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Issue Date: Vol. 41, No. 10 / August 25, 2001 - September 24, 2001, Posted On: 8/25/2001


Frozen Food Finds Varied Roles In Vending Marketplace


Emily Jed
Emily@vendingtimes.net

U.S.A. - With vending clients hungry for more choice in their food machines, and with more branded products than ever hitting the market, many vending operators are turning to frozen food vending as a partial solution to the perpetual dilemma of maintaining the best possible balance between variety and waste.

Not only can operators provide a growing array of branded favorites, from sandwiches and snacks to breakfast items and dinner entrees through frozen food machines, but many also are adding significant incremental sales by offering ice cream as well as frozen food.

While fresh food seems certain to maintain its central position in many workplace environments, operators are taking a closer look at the role a frozen machine can play alongside a refrigerated food vender. Customers can have twice as many selections, including items that can't be offered in a refrigerated state, while operators essentially eliminate shelf-life issues with products in the frozen machine.

Some vendors are finding lower volume accounts where a fresh food machine would be unprofitable, but a frozen machine can be a viable option. And while frozen food may not have the highest margins, offering the equipment can help secure attractive locations for snack and beverage vending.

Still relatively new, the current generation of frozen venders evokes a variety of opinions based either on results or on a particular philosophy of food sales.

Kathryn Ainsworth of Aquilla Vending Co. (Kentwood, MI) has had an FRD Systems frozen food machine in the field for the past three years, and is ready to add more to meet her customers' demands.

Now in its seventh year of operation, the full-line vending business has 150 machines on location in accounts ranging from prisons and factories to offices, large and small, in Grand Rapids, Ionia and surrounding areas.

PASSING THE TEST

"We've been watching the machines change and progress over the past three years. They're expensive, but now that the manufacturers have fine-tuned them, it appears to me that they're at the point where I wouldn't be hesitant to add more equipment," said Ainsworth. "With the growth of the market for frozen food, I would place the machines where the client isn't insistent on having fresh sandwiches; this would reduce waste. Food manufacturers have also really taken the bull by the horns by offering an extensive variety of products for frozen machines. A lot of processed foods now come frozen for vending, and a lot of manufacturers have widened their lines with bigger sandwiches and more ethnic choices."

With 25 refrigerated food machines in the field, Ainsworth is all too familiar with the waste inherent in vending fresh food, but it's in high demand and enables the company to capture sizable snack and soda sales. Frozen food, she believes, may play an important role in reducing waste and pleasing customers in the future.

"Our one frozen food machine, which is in a factory, has done excellently. We sell more ice cream through it than anything else, year-round, because there's a cold food machine at the location with sandwiches and other fresh foods. Their big thing was that they wanted ice cream," said Ainsworth. The machine is also stocked with some frozen entr©es, and the account requested frozen candy bars as well.

"I think locations such as prisons, where frozen food is available to visitors and employees, and high-volume factories with several shifts, have potential for frozen vending in the future," commented Ainsworth. "I don't think offices are good for frozen or refrigerated food machines. We have a couple of large office locations, and our experience is that office people look for fresh salads." In a refrigerated machine, the lettuce begins to wilt after a day, so people tend to buy it elsewhere. "We only have snack and pop machines in offices, and we plan to keep it that way," she told V/T.

Aquilla Vending prides itself on a well-rounded, patron-pleasing cold food menu, working with the local delicatessen that prepares its food to maintain variety through all day parts. "We have breakfast sandwiches, wedge sandwiches and big hearty sandwiches, and fruit cups for those who are watching their weight, all to meet demands of different tastes and different appetites at different times of the day," Ainsworth told V/T.

PROTECTION IN TRANSIT

Ainsworth finds insulated transport containers very reliable for keeping food cold or frozen during transport. Aquilla Vending uses individual containers for each location, so each holds the product at the necessary temperature with the appropriate coldpack, and each container is only opened once, when the product is loaded into the machine.

"With a refrigerated truck, with all the opening and closing of the door, you expose the product to heat and keep raising the temperature that the refrigeration has to deal with; I think you diminish the integrity of the food," commented Ainsworth. "We're big on health issues and we don't want product melting."

Similarly, Ainsworth's main criterion for purchasing frozen food vending machines in the future is a design that makes fast loading practical. "Once we open the door, we want to load quickly, so the temperature doesn't get too high." Good technical support from the manufacturer also is extremely important, she added.

"I'm looking forward to the National Automatic Merchandising Association National Expo, to see the latest developments," said Ainsworth. "We've set our sights on cold food, snack and soda machines so far. We're not pressing with frozen food, but we can use it as a sales tool to get new accounts because we're familiar with selling it, and our experience has been positive."

Dave Bloomquist of D&R Vending (Rochester, MN) told V/T that he has been a firm believer in the potential of frozen food in vending for the past five years, but to date, he has not been able to realize that potential. "It's just not catching on in our market; the sales just aren't there," he said. When an expensive machine doesn't generate sales of $100 a week, something is missing.

The company has 40 years' experience in the full-line vending and amusement industry under its belt. It runs 25 vending routes, two of which are dedicated to food.

