Chicago-based startup Farmer’s Fridge, which sells freshly made sandwiches, salads and other items via vending machine, will deploy its first 18 machines in Indianapolis this month.
The company, whose registered business name is Romaine Empire Inc., was founded in 2013 by Luke Saunders, who now serves as the company’s CEO. It has more than 250 vending machines, which it calls fridges, throughout Chicago and Milwaukee, and it plans to have its Indianapolis machines in place April 30.
“It’s restaurant-quality food from a vending machine,” Saunders told IBJ this week. Most items are priced between $4 and $8, he said, and customers spend an average of $7 per visit.
Saunders came up with the idea for the business when he was traveling for work and was challenged to find healthy options while on the road. “I was traveling a lot, I had no time, and I didn’t know where I was going to be for lunch.”
So he came up with Farmer’s Fridge as a way to bring fresh food to places that might not otherwise offer many options—offices, hospitals and other spaces.
In Indianapolis, seven of the machines will be in locations accessible to the public, including Circle Centre mall and Indianapolis International Airport. The other public-access locations, all downtown, are in the following office buildings: Salesforce Tower, BMO Plaza, Capital Center, PNC Center and the office building at 130 E. Washington St.
Another 11 machines will be in spots accessible to building occupants but not to the general public.
In order to support local operations, Farmer’s Fridge is starting out with three Indianapolis employees, with the expectation that it will eventually have 10 or more local employees as operations here grow.
Farmer’s Fridge is based on a blend of high-tech and low-tech concepts.
Food is prepared daily at the company’s Chicago kitchen, then drivers pick up the items and deliver them to each machine. “We are hand-cutting vegetables, making dressings from scratch,” Saunders said.
Here’s the high-tech part: Farmer’s Fridge uses systems to track what its customers are buying, route the right items to the right locations and minimize waste. “We’re using the data on what’s selling to optimize the menu,” Saunders said.
By the end of the second quarter, all Farmer’s Fridge machines will offer an order-ahead option. Customers can use an app to see what items are available at a location and then reserve their selected options, ensuring they will be available for purchase upon arrival.
It’s this technology, Saunders said, that is helping make the machines financially viable in a wider variety of locations.
When Farmer’s Fridge first started, Saunders said, its vending machines needed to be in spots where at least 20,000 people a day had access to them. That limited the number of potential sites.
Now, Saunders said, Farmer’s Fridge’s technology has refined its menu to the point that it can make money from a machine accessible to 1,000 people per day. This, he said, is because the food items are appealing to a greater number of new and repeat customers—more passers-by are stopping to purchase items and less food is going unsold.
Saunders estimates that Indianapolis could support between 50 and 100 Farmer’s Fridge vending machines. That number should grow, he said, as the company is able to further refine its technology, opening up new options for where machines can operate profitably.
In some locations, Farmer’s Fridge signs leases with property owners and pays for the right to place their machines at the property. In other cases, property owners don’t charge Farmer’s Fridge because they consider the vending machines to be an amenity for tenants.
The company’s operations in Chicago and Milwaukee are profitable, Saunders said, but it does not expect to be profitable at the company level this year because it is launching in so many new markets.
The company would not tell IBJ where else it plans to launch, but according to a story published in Crain’s Chicago in September, Farmer’s Fridge is eyeing Detroit, Cincinnati and St. Louis as well as an unspecified second region outside of the Midwest.
The company has some powerful financial backing. It has raised $40 million in equity and debt financing through three separate capital raises.
Investors include Innovation Endeavors, the Palo Alto-based venture capital fund founded by former Google executive Eric Schmidt; and Danone Manifesto Ventures, a corporate venture group associated with Paris-based food company Danone S.A., whose brands range from Dannon, Oikos and Activia yogurts to Silk non-dairy milks to Evian water.