Some retail food manufacturers take new interest in dedicated branded food machines. These merchandisers have the potential to bring more national name brands to vending.
For years, the food business has been viewed as vending's final frontier in winning consumer acceptance. If the consumer could be convinced to view the vending bank as a primary destination for a full meal, the vending machines could charge the same price points as other retail channels.
It's been a long wait.
Hope emerged about a decade ago with the introduction of the frozen food machine. These machines brought the opportunity to offer the same products as the consumer purchased at the supermarket. Many operators waited to see more national name brand entr'es at vending trade shows. It happened only on a limited scale.
Integrated Food Systems Offer Hope
Around the same time came integrated food systems that held food in a frozen state, heated and served it. These systems incorporated new heating technologies. They addressed the food manufacturer's concern about preserving product integrity since the machine controlled the heating process.
The killer here was the machine's price point, plus the fact that these machines held a very limited number of selections.
In 1998, Canteen Vending Services Inc. introduced a handful of quick serve restaurant brands that had never been in vending, on an exclusive basis. These products lent some extra branding muscle to the food machine, but they did not set record sales.
1998: More QSR Brands Debut
Quick serve food manufacturers interviewed about Canteen's QSR program admitted Canteen seemed to have handled quality control well enough. However, the market was not large enough to draw more of these companies to the vending channel.
In 2003, McDonald's Corp. tested a branded, dedicated French fry machine that was originally developed by H.J. Heinz Co. The test has been discontinued, and the company did not wish to comment on it.
In the meantime, the vending customer base experienced serious downsizing, hurting an already challenged return on investment scenario for food machines.
Tony Schroder, vice president of vending at Pierre Foods, said the economics of a branded food machine do not make sense for all parties involved. Because there are not enough machines on location, the food processors cannot commit funds to develop distribution and marketing programs. "What's the value proposition?" he asked.
Is There Incentive For Food Companies?
Should the economics prove successful, Schroder is the first to admit that a big opportunity exists.
"It's a great industry since we're underutilized and we're about convenience," he said.
Food manufacturers have refused to give up hope, however. Traditional retail outlets have long been saturated, and the competition for retail shelf space has put continuous pressure on food companies' profit margins. The vending industry, though problematic for these companies, remains largely untapped.
More Branded Machines Arrive
Signs have emerged in the last year that retail food manufacturers are taking a renewed interest in the vending channel. A handful of national name brand manufacturers has developed products for frozen food machines and is working with machine manufacturers to support branded food machines.
What these food and machine manufacturers have realized is that a new business model is needed for food vending.
The business models some of these companies are using are not unlike those that have long made soda machines ubiquitous in the retail landscape. Some food manufacturers are offering to cover part of the cost of food machines bearing their particular brands.
The most visible examples of new branded merchandisers are the Kraft Foods and Tyson Foods branded hot food machines and the Michelina branded frozen food machine. The most unique aspect of these programs is that the machines carry dramatic graphics of national name brand foods.