At Your Convenience
By Thibodeaux, Anna
With record-setting gas prices crimping Americans’ on-the-go lifestyle, Lyons Specialty Co. is expanding food services at convenience stores as more people want one-stop shopping.
“Food service is one of the fastest-growing categories in a convenience store,” says Hugh W. Raetzsch Jr., president of Lyons Specialty and its subsidiary, AA Vending Service, in Poplar Grove Industrial Park in Port Allen. “We’re focusing on this sector more with everything from chicken tenders to hot dogs to branded programs such as ‘Squawkers Chicken’ and ‘Freschetta Pizza’ lines.”
In February, the company expanded food services by introducing new prepared foods such as fried chicken to the 500 Louisiana convenience stores it also supplies with everything from tobacco to automotive items. Newly hired food sales specialists are offering tastings during lunch so store owners and customers can sample the food.
“We’ve worked very hard over the last 10 years to build a certain image with our vendors and customers alike. Today, people from New Orleans to Shreveport know us and know what they’re going to get,” Raetzsch says. “It’s a partnership. We’re trying to make them better and more profitable.”
The goal is to continue to build the 80-employee company with a positive image with customers, he says. Raetzsch hopes to do this while also expanding the company with “profitable growth, not just growing sales.”
While fast food in convenience stores isn’t new, he maintains these in-house food lines are more profitable and manageable for storeowners, as well as help draw more budget-conscious, one-stop shoppers. Everyone has to be more cost-conscious, Raetzsch says, assessing ways to cut fuel costs with both his businesses.
“On the wholesale side, we have diesel trucks that log more miles, and with the diesel fuel prices continually rising we are trying to consolidate routes to cut miles,” he says. “On the vending side, we service nearly 500 machines every week. The trucks servicing these machines run on regular gasoline, which is slightly cheaper, but the ability to recover the increased cost in fuel and product cost is more difficult, as it requires physically visiting every machine to reprogram it with higher prices.”
Pricing pressures are a constant, as well as competition, but he says they stay focused on setting themselves apart in the market.
“We’re all selling Snickers and basically the same products, but in both businesses we differentiate ourselves with service and more extensive lines, and giving customers more options,” Raetzsch says. They also stay ahead of the trends, the latest one being healthy options like energy bars, trail mix or baked or veggie chips.
Overall, the Lyons Specialty-AA Vending relationship has been a profitable niche since 1946. Lyons Specialty handles more than 6,000 items, which lends to AA Vending offering more items than other vendors – a strong competitive edge.
“In the 11-plus years I have been here, I have seen our sales increase from $23 million annually to nearly $90 million last year,” says Ali Momenzadeh, vice president of sales. “The interesting part of that equation is we have not had to increase our customer count by the same ratio, or at all, for that matter. We probably have fewer customers now than we did 10 years ago. The reason for this was our focus beginning about 10 years ago. We wanted to become a one-stop-shop for all of the convenience stores we serviced statewide – and we have.”
When Raetzsch started full time with the company in 1993, it focused on expanding the product line and territory it serviced. Technologically, the company has advanced into handheld computers for inventory and orders.
Charles Schimmel, vice president of operations and general manager, says they’ve been designing and working with programmers to develop these technological advances since early 2007.
“Lyons implemented a paperless and hands-free order selection and verification system,” Schimmel says. “As with any developmental program, there have been many issues to work through. But, what is most exciting to us is the way our employees embraced the technology and the resulting increase in quality they have provided.”
Employees wear a small personal computer on their wrist with a scanner that attaches to their finger. They scan a bar code for a specific order, which pulls up the order on the screen telling them the item and its location, and they find it and scan the UPC code. It gives them a positive “ding” or a negative “buzzer,” verifying whether they have selected the right item or not.
“Getting it right the first time is a big thing because if the customer orders a Snickers bar, that’s what they want; and when they get something else, it can be very costly to correct the error,” Raetzsch says.
Vending drivers also have a hand-held computer. When they get to a machine, they plug in a cable, connecting machine and computer, which downloads all sales data and advises on how many of an item should be put in the machine. When they return from the route, the driver plugs the computer into a “home computer” and downloads all the day’s activity and verifies the money. Raetzsch says this helps with inventory and accounts for merchandise, as well as better keeps track of the many coins and dollars in this high-volume, low-margin business.
“Over the last year, we’ve also invested a significant amount of money in technology with handheld ordering devices that we provide our customers,” he says. “They provide sales data on items such as how fast an item is moving, and it helps them make a more accurate order. We want them to carry just the right of amount of product because that’s money they could be spending on something else.”
CFO Jodi Buckner says Baton Rouge’s growth does keep employee turnover a concern.
“We have moved shifts to make each option more favorable,” she says. “Promoting from within and giving each employee the opportunity to grow will help this not only be their job, but a career. We must continue to look at the larger picture and work to develop new vision. What kinds of demands are likely to develop over the next 10 years? Can we meet them? These are ongoing concerns and questions that must be answered to continue our success.”
Copyright Greater Baton Rouge Business Report Jul 15, 2008
(c) 2008 Greater Baton Rouge Business Report, The. Provided by ProQuest Information and Learning. All rights Reserved.