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Frozen Food Vending Plays Wider Role In 'Downsized' Market

Posted On: 12/15/2010

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vending, vending machine, vending machine business, frozen food, frozen food vending, ice cream vending, food vending machine, Vendo, Victoria Steck, Sanese Service, Scott HalloranHalloran's Refreshment Service, Steve Carvel, Buddy's Kitchen, Michelina, U-Select-It

 The full-line vending revolution was driven by the demand by major industrial enterprises for the delivery of food and beverages to large numbers of assembly-line workers in the short time specified in union contracts for lunch and coffee breaks. Half a century later, the technology which a former Vendo president called "labor storage" continues to enhance workplace productivity by offering round-the-clock access to a variety of food, beverage and snack items -- but those large blue-collar workforces are gone.

Sanese ServicesWith them went the limited range of tastes, characteristic of mid-century America, that could be satisfied with a dozen or so sandwich and entrée varieties. The greatest damage to the classic vending model, though, was wrought by the advent of much smaller workforces, typically with greater flexibility of access to vending and a more insistent demand for a wider range of choices. When there were a thousand employees in a location, the operator could do well even if a substantial percentage of them brought their lunches from home. When there are a hundred employees, it's essential to maximize participation.

PHOTO: Victoria Steck of Ohio's Sanese Service says frozen venders satisfy hungry, productivity-driven workplaces with populations too small to support costly fresh foods.

To meet this need, the industry has taken advantage of the popularity of single-serve convenience meals -- unheard of in the 1960s and '70s -- and a new generation of equipment, both frozen and refrigerated. This larger toolbox is enabling operators to meet the demand of today's downsized, productivity-driven workplaces for convenient 24/7 access to food.

Scott Halloran of Halloran's Refreshment Services (Richmond, VA) recognized early in his 15-year vending career the importance of offering fresh, refrigerated food machines to win and retain the business of the larger, more lucrative accounts.

Requests for food from locations not quite large enough to support the labor and waste associated with a refrigerated vender and demand for ice cream prompted the operator to add frozen food venders. He also saw the value in some sites of co-locating refrigerated and frozen venders to add frozen novelties to the mix.

Today, Halloran has 20 frozen machines and a dozen refrigerated food venders on his five routes. "We're more heavily into frozen; the longer shelf life definitely has its operational advantages, and ice cream is a big seller," he said. "But in many sites, we're trending back to fresh food in response to customers' expectations and wellness programs they want for their staff. With the big wellness push, they want salads, yogurts, fresh fruit and tuna sandwiches, which you can't freeze."

The reality that many "healthier" items simply can't be sold frozen is only part of the reason behind the shift toward fresh food, Halloran told VT. Given the demand he's seeing, the operator said he finds the availability of frozen entrees, sandwiches and other foods formulated for health-mined consumers to be limited, driving many of his customers to insist on freshly prepared meals that he gets from a local caterer.

He emphasized that while it's primarily the white-collar clientele that is focused on "wellness," it's only a matter of time before the movement takes hold in gray- and blue-collar locations.

"When it comes to food, just as with snacks and beverages, I think the industry as a whole has to have good answers to wellness initiatives that our customers are being asked to implement by their human resource departments and health insurance companies," Halloran stressed. "It's a struggle because we're restricted to what manufacturers make and what our distributors supply. Until the big vending suppliers see the volume to bring in less mainstream items in that are healthier -- which I think they are doing more and more -- we have to take it upon ourselves to reach outside the box to satisfy our customers."

The Virginia vendor said he has been pleased with the industry's progress on the technological front, and has embraced the newer tools available to enhance the service model for his frozen machines. After years of assigning his route supervisor to run a dedicated food route covering a wide geographic area for two and a half days a week, Halloran recently installed InOne Technology's remote management devices on all of his coil-driven frozen food machines.

"Now we prekit our frozen machines, using the data we retrieve from the remote monitoring device that tells us what we need," he told VT. "The model is much more efficient. The drivers take care of their own food; there's no guesswork involved in determining what they need to take with them, and we don't have all the costly and often unnecessary windshield time that the supervisor had in the past."

Halloran primarily favors U-Select-It's low-profile Alpine frozen food venders -- both the newer standalone models and older satellite units that share a controller with USI's Snackmart VI snack machines -- since he has found that the larger glassfronts generally have more capacity than necessary to satisfy his clients' needs.

