A growing number of companies in the foodservice world are growing their brand with automated or self-service outlets as they strive to meet consumer demand for convenience.
Vending machines have been around for decades, but they traditionally have offered little more than a candy bar and soda. Other countries, particularly Japan, have made advances in vending machine technology for fresh foods, but America has been slow to catch up.
However, seeing retailers like Best Buy sell electronic gadgets through vending machines at airports and other nontraditional locations could fuel a new trend among restaurants, according to Dennis Lombardi, executive vice president of consulting firm WD Partners.
Lombardi predicted that restaurant companies will partner with vending companies and find other labor-efficient ways to bring their brands where they might never have gone before.
"Certainly in food it has been talked about for a long time,” said Lombardi. “It’s a great way of extending the reach of your brand once you develop the technology to offer a product that represents your brand well.”
Charles Nelson, cofounder of the Sprinkles cupcake chain, based in Los Angeles, said automated delivery methods make sense in particular for brands that are in demand beyond the traditional hours of service. “We pay rent 24 hours a day," he said. "Why not be able to sell our product 24 hours a day?”
Here's a look at automated innovations offered by three restaurant operators.
In March, the Sprinkles cupcake chain installed a “cupcake ATM” at its original location in Beverly Hills, Calif., that has red velvet-craving patrons lining up at all hours of the day and night.
Though he declined to reveal revenues, Nelson said the ATM alone sells roughly 1,000 cupcakes per day.
Nelson said machines will be added to five more Sprinkles locations — in New York; Washington, D.C.; Chicago; Dallas and Houston — before the end of the year, bringing ATM outlets to six of the chain’s 10 locations. Beyond that, the cupcake bakery is also looking to bring the ATMs to other high-traffic locations not near the bakeries.
The idea grew from customer demand, Nelson said. Sprinkles stores are open from 9 a.m. to 9 p.m. typically, but customers begged them to stay open later so that they could satisfy late-night cupcake cravings. While it didn’t make sense to keep the bakery open and staffed into the wee hours, the automated alternative was a solution.
Using a digital touch screen, ATM users can select from a variety of flavors — red velvet being one of the chain's most popular — which are stocked throughout the day. Customers can watch on the screen while a robotic arm selects their cupcake, which is presented in Sprinkles signature individual box.
The machine takes credit cards only.
Because bakers are working until about midnight and are back by 3 a.m. to begin the next day, the ATM can be stocked with fresh products around the clock, Nelson said.
Even at non-bakery locations, the ATMs will be stocked at least twice daily. “We wouldn’t compromise on freshness,” he said.
Jamba Juice this year is expecting to install 400 to 500 units of its new JambaGO outlets in schools, convenience stores, colleges, entertainment centers and other nontraditional locations.
Taking roughly the space of a soda fountain beverage dispenser, the self-service JambaGO outlets include pre-blended smoothies, as well as the chain’s packaged products, such as energy drinks.
At the end of the first quarter, between 88 and 90 JambaGO locations were open, mostly in elementary and secondary schools.
The company expects the revenue stream from the licensed self-service outlets to be about $700,000 for fiscal 2012 — but the concept has potential for much more as outlets are rolled out, said James White, Jamba Inc.’s chief executive. “If successful, we think the number of JambaGO installations could exceed 1,000 over time,” said White in the company’s most recent earnings call to analyst.
“It holds great promise,” White added. “We’ve seen significant momentum building in schools, in terms of the demand for these units, and we’re learning as we go, but we’ve been very pleased with the early results.”
Seattle’s Best Coffee
Seattle’s Best Coffee, a secondary brand owned by Starbucks Coffee Co., has signed an agreement with Coinstar Inc. to put potentially thousands of automated coffee kiosks in grocery and retail stores around the country.
Under the five-year agreement, the companies will begin rolling out coffee-making machines called Rubi this summer. The companies plan on installing 500 machines by the end of the year.
Rubi kiosks grind whole coffee beans and brew each cup to order. The machines offer specialty drinks, such as mochas or vanilla lattes, with prices starting at $1.