The Story Behind This $72M/Year Grab-N-Go MicroMarkets Company

Joe Hessling

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Published: October 3rd, 2020

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Joe Hessling

Founder, 365 Retail Markets

$7.2M

revenue/mo

Founders

239

Employees

365 Retail Markets

365retailmarkets.com

from Troy

started July 2008

$7,200,000

revenue/mo

Founders

239

Employees

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Zero to One: Notes on Startups, or How to Build the Future Peter Thiel

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Hello! Who are you and what business did you start?

Hi everyone! My name is Joe Hessling and I started 365 Retail Markets. I began with the idea of self-checkout convenience and turned it into a full-blown innovative industry. We started with one MicroMarket and turned it into 29,000 worldwide in locations such as offices, hospitals, universities, automotive campuses, and hotels.

What is a MicroMarket you might ask? It is a grab-n-go concept that allows consumers to get what they want when they want it. We make healthy snacks, meals, and beverages available to anyone, anywhere.

Our initial revenue in year 1 was approximately $75k and we are now at $72,000,000 in 2019. With phenomenal growth, we work daily to continue pushing our technology into the future to grow our footprint even more.

the-story-behind-this-72m-year-grab-n-go-micromarkets-company

What's your backstory and how did you come up with the idea?

At 365, we always say that I started in my garage and now I’m here, but I started much earlier. I have always been an entrepreneur - I come by it naturally - I learned a lot from my Grandfather and Father. They both worked hard and that rubbed off on me. I learned how to hustle to make money. My Grandfather owned a hotel and my Dad was in foodservice.

From a very young age, my Dad and I would make early morning trips to Eastern Market (a Detroit farmer’s market) to buy food and beverages that we then delivered to restaurants. I bought my dad out (in 1997), and he worked for me for two years until he passed. I learned so much from him, especially how to work with people from so many different backgrounds. Most of our customers were immigrants who owned restaurants and their customers were primarily blue-collar workers.

After my dad died, I sold the business because I just wasn’t as interested in it anymore. So I retired and had a retirement party. That lasted about three months, and then I got married and we had a baby, so it was time to get back in the workforce. So, with some partners, in 2000 I opened Abe’s Deli, which is focused on corporate catering.

Starting a business is not for everyone. It’s lonely as time goes by. People don’t always understand how or why you do it and once you are successful, they understand less and less.

I had a great understanding of the blue-collar workforce as a kid, and Abe’s Deli introduced me to the corporate lifestyle and how people used food products at work. In full swing, we operated over a dozen locations incorporate cafeterias in metro Detroit, and we generated upward of $10 million in annual revenue.

In 2008, I started 365 Retail Markets out of my garage amid a financial crisis. MicroMarkets became an ideal solution for cash strapped companies to be able to provide convenient services to their employees without the additional cost of labor. On the other side, MicroMarkets provided a more ideal shopping experience for consumers than they would have at say, a vending machine.

At the start, 365 Retail Markets was a low-volume, low-revenue business. As the idea started to catch on that you could operate MicroMarkets inside large office buildings, I started to get some traction. From there it became a real business, and sales picked up and took off in 2012. All my life I’ve been involved in the food business, so I never really had a boss. But being an entrepreneur, you find yourself spending a lot of time on everything

Take us through the process of designing, prototyping, and manufacturing your first product.

THEN:

NOW:

At first, we purchased our kiosk hardware from a manufacturer and assembled all the necessary components that turned it into a MicroMarket in my garage. In those early days, we all took on whatever role was necessary to get kiosks assembled, tested, shipped, and invoiced. Some of those early kiosks were shipped with an extra dollar bill left in the kiosk from testing the bill validator.

One of our first hires was a hardware engineer who has designed two generations of kiosks for us and is working on a third. He also helped set up assembly operations for an in house team to be able to build our kiosks. The first model we designed met the needs of our customers and our consumers, but since our product and the concept was still new, the needs kept evolving.

At first, our kiosks used RFID technology, but we eventually learned that the cost of the RFID tags for each item of food was higher than the cost of product lost due to theft. We also learned that some customers wanted to be able to offer a cash payment to consumers, while others preferred only credit. The other big takeaway was that kiosks need maintenance and we needed to update our hardware to be easily serviceable in the field. With this new information, we launched a new, more versatile kiosk.

