Summer 2011 A Fresh Approach
New franchise looks to buck the tradition of unhealthy foods in vending machines at malls and other locations.
Jolly Backer was at a trade show for the video game industry last year when a friend invited him to stroll through an organic food trade show that was going on in the exhibition space next door. As Backer walked around and spoke to vendors, he began thinking about how healthy drinks and snacks would make sense for vending machines—which are typically the domain of items packed with high-fructose corn syrup, chemicals and fats.
Thus the idea for Fresh Healthy Vending, which now distributes more than 450 natural, healthy products through vending machines, was born. Backer, who had worked in the video game industry for 25 years, got to work quickly, test-marketing 20 vending machines with healthy items in the San Diego area. That testing confirmed the validity of this concept.
Backer describes Fresh Healthy Vending as a “Trader Joe’s or Whole Foods in a vending machine,” he says, referring to two supermarket chains known for organic and healthy foods. Some of the most popular products are Pirate’s Booty baked corn pops, Pop Chips and Stonyfield Farm yogurt. Beverages include juice made with real fruit, and smoothies. “We don’t have products with aspartame or high-fructose corn syrup,” Backer points out.
None of the products have shelf lives longer than 120 days, which Backer says hasn’t been an issue, since the products move fast.
He adds that the items, which are sealed and have expiration dates, do not require special laws for vending. All of the machines are half-chilled, so they can accommodate products like drinks and yogurt as well as items typically kept at room temperature.
In June 2010, the young company started offering a franchise program. Operators can buy a franchise package giving access to 10, 15, 20, or 30 locations. Initial franchise fees range from $10,000 to $30,000. The cost of vending machines is additional and varies depending on how many are bought. Franchisees buying the 20 or 30 locations package will be granted exclusive territory rights. Each franchise package includes location placements, delivery and installation, and training.
Fresh Healthy Vending has sold 55 franchises with 550 locations—including in schools, office buildings, health clubs and malls—in 37 states. The locations are fairly evenly distributed throughout all regions of the country, says Backer, who noted the company hopes to be in 1,000 locations by the end of the year.
Moving to malls
Schools were an early hit for Fresh Healthy Vending, due to the current initiatives to fight childhood obesity. The timing was also right for offices, with insurance companies offering lower premiums for clients that institute wellness programs. Getting into malls was a bit more challenging.
“The malls have had exclusive contracts with Coke or Pepsi,” Backer says. “But the contracts have started coming up, and places like malls and theme parks are getting away from exclusive contracts. They’re getting more requests for healthier options and they’re looking to provide their customers with more choices.” Many of the organic vendors that Backer is working with had tried to get their products into vending machines at places like malls but failed because “it was a juggernaut for Coke and Pepsi,” Backer says.
Fresh Healthy Vending first landed in Bowie Town Center, a Simon mall in Bowie, MD. Four Simon malls in the Boston area, as well as the Westfield Annapolis Shopping Mall (MD), followed. “We have a business development person on staff working with mall groups to increase our presence in retail outlets,” Backer says.
Backer has promoted Fresh Healthy Vending via the Internet, and the concept has been featured in media outlets like Bloomberg Business Week, MSNBC and the CBS Early Show. “Healthy foods are not a fad, but a trend that’s here to stay,” Backer says. “They have become mainstream.”
For more information, please visit www.freshvending.com.
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