Cutting out the middle man: Farmer's Fridge disrupts convenience dining
Luke Saunders, founder and CEO of Farmer's Fridge, has staked his claim as an innovator in convenience dining, thanks in no small part to self-service IoT technology.
The 32-year-old has established a network of approximately 180 self-serve kiosks offering fresh meals in high-traffic locations across Chicago and Milwaukee. He has also managed to secure $10 million in venture capital.
|Luke Saunders has staked his claim|
as a convenience dining innovator.
The marriage of fresh food with self-service IoT technology has proven to be a winning combination for Farmer's Fridge, offering an alternative to fast food restaurants and traditional vending.
Saunders' entrepreneurial instincts were evident as a student at Washington University in St. Louis, where he launched a bike rental business.
As an international studies and Chinese major, he did not set out to disrupt convenience dining. It wasn't until after graduating in 2009 and taking a field sales position with an industrial lubricant manufacturer that he began thinking seriously about convenience dining.
Discovering a market need
Spending a lot of time on the road, Saunders was struck by the lack of fresh food for people like himself, who had busy schedules but wanted to follow a healthy diet.
"I was traveling a lot and it was just difficult to find options in a lot of places," he said. "I was looking for more fresh options."
Saunders smelled an opportunity, so he went to work learning about convenience dining. Foodservice and vending companies already provided dining options for people where they worked and at transportation hubs, but in Saunders' view, they were not delivering fresh food at an affordable price.
He took it upon himself to "up the ante" in convenience dining.
Technology and independent farms
Saunders realized that self-service IoT technology was evolving, making it possible for self-service kiosks to report activity in real time and for data analytics programs to track customer purchasing data and other information.
At the same time, there were plenty of independent farms and markets offering fresh food. It didn't take Saunders long to come up with a business model in which freshly prepared food could be delivered to a kiosk in a timely fashion, based on the machine's sales.
Farmer's Fridge, a wood-paneled kiosk with a glass front displaying freshly prepared food packaged in recycled plastic jars, made its debut in a Chicago food court in 2013.
The menu offered items such as smoked cheddar Cobb salad, sprouted grain tortillas, pesto pasta bowl, pineapple coconut chia pudding, tarragon chicken salad wrap and organic Bolivian royal quinoa. Prices ranged from $4 to $12.
The food won positive social media reviews.
"Our mission is to make fresh, healthy food more accessible," said Saunders, who sees his typical customer as the person who would normally brown-bag it for lunch.
|Farmer's Fridge's product supply chain allows the company to source fresh product from a variety of suppliers.|
Unique business model
The business model calls for freshly prepared food, a supply chain that facilitates food delivery to the customer location within a reasonable time frame, a centrally located kitchen where meals can be prepared hours before being delivered, a kiosk that allows the customer to shop its inventory quickly, and a management platform that enables the company to replenish the machine based on individual location needs.
One of the most important features of the business model is a flexible product supply chain that allows Saunders to partner with small, independent foodservice suppliers in addition to broadline foodservice distributors.
"I never actually thought about it as vending," he said. "It was more of a supply chain innovation to bring fresh meals to people at a restaurant-quality level. We think of ourselves as more of a restaurant from a food quality perspective."
To say that Farmer's Fridge does not follow the conventional vending business model would be an understatement.
Whereas most vending operators provide fresh food only when required, and view those items as a loss leader to support higher-margin candy and beverage machines — Farmer's Fridge provides only fresh food. The food is prepared and packaged in a commissary and delivered to customer locations from midnight to 8 a.m.
A difference that is less obvious to the casual observer is that Saunders' company makes its own high-tech kiosks with reclaimed wood paneling, as well as the software that manages them.
Where product waste for cold food vending machines can be as high as 40 percent of the machine's inventory, Farmer's Fridge has a product waste target of 5 percent. All unsold items that are still fresh are donated to food pantries. Expired items are composted.
Saunders credits low product waste to the short timeline from production to delivery and his company's cost function algorithm.
Part 2 of this two-part series will explore the IoT technology that plays an important role in the Farmer's Fridge business model.
Photos courtesy of Farmer's Fridge.
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.