The break room at Jet Aviation, a charter aviation company near the Hollywood Burbank Airport, is atypical for a mid-sized company. Instead of several vending machines standing in a corner, the kitchenette features open shelves stocked with non-perishable food items such as microwavable soups, Planter’s peanuts and Ramen noodles. A refrigerator holds burritos, salads, sandwiches and energy drinks. Off to the side, wicker baskets display apples and bananas. There is even a stand for birthday cards. This is a micro market. At first glance it seems a cross between a gas station convenience store and the produce section at a supermarket. But the market is unmanned. Employees take what they want and check out using an iPad kiosk or pay from their cell phones. A security camera hanging from the ceiling deters would-be-thieves. Always Vending, a vending machine and micro market operator based in Canoga Park, is the company behind this new model for the lunchroom. Markets versus machines Since Always Vending adopted the concept in 2016, micro markets have grown to represent about 40 percent of the company’s business. Traditional vending machines account for the remainder. “It’s cheaper for me as a vending company to put in a micro market than it is to put in a vending machine,” said Always Vending President Jonathan Orlick. He said the installation of Jet Aviation’s market cost $7,000, though it is one of Always Vending’s smallest accounts. By comparison, the installation of a single vending machine costs $5,000 to $6,000, and most vending banks have a minimum of two machines for snacks and drinks, and some have as many as eight or 10. Plus, the machines require electronic hardware and software and must be preloaded with change. As for maintenance costs, micro markets are less prone to equipment malfunctions or breakages than vending machines but require more employee visits to restock food, since things like produce and sandwiches will expire if not purchased right away. To maximize the efficiency of this restocking process, Always Vending equips its micro markets with telemetric software that records buyer and payment data for each purchase. When a product runs low, the company receives a notification that it’s time to send an employee to restock that product before it runs out completely. Orlick believes his firm is the only vending company in the Valley that uses telemetry. That software takes a 5.4 percent fee on all transactions, so Always Vending bumps the price of a candy bar from $1.00 to $1.04 to compensate. Like a grocery store, the market’s margins per sale are miniscule. It’s volume that counts. But Orlick said micro markets’ increased frequency and size of transactions make them fundamentally more profitable than vending machines. He estimated markets are 35 percent more profitable. “At a vending machine, most people buy one item and go,” Orlick said. At a micro market, however, the average purchase is “three or four items,” he added. Security question The obvious pitfall of the micro market business model is theft. But Orlick considers the occasional burgled bagel to be a “cost of doing business.” If it becomes a repeat issue – where noticeable amounts of product are disappearing from shelves without telemetric proof of sale appearing on the kiosk register – Orlick or one of his employees will review the security camera footage to find the culprit. They’ll then share the details of the theft with their client’s human resources department, who will handle it internally from there. McCarthy said this hasn’t been an issue at Jet Aviation. Theft is one reason Always Vending doesn’t install micro markets in “open” environments like bus stations — the risk is too high and would require a paid security employee on site. Always Vending looks for companies with more than 100 employees in closed environments such as high schools, factories or warehouses, as ideal micro market locations. Tom MacDermott, president of food service consultancy Clarion Group, called micro markets “the salvation of the vending industry.” He emphasized the importance of placement, and said that in the right environment, a micro market can get sales numbers comparable to a staffed mini café but without the paid labor. MacDermott estimates a well-run operation can net $100,000 a year if placed in a university or large corporate headquarters, though markets of that size would cost far more to install than Jet Aviation’s. “If (vendors) continue to put them in the right places, where the minimum-security system works, they will succeed. If somebody tries to get adventurous and puts one where transients can be, it’s not going to work,” MacDermott said. On-site advantages Research firm Bachtelle and Associates estimated there will be 35,000 micro markets operating by 2022, compared to about 18,000 today. The markets are projected to generate $1.6 billion in revenue over the next 10 years, making it the fastest growing segment of the food service industry in the U.S. Micro markets are desirable for companies because they keep employees on site. “It costs companies a lot of money when employees leave the building to go get something they can get here. Employees will come grab a sandwich and continue to work at their desk. They’re not going to be five minutes late from their break or stuck in traffic,” Orlick said. Additionally, the point of sale experience is much quicker at a mini market than a vending machine, meaning employees are back to work faster. In the case of Jet Aviation, the micro market even saves energy. A motion detector turns off the market’s LED lighting when nobody is around. “We did have vending machines back in here, just a soda and a chip machine, but there were so many issues with it. It wasn’t working, the products were always getting stuck, and eventually people just weren’t buying anything,” said Jet Aviation Executive Assistant Kerri McCarthy
