Vending machines are rapidly disappearing from offices, and micro-markets are taking their place. A micro-market is essentially a mini convenience store in an office break room, and carries a much larger selection of food and beverage products than a vending machine, including many fresh and healthy options. And the products are attractively merchandised to make the micro-market more inviting to shoppers. Studies have shown that a break room with a micro-market significantly improves employee productivity and morale.
Now is a great time to start a micro-market business. The COVID-19 pandemic will significantly change how office goers get their meals and snacks for the foreseeable future. Social distancing norms may discourage them from visiting crowded restaurants at lunch time. For many offices, big and small, micro-markets stocked with fresh and healthy food and beverage options will become a great restaurant alternative for their staff.
A pure micro-market business has these advantages over a traditional vending business:
- Less capital intensive – no expensive vending machines to purchase & maintain
- More flexible – products can be easily swapped in and out based on what is selling at a particular location, without having to worry about a vending machine’s limited available slots and their fixed sizes
Here are the key steps you need to take to start your own micro-market business:
- Set up your company
- Choose a descriptive name for your company, so the name itself conveys what kind of business you are
- An LLC is the most popular entity for a micro-market business – it can be set up in a matter of minutes at LegalZoom, or you can have your attorney or CPA set one up for you
- Create your master product catalog
- A differentiated catalog will help you position your micro-market as a premium offering when compared to vending machines, so you can charge premium prices
- Include a good selection of fresh and healthy food, in addition to popular snacks and drinks
- Plan your catalog carefully, because it will define your investment in shelves, coolers and freezers
- Create sub-catalogs for different-sized locations
- Start with 3 simple sizes – small (<50 employees), medium (50-100), and large (>100)
- Choose how many and which products from your master catalog are in each sub-catalog
- Identify how many shelves, coolers and freezers will be needed at each location size
- Pick your equipment suppliers
- Find a local supplier for commercial coolers & freezers – small coolers can also be purchased at appliance stores when you are starting out
- Find a local supplier for shelves – these can also be purchased at IKEA and other furniture stores when you are starting out
- Pick your product suppliers
- Most popular snacks & drinks can be purchased from Costco, Sam’s Club & other wholesalers
- Find a reliable fresh food supplier – the key word here is “reliable”, since fresh and healthy food is what truly differentiates a micro-market from a vending machine
- Pick your micro-market system
- This end-to-end system enables you to manage inventory, and enables shoppers to purchase products at the micro-markets
- Depending on the characteristics of a particular customer location, you may need to deploy a kiosk-based system or simply use a smartphone-app-based system
- Identify your target customers
- Larger vending operators tend to prefer larger customer locations, thus opening up opportunities for new operators in medium & small locations
- Target one of more types of small/medium locations that currently only have vending machines – e.g. multi-tenant office buildings, medical office buildings
- Create a sales & marketing plan
- Create a brand for your micro-market offering – name (including domain name), logo, who you are, why you are different, etc.
- Create marketing assets – website, business cards, flyers, brochures, etc.
- How will you reach potential customers? Social media, search, email, snail mail, etc.
- How will you sell to prospective customers? Special offers/incentives, service commitments, etc.
- Start your operation
- Start with and run 1-2 small locations, until you grasp the operational aspects of the business
- Analyze your costs for each market – equipment cost, product cost, delivery and stocking personnel cost (even if it’s only you for now), drive time to and from market location, shrinkage/theft, spoilage, etc.
- Scale to additional small locations, then expand into medium ones, and then large ones – the operational aspects and costs will be very different for each location size, especially with fresh food
In a few weeks, we will be publishing a more comprehensive E-Book that goes into each of the above steps in more detail.