14 Mar Case Study: Finding Success in Healthy Vending through Technology
The topic of healthy eating is near impossible to avoid and continues to shape the future of vending. Today, more than one-third of US adults are considered obese causing obesity to be the second largest cause of preventable death in the US according to the National Heart, Lung, and Blood Institute. As a result of this rapidly growing number, federal and state governments have instituted a variety of laws enforcing stricter guidelines on the nutritional value of snack products being sold on government & educational properties. The Healthy and Sustainability Guidelines for Federal Concessions and Vending Operators enforces healthy options in some federal offices, while the USDA’s Smart Snacks in School initiative requires that snacks sold in schools adhere to higher nutritional standards.
Not only has the Government recognized the need to change our eating habits, American consumers efforts to eat healthier are also on the rise. In a survey done by Technomics, 58% of American consumers agree that it is important to eat healthy, while Human Vending Franchisees have reported the sales of healthy snacks outpace traditional snacks almost threefold (HUMAN). Rising health concerns, stricter nutritional laws & guidelines, and an increasing number of health conscious consumers prove that healthy eating – as well as healthy vending – is not going away any time soon.
However, despite the potential to be very profitable, many operators are still hesitant to stock their machines with nutritionally valuable options. High product costs, spoilage, and difficulty establishing customer preferences can make operators skeptical of placing healthier products in their machines. For some, the risk associated with these snacks is simply too high. On the other hand, healthy vending has great potential to yield high rewards with 88% of consumers willing to pay more for food they know is healthy (Forbes).
Some operators see the industry transition toward healthy as an opportunity, however, how are they reducing the risk associated with stocking healthy products? One operator shares his solution to minimizing uncertainty and reaping the rewards of healthy vending. Just six months after implementing vending technology into his business, he was able to pull an extra $100 per machine every time he serviced them.
Recognizing the Opportunity in Healthy Vending
Tanner Andrews, head of Nebraska Sports Nutrition, watched traditional snacks being ignored at vending machines placed in active locations like gyms and youth clubs, and thought there must be a better way. “I really wanted to make healthy snacks more available – especially to kids,” said Tanner. Seeing an opportunity that was being overlooked, Tanner became a HUMAN Healthy Vending franchisee and tackled healthy vending head-on. Nebraska Sports Nutrition focuses solely on providing nutritionally rich products in Boys and Girls Clubs, youth sports venues, skate parks, Taekwondo schools, gymnasiums, and more all over Nebraska.
Despite filling the need for nutritional products at these active locations, Tanner experienced the challenges with healthy vending that required more attention than a typical vending operation. Healthier products are often made with fewer preservatives which result in shorter lifespans. With this in mind, Tanner had to be more calculated about his purchasing decisions and his product placements. In order to avoid letting good product go to waste, Tanner had to identity his customer preferences earlier in his operations growth. He soon realized he needed help to find those preferences. “Traditional vending has been around for a very long time, and keys to success have long been set.” said Tanner. “With healthy vending being new to the industry, there aren’t previous standards to go off of. Healthy vendors must pioneer their own methods for dealing with unique issues like increased spoilage, high product costs, and picky customers.”
Searching for Help
Not long after beginning his search for a management tool to help cut down on expenses, Tanner heard about Parlevel Systems – a vending management system provider that gives operators the tools to capture insights about their machines, increase operational efficiencies, and seize control over their business.
“When we first heard about Parlevel, we immediately knew this was something that could help our business,” said Tanner. Tanner thought the system could help him establish customer preferences, decrease spending on slow moving products, and combat product spoilage. “Managing risk and streamlining operational efficiencies were the biggest reasons we switched over to a VMS with Parlevel. After making the move, it was clear that a VMS is essential to running a good business.”
Learning Customer Preference
It didn’t take long for Tanner to see that Parlevel was making a difference in his day to day operations. One of the biggest challenges he experienced with vending was trying to establish his customer’s product preference per location. “Parlevel’s system helped us optimize the inventory in our machines,” said Tanner. Without vending technology, stocking his machines would amount to a guessing game, and sales would suffer when he wasn’t able to identify which products would perform well at each location.
