Pastries hold their own; Is vending missing out on a chance to upsell?

Vend West in Coos Bay, Ore. serves a largely industrial customer base in the Northwest and has not seen much fallout because of wellness in the last two years, noted Lou Leberti, owner. A fallout came three years ago when schools stopped carrying many traditional items. “Our industrial sites aren’t that wellness conscious yet,” he said. He does get requests for wellness products from location managers, but the sell-through isn’t there from the end user.

The restrictions in schools, hospitals and prisons has had some impact on what industrial locations are asking for, noted John Chavez, operations manager at Texas Refreshments, an 8-route operation in Midland, Texas. More industrial customers are requiring healthier options. But in locations with few restrictions, pastries remain top sellers, Chavez said.

Texas Refreshments mostly carries fresh pastry; frozen pastry is only used for back up, Chavez said. He said customers are accustomed to fresh pastry from the convenience stores, and they usually prefer it to frozen pastry.

Fortunately, the oil fields that Chavez serves have not imposed a lot of restrictions, are adding jobs and the work sites take as many as three shipments of pastries per week. “We’ve seen a huge increase in it,” Chavez said. “These guys get out there in the oil fields and they’re looking for something (filling) to eat.”

Competition from bagged cookies

“The market is not what it was in the mid 1990s,” said Cloverhill’s Jackson. Besides the downsizing that has affected all vend product categories, pastry has faced competition from bagged cookies.

Concurring with this observation was Mike Knowlton, director of vending sales for Kellogg Away From Home. Kellogg’s Rice Krispies Treats and Pop-Tarts are shelf stable snacks that often find their way into traditional pastry facings.

In the last two years, Kellogg enlarged the Rice Krispies package and shaped it more similar to a pastry package, Knowlton said. This helped drive sales even more.

Time for an upsell?

Some observers think the vending industry has an opportunity to improve pastry sales by adding better quality products at higher price points. Bill Skeens, owner of Prairie City Bakery, which supplies frozen pastry to foodservice channels, claims other retail channels have benefitted from better quality offerings at higher price points. The company exhibited at vending trade shows more than a decade ago, but did not find the vending industry receptive to its product line because of its higher-than-average price points. Prairie City products are nevertheless still available to vending operators from foodservice distributors.

Skeens points to the growth of specialty retail bakeries in many parts of the country. He claims that specialty coffee stores, convenience stores, drug stores and other retailers have also increased pastry sales by introducing higher quality, higher priced products.

Skeens further believes that the specialty coffee industry has played a developmental role in building the market for better quality pastries. He notes that specialty coffee stores have introduced better quality pastries in recent years.

“I think that this is something that the vending industry is missing,” Skeens said.

Skeens has paid attention to the rising vend prices, and he thinks vending operators might become more aggressive with higher priced pastries. He also believes that micro markets are creating an opportunity for higher priced pastries.

While the pastry category has suffered somewhat from stricter nutrition regulations and from the account downsizing, consumers still like pastries. Fortunately for the vending industry, a cadre of well know product manufacturers, continues to provide the quality and variety that consumers are looking for.

Because the vend pastry offers a good value to consumers, operators have been able to sell pastries at price points that delivers a reasonable profit margin.

In the meantime, product manufacturers continue to test new pastry products for vending, which keeps the segment interesting for both operators and their customers.