How Allan Baker made a million from your 50-cent lunch

Bill Stephenson January 2 1965

How Allan Baker made a million from your 50-cent lunch

Bill Stephenson January 2 1965

How Allan Baker made a million from your 50-cent lunch

Bill Stephenson

ONE DAY IN 1954 two men sat in the outer office of a plant manager in Oakville, near Toronto. They soon found they were both there for the same purpose: to try to obtain permission to install soft-drink dispensing machines in the factory. The older man casually mentioned he had many such accounts. The other, Allan Baker, a sandy-haired man of thirty-three, admitted this was his first try.

The older man laughed, picked up a phone book and flipped it open to the yellow-page section on vending machines.

"Look, kid." he said, running a finger down the dozen companies listed, "there are far too many in this racket as it is. The last thing we need is another amateur. This guy we're trying to sell may choose you over me. but if he does you'll lose your shirt and he'll be sorry he got involved. Take my advice and blow.”

“You may be right," Baker said, "but I think I'll stick around and see what happens."

This August the vending company owned by the man w'ho had been so free with his advice folded. Of the dozen companies listed in 1954. Baker's alone remained on the list in 1964. although there were sixty-eight new ones.

In the intervening ten years, several of the man's predictions proved wrong. Baker, for example, did not lose his shirt: he now wears twent\-dollar shirts specially made for him. And the Oakville executive never regretted choosing Baker to install his machines in the factory: in fact, he now works for Baker.

But the biggest mistake the man made was in calling Baker an amateur. So professional is Baker, a stubby 172-pound bundle of energy, that, as president of Versafoods Services Ltd. — the 1964 successor to his first two firms. Baker Vending and Nationwide Foods — he has become the largest operator in C anada of both food and drink vending machines and ordinarystyle restaurants. His company employs more dietitians than any other concern in Canada.

He is the country's largest manufacturer of drinkdispensing machines, and — until he discovered he was only helping his biggest competitors — he was the largest distributor of these machines. His five-hundredodd "accounts" in Canada use more than thirty-five hundred machines, worth an average of fifteen hundred dollars apiece.

The coffee from his coffee machines is produced from ground coffee in twelve seconds in a Bakerpatented swirler, and has won Gold Cup awards from the Coffee Institute of America. He does even better with his fresh lea. An independent British testing firm recently awarded it a rating of 9.8. (No one has ever received ten points.)

Baker is a man of parts. In addition to bossing vending machines, he's president of a unique railway.

head of an electronic-organ firm and of one dealing in disposable butane cigarette lighters. He has interests in a shaved-ice machine widely used in hospitals and in preparing soft drinks, and in a firm making magnesium bowling pins. His company. Versafoods. is an equal partner with the British firm of J. Lyons & Co. in a new company called Primapax. which is spreading food and drink machines, specially tailored to the British taste, throughout England. Despite Lyons' centuries-old experience with food, it is Bill Hawes, of Toronto, a Baker executive, who is managing director of the British firm.

Many of the vending accounts in Canada are like Baker's deal w ith the British Columbia Ferry Authority, covering all ferries plying between Vancouver Island and the mainland. Each ship carries two or three machines: one for cold drinks, one for coffee, tea and hot chocolate, a third for cigarettes and candy bars. But accounts such as the Massey-Eerguson farm-machinery plant in Toronto represent scores of machines under one roof, vending drinks, hot meals and other articles twenty-four hours a day. At the Canadian-owned Union Twist Drill Co., w hich spans the Canada-U. S. border at Rock Island. Que., Baker has thirteen machines on the Canadian side of the plant and fifteen on the American side. His largest account is with General Motors in Oshavva. Ont., which has more than three hundred of the machines scattered around.

So numerous are vending machines, with their insatiable thirst for coins, that they have contributed to the shortage of coins which has kept the mint working overtime since 1962. Baker accepts his share of responsibility for the shortage but criticizes the methods used by some people to alleviate it: minting their own metal “slugs."

