Jodi Glimpse, vice president of business development, Camelback, knows the Arizona rules and does her own evaluation when a new product claims to be school approved. Healthy vending products, she noted, require a lot of research.
“It’s still an 80-20 business,” said Glimpse, “80 percent of your profits come from 20 percent of your products.” She relies heavily on remote monitoring technology to tell her what products are selling and what should be replaced. She also relies on her connections with location managers and keeps up-to-date on legislation that may affect food offerings.
Glimpse contacted the purchasing manager at the school where a “healthy” vending machine was placed next to her equipment without her knowledge, citing her contract with the district. The purchasing manager seemed unconcerned, saying the new machine was simply a test program for the final month of the school year.
THE ‘HEALTHY’ MACHINE MISLED CUSTOMERS
Glimpse said the fact that the machine said “healthy” misled people, including the district staff, into believing the products inside were better for them. She found several products in the “healthy” vending machine that violated state and federal nutrition rules. One example was Hansen’s All Natural Soda, which was being sold in a school where district rules do not allow the sale of any carbonated beverages. “They didn’t even have products to meet state regulations,” said Glimpse.
Glimpse also didn’t think kids would pay the premium price for some of the products. In the machine she saw, organic chocolate milk sold for $2. In her machine, the price for chocolate milk was $1.
Within a month, the machine was removed from the school due to low sales. While her own company’s sales were not affected, the incident did create concern.
MOST HEALTHY - VENDING LOCATIONS: SCHOOLS
Advocates of the turnkey programs nonetheless claim they are meeting a rising need. Mark Trotter, CEO of YoNaturals, claims a lot of school districts are removing traditional vending machines. Companies with healthy vending programs, like his, are, in his words, “scooping up the locations right behind them.”
Since 2006, YoNaturals has been selling the concept of non-traditional and healthier products in vending machines. The program allows people to start a vending company quickly. YoNaturals supplies the machines, finds the locations, continues to market the idea, delivers machines, installs and trains the new operator, and helps them choose products. The machines include cashless payment systems.
The feedback from one operator who recently invested in the YoNaturals turnkey program may sound overly optimistic to some, but after a year, it’s still going well.
“I started my business in 30 days,” said Tom DiPasquale, who started a vending operation in Rochester, N.Y. with YoNautrals in 2008. He fills the machines after his day job. He’s very pleased with his return on investment. DiPasquale’s goal was to get 30 vends a day per school. That would give him a profit and allow him to pay off the machines in three years. Currently, he averages 50 to 60 vends a day, with vends going as high as 125 to 150 a day in three schools during football season.
DiPasquale did some of his own legwork, verifying that the products in the machines met New York guidelines. He said while some of the schools have replaced traditional vending machines with his machines, most offer both. He believes having both machines is positive because it allows kids to have a choice.
While turnkey programs are addressing a rising customer need, one question that remains is the integrity of the operators coming into the industry.
Eddie Hicks, president of Prestiage Services in Clifton Park, N.Y., has seen a number of turnkey programs that resemble “blue sky” opportunities which promise big profits for little work. In these cases, the operators aren’t able to give locations the service promised.
About four years ago, a radio disc jockey in Hicks’ market started an organic vending business. The organic products were popular with schools, and the business grew. Unable to keep up with service, the disc jockey sold it to an established regional vending operator.