Versatility has been a cornerstone of J.E. "Eddie" Hicks's growth strategy since he launched Prestige Services 14 years ago, and it has paid off in the present economic downturn. Given today's operating environment, he considers himself fortunate that all his eggs are not in one basket.
"When people ask me what the best thing is about Prestige Services, I say it's that we're diversified," he told VT. "And when they ask what's the worst thing about our company, I say it's that we're diversified! It's complex to operate the various businesses we run, but it's what is keeping us in a strong position, even though vending sales are down a good 10% due to the economy."
Headquartered in Clifton Park, just outside New York's state capital, Albany, Prestige Services has a team of 360 employees deployed across 16 eastern New York counties and Vermont's Rutland County. The company's core business remains its eight vending routes and contract foodservice operations serving the Capital District (Albany and the surrounding counties).
One of Hicks's first diversification ventures was an expansion of the company's manual feeding services beyond the business and industry sector to K-12 school cafeterias. Prestige has also established itself as a specialist in senior meals services, and now offers its elderly dining program across a territory extending far beyond its vending and foodservice hub into the center of the state. Rounding out the business are four Subway sandwich chains, the first of which Hicks purchased in 2003, and his latest initiative, a dedicated office coffee service division.
"Vending is our backbone. It's where I come from and where we focus," said Hicks. "But having a commissary and our expertise in food has led us in other directions that are very successful parts of our business and that are not as affected by the current economy."
Hicks's industry career began in 1978, when he left his sales and systems engineering job at IBM to join Sands & Co., a regional vending and foodservice company. He put his managerial and marketing know-how to work as branch manager for the North Carolina division, and moved rapidly up the ranks to president and chief operating officer of the Atlanta-based organization.
After a stint on the supply side of the business as vice-president of vending and foodservice sales with Golden Valley Microwave Foods, Hicks was drawn back to operating and moved to Bethesda, MD, to serve as vice-president of national vending for the Marriott Corp.
In 1993, the vending executive was recruited by the management team of Servomation International Inc. to become its president and CEO, continuing his steady move northward to upstate New York.
The Clifton Park-based operation (from which Prestige Services eventually emerged) had spun off from Service America -- one of the largest regional contract foodservice and vending companies at the time, which operated throughout the northeastern U.S. and parts of Canada. The Clifton Park office was the hub for six other units based in Boston; Buffalo and Elmira, NY; Erie, PA; Londonderry, CT; and Montreal.
Two years after Hicks took the helm of Servomation, the Philadelphia-based holding company that owned it dissolved. Hicks helped sell off each of the divisions and purchased the Clifton Park operation, which had a well-established vending and contract foodservice base and a regional reputation for delivering exceptional service.
"We have always preached service, and we have an excellent account-retention rate because of the service our team delivers," he told VT. "Providing food is also a very important competitive advantage in vending, especially if you make your own. I've always worked for big vending companies with commissaries, and it tips the scale in your favor when you do it right. You can make money vending food if you have the proper mix and know what you're doing. Most of all, you must get a decent price or you can't do it."
Given the current market, Prestige's B&I dining accounts represent its biggest challenge, as companies hit by the recession have eliminated subsidies and reduced staff levels and hours. Prestige's catering business, which primarily serves workplace clients, has also felt the effects of corporate belt-tightening.
Demonstrating the value of diversification, senior feeding remains a bright spot for Prestige Services in spite of the economic downturn. When Hicks joined Servomation, the company recently had begun providing meals for seniors in the Boston market. He saw it as a logical adjunct business in New York, and had just signed a senior dining contract in Saratoga County before he purchased the business.
MEALS ON WHEELS
Today, Prestige produces 500 to 1,600 meals a day, per county, for seniors in seven counties throughout upstate New York, and the business continues to expand into new territories through word of mouth. The company maintains kitchens in each of the counties it serves, and has a part-time dietician on staff to ensure that meals meet specified nutritional criteria.
"The senior 'Meals on Wheels'-type programs are very different from county to county," Hicks explained. "In some, we deliver to patrons' homes; in others, we drop off the food and the county delivers it to their homes. In many counties, we provide 'congregate' meals, where seniors gather at the site to eat, whether a church, school or senior center."
