School Business Scenarios

Processor/School Cooperative Service

The processor and school cooperative model assumes a leasing arrangement where the dairy leases the machine and the school pays a surcharge for the milk to cover the lease expense. This can be a very attractive proposition for both the schools and the processors, particularly if a large number of machines are placed.

	Pros	Cons
Site size	Location size not as critical if incorporated with other deliveries	********
Start-up costs	Minimal finances needed for the site to start if processors invest in the machines, maintenance, vehicles and staff labor	Processor is financially responsible for the lease or purchase arrangements; sales may need to meet a minimum level to cover leasing costs
Servicing requirements	Processors may leverage existing routes and delivery equipment to handle maintenance, filling and service needs	Small and frequent product deliveries may be needed
Pricing/profits	Profits only shared between the site and processor; input from both parties on pricing	********
Machine location	With more school involvement, more opportunities to place in high-traffic locations	There may be location restrictions from other vendors
Contracts	Processors already supplying milk to a site may be able to incorporate vending easier than an outside operator	May have trouble placing machines in locations that have existing vending contracts
Business success	Opportunity for processors to build and maintain strong school relationships	Schools may not place the focus needed on maintaining and stocking
Product selection	Processors can introduce new products immediately	Product quality and selection is dependent on commitment from both parties