The majority of D&R's half-dozen or so frozen food venders are located in high-volume manufacturing facilities with 400 or more employees, merchandised with a combination of entr©es, sandwiches and ice cream.

"What I believe to be the problem is that big-name products like 'Stouffers' frozen meals are not readily available to vending," commented Bloomquist. "We can get 'Michelina's,' but we need the bigger nationally advertised names too. I'd love 'Lean Cuisine' or 'Weight Watchers,' but the distribution pipeline to the vending industry isn't there." He is attempting to solve this problem through an arrangement with a regional supermarket distribution organization.

He added that items such as "Red Baron" pizzas are great sellers when vended from a fresh food machine, but entr©es are the biggest draw with frozen food venders.

REGIONAL VARIATION

Bloomquist thinks it entirely possible that his market area just isn't as receptive as others to frozen food vending, because even ice cream hasn't been all that well-received.

"We live in the Arctic center of the country, so ice cream has never gone over really big," added Bloomquist. "A representative from one of the machine manufacturers told me of accounts on the East Coast doing $400, $500, $600 a week with ice cream. I told him to give me two machines for 90 days and let me see for myself if it works. There are big differences in different pockets of the country. I'm trying the two frozen machines, filled with ice cream, in a high school. It's something different; the jury's still out on how it'll do."

Bloomquist told V/T that he spoke with a fellow operator who owns a small vending business in St. Cloud, MN who tried the same thing, stocking a new-generation frozen machine with ice cream and placing it at a high school. "It started out like gangbusters and then sales dropped dramatically; but it's worth it for him to keep it there because there's no waste and the account wants it," he told V/T. "The sales come from the other machines."

D&R Vending has 200 fresh food machines on location, which is 200 more than Bloomquist wants to contend with. "How to avoid losing too much money with fresh food is the biggest challenge to the industry, not how to maximize sales in a glassfront snack machine or how to sell hot beverages," he commented. "Selling food in vending is the million-dollar question."

The company purchases its fresh food from two other local vending operators and a commissary in Iowa that makes two deliveries a week to ensure a varied product mix.

"You have to offer a food program for industrial accounts; and it's fresh food they want," said Bloomquist.

The vending veteran added that, if he can get the concept to take off, he sees frozen food machines complementing rather than replacing his cold food machines, because customers will always want products such as milk, juice, and salads, items that can't be frozen.

COST CONTROL

"I think there would be additional sales above and beyond what turns in the cold food machines, if we added frozen machines stocked with the right brands of entr©es. On top of that added volume, we could also eliminate waste," he told V/T. "I know one operator who's getting into frozen food because an account specifically wanted it. He got them to buy into the idea of installing a frozen machine instead of a second refrigerated vender, which would just double his waste. Even though he may not sell more food, he won't have more waste to deal with, either; and, more importantly, he'll keep the account.

"I would look to aggressively grow our frozen food program if I could get the branded products," Bloomquist summed up. "I really think the problem is that we don't have enough name brand products to put in front of our customers."

Other operators don't see a role for frozen equipment in their operations, simply because of the way they regard their food programs. Those with strong foodservice expertise may make this the focal point of their marketing, which precludes any food vending concept based entirely on prepackaged items.

Jerry Caplan of Jel-Cap Vending (Baltimore, MD) is such an operator. He believes fresh food is the only way to go in vending, and he has no plans to enter the frozen food arena. The company meets requests for ice cream equipment by subcontracting.

The Caplans have been in full-line vending for 12 years and have 50 food machines on location.

"Our specialty is our fresh food; we emphasize its value because it's all homemade," he told V/T. "My two brothers and I grew up in restaurants, and we brought that experience into our vending business with freshly-made foods and sandwiches." The brothers owned three restaurants at one time, and still own one in addition to their vending business.

Jel-Cap bakes its own muffins and cookies, prepares its own bagels, and makes from scratch such customer favorites as pancakes, French toast, cheesesteak sandwiches and fried chicken.

To meet customer demand, the Caplans are obliged to offer some branded convenience items, which are shipped and stored frozen, but thawed and sold through their refrigerated machines to supplement their own food. Such items also provide longer shelf life and enable the company to maximize the variety it offers its customers.

"Some accounts simply want the big-name brands in their machines; fresh does not always win out," added Caplan. "They like to see some 'Michelina's,' and 'Tony's' pizzas and 'Fast Choice' sandwiches."

While fresh food is a big selling factor and a great tool for winning new accounts, the vending company, like many, operates the majority of the machines at a loss.

"No matter how fresh our food is, and they know it's all homemade and high quality, there is still something about people not wanting to buy food from a vending machine," commented Caplan. "But they still want to see it there, and they like the idea that it's fresh."

And despite the quality of the product that customers receive, "they want to pay nothing," said Caplan. "They pay $1.50 to $1.75 for a sandwich and they still complain!"

