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Sunday, December 2, 1990 - Page updated at 12:00 AM

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What Vending Machines Need Is A Good French Fry

Los Angeles Times

DETROIT - Since the coin-operated dispenser was patented in 1886, there is little that entrepreneurs haven't figured out how to sell from a machine.

Automobiles, investment advice, water skis come to mind. But there is one that really rankles the vendors: the french fry.

The hot oil needed to cook french fries causes so many maintenance problems that the machine-vended fry has been a commercial flop. Duane Neibel, who teaches vending-machine repair in Tampa, Fla., explains that the intense heat cooks not just the fries but the machine itself.

Now, potato people from Boise, Idaho, are conducting field tests on a vending machine that purports to do french fries without the oil - and thus without the problems that always frightened off the nation's vendors.

Understandably, this latest effort has caused a stir in the vending fraternity, otherwise preoccupied of late with the inadequacies of the dollar bill, the anti-smoking frenzy, the demise of the American factory and other continental shifts in American life.

Beyond the fry, new technology is having its way with the vending business. Next spring, a special credit card from Verifone of Redwood City, Calif., will make it possible to buy things from vending machines without money.

And with electronics, the vending machine is counting coins, alerting owners to problems, and more. The microprocessor makes it easier to raise prices, for example. Or it can give a discount on a Coke to someone who buys potato chips from an adjacent machine that is electronically linked. Or it will charge lower prices to the night shift at a factory.

Says Neibel: ``That's as exciting as these french-fry machines.''

It's about time the vendors had some good news, they figure, as they stare into the teeth of a recession. Layoffs are starting to cut into their revenues from factories and office buildings, the workplaces that vendors rely on for more than half their business.

``Business is slow right now,'' says Don Phelps, the owner of Food Systems Inc. in Santa Fe Springs, Calif., which has up to 40 machines at a single site. When

Alert vendors during the 1980s deciphered a unique message in the nation's shift from a manufacturing toward a service economy. One upshot: the advent of the white-collar vending machine. Designed to make money from the smaller number of customers in an office environment, it has food, snacks, and hot and cold drinks all in one.

Once the soul of the vending industry, the cigarette machine is being run over by the health movement and a regulatory outbreak that has seen one municipality after another restrict or ban it.

By the tens of thousands, the familiar 200-pound steel cigarette machines are being melted down and turned into I-beams, reinforcing rods and so forth.

People like David Baum, though, president of Mechanical Servants Inc. in Chicago, are rescuing cigarette machines from the scrap heap and dressing them up to peddle popcorn, perfume, aspirin, fingernail clippers, sanitary napkins and other sundries, all boxed to fit the cigarette-package-sized slots in each dispenser.

In the past decade, though fast-food joints have become a big competitor, vendors managed a 9 percent average annual increase in dollar sales - chiefly by jacking up prices, judging from data in the trade-publication Vending Times.

Tim Sanford, editor, says that there aren't a lot of economies of scale in the vending business. So despite the presence of such longtime major corporate players as Canteen Co., small and mid-sized independent local operations - often family run - still control 70 percent of the business.

Typical is Tom Koosis, a one-time math teacher in Detroit who bought a few gumball machines as a sideline 21 years ago and now has 110 people working for him at HAV Vending and Food Services Inc.

Fiercely independent by nature, the vendors are an anonymous bunch not given to rumination, says editor Sanford. Information about the industry is scarce, and marketing decisions are strictly seat-of-the-pants.

``I'm always getting calls from young women who want to know which products sell best from the slot in the upper left-hand corner of a snack machine,'' Sanford says. ``I tell them nobody studies that kind of thing.''

Perhaps for lack of such forethought, the fanciest ideas may have passed many vendors by. Automatic-teller machines, for example, are owned and operated by banks. Today, vendors are nervously watching the inflation index. They hate inflation more than anything. Rising prices require customers to carry around so many coins that many find it easier to buy their products elsewhere.

``If you're selling cigarettes at $2.50, it takes 10 quarters,'' says vendor Phelps. ``You dig?''

The devices on vending machines that accept dollar bills are not a satisfactory answer to vendors, who complain that the retrofit gadgets are unreliable at $500 a pop.

That is why vendors have joined with the blind and other unlikely allies to push federal legislation that would abolish the dollar bill - which blind people can't identify by touch - and replace it with a dollar coin.

But back to the french-fry machine.

Ore-Ida, a synergistic subsidiary of ketchup-maker Heinz, cooks the fries with hot air in what is basically a convection-oven approach. Stone and others report that the fries are very good.

Ore-Ida has solicited bids from several vending-machine manufacturers and hopes to have 50 or 100 french-fry machines in field tests by next spring. Meanwhile, it will work on what is described as a slight smoke and odor problem. Ore-Ida will decide in a year whether to enter full-scale production.

Copyright (c) 1990 Seattle Times Company, All Rights Reserved.

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