40-year veteran stays on top in Philadelphia by trying new ideas; some win, some lose: Havco Services Inc. made it big with its commissary, but its constant search for innovation has led to handheld computers, GPS vehicle tracking, digital video surveillance, and other points of difference.(Operation Profile)

Ten years ago, Havco Services Inc., Croydon, Pa., was at a crossroad. The company was quadrupling its warehouse space to accommodate new growth. As noted in a 1994 operation profile in Automatic Merchandiser, the company was making a bid to become a key player in the highly competitive Greater Philadelphia market. It was a challenge, to say the least.

Industry observers have noted flint when operations expand beyond the $5 million revenue mark, they require a lot more overhead, but do not enjoy significant economies of scale until riley reach the $10 million mark. Some industry observers have gone as far as predicting the elimination of this size vending operation.

To be sure, Ivan ("Ike") Schultz, founder and president, didn't find the going easy. To become a key player in the Philadelphia market, he knew he had to offer services that competitors weren't providing.

Some initiatives succeeded while others did not. But the fact that Schultz had (and still has) the will to try new things, and the sense to know when to pull back when something doesn't work, has served him well. His company has grown by two-thirds in the last 10 years.

Schultz's formula consists of the following: 1) Stay focused on customer service, 2) Be open to new ways of doing things, 3) Use technology where it makes sense, 4) Don't grow too fast, 5) Know how to purchase equipment, 6) Invest in employees, and 7) Master the flesh food business.

A focus on second-tier accounts

Havco focuses on what Schultz calls the second-tier vending accounts: those that do not require a cafeteria. Like many medium-size operators, he maintains that the national and large regional operations do not adequately serve this second-tier customer.

When the company expanded into its present 36,000-square-foot building 10 years ago, it was indeed a challenging time. Schultz invested more than $200,000 in his commissary, with plans to add manual foodservice.

He also implemented the company's first software system to provide better accounting and inventory control. This represented another major investment.

He also had hopes for a machine that heated frozen hamburgers that he designed, thinking it would allow smaller accounts to have food on demand, thereby further distinguishing himself in the market place.

Manual foodservice didn't pan out

After operating three cafeterias, Schultz determined this was not his niche.

The hamburger machine didn't pan out, either. After testing this concept for a year, he sold these systems to convenience stores.

But the new commissary put …