embraced micromarkets; at right is one of its Avanti self-checkout stores.
The company provides full-line vending and coffee service in southern New Jersey, coast to river from Cape May to Burlington County, and in eastern Pennsylvania and parts of Delaware. Its most distant stop is 50 miles from its centrally located Bridgeton headquarters.
Brad's father-in-law, Konrad Stutzmann, and Konrad's brother, Richard, entered the vending business in 1978 when they purchased a 10-machine route from a coworker at a printing plant.
The brothers kept their day jobs, moving equipment and making repairs during evenings and weekends, while Konrad's wife (and Brad's mother-in-law), Johanna, wore many hats to help the business expand out of their garage. Within a couple of years, they had grown large enough for Konrad and Richard to join the family venture full-time. Fresh food, made in Johanna's kitchen, was added to the menu to win the business of large industrial accounts. Today, K&R's commissary remains a cornerstone of the family business.
By 1984, the operators had established two routes, one run by Konrad and Johanna, and the other by Richard and his wife Barbara. They built a three-bay garage behind Johanna and Konrad's house to accommodate a larger kitchen and warehouse. Konrad and Johanna's daughter Silvia (Brad's wife) and Richard and Barbara's son, Rich, also came into the growing business.
Brad was an engineer working for Campbell Soup Co. (Camden, NJ) in 1988 when his in-laws asked him to manage and continue expanding the family vending business. He made the career switch, applying his technological know-how and determining what benefits it could bring to the operation.
Months after joining K&R, Brad designed a new 2,500-sq.ft. facility. He equipped it with a nursery for his son Bradlee, making it possible for Silvia to become even more involved in the family business. K&R's headquarters was expanded by another 6,000 square feet in 1994, primarily to increase the production capacity of its kitchen.
Brad computerized K&R's route system in the early 1990s, earning the distinction of being the first company in New Jersey to use Validata's RouteSail vending management system and reportedly the first vendor in the state to employ handheld computers on its routes.
Focused on adopting technology that would better serve its customers, K&R stayed in the vanguard by installing $1 bill validators systemwide in the mid-1990s. The company was also an early adopter of cashless payment at around the same time, with its installation of a "closed" debit card system at a federal prison.
photo | TURN, TURN, TURN: Warehouse automation has allowed route consolidation while minimizing out-of-stocks and improving accuracy. From left, warehouse specialist Jim Manna finds and pulls some 2,000 snacks per hour for prekitting, using LightSpeed's "pick-to-light" technology, while Mike Casper and Earl Ruiz ready coffee and packaged cold beverage orders for K&R Vending's 101⁄2 routes.
The New Jersey vending firm has extended its cutting-edge approach to the office coffee service segment as one of the early adopters of Keurig and other portion-pack brewers.
When Bradlee joined the business in 2007, he helped his father spearhead another wave of technological innovation, beginning with micromarkets.
photo | MAKING IT HAPPEN: Skilled management team keeps K&R Vending's operations running smoothly. From left are Danielle Gravley, "Jill of all trades" in the company's front office; route manager James Mikesell, shown here studying sales data collected in real time for use in dynamically scheduling routes; and Tim Couch, who tracks food sales to keep menus current and minimize waste.
"We saw Avanti's concept at a National Automatic Merchandising Association show early on, and flew to see Aaron Spiegel of Piedmont Vending and Jim Brinton of Evergreen Vending," he recalled. Spiegel and Brinton are vending operators, based in Conover, NC, and Seattle, WA, respectively, who founded Avanti Markets, a pioneer developer of micromarkets. "On the way home from the airport, we got a call from a prospective customer who wanted something different from what Canteen Vending was offering as an onsite food solution," the younger Whitson continued. "Very soon thereafter, we placed our first market."
Today, the K&R commissary turns out 2,000 to 3,000 freshly prepared salads, sandwiches and entrées each week. They're sold through 80 food machines and nine micromarkets.
For its micromarkets, K&R developed the premium "Johanna's Kitchen" line (sandwiches, entrees, salads and other refrigerated items) in biodegradable packaging, honoring its founder who ran the commissary for 20 years before retiring in 2009. "We elevated the product quality even higher than our existing 'Deli Delicious' line has always been, along with upgrading the packaging and charging a higher price," explained Bradlee. The company's micromarket foods are priced as high as $4.99, while its vended foods cap out at $3.50.
"In micromarkets, people can see and feel the products up close, which makes them more receptive to higher quality -- and to paying more for it," Bradlee observed. "They simply won't accept the same price-points when it's behind the glass of a vending machine, but we're hopeful that will change."
The next big technological leap for K&R followed right behind micromarkets in August 2011, when the tech-savvy operators recognized a need to change the old vending fill-and-collect model. They believed that remote machine monitoring could be the answer.
"It was the Great Recession, margins were shrinking and gas prices were up," Brad recalled. "We knew vending couldn't survive if we did the same old thing."
After some study, the operation committed to fully deploying Cantaloupe's Seed system, and installed the telemetry devices on 750 of its machines by January. Simultaneously, they upgraded the entire installed equipment base with LED lighting and positive vend assurance sensors.
