In-house Food Packaging Allows Expansion into New Business Opportunities

The world of the vending operator is constantly changing. The industry has gone through hundreds of changes since its inception. One of the early innovations was the in-house commissary, which continues to offer operators growth opportunities.

Some operators think the commissary has outlived its usefulness. On the contrary, however, changes in packaging equipment have created a new set of opportunities that some operators may not be aware of.

In order to understand how these opportunities have evolved, it helps to first understand the history of the in-house commissary in vending.

How commissaries evolved

The traditional candy to snack to gumball vendor moved into the hot and cold drink business in the 1950s.

As demand grew for more services, the vending operator established cafeterias in business and industry locations, and the offshoot of that idea was the set-up of the commissary kitchen to service the new cold food machines that could be situated in unmanned areas to serve the public 24 hours a day.

To fill these cold food machines, the vending commissary was begun. Food could be made off-site and brought over by the same route driver that originally just placed the candy and bag snacks in the rest of the machines.

Commissaries became critical factors

There were no store-bought sandwiches that came already packaged in those days. And if there were a few of these resources out there, they didn't reach out to serve the vendor that handled factories and offices in rural areas.

The commissary became the heart of the vending operator's business. Some operators not only packaged sandwiches, but also started the off-site catering that is part of many vending companies today.

The reasons to have a commissary today are as valid as they were 20 years ago. Even in the wake of the new commercial kitchens that have sprung up in the larger areas, the traditional commissary still holds its own.

The advantages have not changed

Let us look at the business as it is today, in relevance to the competition and where it could be going in the future.

First, consider the advantages to having an in-house commissary for your vending customers.

Unlike the new commercial kitchens, the local commissary chooses its food items from its local customer base and what is important in their particular area.

It would be a difficult sell for the national sandwich maker to have a "pepper and egg" sandwich, but the local vendors produce them in the Chicago area because that is where it is popular.

The local vendors do smaller runs, producing the correct products at the correct time. The local vendors know what their customers want.

The commercial sandwich maker has an impressive array of offerings, but does not have the local appeal for all of the items it manufactures.

On average, a sandwich from a national sandwich kitchen will be competitively priced with most of the other sandwiches in the area. But the cost to the local vendor is high and the sales margin is lower compared to a product produced in-house.

It is estimated that the margin at a vending company from a commercial sandwich can be around 25 percent, but a sandwich made in the operator's own kitchen is around 50 percent. The returns which are computed in the selling price are about the same for both.

Consider packaging costs

We have heard of modified atmosphere packaging (MAP) which keeps a sandwich fresh for a month from the large commercial kitchens. The taste is not quite the same as a fresh product made in the morning and delivered the same day.

The prices of those MAP products are high, and someone has to pay for them. So the local operator loses a lot of margin to put out a product that was made hundreds of miles away.

Don't discount customer satisfaction. There could well be a difference in satsifaction between the commissary sandwich and the commercial kitchen's product, although this is not as easy to quantify. The local vendor produces sandwiches the same day they are put into the machines. Customers like the freshly made product.