Emerging Concepts | February 2014 | By Nicole Duncan

Around the Vend

Brands find consumer interest, financial success in offshoot vending machines.

Vending machines are able to provide fresher and more innovative food options.
Vending machines, like this Burrito Box in California, are offering more upscale food items, including quick-serve goods. www.nicee.co / Cheng Qian
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Long dominated by the likes of Twinkies and soda, the vending world is now counting quick-serve specialties among its selections. Consumers craving a fix from some of their favorite brands are no longer restricted by regular hours of operation, and operators can boost sales with a small initial investment and low operating costs.

“It’s becoming more and more prevalent,” says Steven Brush, cofounder of the consulting service iBrandEz, which specializes in nontraditional franchising. “Customer occasion marketing basically means where-I-want-it, when-I-want-it types of foods.”

One company to take note of this trend early on was California-based chain Sprinkles Cupcakes, which opened its first Cupcake ATM concept in 2010.

“We were always amazed how many people would come by late wanting cupcakes,” says Sprinkles cofounder Charles Nelson. “Why can’t a machine just give a cupcake? There’s not enough business for us to be open, but there’s enough that it would be worth it to do it.”

Smoothie retailer Jamba Juice entered the vending space with its self-serve machines called JambaGo after a downturn in sales two years ago. Now the brand has more than 1,800 JambaGo machines in convenience stores, sporting arenas, universities, and schools.

“People are continuing to look for convenience but are expecting much higher quality and wanting to eat healthy and have choices,” says Steve Goldmann, principal at The Culinary Edge, a restaurant consulting group based in San Francisco.

Vending offers all of that, but also presents a challenge in terms of maintaining quality or freshness. Goldmann does not foresee that being a setback for JambaGo, however.

“There’s such a low bar in the sort of slushie [and] smoothie world for dispensed drinks. It doesn’t have to be better than what’s in the store, just better than what your other options are,” he says.

As for Sprinkles Cupcakes, all of its ATMs are attached to the kitchen of a brick-and-mortar shop. Nelson says the brand expects to open a standalone vending unit by the end of the year, but quality would not be diminished. Like the attached Cupcake ATMs, these models would be stocked twice daily.