Until this October, K&R had used a hybrid management system that combined Validata's vending software and Cantaloupe's remote machine monitoring system. But the operators saw the value in moving to a single provider and switched to Cantaloupe's Seed Office, which they say has simplified and streamlined their control and accounting processes.
photo | THEN AND NOW: K&R Vending has grown by focusing on its customers while seeking out new methods for serving them better. Top, the company's well-maintained trucks await their daily runs in 1994; Bottom, its expanded fleet in the wake of 1997 acquistion of B.W. Stetson.
The real-time machine sales and inventory data gleaned from the telemetry solution enabled K&R to scale its 151⁄2 routes down to 101⁄2 by dynamically scheduling a stop only when service is needed.
"We all want to think we're the world's greatest vendors and that each item has sold out minutes before we arrived, but we learned from Seed that in one location, Doritos was selling out in six hours," Bradlee noted. "With a static route schedule, you wouldn't go back to fill that machine for a week."
He emphasized, however, that while Seed's software does a remarkable job tailoring machine menus based on line-item sales data, there's still a need for oversight and careful analysis by the company's route manager.
"We service food-processing factories where our machines can't sell nuts, for example, but the category management software may recommend nuts," Brad instanced. "Only humans can know the idiosyncrasies of each account. We talk a lot about what the customers see and feel when they walk up to our vending machines. Our goal is to leverage technology, combined with a human touch, to hopefully elevate vending to a retail channel people want to use rather than simply a last resort."
K&R's investment in leading-edge technology extends to its warehouse, which it equipped with LightSpeed Automation's pick-to-light system last year. The system simplifies order fulfillment by using computer-controlled light signals to direct warehouse workers to the products they need to "prekit" route orders.
"It's been wonderful," reported Bradlee. "With paper pick-tickets, we averaged 400 to 500 units an hour. Now, we're approaching 2,000, and with a huge improvement in accuracy."
K&R is also well on its way to its goal of being 100% cashless ready within three years, with 25% of its machines already equipped with card readers. "We believe the credit card reader is the new bill validator," Bradlee stated. "It's not an option; it has to be on every machine because if it's what customers want to use, they should be able to."
The company's use of cutting-edge vending technology gave it a ground-floor entry to USConnect, a recently-formed nationwide network of independent vending, foodservice and micromarket operators linked by a wireless network and by a shared mission to elevate the automated retailing experience through employing the latest tools.
photo | BEST FOOD FORWARD: Excellent fresh food in vending machines and micromarkets helps K&R Vending win high-volume clients. At left, commissary veteran Lill Brown and three coworkers prepare 2,000 to 3,000 sandwiches, salads and entree per week in the company's central kitchen; at center, K&R's signature Johanna's Kitchen selections enhance variety of Deli Delicious and Healthier Choice items in a reach-in cooler. At right, K&R principals Bradlee, Lauren and Bradley Whitson make sure route truck conveys a professional company image.
"It brings us together with fellow operators who share cutting-edge ideas and best practices, but we have exclusive territories, so we're not competing with each other," Brad told VT. "It also gives us a nationwide footprint to secure national accounts. You have to invest in technology and run your business right to succeed today. That's what excites us about USConnect: sharing that common vision with operators across the country and pooling our resources."
K&R is in the process of replacing its existing "healthy" vending program with USConnect's "The Right Choice ... For a Healthier You" initiative. Complete with signage, static clings for machines and other marketing materials, it follows nutritional guidelines that emphasize sensible nutrition choices, education and a healthy, active lifestyle. USConnect also has a dietitian on staff to help members develop recipes that meet those criteria, and qualifying them for the program's apple-heart logos.
The New Jersey vendor plans to upgrade its machines with touchscreen displays, but is waiting for the U.S. Food and Drug Administration to issue its final calorie-disclosure rules before taking that leap.
"We want to incorporate touchscreens for nutrition information, as well as marketing and promotions, but we don't want to pick a 6" version, for example, only to find out the rules require 8" or something else," Bradlee explained. "That's one thing that requires a wait-and-see approach."
With increasing numbers of accounts focused on "green" initiatives, K&R is also promoting USConnect's "The Right Choice for Earth" program to communicate the role of LED lighting and Energy Star compliant machines in reducing energy usage and encouraging recycling.
Another benefit of USConnect membership is access to its loyalty and rewards card, which offers patrons cash back, discounts and promotions. K&R has rolled it out in a few locations, and said it has found the rewards card to be a feature attractive to location decision-makers and end-users alike.
"Embracing technology has positioned us very strongly as a company," Bradlee observed. "I've spoken across the country at industry technology seminars to share what we've learned, because the whole industry benefits when we are profitable and when we raise the customer's expectations of vending. But it's impossible to do that without using new tools available to us."
The newest family member to join the K&R team, a year ago, is Bradlee's wife, Lauren. Charged with cultivating new business, she brings a background in public relations and communications to that task, as well as a shared passion for carrying on the family legacy.
"We're well positioned as we aggressively pursue new business, and we're seeing good, steady growth," Bradlee summed up.