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Daily news and analysis about the food tech revolution

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How Mini Melts Built a $150M Beaded Ice Cream Business With a Nationwide Network of Automated Kiosks

If you’re like me, you’ve probably bought a beaded ice cream at your local ballpark or fairgrounds during the dog days of summer. You know the kind, that ice cream that comes in tiny cryogenically frozen balls that melt as soon as you scoop a spoonful into your mouth.

My experience with beaded ice cream has been primarily with Dippin’ Dots, but today there are also a number of other beaded ice cream brands out there, the biggest non-Dots alternative being Mini-Melts.

After getting its start in Europe in the 90s, Mini Melts landed in the US a couple of decades ago when a one-time Dippin Dots distributor bought the North American rights to the beaded ice cream brand. After successfully withstanding a legal challenge from Dippin’ Dots, Mini Melts ice cream can be found nowadays across the country, sold primarily through automated kiosks that store the ice cream at negative 40 degrees Fahrenheit.

The company grew from a single kiosk in 2005 to over two thousand in the field today, but the journey to wide availability was a winding one. After experimenting with a few different kiosks in the initial years, the company started working with a single third-party vendor to build the machines from 2009 to 2019. After a decade of tinkering and adapting machines, they decided to build their own robotic kiosk starting in 2019.

Recently I caught up with Mini Melts USA CEO Dan Kilcoyn to hear the story of how the company went from a Dippin’ Dots alternative available at a few storefronts to building out a network of over two thousand automated kiosks that collectively serve beaded ice cream to the tune of 30 million servings and an estimated $150 million+ in sales per year.

So how did you first roll out Mini Melts in the US?

So we used to run physical retail locations mainly in shopping malls. In 2004, we started to get out of those retail locations, and we wanted to test the automated kiosk concept. We started with one kiosk. Unfortunately, we didn’t really know what we were doing at the time. So rather than read the manual, we essentially broke the first one, but it was a good learning experience for us, and we kind of built upon that to the kiosk that we have today.

Initially, you used a third-party kiosk?

Yes. We started with a couple of different third-party options that were out there, but some just didn’t work from a temperature perspective. We really needed to make sure that we could have our remote telemetry and we have a probe that downloads our sales information as well. So we tried a couple of options. From 2004 to 2009, it was all very experimental. Then when we were with one supplier from about 2009 to 2019 before they ultimately went out of business.

So in 2019, your third-party supplier goes out of business. Was it at that point you started developing your own kiosk?

You know, while we were taking these different third-party units, we were doing a lot of the work ourselves to make it work for Mini Melts. So prior to 2019, we started to ask, ‘What would this look like if we wanted it to be our own kiosk?’

What were the key considerations?

We wanted to know what was important to the location. Most of our locations are high-traffic tourism locations like zoos, aquariums, and theme parks. And they traditionally focus on face-to-face retail. So when we started initially with the vending machines, there was a pretty steep hill to climb because typically, if someone is at a location, they expect to be served by another human being. As we started to really hit our stride in 2019, we needed to make sure that the kiosk held the right amount of units because, in a given day, we could sell 200 or more cups of Mini Melts.

Was accommodating different forms of payment a consideration?

By 2019, we saw that our consumers really shifted from a cash-based system to credit card payment, Apple Pay and Google Wallet. So we really needed to make sure that the board on our machine was able to accept all that changing payment dynamics.

How did customers pay in the past compared to today?

In 2005, about 5% paid with credit cards. By 2019 it was 50%. Today it’s 60%. in 2019, mobile pay was less than 1%, and today it’s about 5%, growing by 2% every year.

Where is your ice cream made?

So when we started out, we started in the Philadelphia area, originally, and our manufacturing facility is in Connecticut.

And that one facility serves the entire country?

Yes. What we’ve built is we have 23 distribution centers across the US. It’s our own team that’s in 23 cities across the US. It’s our trucks, our technicians, and they’re going in and handling everything from the manufacturing of the product all the way down to the retail of the product.

How do you get the ice cream across the country?

We have negative 40-degree tractor-trailer units that we own, and we pull the tractor-trailers to our depots.

Your new kiosks remind me of a game I’d see at Chuck E. Cheese. How do they compare to the older machines?

The new ones definitely more like the claw-style game that you’re referring to. The only difference is there’s a prize every time you don’t have to worry about the robot missing. The old units are either the traditional kind of a bunker freezer where one would slide up and you would just remove a unit out, or it would work off of like a pulley system.

