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stantial increase, despite still only representing 8.7 percent of the total serviced locations. Operators report economies increasing, many slowly, but businesses are hiring, leading to additional services and sales. Non business and industry sites, such as restaurants, hospitals and correctional facilities have seen more service from operators as well. Even schools, which initially suffered due to the U.S. Department of Agriculture rules about what products could be sold in school vending machines, has rebounded. New products that meet guidelines have been introduced to the vending channel, which has allowed operators to successfully serve this niche. Some of the new products are a result of suppliers no longer keep- ing certain products available only in vending or only in retail channels in a siloed sales model as well as new product entrants. It has resulted in a CHART 7: SEGMENTS WHERE PRICES WERE RAISED PRODUCT 2015 Candy/snacks/confections 28.4% OCS 8.1 Ice cream 6.1 Sundries/toiletries 2.9 Milk 5.5 Vended food 12.6 Bulk vending 1.6 Hot beverages 5.2 Condoms 0.4 Bottled water (not single-serve) 3.3 Music 0.1 Cooperative service vending 0.4 Cigarettes 0.8 Cold drinks 21.3 Manual foodservice 3.0 in 2015, which would support the theory there are a greater number of vending, micro market, and offce coffee service customers now, than in 2014. One area that has been added is military bases which showed a sub- The same product doesn't work every- where, keeping it from being a one size fts all type of service solution. Acquisitions remain fairly constant While the number of operations that divested or acquired business in 2015 shrank a little, the percentages stayed pretty consistent with prior years. Just less than a quarter of operators reported acquiring companies last year (see chart 6). Many of these acquisitions appear to be smaller operations. The percentage of opera- tions making under $1 Million in rev- enue each year dropped by 1 percent in 2015 (see chart 2). Mid-size and large operations grew. The number of extra-large operations declined. Com- ments suggest that pricing challenges among very competitive regions as well as those that are not utilizing technology are struggling. In 2015 there was a shift in some of the locations operators served. Manufacturing and offces remain very important, but vending opera- tors are diversifying their location mix which makes those percentages shrink due to the total percentage of 100 (chart 3). In actual numbers, it is unlikely these locations are decreas- ing. In chart 3B, nearly half of opera- tors report servicing more locations CHART 5: STRATEGIES FOR HANDLING HIGHER COSTS, 2-YEAR REVIEW PRODUCT 2014* 2015* Raised prices 61.6% 82.4% Absorbed extra cost 38.8 56.7 Eliminated unproftable account 28.2 44.0 Rearranged routes 24.8 37.0 Reduced service frequency 22.6 36.6 Lowered commissions 20.0 28.2 Reduced equipment in accounts 13.6 18.3 Switched to using more cost-effcient vehicles 7.6 15.5 Rearranged job responsibilities 10.2 13.7 Postponed parts or equipment buys 9.4 13.4 Reduced product variety 6.8 9.2 Reduced company travel 5.6 6.7 Postponed equipment repairs 3.8 4.9 Adjusted compensation/benefts 4.6 3.5 * Includes multiple mentions 4.7% 6.9% 4.2% 3.9% 4.3% 14.1% 16.9% 17.7% 16.1% 12.5% 5.9% 3.6% 4% 3.6% 5.4% Divested Acquired Both acquired and divested Neither acquired nor divested 75.3% 72.7% 74.1% 74.6% 79.6% CHART 6: ACQUIRED OR DIVESTED BUSINESS, 5-YEAR REVIEW ● 2011 ● 2012 ● 2013 ● 2014 ● 2015 NEARLY 3 OUT OF 10 operators raised candy & snack prices. 24 Automatic Merchandiser VendingMarketWatch.com June/July 2016 STATE OF THE INDUSTRY