It may appear an unusual
aspiration in an industry
dominated by potato chips and
candy bars, but it's a key
component of the growth strategy
that Anzalone's East
Boston-based vending services
firm,
Automated Food Service Inc.,
has been pushing for the past
five years. In addition to the
more traditional fare that has
been a staple of his business
since its inception in 1990,
Anzalone has been stocking more
items that fall into the
"healthier alternative"
category, such as protein bars
and sports drinks.
While some of his colleagues
called him crazy for shaking up
a widely held business model,
Anzalone says it's enabled him
to create a profitable niche,
with 12 percent of his 200
accounts in Massachusetts --
organizations as small as 80
people and as large as 1,200 --
now opting for healthier
selections.
The success of this formula
is reflected in the 11-person
firm's bottom line: About 23
percent of its gross revenue,
which was $1.5 million last
year, is derived from healthier
(i.e., low fat or no fat) items.
That's up about 400 percent from
two years ago, says Anzalone.
For him, the product
expansion, which he has dubbed
"Mission Nutrition," has let
Anzalone marry a long-held
personal interest in fitness and
nutrition with his business. It
also gives Automated a critical
point of differentiation in an
industry where smaller vending
firms struggle to compete
against supermarkets and
convenience stores wielding more
buying power with manufacturers.
"Competition is
fierce right now,"
says Anzalone.
"There's a lot of
mom-and-pop
companies out there.
Some are doing it
out of their cars.
It's a part-time
thing for them.
There's little
barrier to entry
into the business.
You need enough
money to buy a
machine, and you're
in business."
With corporations
increasingly interested in
maintaining a healthier work
force, demand for nutritious
products has risen, says Jackie
Clark, spokesperson for the
Chicago-based
National Automatic Merchandising
Association. "We've seen a
big shift in the industry toward
better-for-you products," says
Clark. "For smaller independent
(vending service companies),
with not as many resources, it's
a challenge."
It's not the only way
Anzalone has deviated from
industry norms. For instance,
rather than accept equipment
from manufacturers to whom he
would then be beholden, Anzalone
has purchased 336 vending
machines of his own, with an
estimated aggregate value of
$840,000.
While implementing
the healthier food
program has been a
boon to the
business, Anzalone
admits it's also
brought a range of
new challenges. In
the past, he's taken
hits on products
that failed to
resonate with
customers and ended
up collecting dust.
"When you're trying
to be an innovator,
sometimes you get
stuck with products
that don't move," he
says.
One of his biggest
hurdles, he says, is
that too few
manufacturers offer
healthier products,
forcing him to
pursue
unconventional
channels of
distribution -- such
as those that
traditionally supply
health clubs.
That process, Anzalone
concedes, has required a lot of
arm-twisting: "Getting people to
sell to me because I couldn't
buy enough product" was a
problem, he says. "And showing
them that once I bought the
products from them and they
started to move, I could buy
more and more product from
them."
Five years into the "Mission
Nutrition" initiative, Anzalone
has earned the clout to carry
many major brands -- from Baked
Lays Chips to Balance Bars. Of
the 1,200 different items he
currently stocks, about 300 fall
into the healthier category.
Moreover, clients like Bill
Johnson, vice president of
property management at the South
Shore YMCA, which recently
transitioned to healthier
vending options, respect the
risk that Anzalone's taken. "A
lot of vendors are in it only
for the profit," says Johnson.
"Some are afraid that if they
take out the junk food, they're
going to lose profit. Pat's
taken the opposite approach."
Sean McFadden can be
reached at smcfadden@bizjournals.com.
