Vending machines have increasingly moved beyond salty snacks to offering a variety of fresh food options, something that CEO Luke Saunders, of fresh meal vending solutions provider Farmer’s Fridge, tells PYMNTS represents special inventory challenges. In the Automated Retail Tracker, Saunders discusses how cloud-based tools can help capture real-time data and strategically target offers to nearby customers, while keeping machines well-stocked.
Vending machines have come a long way from their origins as coin-operated appliances that dispense sodas or candy. Consumers can now purchase nearly anything from them — health and beauty products, electronics, clothing and even groceries — with their credit cards or mobile wallets.
Traditional vending is geared toward quick snack purchases, meaning items needed to be nonperishable for minimal upkeep and restocking. Chips, crackers, cookies and candy all fit the bill, leaving hungry consumers no ability to order healthier options. Fresh meal vending solutions provider Farmer’s Fridge launched in 2013 to meet that need, using vending machines to sell fresh and healthy food at scale.
“I was looking for higher-quality food, and by that I mean fresh, unadulterated, no preservatives — basically high-quality calories at an affordable price,” Luke Saunders, the company’s founder and CEO, said in a recent interview with PYMNTS. “I had an interest in leveraging technology to make that possible.”
The company sells items like salads in recyclable jars, avocado BLTs and pineapple coconut chia pudding through 400 internet of things (IoT)-connected fridges in major U.S. cities, including Chicago, Milwaukee, New York City and Philadelphia, and it plans to expand to additional locations. Enabling such sales required more than just swapping traditional vending machine products for healthier options, however. The concept required careful planning and execution to ensure fresh items could safely be sold in unattended machines without creating too much waste.
Focusing On Customer Service
Farmer’s Fridge developed the technology that powers its smart machines in-house, Saunders explained. IoT- and artificial intelligence (AI)-enabled infrastructure ensures that food items are kept at safe temperatures and restocked as necessary. The company recently began upgrading its digital infrastructure to accommodate the flood of data flowing in from an ever-expanding network of vending machines, suppliers and field operators.
“From the supply-chain side, I have to be able to manage a highly perishable inventory,” he said. “Essentially, our business model is to fill the fridge and then go back and refill it, but we have to know what’s in there [in real time to do that].”
Farmer’s Fridge sources its items from local and regional suppliers, prepares them as needed in its commissary kitchen and delivers them in refrigerated vehicles to each location five days a week. Each product has a “donate by” date, and anything not purchased by that point is removed from the machine and donated to local food banks. Saunders explained that this system aims to improve inventory management, facilitate communication and boost productivity across the organization while also helping the company better understand how users are interacting with its vending fridges.
“We’re [now] able to [answer questions like] has that customer been here before, have they purchased other items [and] what did they purchase?” he explained. “A typical restaurant chain knows that [it] sold a hundred pizzas … but they don’t necessarily know who they sold them to — and we do.”
Farmer’s Fridge controls its menu and ingredients with algorithms that quickly capture data and combine the results with real-time analysis. Saunders said deep knowledge of customers’ behaviors allows the company to alter its products as needed and offer personalized discounts.
“It allows you to be much more targeted in how you innovate and how you meet customers on what they want,” he said. “We do adapt, taking that to the next level [and] using the user interface to gather information from customers on what they’re looking for and then actually serving them up offers that are specific to what they’ve [bought] in the past, how they’re navigating the screen or what time of day it is.”
The robust centralized system provides data that points management to strategic locations for fridges like hospitals, universities and convenience stores.
Targeting Convenience
Farmer’s Fridge has had to innovate its smart vending machines in ways that will meet customers’ demands while also improving its bottom line. The company’s original system stored data directly on its fridges, causing troubleshooting delays and communication bottlenecks while also preventing it from easily maintaining its menu, fixing broken fridges or updating inventory in real time. The company thus decided to upgrade its machines and identify elements that could be simplified and transferred to the cloud — a process that included menu and planogram changes and inventory data. Shifting those systems to create a more agile, scalable infrastructure has been the company’s biggest area of improvement, Saunders said.
“Building a scalable data center infrastructure has been the focus of the last 12 months, and then being able to do that across every aspect of our business,” he noted. “Looking at our customers, for example: What items did we recommend? How did that affect their loyalty?”
Farmer’s Fridge expects its recently released app to improve customers’ experiences as well, allowing them to view inventory for select fridges on their mobile devices, preorder and pick up their items when they reach the machines. This capability is only available for a small number of fridges right now, but Saunders expects a full rollout in the near future.
The Farmer’s Fridge app also enables customers to use more than just credit cards to make purchases. The addition of another payment channel heightens the need to safeguard transactions, Saunders noted, but the firm built safety features into its terminals during design and development. All transactions go through its Payment Card Industry (PCI)-compliant payment network, which uses a third-party authentication process to approve transactions.
“That was really the focus early on, to be able to be PCI-compliant and pass an audit,” Saunders said. “We have quite a lot of partners and then, obviously as you grow, [you need] just more general security around customers’ [personally identifiable information] and things like that. … Right now our focus is on … really meeting customers where they are versus being adrift about what that means from a format perspective.”
Meeting customers where they are and providing the safe, secure and convenient shopping experiences they crave is important as automated retail becomes more prevalent. Keeping tabs on what consumers are buying and when — and giving them access to easy, digital payment methods — will ensure that providers in the space continue to differentiate themselves from their competitors.
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