"We do serve some of those absolutely perfect locations, like large trucking terminals and other sites with nontraditional work hours, with the bigger APi frozen food machines and in sites like that, the big machines are an ideal fit," he reported.

In half a dozen locations that want food but do not have large enough populations to support a dedicated frozen or refrigerated food machine, Halloran has found the perfect solution by using the "Entray" conversion kit, developed by Dixie-Narco to permit selling refrigerated food through a BevMax glassfront cold drink vender. "For smaller locations that need food, it's a great solution," he told VT. "There's no additional investment and it's first-in, first-out because it vends from spirals, so it's not shopped by date like a traditional food machine."

The Virginia vendor also recently ventured outside the box by offering suitable existing and potential clients the Avanti Market self-checkout kiosk system. In the few months since he replaced the vending banks in two Richmond businesses with the unattended c-store concept, he is convinced the model is a superior way to deliver food, fresh and frozen. Customers simply pick up the items that they want to purchase, scan the UPC barcodes at the kiosk and pay for them using a credit card or dedicated Avanti Market keytag.

"We're selling ice cream, sandwiches, pizza, and Lean Cuisines from a reach-in chest freezer at a higher ticket than we could do in vending, where you have items from $1 to a $3.50 price ceiling," Halloran pointed out. "We sell some fresh food items for as much as $7 and the volume of food sales is definitely significantly higher out of a 'Market' than a vending machine."

The operator added that many of his locations are still well-served by frozen food machines, but said his experience with Avanti Markets has demonstrated that it can be a better fit for others. One 200-employee vending account that received an Avanti system had a frozen food machine with sales that were sluggish, at best. "I converted that account to the Avanti market concept and, surprisingly, we're moving a lot of food, because we have the fresh sandwiches and the salads, along with the frozen foods in the chest freezer," he told VT.

At the moment, Halloran only accepts credit cards at his kiosks and not in his food machines; he speculates that this probably is part of the reason food sales are higher in the Avanti sites than in vending machines. Halloran Refreshments is, however, gearing up to enter the cashless vending arena in the near future, which the operator says may demonstrate the importance of accepting alternative forms of payment in frozen food machines.

The company began operating its first two Avanti markets last summer, and is currently installing two more. So far, all of the accounts that have signed on for the self-serve kiosks are white-collar locations, but the operator is heavily pitching blue-collar sites, in which he sees an enormous opportunity.

"It's a good concept when you have shift work. You can provide food 24/7 and it's better than the vending model," commented Halloran. "They can have locally prepared soups and salads, ice cream and burgers to satisfy every taste and diet around the clock. A big reason it's better is because the product can be touched and felt. The customer can make a purchase decision before completing the transaction. In vending, you have to look through the glass. People don't want to risk spending $3 or $4 and risk not having the quality and freshness there."

A big plus with frozen product, whether merchandised through a vending machine or an Avanti Market, is instant recognition of well-known national brands and consumers' trust in the products' freshness, Halloran pointed out. The universal appeal of ice cream, which occupies 30% of Halloran's frozen machines, also adds incremental sales, whether through a vender or self-serve kiosk.

On the other hand, a downside to vending food in a frozen rather than a refrigerated state is that a number of products do not hold up under the more prolonged rethermalization process required to bring them up to serving temperature. Through the years, Halloran said he has been able to identify those items best suited for frozen vending, including Michelina's entrees, White Castle hamburgers, Nestlé Hot Pockets, Pierre Foods chicken wings and a variety of pizzas and breakfast biscuit sandwiches.

From a manufacturer's perspective, Steve Carvel, national sales manager for Buddy's Kitchen, is in complete agreement with Halloran about the shortcomings of heating some foods from frozen. "The longer it takes to cook in the microwave, the harder it is on the product, particularly the bread," he told VT. "My first piece of advice to anyone vending frozen food is to follow the directions on the package -- and try it yourself first. If it doesn't taste good after you take the time and effort to follow the directions, what do you think will happen if the customer just throws it in the microwave? Don't sell it!"

Carvel noted that his company's grilled sandwiches come out of the microwave oven properly crisped, whether reheated from a refrigerated or frozen state, and Buddy's English muffin breakfast sandwiches also hold up well. But its croissant sandwiches collapse during the lengthy heating process when frozen, so he chooses not to include frozen directions on the packaging.

"You want people to buy it again, and they won't if the bread comes out like a rock," the frozen food veteran cautioned. "They won't even come back to the machine, and they'll tell everyone else about their horrible experience."

