Unlike most vending companies, Boston-based LeanBox - which is only two years old - makes its money by charging employers a monthly fee for the use of its machines, and encourages a high level of employee engagement by giving them a say in what’s in them, said Sean Butler (job title: 'heavyweight leanboxer'), who heads up business development at the start-up.
Inventory is managed in real-time, minimizing waste, the 200+ kiosks are replenished at least every other day from a LeanBox fulfilment center, and the products are sold at below retail price, ensuring strong sales.
We do really well in places where you’ve got to drive 15 minutes just to find somewhere to eat
So while employers part-subsidize the food, it’s worth it to keep staff happy, and enables busy office managers, HR directors and facilities managers to concentrate on other things, he said.
“Usually in places where the employer has committed to some kind of food program you’ve got a hodge podge of different products and suppliers to deal with, from fruit deliveries to snacks, and once you’re dealing with foods beyond snacks, they have to worry about managing stocks, looking at expiry dates. But also, people don’t know what to order or don’t have an efficient way of asking employees what they want.
“If they work with us, we take care of everything. We also do fruit deliveries for some clients and we have additional concepts such as cold brew coffee on tap.”
Because prices are lower than retail, employees have a say in what’s in their LeanBoxes, and inventory is managed based on what sells, products in the LeanBox typically move very fast, says 'heavyweight leanboxer' Sean Butler, who handles business development at the Boston-based firm.
“Take something like Siggi’s Icelandic yogurt. You might buy this at Whole Foods for $2 whereas you can get it in the LeanBox for $1.10, and a sandwich or salad might be $3.25 compared with $8 at a deli, so waste is low and consumption is high.”
And in small businesses where you can’t walk out the front door and find 50 different options for lunch, but have to take a 15 minute drive; or you don’t have time to leave your desk; or just don’t have enough staff/space to warrant a company cafeteria, it’s a concept that is steadily gaining ground, he said.
“When we started, we thought our target market would be tech companies in places like New York and San Francisco.
“But what we’ve found is that we do really well in places where you’ve got to drive 15 minutes just to find somewhere to eat, or in manufacturing facilities, even a fish processing plant. There are a lot of businesses that don’t have a cafeteria, or maybe they do, but it’s not open 24:7, and people want something quick and healthy that isn’t just a snack.”
We’re empowering people in a fun way to tell us exactly what they want
While building a vending operation around perishable items that need replenishing at least once every other day might sound like a margin-crushing recipe for disaster, LeanBox has made it work by creating a highly responsive system, said Butler.
For a start, employees can vote for what they want in the office LeanBox via a mobile app, while each machine has a touchscreen that feeds data back to LeanBox HQ to track inventory in real time and see exactly what is selling, when, in order to minimize waste.
New initiatives in the beta testing phase also boost employee engagement via online-dating-style modules in the app (swipe right if you want this item in your box), he added. “We’re empowering people in a fun way to tell us exactly what they want.”
The LeanBox product universe typically has around 300 products at any one time, while each LeanBox (20 cubic feet) typically stocks around 60 of these, including sandwiches, entrees, salads, desserts, beverages and snacks, saus 'heavyweight leanboxer' Sean Butler.
“There are staple products like salads, green juice, sandwiches and Greek yogurt, but also fun things like cricket protein bars and caffeinated granola.”
We’re not a franchise model
As for the business model, he added: “I don’t think you could make money using a traditional vending model with this kind of offer. We’re not a franchise model, and we’re dealing with highly perishable products, so we’re very different to something like HUMAN Healthy Markets.
“Right now, we replenish all of our 200+ kiosks via a distribution center that supplies Maine, New Hampshire, Connecticut, Massachusetts, and Rhode Island, but we are about to open a second distribution center that will allow us to expand a lot further, and we're looking to hire a significant number of people in 2016 to meet demand."
We are planning to expand aggressively
As for financing, LeanBox is now at the stage where it is seeking capital from a strategic investor/partner, although it is also talking to VC firms, said Butler. "If there is an interesting partnership opportunity where we could reduce supply costs, or work with a partner that has a b2b workforce targeting similar clientele, we're particularly interested in those kinds of opportunities."
It's still early days, but the company is now at the stage where it has a scalable business model that could be rolled out nationally, and ultimately internationally, said Butler.
"Over the next couple of years we are planning to expand aggressively."