Hicks's wife, Janice, whose prior career path was as a registered nurse, works with the division. She spends a good deal of time visiting the congregate feeding sites to maintain a personal touch and ensure that the service and food quality meet Prestige's exacting standards.
The elderly dining programs are funded through federal, state and county money, often supplemented by a small fee charged to the person receiving the meal. "It's a very rewarding piece of our business. It allows seniors to stay home and get a hot, quality meal each day," Hicks commented. "And it's been a solid, growing business that has not been hit by the economy."
In 2003, with the senior meals division well established, Hicks set out to diversify further. That's when he customized the K-12 school foodservice program, which has become a growing component of the operation. At the same time, Hicks became a Subway franchisee and opened the first of four sandwich shops in the region. All have turned into booming contributors to his business, and remain steady performers in this challenging economy.
"I achieved the diversity I was looking for; our success is not completely dependent on vending or on Subway, on schools or on elderly feeding," commented the vending veteran. "We're seeing location downsizing, a lot of cuts that are affecting vending and B&I feeding. But our ability to grow in the current economy is proving that our mix of business offerings works."
In addition to enjoying the revenue stream generated by his Subway locations, Hicks leverages the popularity of the fast-food brand by selling the submarine sandwiches through his vending machines from time to time, and catering Subway lunches for clients. "People love Subway and get excited to see the brand," he told VT. "We only do it here and there as a monotony breaker, not as a regular vending item. The big thing with Subway is the freshness of the bread; it has no preservatives, so it has a short shelf life that doesn't fit well into vending."
Hicks's latest venture is an aggressive move into office coffee service, a segment he admits he's a few years overdue in cultivating. "We were so busy with developing so many other areas of our business that we are only now getting into OCS in a big way," he told VT. "With the way the market has evolved, it makes sense to be able to go into a 'minimal' account with a coffee brewer, and not just limit ourselves to the big vending accounts we've traditionally targeted -- especially in the Capital District, where there are so many small offices."
Helping spearhead the initiative is industry veteran Mike Esposito, who came on board a year ago to head up the company's vending division and develop and execute its OCS program. He joined Prestige after a two-decade career with Syracuse, NY-based Aramatic Refreshment Services, most recently managing that company's Albany division.
Esposito and Hicks honed their coffee expertise by completing NAMA's Quality Coffee Certification Program at the NAMA National Expo last fall in St. Louis, and now are leveraging their knowledge as certified coffee specialists when presenting to prospective clients.
A focal point of Prestige's OCS program is Mars Drinks' Flavia system, which the company is marketing forcefully as a convenient, high quality single-cup solution. "Single-cup continues to grow in appeal, and we think there's a lot more opportunity for penetration in the workplace market," said Esposito. "We became a Flavia distributor because Mars is all over the world; they pick and choose the best products."
For batch brewing, Prestige is exclusively placing Bunn automatic and pourover brewers, which Esposito considers the "Cadillac" of coffee service equipment, to achieve the best possible level of performance and simplify service through commonality of parts and repair procedures. The company has selected Barrie House (Yonkers, NY), a well-recognized brand in the region, to supply its signature fraction-pack coffee.
Prestige Services will also offer Kool Tek point-of-use water coolers, which Esposito said he selected for their proven reliability and customer satisfaction during his tenure at Aramatic.
Reinforcing his commitment to expanding the OCS division aggressively, Hicks recently hired the first salesperson since the launch of his company to pursue the business. "We have never had a salesperson on the street. We've always gotten new business through word of mouth, or by me or other managers going out and selling," he commented. "Our new salesperson, Jay Kirker, has been cold-calling for just a matter of months and is already up to our target of securing three new OCS accounts per week, in addition to adding coffee service at existing vending locations."
Another area of sharpened focus for Prestige Services has been bringing an appealing assortment of "healthier" alternatives to patrons and promoting their availability through point-of-sale merchandising.
"Customers in every type of account, in vending and dining, are more interested in the healthy aspects of snacks and foods," observed Hicks. "They're a lot more interested in reading the label, knowing what's in what they're eating; they're getting more sophisticated."