Researchers who conducted early market tests with the new generation of frozen food machines a decade ago predicted that they would do best in most locations if stocked with a mix of food and ice cream; and that they could extend vended food into smaller sites that want it badly, but have not the volume to defray the cost of a fresh-food machine, with its high percentage of throwaways and need for very frequent service.

Mike Murriar of Nashville Snacks (Nashville, TN) has found this prediction to be largely accurate. His company has been steadily expanding his frozen food vending following success with the 12 machines he has in the field. The four-route, full-line operation has 300 vending machines on location; only four of the company's machines are refrigerated food venders.

Nashville Snacks has been in business for 12 years and placed its first Automatic Products international "À la Carte" frozen machine several years ago.

SALES-BUILDER

"We're able to put frozen machines in accounts where we otherwise couldn't offer food; it's not as short-dated, so it doesn't have to turn as fast," Murriar told V/T. "It opens doors by allowing us to provide variety, including sandwiches, entr©es and ice cream, with no waste. Ice cream increases sales because it's something they can only get in a frozen machine; it's a whole new category."

The company has frozen food machines in accounts ranging from large manufacturing plants to offices of 100 people. One prized account is a large car dealership in which the machine is available to both employees and the public.

"How much access they have to other food strongly influences our decision about installing a machine," Murriar told V/T. "In some accounts, frozen food vending is profitable. In others, it's just a foot in the door to the more profitable vending items." This, of course, is the traditional role of refrigerated food; but Murriar pointed out that a frozen machine often is preferable because there is practically no waste.

Some of Nashville Snacks' larger accounts have both frozen and refrigerated food machines, and according to Murriar, sometimes it requires some experimentation to determine what equipment mix will work best. This is a strong argument for food machines with selectable tempera tures, he noted; "There's always the flexibility to turn the temperature up to vend refrigerated foods, or down to experiment with frozen , or to move the equipment somewhere else," he commented.

He emphasized that name brands sell, and that the array of branded frozen products on the market , "Pierre," "Tony's" and "Red Baron" pizza and "Michelina's" entr©es, to name a few , is more than ample to keep customers happy.

"Pierre's upscale sandwich line sells great in our frozen machines," Murriar reported. "And 'Rudy's Farm' sausage-and-biscuit sandwich is our number one frozen seller. 'Good Humor' ice cream sandwiches are very popular, too. And price is not necessarily an issue with a quality product. We'll sell entr©es for $2.75; our lowest-price items are $1.00 for the 'Rudy's Farm' sandwich and the ice cream sandwiches. I see vendors buying the cheapest thing they can find, trying to get the best margins; they overlook the importance of branding. You spend more for branded foods, but you get more."

"Hot Pockets" are another huge seller in Nashville Snacks' machines. "They don't take much reheating time, even from frozen, and they're convenient to eat without a fork or a plate. Having pastry, meat and cheese together is an appealing combination," commented Murriar. "Our frozen-food menu extends from breakfast to lunch to dinner, with ice cream snacks in between. We're very pleased with the flexibility of what we can offer in the machines, and our customers are, too."

Nashville Snacks has different planograms for its frozen food machines to suit each account type, whether white collar, blue collar or predominantly populated by a particular ethnic group. And a few slots are left to the route driver's discretion.

According to Murriar, the "turn" time is faster with frozen food than with refrigerated, even though heating takes a bit longer. He attributes this to the greater visibility of packaged items displayed vertically.

ENHANCED DISPLAY

"Customers can 'shop' a frozen machine more quickly," he commented. "They know what's there, and they can look over the shoulder of the person in front of them to see what they want before they actually make a selection. And we have the same couple of microwaves we would install for cold food, without the need for any more."

One drawback to frozen venders, according to Murriar, is that milk cannot be sold alongside food, as it is in refrigerated machines. "People will ask me why there's no milk in the machine, and I have to tell them, 'because it's frozen!'"

He has resolved the issue by placing Dixie-Narco "BeverageMax" glassfront beverage venders fitted with health controls in accounts where milk is needed, usually filling the whole bottom row with milk. "If you have food, you need milk," he told V/T. "Some accounts don't ask for it, but most do, and we see more demand for milk lately than ever."

Nashville Snacks organizes its routes so that frozen-food locations are the first scheduled stops. The company services three counties extending over a 50-mile radius, and avoids transport issues by alert routing and dispatching. "If we need to, we fill the machine, check the inventory and return, sometimes the same day, if we need to," explained Murriar. "Some machines are filled daily, some weekly. Some we can inventory one week and fill the next."

The company's drivers use "Igloo" coolers to transport its frozen food. "They are extra insulated and hold the temperature beautifully. They are rated to hold ice for five days without melting, and they're more than adequate for a few hours on the road, even during the hottest part of summer," said Murriar. "We have built-in cold plates in our trucks, but the coolers are more effective."

Nashville Snacks currently receives its frozen-food shipments from VSA and stores them in a few noncommercial freezers, but is in the process of installing a walk-in to accommodate this expanding segment of the business.

"Our frozen food market is growing itself. It's only going up," said Murriar. "I'm seeing more and more demand for it, and it's a good foot in the door; it's certainly helped us gain and retain accounts."


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