Fresh-Food Programs Help Sell Vending And More

Posted On: 4/7/2017

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TAGS: Vending Times editorial, vending industry, vending editorial, retail automation, vending operator, vending industry history, coin machine, coffee service, food service, Tim Sanford, Today's Consumer Rewards Food Quality, vending machine sandwiches, micro market fresh foods

From its earliest days, the vending industry has explored the extent to which it can, or should, meet the very diverse desires of its customers. Half a century ago, most of the machines in the "full line" were defined by a product and a package. The limitations of the equipment imposed real constraints on what could be sold through vending machines before the early '70s. "Candy" venders could sell a limited selection of candy bars, boxes and trays, as well as "vend size" vertically packaged cookies and crackers. "Pastry" venders could sell an even more limited selection of larger wrapped items. Bagged snacks were a problem until glassfront multiproduct machines went mainstream in the mid-1970s.

Those constraints led some observers to regard vending as a limited-menu retail channel best suited to selling the top 10 items in a particular area. And a number of products that later became widely popular got their start when the producer saw an opportunity to create a single-serving vend item that was appealing and different.

The rise to dominance of the glassfront machine, which had more or less swept earlier types off the field as the '80s began, solved most of those selectivity problems but created a new one: the challenge of shifting their inventory control and warehouse operating procedures to handle (say) 150 stock-keeping units rather than 20. This difficulty has fostered the development of information technology that can keep track of all those SKUs.

While all that was going on, full-line vendors with complete food programs were devising their own solutions to selling a very wide variety of short shelf-life items at a variety of prices. At a time when uniform product codes were unknown on vendible snack wrappers, operators with central kitchens were setting up menu databases and adding barcodes to their product labels they printed in order to track the performance of each item in every machine, whether it was sold or returned as "stale." This also allowed them to analyze line-item cost and profitability long before that became practical for other categories.

One could make a case for the assertion that the ability to vend single-serve wrapped food items was as critical to full-line vending's spectacular rise in the 1960s as fresh-brew coffee and postmix cup cold drinks. There were very few sources of individually wrapped prepared food items in the late '50s and early '60s. In some important markets, mobile catering operations ran central kitchens to supply their routes. Some of these companies were eager to increase their production volume by supplying full-line vending companies with prepared sandwiches, salads and platters. In other regions, though, the vendors were on their own.

The Vendo Co., then headquartered in Kansas City, MO, and a pioneer in the development of full-line vending equipment, organized the Vendo Food School to help vendors get started in fresh-food vending. Led by culinary arts experts, this program ran for several years and catalyzed vending's expansion into food preparation. The advent of a commercial microwave oven in the mid-1960s gave further impetus to the integration of fresh food into vending.

The recent arrival and dramatic growth of micromarket self-checkout technology represents the next step in this development. Enhancing the appeal of the micromarket concept to early adopters is the ease with which menus can be changed quickly, and new products introduced, because the payment terminal records the SKU when the customer swipes its barcode during checkout.

This makes micromarket inventory control simpler than vending's, and micromarkets will retain that advantage until a practical method is developed for a vending machine to capture the identity of the item being dispensed, in real time. Lacking that, vendors depend on their drivers to follow the load plan without deviation.

It is widely believed that micromarkets are at their most competitive when they offer fresh food. Vending operators already offering refrigerated food machines were among the first to adopt micromarkets because they already knew how to keep track of a very large number of continually rotating SKUs. And the ability to take control of all aspects of food production offers many benefits, all of which were discovered more than half a century ago. Among the most important is the value of a well-designed, well-run central kitchen to build an operation's credibility and boost its image as well as creating new market opportunities like event catering. Many full-line vendors have used their commissaries as showplaces, inviting prospects and customers to tour the facilities and have lunch.

Foodservice production, like cup beverages, is a topic that has faded in the ongoing industry conversation as locations with large blue-collar workforces have become rarer. But today's consumers, especially the much-discussed "millennials," have been sensitized to the pleasures of good food and good beverages, and educated to demand and reward quality. This offers an opportunity that the vending industry is well positioned to pursue.