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Initial growth In January 2011, Five Star began experimenting in micro markets. Recher had seen a micro market con- cept at a tradeshow and was intrigued with its potential. After six months of testing the concept, Five Star manage- ment determined that micro markets could be a sustainable growth engine for the company. "The primary rea- son we believed in the concept was due to the overwhelmingly positive reaction we were getting from our customers," said Greg McCall, vice president of sales and marketing. "Over and over, we were told that employees loved the convenience and variety of the market concept." The company found that micro markets offered consumers a much wider product selection and gave the company a platform on which to expand. Initially Five Star began integrating the micro market concept within the sales force and witnessed signifcant growth, so within the frst year it became its own line of busi- ness within the company. Retail-oriented Five Star immediately saw micro mar- kets as a retail concept. "We began to design a retail company within our vending company," said McCall. The company created micro market-spe- cifc warehouses within its vending warehouses, in order to keep the busi- nesses separate. Vending routes were separated from micro market routes and the company began looking for retail-oriented micro market drivers who could merchandise. "From the beginning, we believed that it would be necessary to build a dedicated operational infrastructure to support the micro market business," said McCall. And so a new level of management was created. Micro market managers and area micro market managers were hired. Mark Stephanos, who had been with the company since 2003, was chosen to lead the entire team of micro market-dedicated staff as vice president of micro mar- kets and two directors of operations were put in place. "We have around 65 employees who are completely dedicated to the micro market busi- ness," said McCall. In order to act as a retail seg- ment, the company began offering retail-like promotions as well. "We are dedicated to providing frequent and high quality promotions within our markets," said McCall. "We are realizing how to operate a retail busi- ness, and promotions play a large role in that mission." Typical company promotions include a price discount or the chance to win valuable give- aways. The most recent promotion gave customers the opportunity to win a Caribbean cruise for two. Manufacturers also began partner- ing with Five Star to provide giveaways and promotions, including a current promotion sponsored by Mars. When users purchase a Twix Bar using their account IDs, they are entered to win a pair of tickets to a NFL football game and a $50 Visa Gift Card. The mini micro market Five Star Food Service recognized the infuence of the micro market con- cept and has grown it to be a large part of the company's expansion. Micro markets work best in a space of 150 employees or more, however, that meant many locations were not eligible, as offces are seeing shrinking body counts. To meet the need of smaller locations, Five Star has recently begun offering the mini micro market. It is a smaller kiosk at a lower price and meant for offces of 50 to 125 employees. In the mini micro market, Five Star might place a two-door cooler, four-foot snack rack and a kiosk, taking up nine to ten feet of wall space. In a little over three and a half years, Five Star Food Service has opened 327 markets and expects to reach 400 by the end of its current fiscal year. 38 Automatic Merchandiser VendingMarketWatch.com October 2014 O P E R A T I O N P R O F I L E