Prestige began implementing NAMA's turnkey Fit Pick better-for-you vending program six months ago, and is working towards having it in place in all machines systemwide. "A few years ago, we tried our own program with our own signs and shelf markers, and it was not as effective," he observed. "People were not as ready as I think they are now. And NAMA's signage and information really breaks down which products fit into which healthier categories, and helps the patrons find them easily in the machine."
Cashless payment is another emerging trend Hicks is embracing. "I have cashless acceptance on several machines in locations where I'm sure we'd lose sales if we counted on people having cash," he told VT. "We've seen the cashless option lift sales by as much as 15%. I see demand growing, and it will continue to grow. I think it will be less of an option, more of a necessity and even more worth the investment moving forward."
Proactively adapting to the industry's inevitable changes is a key to surviving and prospering through tough times, the Prestige Services president emphasized. "The move from cup soda vending to cans was a huge transition, and the move to bottles has been a big adjustment; there was a lot more profit back in the good old days!" he commented. "And the disappearance of cigarette vending had its impact years ago. On the flipside, the improvement in quality and variety of packaged snacks and food and the reliability and merchandising appeal of machines, and the upswing in coffee quality and equipment, have opened the doors for many opportunities."
These advances, along with the National Automatic Merchandising Association's efforts to help operators promote them, have enhanced customers' expectations when they approach a vending machine, according to Hicks. But the industry still has a long way to go, he added, emphasizing that he is committed to doing his part to help NAMA raise the bar.
Hicks is currently serving as chairman of the association's Ethics Committee, the mission of which is to steer locations towards ethical operators and away from those who are unscrupulous. The latest component of the campaign is a downloadable toolkit to help operators demonstrate to accounts that they conduct business honestly, and to enable location management to identify unethical operators.
"Operators can use the toolkit as a competitive advantage. As an industry, we need to make sure we're doing all we can to keep clean, because there are people out there who cheat," Hicks told VT. "The last thing we need is an article in The Wall Street Journal that accuses vending of cheating! The efforts of NAMA have helped, and there's so much more that can be done to improve the industry's image; we're working on it. The next part of the ethics campaign will be to follow up the toolkit with a public relations program."
Hicks always has been a believer in the value of trade associations. His long dedication to NAMA began in 1993, when he joined its board of directors. He has served as chairman of the technology committee, and was the association's chairman in 1999. In 2001, Hicks received NAMA's Industry Person of The Year Award and, in 2004, was chairman of NAMA's first national capital campaign that raised $5 million. He has also served on the boards of vending associations in North Carolina, Georgia and Maryland, and is a past-president of the New York State Automatic Vending Association.
The New York operator's industry involvement also extends abroad. Hicks was chosen to serve on the Worldwide Vending Association's board of directors by NAMA, and he is the organization's current chairman. WVA was founded in 2006 by NAMA and the European Vending Association to address the increasingly large number of decisions made at a supranational level that impact the vending industry. Its membership is active in vending in 21 countries, comprising 20,000 companies operating some 10 million machines.
"There are common industry problems in our country that have gone global, including obesity, environmental issues and technological standards," Hicks pointed out. "Europeans overcame major problems getting the euro under control, and we can learn from them when dealing with our own currency issues, for example. The WVA is a very effective way to coordinate our efforts and share knowledge 'from both sides of the pond.'"
Prestige Services is also closely involved with local industry endeavors. Esposito is the current president of the New York State Automatic Vending Association, and has been instrumental in gaining the support of lawmakers to raise the state's tax exemption for vended candy and soda from 75¢ to $1.50 per item. Esposito and others in the association have been meeting with legislators to push the effort along, and he believes the prospects seem favorable.
Beyond his trade association involvement, Hicks devotes his time and business expertise to local community organizations. He currently serves on the board of directors of the Southern Saratoga County Chamber of Commerce, and was chairman of the Saratoga County Chamber of Commerce, while taking an active role in many other organizations.
"My personal involvement in the community is important to me," Hicks emphasized. "I value the opportunity to be close with other people around me, and I benefit professionally by being around people from other industries.
"A good vending business is all about people and relationships," the industry veteran summed up. "When you're involved in your community, professionally and personally, the lines between friends and clients blur."