Vending Cart Generates Revenue, Serves as Amenity

While working in Chicago in the early 1990s, Eric Semple came to like a good cup of coffee. Upon returning to his native Cleveland as the new property manager at the AJC Federal Building, he was disheartened by the dearth of places offering premium java — and figured that others were, too. Wanting “to give something different” to tenants and visitors at the AJC Building, which include the Immigration and Naturalization Service (INS) and its clients, he came upon the idea of having a vending cart in the lobby specializing in premium coffees and teas, baked goods, and sandwiches. He even had an operator in mind: Take 5 Coffee, a local upscale beverage chain started by onetime building contractor Dennis Dooley. But before Semple could bring in Take 5 as a third-party vendor, he had to gain the blessing of the building’s existing food-service provider and two vendors operating through GSA’s Randolph-Sheppard Program. Semple successfully navigated these regulations, using cooperation and creativity to bring his customers a better cup of joe.

Merging Protocol And Innovation

Semple had a clear vision not only of the items he wanted the cart to offer, but also of the cart itself: He felt it should be a high-end, self-contained unit with its own holding tank and drain. Take 5′s Dooley put together a proposal that included a mahogany-trimmed cart with specialized coffee equipment, staffed by uniformed employees.

Following protocol, Semple took the proposal to the Bureau of Services for the Visually Impaired, which represent the building’s Randolph-Sheppard vendors, who manage the building’s vending machines and have first right of refusal for additional vending opportunities. Semple explained his concept to the Bureau, showed the proposal to the vendors, and asked if they would be interested in participating. They declined, agreeing it was more specialized than their efforts and was, as Semple says, “not a business [they] wanted to get into.”

Semple and Dooley then discussed their vending cart proposal with representatives of Southern, the cafeteria’s food service. Southern did not wish to invest the time, money, and training needed to manage a high-end coffee cart; however, it was open to developing a resource-sharing agreement. This agreement would need to cover basic issues like the menu and operating hours for the Take 5 vending cart, as well as practical maintenance issues, such as where Take 5 staff would wash their coffee urns and store supplies.

After detailed discussions, Southern and Semple came to a solution: Take 5 would become a sub-contractor of the cafeteria. That way, in exchange for a percentage of the vending cart’s profits, the food service would share its cleaning equipment and storage space, and also include Take 5 in its food license. Aside from those factors, Take 5 would act as a stand-alone operation.

There were a few details to take care of before Dooley could set up his operation in the lobby. He had to purchase a cart that matched his proposal, and obtain an annual permit for use of space in a federal building (an opportunity offered to all U.S. citizens). Semple, in turn, had to amend the building’s food vendor license to mention the cart — which consisted simply of notifying the city’s health commission of the change.

The Sweet Smell Of Roasted Beans

In July 1995, the Take 5 Coffee vending cart opened for business in the AJC Federal Building — and it’s been thriving ever since. On the menu are flavored coffees, herbal teas, chai, mocha, latte, espresso, and hot chocolate; with a full line of bakery goods (bagels, pecan rolls, and muffins and such) in the mornings. At lunchtime the cart features fresh gourmet salads, sandwiches, and two types of soup, while cakes and pastries are served throughout the day. Staffed by specially trained employees, the cart is open for business between 5:30am and 2pm, roughly mirroring the hours at the building’s cafeteria. Both cafeteria and Take 5 personnel meet regularly with Semple, and the cart is inspected yearly by representatives from the city and state health commissions. Like the cafeteria and the buildings’ Randolph-Sheppard vendors, Take 5 pays no rent for use of the lobby space.

Although there have been a few negative comments about the cart, mainly from those who believe a private company should not be allowed to sell goods in a federal building, most see Take 5′s presence as an amenity. The cart stocks a limited number of items, so, as Semple observes, “You’ll see someone at 7am buying both coffee and a salad, to make sure he gets one for lunch. There is a sense that this is special, this is fresh, and there are only so many to go around.”

Semple is still a big fan of the operation, but if he did it again, he believes the building would be better served with a built-in kiosk instead of a cart; during busy times, the lines for the cart can create traffic-flow issues. This is partly due to additional security equipment that was installed after September 11, creating less space around the cart, which is on the secured side of the lobby. Yet the congestion is temporary, as a new lobby annex will alleviate the overall crowding in the entranceway.

Despite such issues, Semple concludes that the cart’s positives outweigh any negatives. “I think we who work in federal buildings can tend to pigeonhole ourselves — we have this institutional mentality. Trying something new is tough, and you have to jump though the hoops, but it can be done.”

Lessons Learned About Bringing in a Third-Party Vendor

  • New vendors must provide goods or services that existing vendors in the building cannot or do not want to provide. Multiple vendors can successfully offer similar goods, but there needs to be a difference of scale (that is, price points) or of kind (different specialties).
  • Get the go-ahead from existing building vendors, especially any Randolph-Sheppard representatives, before introducing the new vendor.
  • Coordinate and cooperate — don’t compete. Developing alliances and sharing resources can help all parties.
  • Consider having a vendor piggy-back off a cafeteria’s food license.