HOWZAT

Another problem is that some of Supercups’ rivals offer the machines free to get their foot in the door. Simmonds has to spend time persuading potential clients that it is worth investing up to £7,000 to buy or lease his machines rather than opting for the “free lunch”.

“The free deals can come with restrictive, tie-in contracts whereby the employer is required to guarantee that certain amounts are sold each month or year. Somewhere along the line they will end up paying for it.

“It can be difficult to get an opportunity to explain that given our lower running costs they would be better off making the initial outlay or investing in a lease.”

Most of the machines that Supercups deals with have been leased by clients. Supercups looks after them and the clients receive a royalty payment based on sales. Some contracts include a full-time Supercups employee at a client’s premises.

In a few cases, where sales are particularly high and competition fierce, Simmonds has reluctantly offered agreements that include a free machine.

“This is not ideal as it gives little chance for clients to appreciate the real value of these expensive pieces of kit,” he said.

“People abuse vending machines. At a factory recently the door of one was crowbarred off and money stolen. If a client has paid for the outlay, you can bet it will make sure the machines are looked after better.”

Vending machines that need significant repairs are taken to the workshop at Supercups’ site in Ashford, Kent.

Alongside is the warehouse packed with confectionery, cereal bars and cans and bottles of drinks. Sandwiches and other fresh produce are delivered direct to clients from a nearby independent specialist supplier.

To help reduce cost of longer-life products, Supercups is part of a buying consortium that deals direct with manufacturers rather than wholesalers.

This cost-cutting is essential in an industry where the number of cups sold has been falling by 5%- 7% a year. “The factories employing 50 to 100 people, which traditionally used the services of companies like us, are closing. Also, more people are preferring water to hot drinks.”

In response, the company has diversified into sales of water coolers and bottled water. It has also picked up new business from smaller clients such as car showrooms and solicitors’ offices.

Another potential growth area is schools, where efforts are being made to encourage healthy eating and reduce obesity.

“Until recently, most schools dealt direct with large suppliers such as Mars and Coke, which offered machines free or on a subsidised basis in return for space being committed to their products,” said Simmonds. “Now many schools are looking to deal instead with independent suppliers like us that don’t have fixed deals, giving them more chance to offer healthier selections of snacks.”

Five years ago schools provided only about 2% of Supercups’ turnover. Now they account for 8% and the amount is growing quickly.

“We know many schools rely on the income generated by these machines. We can work with them to make sure they provide an income stream and fulfil the requirements for healthier options,” said Simmonds.

To promote Supercups, a demonstration day was held recently to which the firm invited a selection of schools within 80 miles. The event was successful, with a third of the 23 schools that attended making a deal. More contracts are in the pipeline.

The hardest challenge will be getting a foot in the door at schools where catering is already contracted to firms that have direct links with Supercups’ bigger competitors. To succeed, Simmonds needs to press all the right buttons.

To discuss these challenges and offer your own advice, go to the forum section of www.enterprisenetwork.co.uk