Vending machines get a high-tech makeover

SAN FRANCISCO—Ah, the vending machine, longtime purveyor of either guilty pleasures or scary meals.

The entrepreneurs behind Pantry, which launched earlier this week, want consumers to forget the unappealing image of stale food behind glass and embrace their web-connected kiosks that stock fresh food around the clock. The company has been in development for three years and more recently was proving its concept in stealth mode through kiosks in Stanford University and the University of California-San Francisco Medical Center.

"We're always fresh and always open, and that's a hard combination," says Russ Cohn, CEO of Pantry, which has secured $2.3 million in funding, including a recent $1 million round led by Cowboy Ventures. "We want to be the grab-and-go solution that's in your hospital, your office and your university."

OASIS

The company is specifically looking to target so-called food deserts, either locations or times of day when finding traditional stores and other food vendors open is difficult.

Its kiosks look like glass-doored refrigerators, with the exception of a payment swipe box near the top left corner of the door. Slide your credit card, the door unlocks and then sensors detect which food item is selected from the kiosk. Close the door and your credit card is charged  for foods such as salads, sandwiches, soups and yogurts, with most items costing no more than $10.

Pantry's play is reminiscent of Chicago-based startup Farmer's Fridge, whose vending machines — which boast faux wood panels — are stocked with refrigerated organic food in recyclable plastic jars.

The healthy-food vending machine franchise model, typified by the success of companies such as HUMAN Healthy Vending and Grow Healthy Vending Machines, is also on the rise in light of the ongoing battle against childhood obesity, which has seen the Department of Agriculture tighten up requirements on the sugar and fat contents of food sold in schools.

This vending machine make-over and renaissance is gaining momentum in part because retailers appreciate both the ease with which millennials interact with machines as well as the employee-free nature of this mechanical company outpost.

LONGER WORK HOURS

"Pantry could be onto something considering today's new workplace with its longer hours and a younger generation that's interested in good food at all hours," says Emily Refermat, editor of Automatic Merchandiser magazine, which covers the vending machine sales industry. "This is an offshoot of the micro-markets trend, which is coolers and open shelves inside workplaces, and employees select what they want and pay."

Refermat notes that big box chains such as Best Buy, which offers an array of high-tech goods in proprietary machines, and startups such as DVD rental company Redbox, whose DVD rental kiosks helped bring the demise of Blockbuster Video stores, are rebooting the venerable chips-and-soda vending machine image.

In recent years, retailers ranging from Benefit cosmetics to Sprinkles cupcakes added such machines to their product distribution plans. And there's a sense the types of items consumers may soon find in machines is likely to expand: in the Netherlands, a startup called Caenator is busy testing a vending machine that dispenses freshly made french fries.

More evidence of the shifting vending machine trend is found in efforts to retrofit old school machines that only take coins or bills. PayRange, a Portland, Ore., startup that leverages a Bluetooth device and an app to make machines credit-card friendly, recently landed $12 million in venture funding.

Vending machines in the U.S. generate around $25 billion in sales annually, according to the National Automatic Merchandising Association, though Japan remains a per capita king thanks to nearly one machine for every 20 citizens that sell everything from eggs to underwear.

The biggest challenge facing Pantry is "fresh food can spoil, and (keeping stock current) is difficult to manage well," says Refermat.

Pantry's Cohn says that by allowing its machines to connect to the Web, staffers can closely monitor sales and order restocking according to how each individual kiosk turns over its merchandise. "That not only allows us to see what a given kiosk might need depending on the day, but it also helps us reduce waste," says Cohn.

So far, Pantry's main partnerships on the food-provider end include behemoths such as Sodexo and Aramark as well as niche food purveyors such as Mixt Greens. Cohn says the company welcomes inquiries from new partners so long as they meet the company's need for delivery efficiency.

Pantry was started by a trio of engineers — Art Tkachenko, Alex Yancher and Tony Chen — who had grown frustrated by their inability to find healthy food options while working late hours. The company's ambitions are as large as a post-work out appetite, which may be realistic if one considers the increasingly 24/7 nature of today's tech-fueled work world.

"We think we can have one in every workplace and five in every hospital," he says.

Follow Paste BN tech reporter Marco della Cava on Twitter @marcodellacava.