Coffee Vending And The Upscale Market

Tim Sanford

Vending machines able to brew and dispense freshly brewed coffee by the cup were central to the full-line revolution that established vending as a key retail channel. A reliable machine that could dispense four cups of fresh coffee a minute was just what large factories needed to enable the coffee breaks written into union contracts. Armed with these machines, as well as postmix cold cup venders that similarly provided round-the-clock access to fountain soft drinks, vending operators could add their proven candy and pastry vending machines to provide fast, efficient service to a workforce spread out along an assembly line. When everyone had less than 15 minutes to get to the serving area, purchase and consume a drink and a snack and return to the workstation, a series of vending machine banks was an ideal delivery system. The addition of fresh food completed the package that enabled the national operating companies to capture the industrial feeding business from contract cafeteria management firms.

This is the modern vending’s origin myth. It really happened, and it catalyzed a wave of innovation that familiarized working Americans with novelties like microwave ovens and portion-packed main-meal foods. But, like most origin myths, it can get in the way of adapting to changes in the market.

In retrospect, the 1990s were illuminated by the sunset glow of the classic vending industry. An operator serving a top-tier account could install a full-house hot beverage machine that could grind and brew either of two kinds of coffee bean, deliver freshly steeped tea, offer a variety of whipped soluble gourmet hot drinks, and give the consumer a choice of two cup sizes. Operators who merchandised them carefully were very happy with the results.

But the shadow of the past continued to dull their real transformative power. Part of the problem resulted from the very wide variety of coffee vending machines that had been in use in the 1950s, which included older soluble-product types. To the typical vending patron, a vending machine was a vending machine. Such patrons, experiencing an unsatisfactory cup of coffee from an obsolete vender, often concluded that “vended coffee” necessarily was inferior to coffee sold in other channels. They did not condemn all coffee served at diners after one disappointing experience, but vending machines were different.

As time went by, equipment got more sophisticated and the vending customer base evolved, we began to suspect that many operators had despaired of convincing people that coffee prepared by a contemporary top-of-the-line fresh-brew vender was as good as, or better than, much of the coffee served in many foodservice outlets: fresher, for one thing, and more consistent from cup to cup, for another. This was a marketing problem, and no widespread solution based on marketing ever was implemented.

The economic convulsions of this century’s turbulent first decade accelerated the decline of the large blue-collar workplace, as manufacturers turned to automation or to “offshoring.” At the same time, the workforce was being transformed by a generation who had no preconceived notions about vended coffee. These up-and-coming employees eagerly accepted the single-cup innovations offered by office coffee services — capsules, pods, cartridges — and they had grown up in a world of automated teller machines, self-check-in terminals at airports and other computer-enabled conveniences. This is the audience for which the National Automatic Merchandising Association staged its “Gratitude Tours” early in this decade, and these were very well received.

A fairly recent development is the return of full-size “bean-to-cup” equipment, usually with more or less novel styling and a bit less automation than the classic “full-house” hot beverage vender. Most of the ones we’ve seen appear to be oriented toward high-traffic public locations, but they would work equally well in large business-and-industry and institutional environments. They tend to be offered as part of a package that includes a branded line of products, sometimes as franchise opportunities and sometimes as turnkey programs that provide the operator with equipment, products and merchandising support.

This seems like a very positive development. The franchise model has fallen into disrepute in this industry, but it worked well for Rudd-Melikian; the Kwik Kafe franchises got many successful operators into the business.

Forty years ago, a common complaint made by vending operators was that the large national roasters never ran television commercials showing people purchasing and enjoying coffee from vending machines. A specialty-coffee roaster today who seeks differentiation and understands online advertising might find upscale vending to be a highly visible solution.

We think existing operators stand to benefit from this, as it could eliminate residual resistance to coffee vending machines on the part of locations and it may well induce a new wave of entrepreneurs to enter the business. It has happened before, and we have been the better for it.

Written by Vending Times.