“At one time we took in a ton of slugs a year from the Toronto area alone," he claims, "and the counterfeiters didn't even put my profile on them."

Baker's machines now foil most petty swindlers by rejecting all slugs that don't have exactly the correct weight, shape and magnetism. Even the multi-edged nickels minted until last year often refuse to function. "When this happens, even honest men will sometimes batter one of our machines to bits." sighs Baker. “We almost wish they'd used a slug that worked."

Naturally gregarious, he regrets the utter impersonality of his machinc-to-customer relations, and is glad his food empire is no longer confined to the silent, sometimes maddeningly unresponsive robots. Sixty percent of his twe.ity-million-dollar annual turnover is now in cafeterias run by real live human beings: chefs in white hats, pretty waitresses and cashiers who can receive complaints or make change with equal aplomb.

Baker has three thousand employees in the vending machine organization and in close to five hundred restaurants. cafeterias and snack bars, and they work to orders and specifications from Baker himself. The waitresses serve eighty thousand meals a day and the machines make three hundred sales every minute.

Included in his corporate customers are many of Canada's blue-chip companies and institutions: all but one of the big car companies: more than half of the country's universities and insurance companies: fourteen of its hospitals: the O'Keefe Centre in Toronto: all but two plants of the Northern Electric Company, one of the largest employers in Canada. (“We never give all our business in any line to anyone," say Northern Electric officials.)

Other Baker clients include Imperial Oil, IBM, Maclean-Hunter, Westclox, General Electric, most of Canada’s banks, Loblaws, the Polymer Corporation, the Steel Company of Canada. Continental Can, SmithC orona, Canadian Kodak, Simpsons-Sears, Smith Transport, Molson's Brewery, CIL, Singer Sewing Machines, Woodwards Stores, Ingersoll-Rand. One of his latest restaurants is in the Fathers Of Confederation Memorial Building in Charlottetown, which was opened by Queen Elizabeth October 6.

Until recently Baker was the sole victualler for the Ontario paper town of Marathon, w'here he also operates a laundry and bar associated with the Everest Hotel. Nownew motels compete for travelers' and residents' patronage. But

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ALLAN BAKER

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Selling food in Frobisher is a gamble on which Baker could lose his twenty-dollar shirts

Baker has been the sole purveyor of food and drink to the fifteen hundred residents of Frobisher Bay in the eastern Arctic since 1958.

For Baker, Frobisher is a gamble on which he could lose his twentydollar shirts — and a lot of cash as well. The critical factor is the weather. Each September he ships from Montreal a year’s supplies, except for fresh fruit and vegetables which he flies in by Nordair each week. “Winter-keep” vegetables, the only ones which will stay fresh in storage, do not mature till the second week in September, and Baker’s men must rush them aboard ship and make the twenty-six-hundred-mile dash to Frobisher. There, another tricky situation awaits.

“We anchor out in the bay and unload by small craft,” says Bryan Collins, Baker’s chief purchaser. “Invariably we can’t off-load at night because of the cold, and by day the weather may be too rough. But if we wait for good weather, we may get frozen in for the winter.”

One year the temperature dropped eighteen degrees during unloading and five hundred cases of potatoes were ruined. Since air freight is nine times the cost of sea freight, restitution of this was a heavy loss. But he is philosophical about such risks and likes to point out that his ships have never yet been frozen in. He is even cheerful about the huge food intake of Frobisher’s citizens at his two cafeterias.

“They need an average of fifty-six hundred calories a day to keep healthy under Arctic conditions,” he says, “and they can take all they can eat. All we ask is that they don’t waste food, or we’d have the most expensive garbage in the world.” Baker also runs the grocery store in Frobisher.

Among other enterprises, Baker manages Crysler Park Restaurant, a modern café, and a hundred-andeighty-year-old stagecoach stop called Willard’s Hotel, at the St. Lawrence Park Commission’s two-thousand-acre Upper Canada Village, near Morrisburg, Ont. (Only Niagara Falls surpasses this collection of reproductions of nineteenth-century buildings as a tourist attraction.)

