Breaking away from the traditional breakroom

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Breaking away from the traditional breakroom

Few, if any, product categories offered by independent dealers were hit harder than breakroom supplies during the pandemic. David Guernsey, president and CEO of Guernsey Inc. in Dulles, Virginia, sums it up in simple terms: “If you drive down the main streets of Washington, D.C., all you see is empty parking lots. If there are no workers in the workplace, there are no people in the breakroom. You can’t make it more complicated. Until people come back into the offices to work, you’re going to see distressed sales.”

Guernsey reports that breakroom sales plummeted from 27 percent of the company’s total sales in 2019—a record high—to 11 percent or less in 2020. “And it’s looking like 2021 is not going to be a lot different,” he predicts.

Dan Schmidt is vice president and sales director of Great River Office Products, St. Paul, Minnesota. He says breakroom supplies account for between 12 and 15 percent of the company’s total sales. He admits 2020 was a challenging year, but is far more optimistic for 2021, based on the sales the company is already experiencing. “Beverages were the hardest hit by the pandemic,” he says. “We sell a ton of Gatorade, pop/sodas and Keurig cups. People are not back in the office, but we’ve still seen sales coming back threefold. It started increasing in May and since then it’s been going gangbusters.”

But how can breakroom sales be booming if offices remain largely empty? According to Schmidt, this stems from appreciation—and weather: “Employers want to provide those employees who are coming into the office with things that make them and the breakroom more comfortable. Employers know a lot of people who are working in the office are working doubly hard, so they want to take care of them. Employers want workers to know they are appreciated. Also, there’s been a huge heatwave in Minneapolis—we’ve had 25 days straight where the temperature has been over 90 degrees. Large manufacturers are providing workers with Gatorade in 20-ounce jugs and buying pallets of water. They know keeping workers hydrated keeps productivity up, especially when what they need to do so is right there and they don’t have to go out and buy it.”

For Strive Workplace Solutions in Portland, Oregon, breakroom sales accounted for about 10 percent of its sales in 2019—a figure that fell some in 2020. So how is 2021 shaping up? Until more offices open up, says president Jeff Lurcook, it will remain hard to tell, especially given Strive’s specialty: “Our claim to fame when it comes to the breakroom is fresh fruit. Produce companies cater to restaurants and grocery stores, but they aren’t set up to do breakrooms. We are.”

The company wasn’t always a fruit seller, though. “I had a client who said to me one day, ‘If you carried fresh fruit and could deliver it, I’d be happy to give you my jan/san business,’” recalls Lurcook. “It turns out, every Sunday, she would have to go to Costco and buy fresh fruit for the office breakroom. Then, she’d have to get up early Monday morning to be sure to beat everyone to the office so the fruit would be there when the other workers arrived. I told her, ‘We can do that. Give us your jan/san and I will get you your fruit.’ Then I had to go back to the office and figure out how we would do it.”

And figure it out they did. Once a week, a Strive employee would go to Costco and shop for the account and deliver it Monday morning. Word spread and the company now has a list of loyal clients who order by Thursday for a Monday morning fruit delivery—or at least, that was the schedule pre-COVID-19.

“Before the pandemic, our sales of fruit were reaching $10,000 a month and it was relatively new—we were just getting rolling,” says Lurcook. “We have not sold a single dollar’s worth since the pandemic started.”

Will things pick up once more office workers return? Lurcook is unsure, given the growing trend toward individual wrappings: “We hope fresh fruit won’t disappear from breakrooms. I mean, bananas have a peel. But single wraps are the trend; and a lot of our orders are for raspberries, strawberries and blueberries. How do you single wrap them? It would be tough to wrap single servings and it would increase the cost dramatically.”

Individual focus

According to Lurcook, fruit isn’t the only edible facing possible breakroom extinction.

“Bulk nuts are another thing that went away,” he says. “We sold a lot of 85-pound boxes of them. But bulk nuts are exposed to air and are poured into dispensers. You even see people open the containers and pour nuts back in. Sealed, single-serve containers might still be sold, but I don’t see bulk coming back.”

Schmidt has likewise noticed a move away from bulk. “Individually wrapped items are popular, especially for things like stir sticks and utensils,” he says. “No one wants bulk for anything that is going to touch food.” But getting these items isn’t always easy: “Manufacturers need to wake up, as individually wrapped is what’s coming down the pike. I don’t think you are going to see any more bulk and manufacturers are not keeping up with the trend.”

Lurcook believes individually wrapped items will remain a major trend: “The biggest change in product is to individual servings. I know a lot of customers had communal refrigerators where people would bring their own food. I don’t see that happening anymore. Some may switch to vending machines, but employers are going to pare down and be more selective in what they offer.”

But Guernsey sees the trend in breakrooms veering in the opposite direction, toward the more elaborate. “Employers are choosing different products and different equipment,” he says. “They are upgrading their breakroom offerings. Single-serve Keurig is giving way to more complex variety and fancier coffee machines.”

