Some operators found that advertising the superior value they offer compared to food in other retail venues helped win food sales.
Frozen-prepared versus fresh
What role the continuing decline in freshly-prepared food plays compared to frozen-prepared food remains a matter of debate. Some operators maintain that fresh food is important to win the food sale, while others say that frozen-prepared food has improved significantly, rendering the fresh-versus-frozen debate unimportant.
Food-borne illnesses increased in 2009, which contributed to consumer reluctance to buy packaged food.
While refrigerated and frozen machines declined in 2009, more operators began using ambient machines to offer canned food, as indicated in chart 16A. More lunch kits, usable in ambient machines, were introduced in 2008 and 2009.
Milk falls again
For the second straight year, milk sales fell in 2009, largely due to the decline of all types of machines that vend milk. Most vended milk is sold in refrigerated food machines as opposed to dedicated milk or cold drink machines, as indicated in chart 17A.
Milk sales declined despite the fact that vending operators continued to raise prices in this segment in 2009, as indicated in chart 17D.
The vending industry has not been able to share in the overall growth of milk in recent years, which has been driven in large measure by the milk industry’s aggressive advertising. Milk continued to grow at retail in both 2008 and 2009, according to the BMC, which tracks beverage trends.
The number of dedicated milk machines declined for the second straight year in 2009. This was partially due to the dairy industry’s diminishing support of vending.
In the mid 1990s, national, state and regional dairy organizations provided marketing support to milk vending, primarily targeting schools. Many associations subsidized milk machines.
Chart 17A indicates that milk sales in refrigerated food machines did not decline, unlike dedicated beverage machines and dedicated milk machines. This continues a trend from 2008, when milk sold in refrigerated machines increased despite the drop in the number of these venders. Vending operators likely increased the use of milk in refrigerated machines to reduce the amount of food in them.
Ice cream grows slightly
Ice cream and frozen desserts were the only segment other than cigarettes to post a gain in 2009. The 2.2-percentage-point gain was not significant, and it did little to compensate for the decline reported in 2008.
The decline in frozen machines continued in 2009, but operators using frozen machines allocated more of their facings to ice cream than frozen food in order to reduce expenditures.
The number of dedicated ice cream machines fell for the second straight year in 2009. The number of old style dedicated 3- and 4-select machines took a big hit, indicating they are being phased out.
Much of the reduction in frozen food machines was driven by schools that banned ice cream due to nutrition rules.
2010: Gradual improvement expected
Vending operators agreed that the losses that began in the last quarter of 2007 began to level off in the third and fourth quarters of 2009. There was no significant change in the first quarter of 2010, indicating conditions were stable but not showing major signs of recovery.
Operators overall felt that a gradual recovery was under way but that business was not going to return to 2006 levels any time in the current year.
The Conference Board, a Washington, D.C.-based organization that tracks economic trends, reported that the nation’s economic activity has been improving slightly but consistently since mid 2009 through the first quarter of 2010.
The National Restaurant Association predicts that onsite foodservice, which took a huge hit in 2009, will grow by 4 percentage points in 2010, which translates into 1.3 points when adjusted for inflation.
Vending operators have used the “down time” imposed on them by the recession to review their financial reports, make changes to improve profitability and in some cases, invest in technology that will further improve their profitability.