VENDING MACHINES GET SMART
Ah, the vending machine, longtime purveyor of either guilty pleasures or scary meals.
The entrepreneurs behind Pantry, which launched last week, want consumers to forget the unappealing image of stale food behind glass and embrace their Web-connected kiosks that stock fresh food around the clock. The company has been in development for three years and more recently was proving its concept in stealth mode through kiosks at Stanford University and the University of California- San Francisco Medical Center.
“We’re always fresh and always open, and that’s a hard combination,” says Russ Cohn, CEO of Pantry, which has secured $2.3million in funding, including a recent $1 million round led by Cowboy Ventures. “We want to be the grab-and-go solution that’s in your hospital, your office and your university.”
The company is specifically looking to target so-called food deserts — either locations or times of day — when finding traditional stores and other food vendors open is difficult.
Its kiosks look like glass-doored refrigerators, with the exception of a payment swipe box near the top left corner of the door. Slide your credit card, the door unlocks and sensors detect which food item is selected from the kiosk. Close the door and your credit card is charged for foods such as salads, sandwiches, soups and yogurts, with most items costing no more than $10.
Pantry’s play is reminiscent of Chicago-based start-up Farmer’s Fridge, whose vending machines — which boast faux wood panels — are stocked with refrigerated organic food in recyclable jars.
The healthy-food vending machine franchise model, typified by the success of companies such as HUMAN Healthy Vending and Grow Healthy Vending Machines, is on the rise in light of the battle against childhood obesity, which has seen the Department of Agriculture tighten requirements on the sugar and fat contents of food sold in schools.
This vending machine makeover and renaissance is gaining momentum in part because retailers appreciate both the ease with which Millennials interact with machines as well as the employee-free nature of this mechanical company outpost.
“Pantry could be onto something, considering today’s new workplace with its longer hours and a younger generation that’s interested in good food at all hours,” says Emily Refermat, editor of Automatic Merchandiser magazine, which covers the vending machine sales industry.
Refermat notes big-box chains such as Best Buy, which offers an array of high-tech goods in proprietary machines, and start-ups such as DVD rental company Redbox, whose kiosks helped bring about the demise of Blockbuster Video stores, are rebooting the venerable chips-and-soda vending machine image.
In recent years, retailers ranging from Benefit cosmetics to Sprinkles cupcakes added such machines to their product distribution plans.
And there’s a sense the types of items consumers may find in machines is likely to expand: In the Netherlands, a start-up called Caenator is testing a vending machine that dispenses freshly made french fries.
More evidence of the shifting vending machine trend is found in efforts to retrofit old school machines that take only coins or bills. PayRange, a Portland, Ore., start-up that leverages a Bluetooth device and an app to make machines credit-card friendly, recently landed $12 million in venture funding.
Vending machines in the U.S. generate around $25 billion in sales annually, according to the National Automatic Merchandising Association, though Japan remains a per-capita king thanks to nearly one machine for every 20 citizens.
Pantry’s Cohn says that by allowing its machines to connect to the Web, staffers can closely monitor sales and order restocking according to how each kiosk turns over its merchandise.
“That not only allows us to see what a given kiosk might need depending on the day, but it also helps us reduce waste,” he says.
Pantry’s main partnerships on the food-provider end include behemoths such as Sodexo and Aramark and niche food purveyors such as Mixt Greens.
“We think we can have one in every workplace and five in every hospital,” Cohn says.