Vending machines—the original contactless delivery systems—now deliver ramen and art to U.S. consumers
It wasn’t long ago in the United States that the idea of buying things—be it salad, frozen custard, socks, baby wipes, ramen, or art—from a robotic vending machine was a novelty. That has shifted—quickly. Now, a word that wasn’t much used before the coronavirus epidemic began—contactless—has become a must for retailers and a competitive advantage for those in the vending game.
Back before the pandemic, traveling salesman Luke Saunders started Farmers Fridge as a solution to what now sounds like a rather simple problem: he wanted access to more salads while traveling for work.
In 2013 he founded Farmers Fridge, which sells fresh salads, bowls, and other meals in reusable jars from machines in Illinois, Wisconsin, Indianapolis, New Jersey, New York, and Pennsylvania. “It is funny now, but initially it wasn’t. I would tell people what I was doing, and they would say, ‘Are you SURE? Who wants to buy lunch out of a vending machine?’” Sanders said.
Turns out, lots of people wanted his vending machine salads, and the numbers are now growing. According to the National Automatic Merchandising Association (NAMA), the vending industry has $24.6 billion economic impact, encompassing everything from office coffee services to The Sock Spot‘s namesake product to Anchorage, Alaska-based Baby Vend, which sells bottles, diapers, and baby wipes at airports and other locations parents might need them.
Arun Sundaram, an equity analyst with CFRA, said that businesses with contactless models are well-positioned to cope with the repercussions of social distancing. “This virus has reshaped consumer perception,” he said. Before COVID-19, online orders accounted for about 3%-5% of grocery shopping, as compared with 10% in Europe. “It is spiking right now. We’re seeing more use of Amazon lockers. I think we will see a more rapid adoption rate once the pandemic ends. [These businesses] are benefiting from unexpected trials.”
Depending on the geographic location, some vending machine companies are classified along with businesses that take up a far bigger footprint. In New York, the health department classifies Farmers Fridge units as restaurants. To the eye, the unmanned machines, with Astroturf plots in front of them, occupy a visual space somewhere between full-service restaurant and waiting room units where you buy Cheez-Its in a fit of hunger. Farmers Fridge’s 400 machines are located at airports, college campuses, office complexes, and hospitals. Pre-pandemic, for example, Saunders cited folks in waiting areas in hospitals who wanted something better than a cafeteria meal as another demographic.
“There is a ton of data about the willingness to buy from a machine and it shows that younger people are willing, but in reality, our customers skew older,” said Saunders. “They have a time deficit. Add some kids and work in there, and they are looking for the time savings.”
The company’s vending machines are serviced out of a central location in Chicago, making it easier to maintain quality control over the products, and a driver delivers the food to locations in the Northeast. Even with the expense of drivers and refrigerated trucks, vending is cheaper than brick-and-mortar retail, particularly in locations like airports, where real estate can be prohibitive. “The value proposition gets greater. Those are the kinds of trends that you can’t stop,” said Saunders.
Like Farmers Fridge, Yo-Kai Express was born out of necessity. The Hayward, Calif.-based ramen vending machine. While his wife was at the hospital in labor, CEO and Founder Andy Lin was coming up short on a late-night meal. The hospital vending machines didn’t offer any real foods. So Lin, an engineer, developed a machine to make hot, tasty ramen in eight minutes.
The vending machines are in hospitals and airports (they even accept United Airlines’ vouchers) and in hotels, where nearby office workers pop by for a meal if they missed traditional restaurant lunch hours.
“We are not trying to replace humans,” said COO Amanda Tsung. “We serve you in the off hours when other food options are not available, if your flight is delayed and you want another option not just junk food.”
SouveNEAR, a Kansas City-based company, sells the work of local artists in vending machines in airports and transit centers.
“The idea was that the vending machine made it affordable to get into these tight spaces,” said Suzanne Southard, one of three partners in the business. Price ranges for the art itself don’t exceed $40 and often are in the $5-$10 range, including stickers, t-shirts, and tote bags. Airports typically have high-dollar rent, that wouldn’t be accessible to artists who are making small-batch items. The model appeals, in particular, to women ages 30 to 50 who are traveling and looking to bring home a souvenir that doesn’t look like something they’d find in Any City U.S.A.
Since COVID-19 has curtailed flying, the firm has started selling online as well. But they believe they’re well-positioned for when airports re-open. “We don’t have to staff to be open, which keeps risk down for our people as well as the traveling public,” said Southard. Items are all behind glass. “Customers can know that their selections (and surfaces that they sit on) have not been handled by numerous other shoppers as they are out for display.” Though the machines require pressing two buttons to make a selection, the remainder of the transaction, including using a credit card, can be touchless.
Of course, none of the upsides matter if the vending machine doesn’t do what it was supposed to do. Some Moxy Hotels, such as the Moxy Denver Cherry Creek, had vending machines with fun items like Polaroid cameras in their lobby vending machines. They were removed from the chains because of complaints that the machines didn’t dispense the right item for the proper amount of money on a regular basis.
In general, most business owners say that the technology is better than those days when a machine would eat your quarters. Machines are contactless or touch screen and are Internet-connected, so that businesses get real-time information about stock levels, usage, temperatures, and more.
For St. Louis-based Ted Drewes Frozen Custard, reliable technology, or lack thereof, had been one of the reasons that the iconic company had been reluctant to agree to allowing its product to be sold in any vending machine. “Ted and I have been very picky,” said Travis Dillon, president and owner (and Ted’s son-in-law). But after Dillon saw that Las Vegas-based Advenco Vending had technology that would allow them to stop selling if the frozen treat’s temperatures were off, he felt confident. Advenco buys the custard at wholesale; Ted Drewes gets the marketing benefit of being inside machines that pepper college campuses and airports.
Considering the amount of square footage required, that’s a super sweet boost for all.
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