At the same time, we were continuously updating the software for the kiosks to meet the growing demand of our customers, the foodservice operators. The design process for our software includes buy-in from our customers every step of the way as well as an understanding from our team on how the industry continues to evolve.

As with our hardware, we have learned a lot along the way and recently launched a new software platform that better meets the consumer and operator needs, while creating a new revenue stream for us and our customer: advertisements.

We spent a lot of time looking at what this convenience industry needed. We then mapped out what technology was in the marketplace with what we had in the industry, what we saw that the self-service industry needed, and married it together. We needed to go through fundraising and finding new market opportunities and then sales relationships carried us through.

Since launch, what has worked to attract and retain customers?

Our customers and our 365 employees are our best opportunities. We continue to grow with our customers, help our employees move ahead in their careers, and from those relationships, we establish partnerships that no one else in the industry can have.

Don’t be cheap - hire the best people you can afford and do that early!

About two years ago we created a specific department that 100% focuses on the success of our partners and their business. The team is made up of people that care passionately about personal relationships. They can have open conversations about what is needed to improve, what is needed to help our customers, and what 365 and our product and Dev teams can do to continue to drive revenue growth for them.

We put our employees and our customers first to ensure we have a community and culture that mutually benefits 365 and our customers.

Some of the top marketing tactics we have used to capture new clients and keep our current clients in the know include:

Established worldwide publication partnerships
Revamped our website
Increased social presence by telling our story consistently on Facebook, Twitter, LinkedIn, Instagram, and YouTube
Monthly email campaigns and newsletter
Enhanced our SEO and keywords
Created videos to promote new technologies and industry-related topics
Host monthly webinars for current partners
Blog entries to deliver content differently:
Power Of The 365pay App For Your Micro Market Business
Ingredients Of A Micro Market For Unattended Retail
Touchless Transaction Technology With The V5 Kiosk

How are you doing today and what does the future look like?

Today we are the convenience services Global Leader. We dominate our industry and the future holds tremendous growth. We are diving into new industries that can and will benefit from our technology. We not only follow the trends to keep up but we push the limits to think of what is next before our customers do.

We are always striving to lead the industry with the best technology and service. We have been working diligently on app updates, AI technology, secured cooler technology all of which work through our one back-end system throughout all of our customers' locations, big or small.

Our biggest opportunity for growth is our customers and communication with them is open, honest, and a true partnership. We don’t just update our technology for 365, we update it with our customers and consumers in mind.

Our combination of MicroMarket, vending, mobile and dining technologies creates a cutting-edge point-of-service platform for any type of business or location. Every 365 strategic partnership includes unique technology solutions, marketing, and engagement services as well as a dedicated, experienced team that is focused on the success of our customers.

Through starting the business, have you learned anything particularly helpful or advantageous?

Don’t be cheap - hire the best people you can afford and do that early!! In my opinion, some rules are bendable and some that are not, and learning the difference is very important.

You need to adapt to the situation you are in; COVID 19 is a perfect example - hire hire hire at one time and then a month later, you need to have operational efficiencies. You can’t box yourself in and must keep yourself open and adaptable to change.

What platform/tools do you use for your business?

We develop the majority of the technology and platforms we use. We have created a backend system that links all of our POS for our customers. We then developed an app, 365Pay, that links all consumers to our POS via one account.

What have been the most influential books, podcasts, or other resources?

Zero to One - Any of the early PayPal group - I look to them as people that took a lot of risks and have grown and paid off for them and the society

Advice for other entrepreneurs who want to get started or are just starting?

Starting a business is not for everyone. You have to be dedicated and it’s a lonely job. It might not be lonely at first, but it’s lonely as time goes by. People don’t always understand how or why you do it and once you are successful, they understand less and less. If you are a person that requires satisfaction by others, you might not get it. It might not be as fulfilling as it’s played out in the news or on TV.

BUT if you like building things and feel good about accomplishing things, that is where I get my benefit from. I get it from knowing that I helped someone, accomplished something and if others don’t understand, that’s fine. It is not a popularity contest.

Are you looking to hire for certain positions right now?

Right now we are taking stock in what we have, where we are going, and what the future holds. We are always looking for amazing talent and innovation whether it is people or new technologies. Our website has specific careers listed but new, unique ideas we are always willing to discuss!

Where can we go to learn more?

If you have any questions or comments, drop a comment below!