The improving economy, along with a renewed commitment by food manufacturers to create variety and value in their food product, is a reason vending operators should reconsider their food programs.
Throughout the recession, convenience store food sales have remained strong, according to the National Association of Convenience Stores, and fast food restaurant sales are on the rise, says the National Restaurant Association’s 2010 Restaurant Industry Forecast. With the economy no longer severely declining, consumers are spending more on convenience meals, and food purchases can lead to higher snack and beverage sales. Offering food in vending machines is a good way for operators to maximize sales, especially with the right products.
Customers are already telling vending operators what foods they want, or in the case of a high stale rate — what they don’t want, according to Cole Richardson, sales and marketing manager for WOW! Foods. WOW! Foods is a new food manufacturer started by the Richardson family, which once owned Pierre Foods.
Richardson believes increasing fast food restaurant sales are due to consumers wanting a quality entrée they often can’t find in vending. WOW! Foods has entered the market with the intention of providing food that is the same quality as these fast food restaurants. “Some vending operators think ‘I have a captive audience. I can put whatever I want in the machine,’” said Richardson. “We (WOW! Foods) think like a restaurant owner.” For Richardson, that means quality sandwiches in branded packaging that has a reasonable price point.
What makes a sandwich restaurant quality? Richardson said it starts with the bread.
Quality ingredients are critical
“We now have bread that goes through the freeze/thaw process, the microwave, and still tastes like fresh bread,” said Richardson. Add leaner meats with no fillers (additives that bulk up the weight of a food with less expensive ingredients) or preservatives as well as well-liked condiments, and consumers are getting a product for a $2.75 suggested vending price that they would pay $3.00 or more for at a restaurant.
Creating restaurant-quality sandwiches was a driving force behind Pierre Foods’ successes as well. Mike Medina, director of marketing for Pierre, talks a lot about quality assurance and a great taste for a great value. “We’ve worked hard so that sandwiches you’d buy from the vending machine are comparable to the QSR (quick serve restaurant),” said Medina.
He’s noticed almost opposite trends in the types of food vending customers are buying: big portions that deliver value, and smaller portions that meet the demand for snacking and eating on the go. Because Pierre was already providing big portions with its Big Az burger, it focused on the second trend, developing the mini sandwich line from popular varieties of sandwiches.
White Castle Food Products LLC has confirmed the rising demand for smaller sandwiches in its consumer research, noted Kelly Collins, marketing supervisor. The company recently conducted research as part of an effort to redesign its product packaging.
Collins said consumers are increasingly viewing White Castle sandwiches as snacks as opposed to full meals. “They consider us a snack occasion,” he noted. He said research found parents are using the sandwiches to keep kids satisfied until the main meal is served, while adults eating on the go are looking to the sandwiches as well.
The Wall Street Journal recently reported the line between snack food and meal-time dishes is blurring as restaurant chains are launching a host of new substantial snack foods that seem more like full meals.
Don Miguel Mexican Foods is riding both the popularity of smaller portions and the increasing popularity of Hispanic products. Ron Mendoza, c-store project and sales coordinator who also handles vending and foodservice, said mini tacos are best sellers in the vending channel, compared to a 14-ounce burrito in c-stores. While sales have dipped a little during the recession for vending, Mendoza sees an optimistic future for handheld heated foods.
The popularity of Hispanic items is something Manny Gonzales, national sales manager of Raybern Foods LLC, can attest to. “(There’s a) growing acceptance of Hispanic products into mainstream America,” he said. He refers to enchilada dinners and burritos, as well as flavored chips and Mexican drinks.
“In summary, positive changes are good for the industry if we want to grow our sales and satisfy our customers’ demands for unique products and flavors,” said Gonzales. “We must think globally.”
An innovative way to offer food products to more vending customers is being touted by Hormel Foods Corp.’s Regan Schultz, national sales manager for vending. The Hormel Compleats line of entrees have an 18-month shelf life and require no refrigeration. “Lots of operators have turned to us to give customers a food option in a snack machine,” said Schultz. The Compleats products fit in an 8-count spiral or a 10-count if it’s a double helix.
Brokers tell him most new sales in the last 12 to 18 months have been in snack machines.
Health trend also drives sales
In addition, some of the Compleats, known as the green line, are USDA approved for a healthy lifestyle and are National Automatic Merchandising Association “Fit Pick” approved. These products help operators satisfy requests for better-for-you items. In fact, Schultz said three of the green line flavors have broken into the top 10 best selling Compleats flavors overall.
