The pandemic has rocketed vending machines into new territory. Light-years beyond dispensers of Funyuns and Snickers, vending machines, robotic kiosks and other grab-and-go technology now broadly called “unattended retail” are putting artisanal pizza, hot bowls of ramen and prime cuts of beef into the hands of consumers 24/7.
Carla Balakgie, chief executive of the National Automatic Merchandising Association, the trade group representing the vending machine industry, said coronavirus pandemic fears and social distancing have accelerated vending machine adoption.
“It’s touchless, it’s considered safe and it’s prepackaged so products haven’t been fondled and breathed on,” she said. “And technology has made it even safer: Some machines have a hover feature so you don’t have to touch the buttons and you can use an app on your phone or use mobile ordering.”
She said adoption in the past year has been swiftest by first responders needing sustenance on the go, but what might have previously been novelty “stunt” vending machines at trade shows are becoming normalized as regular avenues of commerce: bread-baking machines, customize-your-yogurt machines, even machines that dispense slippers, mascara and sundries at airports.
She said that, just a few years ago, the technology to take something frozen and cook it on the spot was nascent. New technology that monitors stock with sensors and cameras has been instrumental in expediting reordering.
“What a consumer buys is driving what gets merchandised,” she said.
Deglin Kenealy, chief executive of gourmet pizza vending machine startup Basil Street, has seen both additional challenges and successes due to the pandemic. Raising $10 million in an initial round of funding, the business started with a pilot program of five machines early in 2020 with a focus on university dorms and airports.
After those two markets saw massive contraction because of the pandemic, the company pivoted to what Kenealy called “closed environments” like manufacturing plants or military sites. He said Basil Street will have 50 units by midsummer and 200 by end of year, mostly in Texas and California.
He called his units “automated pizza kitchens” and said that they represent an evolution in consumer thinking.
“People are spending more time thinking about how their food came to the table. Consumers are demanding — they want fast, convenient and high-quality, and COVID has accelerated that,” he said. Basil Street is completely touchless, he said: “The only person who will touch their pizza is the customer when they take it out.”
Customers are given three choices for pizza on the touch screen, and swipe a credit card to pay. Pizzas take about three minutes to cook from frozen, exiting the machine in a box. A 10-inch pizza costs about $8.50. According to Kenealy, this concept is ideal for college dorms, taking less time than traditional delivery and obviating the need for a stranger to show up at students’ rooms.
Antonio Matarazzo, owner of Stellina Pizzeria in Arlington, Va., watched the news as the pandemic took hold in his native Italy and knew he had to do something to prepare.
“In Europe, you can buy everything in a vending machine,” he said. He ordered a refrigerated pasta-and-sauce vending machine last April, but it did not arrive until February. Customers come for $25 pasta kits that feed three or four — Bolognese and cacio e pepe sauce have been top sellers so far. There are also cannoli-making kits and jars of tiramisu.
“Our landlord has an office building downtown and we’re going to put a second machine there for when people go back to the office,” he said. Of the first machine, he says, “people are super excited about it. Sometimes it’s hard to keep up with the stocking of it.”
Innovative vending concepts that existed before the pandemic have seen dramatic changes in sales. Dan Mesches, chief executive of Sprinkles Cupcakes, a chain of upscale sweets shops, says their “cupcake ATMs” have seen a 100% increase in sales since last March. They have two types: those that are attached to brick-and-mortar shops and others that are free-standing in airports and retail centers. They aim to launch 10 more of the latter around the country, Mesches said: “We see great growth as airport business comes back.”
Luke Saunders, founder of Farmer’s Fridge, a chain of Chicago-area refrigerated kiosks that sells healthy bowls and salads in jars among other items, says he’s doubled the number of kiosks the business has in airports.
“So many airport restaurants have been closed that it created an opportunity for us. People have shifted their mindset to being more comfortable using an app and doing digital ordering,” he said. Farmer’s Fridge locations in office buildings generally suffered as employees worked from home, but he says some employers have used the vending machines as a subsidized perk for workers.
Joshua Applestone, whose meat company, Fleisher’s, in New York was at the vanguard of artisanal butchery about a decade ago, began selling locally sourced and sustainably raised meats vacuum-packed and dispensed by vending machines in 2015. Applestone Meat Company now has three locations.
“COVID helped, I’m not going to lie. We don’t live in a 9-to-5 world anymore; people have different schedules,” he said. And while he declines to share sales figures, he said, “We’re doing more in sales than I have in other businesses, and we’ve surpassed the numbers that we needed to be at.”
He says that for years the vending machine world was fairly static, but new technology, coupled with changing consumer desires, has supercharged innovation in the industry.
He says his next generation of custom-made machines will be ready in six months. He hopes to add the ability to describe products to customers and “upsell” related products, with app-enabled live inventory so consumers can see, from home, precisely how many flank steaks or rib-eyes are still available from the machines.
“It’s fascinating to me that COVID has driven this. Of course we’re going back to ‘normal’ post-pandemic, but these things will stay because they make a lot of sense. If you sell a great product, you can expand it now with 24-hour sales,” Applestone said. He says he sees utility for restaurants to expand their operating hours and minimize waste, and for industries like CBD or pharmaceuticals to enhance the convenience of their services.