Trend Watch: Vending Machines

Perthshire egg producer, Stuart Retson, used to sell his seconds – eggs too small for supermarkets – in an honesty box by the farm gate. Not everyone was honest. They also swapped eggs around to take the larger ones, damaging stock. Then, six years ago, he replaced the box with an automatic vending locker. The results were so impressive, he started his own vending machine business. Since the pandemic, enquiries have soared.

He said, “People who made tentative enquiries before lockdown want a machine NOW. And those who’ve already invested have found their sales going through the roof.”

Andy Swinscoe, owner of the award-winning Courtyard Dairy cheesemongers in Lancashire has had a £3,500 cheese vending machine since mid-July. He was inspired by automats seen in Switzerland. In the first two weeks, it took the equivalent of an extra day’s trading.

Why are vending machines trending now?
Andy says, “People can buy when they’re in a hurry or don’t want to queue in the rain. With social distancing, our shop is operating at only 60% capacity so the machine gives us extra trading space. It extends opening hours. We’re on a busy road and close at 6pm but there’s a lot of tourist traffic between 6pm and 9pm. Also some customers do not want any people contact right now.”

And many customers don’t want to handle cash, do they?
Right. Before Covid, 74% of machines sold by Stuart’s company, J.S.R. Services, were contactless and card; after Covid, 93%. 

Why do I associate vending machines with yucky tea, frustration and losing my money?
“In this country, they have a bad reputation,” admits Rob McDermott of Sell-A-Vend, the Blackpool company who supplied Andy. “But the industry has come a long way in the last 15 years. Failure to deliver your snack is down to machines not being filled correctly or not being positioned on level foundations. Now there are infra-red sensors which detect whether goods have been released. Only if they have, will they take your money.”

If I install a machine, won’t the revenue go to Evian or the vending machine company?
You’re thinking of the machines in universities, hospitals and on railway platforms. The institutions don’t own the dispensers, or fill and maintain them. That’s done by a vending machine operator.  They merely allow vending on their premises in return for 10-20% commission on sales.

I want to take 100% of the profit.
So do your sums carefully. Compare the running costs of an automat over a set period, say three years, with those of running your shop selling the same goods. Your biggest challenge is likely to be capitalisation. Andy bought his repurposed sandwich machine outright and reckons it will pay for itself in a year – the industry-wide forecast. If you lease, there’s usually a three to five year commitment.

How will I know when I need to fill the machine?
Text messages alert you and you also get daily sales reports. At the Courtyard Dairy, staff pass the machine often so can see when it needs refilling. Expect to sell about 80% of your stock each day.

I assume the lockers are chilled?
Andy sells yoghurt plus vacuum-packed and boxed cheeses kept at the perfect temperature. With vending lockers, products don’t ‘drop down’. Customers pay online and you text them a pin code and locker number, a system known as pin-and-collect. Doors spring open to dispense anything from a pot of homemade jam to a fresh chicken, six eggs to a breakfast hamper, a punnet of strawberries to a sack of potatoes.

Great idea. Where do we start?
Talk to companies such as Farm Pantry, J.S.R. Services and Sell-A-Vend who’ve helped businesses like yours. Do you want to sell a single product or a choice known as a multi-vend? How often can you restock? This will determine how many lockers you need and what size.

What extras should we budget for?
A service contract, typically 10% of the cost of your machine, plus insurance against misuse, CCTV and a shed, or three-sided, bus shelter-style enclosure, to protect the vending machine from the rain.

How can we make the most of the trend?
- Make sure your machine is well-lit and well signposted with easy parking.
- Make the instructions idiot-proof. At the Courtyard Dairy, they had to tape extra step-by-step, illustrated instructions on the side of the cheese machine to overcome customers’ initial difficulties.
- Ensure every member of staff can work and stock the machine.
- Commodities – bread, milk, eggs – sell well. Items at eye level sell fastest so rotate stock for freshness
- Have hand sanitiser nearby
- Ask customers what they’d like to buy from the automat. Breakfast and Sunday roast ingredients are popular

Will this trend last?
Coffee machines with no-touch technology have already been invented. Ever more sophisticated machines are in development. As automats become linked to convenient, fresh, healthy food – rather than crisps, coke and frustration – so they’ll become common. We resented self-checkouts at supermarkets at first but look how they’ve reduced queues. Press go.