Micro markets versus vending banks by the numbers — an operator's perspective
|A customer pays for lunch at a micro market kiosk.|
Micro markets, an unattended retail concept offering consumers open product shelving and automated cashless payment, are the fastest-growing foodservice channel, according to industry reports. One of the reasons for this growth is the favorable economics of operating the self-serve markets — where customers select products from shelves and typically pay by scanning the product barcode at a self-serve kiosk — compared to vending.
Reed Stevens, director of vending at Bernick's, a full-service refreshment services company operating more than 70 micro markets in the Twin Cities, compared the costs and revenues of micro markets with vending machines for a customer location with 500 people. Stevens' analysis indicated that a micro market can save close to $14,000 in upfront investment over a vending bank and yield an additional $1,000 in monthly sales.
Upfront costs for vending
While the numbers below are approximations and can vary based on the needs of an individual location, Stevens said, they reference the costs for new equipment, which is what an operator will typically install in a new customer location. A typical vending bank for a location with 500 people will include three cold drink machines ($4,500 each), two candy/snack machines ($4,300 each), two refrigerated food machines ($5,500 each) and one free-standing hot beverage machine ($6,000), making a total of $39,100. There is also $30 in change included in each of the nine machines, bringing the total to $39,300.
There will also be five microwave ovens costing $250 apiece, a condiment stand and a microwave stand, costing $500 each. The total investment then becomes $41,350.
In cases where the service company provides coffee service — where the company provides a coffee brewer and bills the location for delivering the coffee and related products — there will be no hot beverage machine, reducing the total investment by $6,000.
Upfront micro market costs
The costs for a micro market are as follows.
A countertop kiosk with a bill acceptor will be $7,500.
There will also be two candy/snack racks ($1,000 each), two cold food coolers ($2,500 apiece) and three beverage coolers ($1,800 apiece). There will also be a countertop hot beverage machine ($4,500), five microwaves ($1,250), a condiment stand ($500) and a microwave stand ($500). There will also be a surveillance camera with a DVR player ($900).
The micro market investment totals $27,550. Hence, the investment in a micro market is $13,800 less than in a vending bank, assuming both the micro market and vending bank have a hot beverage machine.
The internet connection cost is typically covered by the location, Stevens said. In cases where the service provider pays this cost, it will be higher for a micro market. Most micro market kiosks are hardwired to a dedicated internet connection, incurring a monthly cost of $70 to $80. This is double the cost of the wireless connection for the cashless card readers on the vending machines.
In the last 18 months, however, micro market kiosks have been offering wireless connectivity, bringing the connectivity cost down.
The power cost is also typically covered by the location, Stevens said. In cases where the service provider pays the electricity, this cost will be about the same for a micro market as a vending bank.
The micro market will have a monthly service fee from the kiosk provider between $50 to more than $100.
While the micro market saves nearly $14,000 in upfront investment, it will deliver an average $1,000 in additional sales due to ease of use, increased product variety, higher product price points and more payment options.
"In a micro market, you can pick up the items and look at them and review the ingredients and nutritionals," Stevens said. "It's more of a retail atmosphere as you'd see in a c-store."
Part 2 in this two-part series will examine additional benefits a micro market provides over a vending bank.
Photos courtesy of Bernick's.
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.