Victoria Steck, vice-president of operations for Sanese Services (Columbus, OH), also takes great care to encourage patrons to follow proper heating instructions so they will be satisfied with the finished product. In locations in which the 45-route operation has both frozen and refrigerated machines, Sanese assigns separate microwaves to the products vended from each. The ovens feature buttons designated to heating frozen entrees and sandwiches that are programmed for the proper heating time.

"We take time to market the microwaves to the customers, so they know which one to use and which buttons to use because they're programmed to cook the product just right," she told VT.

Sanese Services has made a name for itself in Ohio by producing its own high-quality foods and marketing them extensively. "We have a strong following for our fresh food, but there are many locations where we would have so much waste and low participation that it's better to put in a frozen food machine," Steck explained. "We can provide a hot meal instead of just snacks and pop in places that don't warrant having a cold food machine, rather than put one in and waste food, or say 'no' to food altogether and risk an unsatisfied client."

The company's 75 frozen machines -- Crane's National 320s and Fastcorp's robotic venders -- are generally merchandised with a mix of 70% food, ranging from sandwiches and pizza to burritos and entrées, supplemented by 30% frozen novelties. In the summer months, the ratio is closer to 50:50.

Michelina-branded entrées are especially popular among Sanese clientele, and they please diverse populations with selections ranging from "comfort foods" like fettuccine Alfredo with chicken and broccoli and Swedish meatballs to health-conscious Michelina's Lean Gourmet offerings.

The company also addresses the demand for food at a dozen or so locations with Tombstone-branded KRh Thermal Systems Hot Choice machines. The operations VP said the hold/heat/serve machines, stocked with items like frozen Tombstone personal pizza, Kraft macaroni and cheese and Oreo brownies, dispensed hot, are especially well-suited to locations with cafeterias that do not operate in the evenings. "It's a great machine to be able to put in," she said. "The food comes out piping hot and cooked to perfection. It answers the concern about patrons' not microwaving an item for the proper amount of time. It doesn't have ice cream or 'healthier' selections, but it gives customers a whole other option."

Steck said frozen food machines more often serve as a food solution in blue-collar sites than in white-collar venues, but she emphasized that frozen vending has a place in offices; there tends to be a strong following among women for the Michelina's Lean Gourmet offerings, she reported, for the same reasons Halloran cited.

"We've seen a big increase in demand for lean Michelina's. A lot of companies are trying to help their employees stay healthy because of insurance costs, and want us to have a certain percent of 'healthier' options available to them," said Steck. " The lean Michelina's line is one of the few frozen options available that takes dietary concerns into account, and consumers recognize it." She added that Sanese Services takes advantage of Michelina's-branded machines in many locations, to leverage the line's popularity.

To widen the "better-for-you" choices available from Sanese's frozen food venders, the company's dietitian developed its own Carmen's Cuisine line of freshly made entrees, formulated specifically to be vended frozen. All selections contain less than 10% saturated fat, less than 60mg. of cholesterol, less than 30% of total calories from fat and less than 30% sugar by weight.

In her 21 years with Sanese, Steck said the biggest change she has witnessed -- other than the health movement -- is that younger consumers moving into the workforce have more cultivated palates than they did years ago.

"At a call center, where you have a lot of younger people, you can no longer offer just a hamburger; you need to have something more interesting and sophisticated, like a blackened bleu cheese burger," she explained. "It's easier for us to do with our fresh food, but we need to see more exciting frozen offerings."

To satisfy patrons' cravings for bolder flavors, Sanese merchandises Asian-inspired foods like Pierre's teriyaki chicken sandwich and Schwan's Minh egg rolls and Mexican favorites like José Olé burritos and Hot Pockets chicken quesadillas.

According to Steck, besides the limited variety of "healthier" and Gen-Y-friendly foods, the biggest limitation to frozen food vending at present is a low price ceiling. Sanese's prices range from $1.50 for ice cream to $3 for entrees.

"It's a tough sell to price food any higher when people see Michelina's at a grocery store for 99¢; they feel they should be able to get it at the machine for the same price," Steck pointed out. "Grocery stores can afford discounts on certain items that vending can't, but the consumer doesn't understand that."

On the positive side, Steck pointed out, the very fact that consumers are so accustomed to purchasing frozen meals at the supermarket and preparing them at home bodes well for vending, since their familiarity with many products gives them confidence about what they can expect when they purchase similar items from a machine.