2007: Vending Becomes a Tougher Balancing Act
Operators move into survival mode as operating costs increase against limited growth opportunities.
Integrated food systems grew for the fifth consecutive year in 2007. These systems keep food in a frozen state and reheat it at the point of sale. While expensive and service intensive, it meets the needs of consumers eating on the run in high traffic locations.
Manual foodservice grows
The steady growth in manual foodservice among vending operators largely reflected the continued dominance of the extra large operators, almost all of whom were active in manual feeding.
Managed services, also referred to as on-site foodservice for industrial plants, office buildings, health care facilities, schools and recreation centers, posted a composite annual growth rate of 6.1 percent from 2005 to 2008, according to The National Restaurant Association. This indicates that vending operators active in this category were involved in a segment growing faster than vending.
Like fresh food vending, manual foodservice offers an operator an area of marketplace distinction. It offers even more opportunities to be creative in food presentation.
However, the competition among operators limits how much they can raise prices and hold onto customers.
Vending operators active in manual feeding found themselves competing with dedicated manual foodservice companies. As with any business, dedication oftentimes strengthens performance.
Manual foodservice is also more labor intensive than vending.
Automatic Merchandiser tracks only manual food sales for companies that also provide vending, which does not include the majority of manual foodservice providers.
Milk continues to grow
Milk continued to grow in 2007, largely due to its perception as a healthy product. The dairy industry continued to promote Milk ’s benefits to the public through an aggressive consumer advertising campaign.
Milk sales increased every year for the past six years in all retail channels, according to the Beverage Marketing Corp., which tracks beverage trends.
Vending operators increased their Milk prices more in 2007 than in the previous two years, as indicated in chart 11c.
The percentage of Milk sold in cold beverage machines rose slightly in 2007 at the expense of refrigerated food machines. This might have been driven by the increase in glassfront beverage machines.
Extended shelf life Milk offerings gave vending operators more choices in recent years. However, the majority of operators continued to source local dairies for most of their Milk , as indicated in chart 12b.
Many vending operators found that local dairies provided better pricing than branded, extended shelf life products, even though the latter type featured nationally known brands and had the added benefit of not requiring temperature-controlled transport and warehousing.
Operators serving schools with strict beverage restrictions often found Milk a popular substitute among children.
Ice cream increases
Ice cream held its own with a 3-point gain in 2007, as the category continued to benefit from the steady increase of frozen food machines, many of which also vended ice cream.
The revenue gain did not rely as much on price increases for ice cream as it did in other categories as operators found it difficult to raise prices.
The segment continued to benefit from improved distribution. The first nationwide distribution for vend ice cream was established in 2005, making ice cream more accessible to more operators.
Much of the ice cream business was handled by dedicated specialists. Many full line vending operators preferred to subcontract the ice cream business to specialists due to the temperature requirements involved.
Some operators introduced remote machine monitoring to ice cream machines in 2007, seeing it as a way to prevent costly melt downs. Remote monitoring systems alert operators quickly about machine malfunctions.
Dedicated ice cream specialists were able to increase machine placements in public locations and retail accounts. In some cases, vending management companies helped place these machines.
The public access and retail locations typically required high commissions, however.
