Hot food vending makes big strides; challenges continue

Managing hot food in a vending machine has always been a balancing act for convenience services operators — being able to offer quality and pricing the customer will accept while keeping operating costs under control.

But in recent years, food preparation and dispensing equipment has evolved, giving vending operators new tools to succeed in this challenging but increasingly important sector.

As pioneering operators have introduced new products and technologies in recent years, are consumers responding favorably? A panel during the recent Self-Service Innovation Summit in Miami tackled this issue head on. The session was titled, "Hot, fresh foods through self-service = hotter revenues."

Technology improves

"The equipment has evolved to the place that the quality of the food that could be sold has improved and there are more opportunities to serve both hot and fresh food to the customer," panel moderator Elliot Maras, editor of Vending Times and Kiosk Marketplace, stated at the outset of the session.

Maras explained that in the traditional vending industry, "food" refers to perishable food as opposed to shelf stable products like candy and soda.

"Food for the vending operator is a very complicated operation and it's a very labor intensive operation, but as far as meeting the customer's needs for customers on the go, food is certainly the most important part of the meal," he said.

The panelists, which included two location overseers, a vending operator and a vending technology provider, agreed that customer perception of vend food is improving, but more importantly, so are opportunities for offering vend food.

"They love it," said panelist Marc Crocquet, vice president of business services, Nova Southeastern University based in Fort Lauderdale.

The university introduced automated food machines in its dining areas in the last few years after noticing how receptive students were to code accessible lockers in the residence halls, Crocquet said. The students liked using the technology and did not want to interact with an attendant.

The panelists agreed, however, that education locations cater to younger consumers who are more comfortable with self service. Hence, the acceptance at universities cannot allow one to assume that locations catering to other consumers will deliver the same acceptance.

Education needed

Yang Yu, founder and CEO, KitchenMate, a manufacturer of autonomous hot food kiosks, found vending operators were not receptive to hot food kiosks since they were not convinced consumers would embrace food offered in a vending machine.

Facing a skeptical vending operator community, Yu took it upon himself to place and operate his KitchenMate machines in locations in Toronto.

KitchenMate uses computer-vision "smart" fridges, "smart "cookers and a companion consumer app. The customer opens the fridge, removes a "smart" meal pod and scans it with their phone, then loads the meal pod into the cooker where it heats and is ready to serve within minutes. The customer then pays using the smartphone app.

To date, consumer perception in most locations where Yu has deployed his technology remains a challenge, he said. Many consumers assume the food is prepared from a frozen state and is possibly unsafe.

To demonstrate his point, Yu asked his listeners during the session how many have used food delivery services and nearly all hands went up. When he asked about ordering from a vending machine, only one hand rose.

Hot food offers new opportunities

"I think there's a lot of work to do on this, but we're moving in the right direction," Yu said. "The hot food is what unlocks the business of vending and takes it to the next level." He said hot food from deliveries is a $30 billion market in North America, which is triple the size of the vending market as a whole, of which food vending is only a small portion.

The panelists agreed that universities can play an important role in improving consumer acceptance of vend food.

"We have the right consumer segment," said panelist Mike Alkurdi, resident district manager at Chartwells Higher Education Dining Services, referencing Gen Z. Chartwells manages the dining at Nova Southeastern University and Alkurdi confirmed Crocquet's observation that the hot food machines have been well received.

"They want less interactions, faster service and more convenience," Alkurdi said, adding that the university constituents found it easy to use the technology and in some cases made suggestions to make the machines more efficient.

"Their feedback has been critical and they've been loving this experience and the interaction with the technologies," he said.

The students "go through them (the autonomous machines) and know them better than I can navigate through the self ordering kiosk or the vending machines…and they provide intel to us on improvements we can share with the vendors," agreed panelist Jason Fitch, director of auxiliary service at Nova Southeastern University.

Another benefit self service provides is freeing up staff to focus on non-customer-facing activities, such as production and delivery, Crocquet said.

"It helped me with the labor market challenges that we were facing during COVID," agreed Alkurdi.

Food integrated innovation rises

More specifically, Nova Southeastern University has taken a pioneer role in what Maras referred to as "food integrated concept," meaning a machine that maintains the food at a certain temperature and prepares it and dispenses it in a heated state.

Nova Southeastern University has offered Yo-Kai Express machines, which serve ramen noodle bowls, and Just Baked machines, which serve hot entrees, sliders and desserts.

"This is different from the traditional model that the traditional vending operator has used for offering food," Maras said. "Traditionally, vending operators would have food in a refrigerated machine or in a frozen machine, and then a customer would come, buy their selection and heat it up in a microwave.

"This type of system (food integrated concept) is a much more complex type of machine than a refrigerated machine or a frozen food machine."

"It's definitely a premier, premium product," Fitch agreed, emphasizing that the quality of the food in the integrated system is better than a frozen item that is microwaved.

Still another benefit of the self-service experience is that it is a "judgment free" experience, meaning the guest can buy as much as they want without feeling that a cashier is conveying an attitude, Crocquet said.

"It's between you, your meal plan and the machine," he said.

Track product preferences

The menu for the integrated food system is diverse, Alkurdi said. The challenge for the operator is determining what offerings will succeed long term.

Fitch said he is satisfied with the machine's food variety and is creating an interactive wall screen for student feedback. They also meet with students for feedback.

The machines at Nova Southeastern University have an Internet portal that lets the operator see real-time data on its activity.

"You can track temperature…you can track expiration date, you can track sales; you can run a report and it gives you a lot of the information that you're looking for that you don't get from a typical vending machine," Fitch said.

Minimum population required?

Asked about the minimum customer population needed for an integrated hot food machine, Alkurdi said some manufacturers are requiring minimum population counts or sales counts. However, he said, the necessary population could depend on the age of the customers and where the machine is located.

Yu said the daily head count is important as well as the type of location. A location with a transient population is different than one with the same people at the location daily. A location with a transient population may not need to have the menu changed as frequently as a location where the population does not change from day to day, such as a factory.

How well the people at the location accept the machine is also critical. The "network effect" refers to people at the location telling others there about the machine. At the same time, negative stories can circulate at an account.

Price also matters, Yu said. He tries to get the location to cover some of the food cost to allow prices to be close to what customers are willing to pay. Employees at a warehouse will not always be able to afford a $12 meal.

A lot of employers are willing to subsidize the food, he said.

"That has a huge implication on demand," Yu said. "Having a restaurant quality meal for $7 is a really good deal.

"There's a clear demand for hot food. The same demand is not for cold food. It's just much less."