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NATIONAL REPORT — There are several factors to consider before deciding which cold dispensed beverage equipment is the best fit for your foodservice operation.
“It’s essentially a function of space, money and store traffic,” said Chad Prast, senior category manager of fresh foods and dispensed beverages for Bentonville, Ark.-based convenience store chain Murphy USA Inc. “Putting 24 heads of fountain into a lower-volume store can cause lots of spoilage, but where space is available, 16 to 24 heads is a good number for high-volume sites.”
As far as the equipment itself, Prast’s position is that most of the dispensers offered by suppliers today have their own pros and cons, but the equipment overall seems to hold up fairly well.
“The newest machines are all coming out with digital screens, and that seems to be the wave of the future,” noted Prast. “It saves on signage costs, but then adds some expense to manage the digital content on the screens.”
The decision whether to buy, lease or use dispensers provided by the supplier is one of the most important determinations a c-store operator will make in the cold, hot and frozen dispensed beverage arenas. Each option has positives, and each option has negatives.
“I recommend to my clients that if at all possible, they should preferably buy or lease from an equipment leasing company, not a bottler,” said Larry Miller, founder and president of Sanford, Fla.-based Miller Management & Consulting Services. “By doing so, they can control what products they want to dispense: Coke, Pepsi, Dr Pepper, Mountain Dew, etc., depending on the market they are in.”
Prast, too, recommends purchasing equipment outright, so long as it’s economically feasible to do so.
“If it is supplier equipment, you will either have to be exclusive [to that supplier] or pay more in the cost of goods,” he explained. “If you go this route, it usually forces you into having less variety or raising retails to get the same margin percentage. If you own the equipment, you control what brands are in it and that can be very good when contracts are negotiated.”
But what if you are a small, independent operator unaffiliated with any major c-store chain?
“In that case, vendor-owned equipment might make sense if you can’t or won’t invest the capital in your own dispensing equipment,” said Prast. “But investing in their own equipment would be more valuable to independents, provided they sell 100 or more cups a day of dispensed cold beverages.”
C-store operators may be inclined to give The Coca-Cola Co.’s new Freestyle fountain dispensers a try, or PepsiCo Inc.’s Spire dispenser. These units give customers the ability to customize their own drinks using more than 100 products and flavors to mix.
“It also offers space-saving in the front and back of the store due to the size of the equipment and concentrated product,” according to Tom Cook, principal of Westport, Conn.-based King-Casey, a restaurant, foodservice and retail consulting, branding and design firm.
“I love the concept. It cleans up the backrooms; does away with heavy, bulky bag-in-the-boxes; and allows customers a lot of customization,” said Prast. “The biggest drawback is the exclusivity — not being able to sell competitors’ products could lead to some customers going elsewhere. So, the question you must answer is: Do all the pros outweigh the few cons?”
Editor's note: Check out the April issue of Convenience Store News for the Single Store Owner for our full report on "How to Maximize the Profitability of Dispensed Beverages."