Dale Dearstyne, national sales manager for vending at Deli Express, said a new packaging process allows for an increased shelf life (from 12 days to 30 days) for all sandwiches. “They’ve done better due to that point of difference,” said Dearstyne.
He acknowledges it’s been a tough two years for vending food sales, but it looks like sales are recovering.
“I’m seeing sales increasing,” said Dearstyne, “Brokers are more successful getting new products in front of the customer, but it’s got a long way to go.”
One trend that surprised Dearstyne was the XXL half pound sandwiches Deli Express introduced. He was concerned about the $2.75/$3.00 price point they would carry, but they’ve been good sellers in the vending channel. “Maybe it’s the different shape/color,” said Dearstyne “…or maybe it’s that the customer sees it as added value.” A customer might consider the XXL sandwich a good value when they see it next to a 4-ounce sandwich for $2.00. The 9-ounce sandwich is only $0.75 to $1.00 more.
While Landshire Inc. hasn’t seen a dramatic decline in food sales in vending, Ken Landreth, national director of wholesale and vending, recognizes it’s not up as much as it had been in the previous nine years, nor as much as for c-stores.
He is saddened by the trend, because vending offers so much more than c-stores. “They sell the same brands as c-stores, but they’re right there at the location. They need to do a better job of educating their customer,” said Landreth.
Steve Carvel, national sales manager for Buddy’s Kitchen, thinks the historic mocking of vending products on television keeps people from buying the product, as well as not being able to physically touch and pick up the package. “People who try vending machine food are, I think, pleasantly surprised,” he said, “but the majority don’t even try it.”
While Carvel occasionally gets asked about healthier items, he believes the vending customer mainly wants to satisfy a craving. For Buddy’s Kitchen, the larger size meals are most popular.
Food sales will continue to increase as the economy recovers and employees spend more on food at work. Offering quality products and larger products at premium price points as well as offering mini handheld foods are ways operators can regain the consumer food dollar from competing channels of trade.
For more information, contact:
Buddy’s Kitchen, www.buddyskitchen.com, 952-894-2540
Deli Express, www.deliexpress.com, 952-949-1430
Don Miguel, Mexican Foods, www.donmiguel.com, 714-634-8441 ext. 1262
Hormel Foods Corp., www.hormel.com, 507-437-5443
Landshire Inc., www.landshire.com, 618-398-8122
Pierre Foods Inc., www.pierrefoods.com, 513-682-7108
Raybern Foods LLC, 714-227-3107
White Caslte Food Products LLC, www.whitecastle.com, 614-559-2453
WOW ! Foods, www.wow-foods.com, 828- 624-4111 ext. 3
Commercial vend food commissaries decline; owners differ on why
As the food segment has taken a hit in recent years, commercial commissaries that supply food to vending operators have found it harder to stay in business.
Early this summer, Honeybake Farms Inc. in Kansas City, Kan. became the most recent fresh food manufacturer to close up shop. Neil Sloman, owner, said a contributing factor for his company’s demise was a change in operator pricing strategy. The longtime practice was to sell product at a price that yielded a 30 to 35 percent gross margin. This changed in 2006 and 2007. Sloman believes operators lost sales by raising prices too high. This, in turn, hurt his sales.
Jerry Goldman, who operated Classic Catering & Commissary Corp. in Binghamton, N.Y. before folding his business 2009, believes vending operators hurt their food sales by moving retail prices well beyond the $1.00 threshold. He believes this change in strategy was largely responsible for the loss in vend food sales.
Mike Reaves, vice president of Mom’s Food Products Inc. in Fort Worth, Texas, agreed aggressive pricing by operators, beginning in 2005, ultimately hurt operators’ food sales.
Not all commissary operators agree with this assessment.
Bill Farhat, who operated Food Specialties Service Corp. in Buchanan, Mich. for 27 years until closing in 1997, believes operators were too conservative with their pricing. He encouraged operators to charge $2.00 at a time when most would not go above $1.50.
John Martin, business development manager at Sunburst Foods in Goldsboro, N.C., thinks a lot of fresh food suppliers’ problems have been due to poor business management. He said some of his colleagues have been too shy about raising their own prices and have not invested sufficiently in quality. Martin encourages vending operators to offer higher quality food.
Emily Refermat | Editor
Emily has been living and breathing the vending industry since 2006 and became Editor in 2012. Usually Emily tries the new salted snack in the vending machine, unless she’s on deadline – then it’s a Snickers.
Feel free to reach Emily via email here or follow her on Twitter @VMW_Refermat.