In Willard’s Hotel, Versafoods offers bread and butter made in the original ovens and churns, and whole menus prepared from ancient recipes. The waitresses wear nineteenth - century clothes, which make it hard for them to negotiate the inn’s narrow stairs, but Baker says, “Now they’re used to them, 1 think the girls are secretly pleased at how very womanly they look.”

Last spring the St. Lawrence Park Commission decided to install a miniature railway in the park. Hearing of this, Baker toured North America studying such lines. Gambling that he'd get the contract, he secretly ordered a scale model of an 1863 Canadian engine called “The Loyalist.” This, five cars, and enough rails

The tea had no leaves. Baker put some In-and Britons were happy

and ties for two miles, were delivered in Morrisburg on June 13, the day after the contract was awarded — to Baker. The hundred-thousand-dollar line was to be built at the winner’s expense and had to be ready by July 15.

Park officials, who had not known of his gamble, were surprised when Baker informed them on June 27 that the line was ready for business. In a parody of the ( PR’s ceremony of 1885. top-hatted Baker and James Auld, Ontario minister of tourism and information, took turns aiming at a large gilt-daubed nail to drive the last spike home. A moment later seventy passengers — the first group of eighty thousand who would ride the longest miniature line in North America during the summer — roared off on the maiden run.

A few weeks later Upper Canada Railroad president Allan Baker met his long-time friend Pierre Delagrave, CNR vice-president in charge of passenger traffic. Baker accepted the homage due the president of a line from a mere vice-president — and also accepted what he considers a pretty good idea.

“I strongly suspect,” Delagrave told him, “that you will soon be running the only miniature railway in the world which has its own dining-car service.”

Baker’s plans include a second train on his line by 1967, both with miniature meal service. Only one thing annoys him; that his tremendously busy schedule keeps him from doing the one job he’d like better than the presidency — the engineer's.

His wish for this job possibly stems from 1943, when he left an electricalengineer’s course at the University of Toronto in his third year, after a difference of opinion with the university staff. He no longer regrets the hot words and his refusal to retract them, which led to his departure, for he still feels he was in the right and has obviously not suffered financially from the lack of a degree.

The only boy among the four children of Mr. and Mrs. Oscar Baker, Allan was born in 1921 in Collingwood, Ont., where his father was with the Bank of Montreal. Allan was just a tot when the family began the trek from one Ontario branch to another; altogether he attended seventeen schools in thirteen years.

Following the university altercation, Baker — unfit for military service because of near-blindness in one eye — worked briefly with the Toronto Transportation Commission. Then he joined the Kendall Company’s drug division and spent eleven years on market surveys and studies, advertising and sales.

In 1954 he began looking for a way to market his own talents, and hit upon food. At least it would never go out of style. So with savings and borrowed money, he plunged into the soft-drink vending business. How he succeeded when so many others failed is probably best explained by Don Storey, national merchandising manager of Versafoods. Storey, a big genial man, was in Baker’s Varsity class and graduated in electrical engineering.

“You can make a lot of money for perhaps the first three years in vending,” Storey explains. “Then the machines either wear out or become obsolete. If you haven’t planned for this, you can easily lose a fortune overnight.”

Baker had planned. For years he took only thirty-five dollars a week, ran the entire business from his own garage, used his car more as a truck than as family transport. Combined with his marketing flair, this frugality began to pay off. Soon he was hiring the best food men in Canada, at salaries several times his own.

In 1958 he acquired companies in Calgary and Montreal and thenceforth expanded in all directions. In 1961 he entered negotiations with two large firms, Industrial Food Services and Duplate, a vending-machine manufacturer. Baker became president of the resulting company, Vendomatic Services, in 1962, a job he takes so seriously that, though he obtained the 1964 name, Versafoods, by feeding a vast selection of suggested names into a specially programmed electronic computer, he insists on knowing every employee by sight and name.

