FOR SOME OPERATORS - SALES ARE MOVING UPWARD
As offices and industrial locations begin to slowly open in some areas, operators are reporting that revenue in certain categories are on an upward trend. In fact, some operators are reporting that one channel in their business is 70% or more of what it was before the pandemic hit.
Vending is the one business channel that is coming back strong. Vending is prevalent in the industrial sector – serving essential workers who have returned or never left the workplace.
Micro markets that are truly functioning are doing well, but too many are in workplaces that are shut down.
Coffee service and the pantry service sectors remain stagnant for most.
We are stuck in the pre-vaccine, ultra-slow return to the office.
Increasing sales – Is this the time to sell?
There is plenty of private equity money just sitting on the sidelines right now and like the second-string quarterbacks we see on Saturday and Sunday morning, they cannot wait to get the call, put on their helmet and get into the game. Unfortunately, in this halftime mode we are in, making a move is a challenge, especially from a valuation standpoint.
It may be just a little early for a flood of deals, but ultimately, it will happen. If an operator conserves cash and follows my suggestions below, they will be well positioned for my promised “tsunami of deals.”
Vending is up - Is vending the answer?
Vending sales lead the industry – does this mean you should focus on vending locations if you plan to sell in 2021? Not necessarily. Private equity buyers are in love with micro markets, the darling of the industry. When offices repopulate and employees feel safe about returning to the office, micro markets will rule the office.
In fact, micro market growth has been nothing less than explosive during the pandemic. There is a clear trend to replace vending with micro markets in many “essential worker” locations, as employers seek to elevate the amenity and make fresh food available.
Plan for the near future
As industry consultant Bob Tullio points out in a recent b2b Perspective video, pivoting is for the short term and preparation is for long term. That is certainly the case for operators who hope to sell their business in 2021. It is time to prepare and there are five important areas to focus on to enhance the value of a convenience services business.
Target functional locations – Direct your sales team to pursue locations that are performing well even during the pandemic – essential services locations will be even stronger in the post-Covid era.
Seize the opportunity to gain market share – I hear reports of excellent locations that are being underserved by operators who cut back too drastically or operators who simply do not have the resources to serve their clients. If a competitor is underperforming, that is your cue to up your game and grow your company.
Retain key staff if possible – It was hard enough for operators to find qualified employees before the pandemic. Cutbacks were essential, but as an industry, we could find ourselves with a completely untrained workforce. Stay in touch with your former employees because you are going to need them when business kicks back in.
Invest in touch free technology – The effort to limit touch points in our industry is not an overreaction. Even before the pandemic - that trash can near the door of a public rest room was there because so many patrons used a paper towel to avoid touching the door handle on the way out. As a society, we are wisely aware that avoiding touch points can prevent the spread of germs. The demand for touch free technology is here to stay. As an operator, you need to invest in touch free technology.
Maintain your access to credit – When the offices repopulate, operators and equipment distributors will be straining to keep up with the demand. When this big opportunity finally arrives, it is critical to have access to equipment. Use credit to stock up on single cup brewers and micro market fixtures, all of which will be in demand and have the potential to be slowed up by a struggling supply chain. Based on the number of companies that have vowed to return to the office after January 1 and the potential for a vaccine, we could be just a few months away from a much-improved situation. Like the rest of us in the industry, I remain cautiously optimistic about the timing and scope of a recovery. One thing is certain – buyers are paying attention.
Whatever your reasons are to sell your company - the timing, the current frustration, the desire to enjoy life or an interest in rewarding yourself for years of hard work – VBB Advisors can help you realize your goals.
I am Mike Kelner, the leading sell side intermediary in the convenience services industry. Contact me for a confidential conversation and to explore the possibilities.
We specialize in sell-side advisory services and mergers & acquisitions. Our focus is on maximizing the realized value on behalf of our clients. VBB manages the entire process from valuing your business, assembling
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