Why? “It’s all about the perks,” he suggests. “Employers are trying to bring people back with spiffy new breakrooms. I don’t think the breakroom alone has enough influence to get people excited about coming back to the office. But it will have a positive impact and is considered a perk. We are seeing employers dressing up their breakrooms and buying new equipment and furniture to make them more comfortable. The breakroom is no longer just a place to get a cup of coffee or water: employers are going to considerable effort to dress it up; to make it more appealing and a place to meet and greet new people. In the past, the average medium to medium-large company had a breakroom with some soft drinks, table snacks, maybe a refrigerator. Generally speaking, they were pretty blasé. Now employers are looking to make them more exciting. They are using color, better furniture and better configurations.”

Guernsey explains that the company recently built a whole café in its showroom to display what a breakroom could look like and received a phenomenal response as a result.


Supply chain woes

According to Schmidt, the traditional supply chain is struggling with some of the new breakroom trends that have emerged from the pandemic. “Companies are asking for different products than before, “he says. “They want flavored waters, different snacks and candy, chips, and other salty things. Vistar is doing a good job of keeping up, but traditional wholesalers are dropping the ball, because they don’t carry fresh food or give long enough expiration dates. I recently had a customer who called to say that the Land of Lakes cream she ordered had an expiration date of 60 days from when she received it. She said that wasn’t enough time to use up what she ordered. The cream only carries a three-month expiration date, so I suggested she cut back her order to be sure it would stay fresh. Wholesalers don’t do that. They don’t check expiration dates like we do and they need to get fresher product.”

For Lurcook, the main issue with the traditional supply chain is pricing and availability. “We stock 12 and 16-ounce juices, sodas, energy drinks, napkins and plates, and other items with high turnover,” he says. “But wholesalers don’t offer competitive pricing on a lot of breakroom items. Of course, we use a lot of items from wholesalers. But some customers want Costco brands. So once a week, we do a Costco replenishment run and stock it in our warehouse to keep us from having to go and fill one order. Our customers know we mark it up, but they like the convenience. And I use ‘Costco’ as a generic term; in some of our states, we use Costco, in others Sam’s Club—but definitely a wholesale club warehouse.”


Amazon apathy

Interestingly, when it comes to Amazon and breakroom supplies, these players are not worried.

“We haven’t run into any real competition from Amazon and don’t consider it a threat in this area,” says Lurcook. “I don’t know how well Amazon does perishables or expiration dates. Plus, the prices are always in flux and product availability is not set up for commercial. Plus, they don’t have the inventory. If a customer says, ‘I need 4,000 of these and found them on Amazon for this price,’ I go on Amazon and see it only has 40. So, I will match the price on those 40. If Amazon has the quantity, it will come in 12 boxes from six different vendors over two weeks. That is not what customers want. I used to lose sleep over Amazon, but not now because it doesn’t offer what we offer, and it doesn’t have the knowledgeable customer service and sales reps who are responsible for our success.”

Schmidt is equally unperturbed: “We are the only wholly locally owned office products company in the Twin Cities. I tell customers that when they buy from Amazon, they are buying from third-party vendors, so they might as well buy from us and buy local. That’s really important and since COVID-19 a lot of people get it.”

While Guernsey agrees, he’s more in the “never say never” camp: “Breakrooms require specialty environment. We buy, repair, even hook up the water and electric to the equipment. Amazon doesn’t. At some point, it may do that, but it is not a big factor now.”


Breaking down the door

Schmidt suggests that breakroom supplies are also a great way to get a foot in the door of a new client. “We use breakroom supplies to get new accounts all the time,” he says. “When you talk to people about office supplies, they get glassy-eyed. I purposely go in and say, ‘Any pop or bubbly water you want, we will stock it for you,’ and we get other business as a result.”

Guernsey agrees: “We recently cracked NBC Studio, getting it as a new client through its breakroom. We went after them, telling them we could supply the latest equipment and supplies to add excitement to their green room, where guests wait before they go on television. We are talking about real high-end machines. NBC interviews important people, but we get to make those important people happy.”


Breaking into the future

While no one has a crystal ball, Guernsey predicts that “when it comes to breakrooms, it is not going to be ‘same old, same old.’ The breakroom is always going to be a part of the office, but in the past it was an afterthought. In the future, it will be a much more meaningful place. Otherwise, I would not be getting orders for $5,000 and $10,000 machines, like the one I just ordered.”

And Schmidt thinks the products themselves will change: “Customers are now buying pop and drinks we haven’t seen in years, like Hawaiian Punch and Fresca. There may be more demand for fresh fruit; and while there’s no demand for it right now, I think a trend that will be coming next summer is canned ice coffee.”

So what are their tips for those looking to break into or expand their breakroom offerings?

“Don’t go halfway,” advises Guernsey. “If the customer says, ‘We want to install a better breakroom. We have 500 square feet, but we are not sure what it should look like,’ do it all—design, installation, etc. Companies want the breakroom to be something special now, not just a ‘We’ve got to have one’ item. In fact, I just got an order for a pinball machine.”

“Be good at watching what turns and expiration dates,” suggests Lurcook. “Be competitive by carrying items direct from a vendor. Go to Costco or whatever shop is local to get your customers what they want.”

“Find and build good relationships with a grocery wholesaler and be flexible,” says Schmidt. “Don’t rely just on what wholesalers sell. Breakroom success relies on supplying what customers want and like. And watch trends. Go into the office; make sales calls. Look to see who is using the breakroom. Is it office people or warehouse people? See what they are drinking and eating. Then offer to stock those products.”