Baker, a keen judge of men, relies on intuition — reinforced by a personality test devised by Don Storey — to help him choose good executives. But he scouts possible allies just as thoroughly. He searched England for four years before finding a food firm whose personnel met his standards. But having settled on Lyons, he plunged in with cash and ideas flying.

In England he sees a market for vending machines eight times as great as Canada’s because of greater industrialization. But one stumbling block is the longer lunch break enjoyed by British workers, which enables them

to go home or to a pub for meals. However, the North American custom of thirty-minute lunches is creeping in, and as it does Baker's sales soar.

He is constantly jolted by the different tastes of his two main markets. “The sandwiches we place daily in the machines at Massey-Ferguson would be thrown in our faces unless we gave them thick slices of meat between healthy slices of bread,” he says. “But the Britisher won’t look at a sandwich unless the meat is paper-thin and the bread like Kleenex.”

His machines make tea from water just one degree below boiling, to prevent the build-up of steam pressure. He believed it was the British insistence on tea made with boiling water which kept them from slipping their coins into his machines when they wanted the traditional “cuppa.” But researchers found that what the Britishers missed were tea leaves in their cups.

“So we redesigned our swirler to let a few leaves run through with the liquid, and now they’re quite happy,” says Baker.

It is this attention to detail as much as his cost controls that has put Baker on top. Each year he tries to visit every major outlet, a tour of tens of thousands of miles. District chiefs in the fifty-six towns and cities where he maintains offices quake when he hits town, for they know they and their operations will be under the microscope — from the shine on their shoes, to the neatness of their books and the degree of carbonation in the cold drinks. He’ll poke a well-manicured finger into the calves’ liver, heft a chicken leg or measure the space for the dishwasher attendant.

If praise is due, it pours out, and with it often goes immediate promo-

tion. For Baker believes his big lack is always good people.

If someone has blundered, sparks fly. “Blunderers get one warning,” says Jack Scott, of Hamilton, regional manager for the area from Oakville, Ont., to Calgary. “If things aren’t righted at once, they may as well start looking for another job.” At that, he claims, being fired by Baker is worth being hired at a good salary by anyone else, for he gives them a complete character analysis with their pink slips. Often he suggests other companies they would like better. Several executives have come back to thank him for finding them jobs in which they now shine.

One of Baker’s biggest assets — yet worst sources of frustration — is that Versafoods owns no real estate except its headquarters building in Toronto. All his machines are in clients' buildings, on a rental percentage basis. Supplies are held in local wholesalers’ warehouses until needed. The restaurants, bars and cafeterias are all owned by others, though Baker operates them, plans their kitchen and diningroom layouts, supplies the food and people to serve it, and the guarantee that the outlet will make more money than if run by the owners.

His cafés are in both ultra-modern buildings and in ones a step away from being condemned. Along with company executives and factory workers, he feeds residents of old-people’s homes, girls’ schools, army camps, hospitals, jails. In one Vancouver jail his candy-bar machines are regularly cleaned out every Sunday morning. The criteria he goes by are: what does the client want and how much can he afford to . spend? Baker then tailors his services accordingly.

He is acutely sensitive to complaints. Recently he discarded several thousand foam-plastic cups because residents of an old people’s home in Manitoba said they couldn’t tell how hot beverages were in them and often scalded themselves. A high school in Windsor, Ont., had trouble with boys engaging in bun fights till Baker appointed a chef-manager who understood them. A university in the Maritimes had no fault to find with the chef’s meals, but told Baker they wished he were Scottish. Baker exchanged him for a homesick Maritimer in Toronto, pleasing the non-Scot by returning him to his own Ukrainian folk.

To assist his chefs in selecting menus within clients' means, Baker’s executive dietitian, Dorothy Shantz, each year prepares a management manual, listing the ingredients for' mass-sized meals and the prices f.o.b. Toronto. Her sixteen dietitians across Canada then translate these figures into local reality.