With Parlevel’s machine optimization tool, operators are able to visually identify high performing products and low performing products on an individual machine basis. This feature utilizes remote monitoring and sales data to give vending operators the ability to stock more of what sells well while satisfying customers’ needs. In healthy vending, this tool can be particularly effective in decreasing the amount spent on slow moving products.
“Machine optimization showed us what was selling and helped us stock the right products,” said Tanner. Tanner had machines in many different locations, and every location had different preferences. “With the software, we could see what worked well in a school, a business, or wherever else our machines are located.” In just 6 months, these insights helped Tanner establish effective and customer-centric machine planograms, increase customer satisfaction, and boost gross overall sales by 20%.
Decreasing the Cost of Excess Ordering
Learning his customers’ preferences led Tanner to solve another problem common to healthy vending – high cost of goods. Tanner had realized that healthy items tend to cost more than traditional snacks and beverages, and ordering an excess of these products could prove costly. Without help from a vending management tool, Tanner would often guess at how much stock to purchase and ordered a surplus of goods that would often expire before they were purchased. “The hardest thing about healthy vending is there are tons of different brands out there – it is a guessing game,” said Tanner. He turned to Parlevel’s warehouse tool to help him optimize his ordering.
Parlevel’s warehouse tool recommends ordering quantities based on previous sales history. The system looks at the past two weeks of sales across all machines and generates a suggested ordering amount for each product. This tool helps vending operators decrease their cost of goods and increase ordering efficiency.
After adopting the Parlevel VMS, Tanner knew what products were a good investment and what quantities to expect to sell before expiration. With this information, Tanner decreased his cost of goods and improved his bottom line by cutting out poor-performing products and ordering only what he needed. “We were trying to get to the point where we only carried what we sold,” said Tanner. “Parlevel helped us do that.”
Reducing Product Spoilage
“Product spoilage used to be a big problem for us,” said Tanner. Tanner mainly focused on fresh, organic, or preservative-free food, and his products generally expired at a rapid rate. Before he implemented the vending management software, Tanner was prone to ordering too much of a product or slow moving goods that expired before they could sell. He looked to Parlevel’s warehouse tool to help him decrease his spoilage rates.
Parlevel’s warehouse and machine optimization tools worked together to decrease product spoilage in both the warehouse and at the machine level. The warehouse tool takes past sales into account and estimates the amount of product needed to fulfill customer demand, which enables vending operators to decrease their overall cost of goods, lower inventory maintenance costs, and combat product spoilage by ordering only what is needed. Without an excess of inventory sitting in the warehouse, products get placed in machines before they expire. Once in the machine, products sell quickly because the machine optimization tool ensures only high performing products are stocked. Since these products move quicker, they are consumed before they have a chance to expire.
“Parlevel’s system made it easy to stock top products, order the right inventory, and decrease product spoilage,” said Tanner. With Parlevel’s help, Tanner optimized his machine inventory and his ordering process. As a result, he experienced reduced spoilage in his machines and his warehouse.
With Parlevel’s technology at his fingertips, Tanner controlled the risks inherent of healthy vending and drove his company toward success. “As a result of the changes we made with help from the VMS, we pulled an extra $100 per machine every time we serviced them,” said Tanner.
As Nebraska Sports Nutrition continues to grow, Tanner looks forward to helping set the standard for healthy vending. “Healthy vending is becoming more mainstream,” said Tanner. “Products are starting to be branded better, and people are beginning to understand what is good for them.” Tanner plans to continue using vending technology to help his business succeed. “Our partnership with Parlevel optimized our machines and made them really, really strong. In the near future, we want to continue optimizing every machine we get.” In the long run, Tanner is focusing on what motivated him to try healthy vending in the first place. “Our long term goal is to focus on youth sports and youth fitness. We want to help people and inspire kids to eat healthy for the rest of their lives.”