Included in the manual of tested recipes are entire menus for a long list of special diets such as hospitals require. It was this that gained Baker his first hospital account, the new Brant Memorial Hospital in Burlington, Ont., in 1960, and which has since won him nine others, including the three largest in Newfoundland.

Most hospitals, he believes, securely lock only one storeroom — the drug

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cupboard. Casual employees or even staff can often walk off with enough food to keep their whole families. His own computer-checked system of controls can often show a profit for a hospital just by ensuring that the foodstorage area is closed off. But he keeps his opinions of hospital efficiency to himself unless asked for them.

Baker’s private life is carefully separated from his business affairs. This fall, when he planned a new home in Oakville, Ont. — a Georgian-style mansion to replace his modest, fourlevel house in Clarkson, a Toronto suburb — he paid cash rather than take a mortgage. “I want all my worries to be business worries,” he explains. His life with his slim brunette wife, Isabelle, a former nurse at the Toronto Sick Children’s Hospital, and his two children—ten-year-old Cyndy and Brian, who is eight — is similarly kept apart from the office. “When we entertain, it’s for social not business reasons,” he says. “But I’d much rather play with the kids.”

Isabelle sometimes accompanies Baker on his bimonthly trips to Brit-

ain, or Barbados or other distant spots. Her biggest worry — though not his — is that he works far too hard for a man who had a heart attack three years ago, when he was thirty-nine. She approves of two of his recreations, swimming and fishing, but not of his heavy smoking (both pipe and cigarettes) and his all-night Scotch-andbull sessions with associates. She hopes that he will sometime settle down to, say, an ordinary twelve-hour working day.

Baker’s approach to his heart condition is wishful rather than practical. He professes to believe it was frustration which caused it, not overwork or worry, and that his worst frustration was driving to his appointments and hunting frantically for parking. He has since had two chauffeurs. His first was George Forget, who formerly drove for Air Marshal Billy Bishop, Prime Minister Mackenzie King and Prime Minister Pearson. Forget had to quit because of an ear defect. His new chauffeur is a twenty-seven-yearold Torontonian named Gary East, whose dedication to Baker’s welfare has been total since he impressed his

boss a year ago with an ad that said he was “willing to work 10 to 15 hours a day for the right party, for at least 40 or 50 years.”

Baker’s obsession with work is as complete as East’s, but Versafood is not his entire business life. His Allandy Ltd. sells a select line of electronic organs. (Baker has learned to play all models.) Retailing for as much as ninety thousand dollars, they are located in such eminent sites as the bandshell at the Canadian National Exhibition, the Civic Centres in Calgary and Edmonton, and the Fathers Of Confederation Memorial Building in Charlottetown. He also obtained full North American rights recently for a cheap, disposable, French-made butane cigarette lighter called The Cricket. He sold the U. S. rights not long ago and hopes to have Canadian-made models on the market by spring.

Even Baker’s dreams are business dreams, although he is already a millionaire. He is currently entranced with a new invention of his research laboratories called the Versafood Buffet, a compact unit that keeps food

hot or cold and is serviced by a pretty girl who acts as refiller-cashier. He sees this machine as the ideal answer for client companies that are too small to require a full cafeteria, yet too large for vending machines alone. “Buffet customers will get a smile with their meals,” is his slogan. “That’s something no machine can possibly supply.”

Baker’s other dream is of an instant coffee with real coffee aroma, something he believes all instants now lack. With it he could do away with freshcoffee machines and make money at the dime-a-cup rate on which he now makes almost nothing.

Until this super-instant is invented, however, Baker will not be idle. Machines can be improved, restaurants made more efficient. More visits by Baker will please more clients, attract even more clients, require new platoons of managers, chefs and waitresses, all of whom will need close supervision by an expert to keep them functioning efficiently. And who else but master chef Allan D. Baker has the ability and the stamina to perform this task? ★