What is the mix of new vs old machines in the field?

About fifty-fifty.

And have you updated the old machines?

Yes. We went back and retrofitted all of the legacy kiosks in the field to make sure that they were able to take the payment systems and kind of upgrade everything from a technology standpoint.

What are some examples of locations for your kiosks?

We’re at the National Zoo in Washington DC, Philadelphia Zoo, Mystic Aquarium, Georgia Aquarium. Larger family entertainment centers would be Dave and Busters. Round One, Urban Air and Sky Zone Trampoline Parks. We’re at college campuses, a lot of rest stop areas, nontraditional retail locations.

Any one that is trending up at the moment?

Interestingly enough, our rest stop business is starting to kick up more as they add more electric vehicle chargers, because those guests tend to stay longer because they’re charging for longer. We see that there’s more of a need for retail there.

Thank you for your time.

You’re welcome.

You can watch the Mini Melts kiosks below in a video provided by the company.

The Mini Melts Automated Kiosk

Xook Raises $1.3 Million to Roll Out Robotic ‘Food Courts in a Box’ in The US

If you’ve ever visited a cafeteria at a tech giant like Google or Facebook, you probably found that the food is just as tasty (or tastier) and often better for you than what you might order at a corner restaurant or make in your own kitchen.

But according to Xook CEO Raja Natarajan, this kind of access to an abundance of tasty, healthy, and free food is more the exception than the rule for US office workers. This is very different from countries like India, said Natarajan, where most corporate employers provide access to cafeterias stocked with food options for employees. This is why, after trialing a prototype for what he and cofounder Ratul Roy describe as a “food court in a box” in Bangalore, they are eyeing the US for the rollout of their robotic kiosk.

“In countries with high labor costs and high food costs, it is very hard to offer this kind of experience unless it comes with automation,” Natarajan told The Spoon in a recent interview.

To fund the manufacturing and rollout of their kiosks, the company has raised $1.3 million in pre-seed funding from a group that includes deep tech fund SRI Capital, India-based micro-VC Pitchright Ventures, investor syndicates from Letsventure and WeFounderCircle, tech accelerator Techstars, and a handful of angel investors. 

According to the Xook, their first kiosk – the Xook Primus – will be able to make salads and meal bowls across a variety of cuisines. The unmanned kiosks have a 3’x3′ footprint and can make a meal in two minutes. Xook’s current pilot in Bangalore has made 60 different types of meals and is currently offering 25 of the most popular dishes.

Unlike other robotic kiosk startups, Xook plans to utilize a business model in which they provide the kiosk to a customer at no cost, and the company makes money through the sale of meals. The meals, which can be paid for by the employer or employee (or resident in a multifamily housing unit), will be replenished daily by a Xook employee located in each city.

Natarajan and Roy told me they believe this model will work, in part, because of the low cost of their machines, which will each cost about $15 thousand to manufacture. This, they say, compares to a cost of up to $70 thousand for other robotic kiosks. The founders told me they could achieve a lower cost per unit due to their custom-built robotics and easy access to the technical talent and manufacturing in India, where most of their employees are located.

Interestingly, while most of Xook’s employees are in India, the company is based in Singapore. According to the cofounders, the reason for that was they had initially planned on trialing their robots in the island country due to the business-friendly environment and the country’s embrace of high-tech options like robotic vending kiosks.

For now, though, the company is planning to launch its first pilot in the US by the end of this year and has lined up two food brands to help them enter the market. These partners, which include a salad brand and bowl meal brand, will “use Xook as a channel to market” for different locations like offices and apartment buildings.

When it launches in the US, Xook will be joining others like Doordash’s Chowbotics, SJW, Nommi, and RoboEatz, each fighting for market traction with their kiosks. Some, like Basil Street, have found the going pretty rough and have had to call it quits.

In addition to its lower cost and unique business model, Xook’s founders believe they can find a path into an increasingly crowded market for automated food kiosks by relying on food brand partners. In addition to its initial two partners, they think the Xook’s ability to handle a variety of foods will allow them to add additional partners as they grow.

“There could be multiple brands who could be serving food in the same vending machine at the same time,” said Roy. “The Xook is like a multi-brand food court in a box.”

My Other Phone Is a Restaurant

The surprise hit story on The Spoon this week has been our recent post on Mexico City-based remotekitchen, a startup that’s building a mobile-first restaurant-tech platform that, theoretically at least, only needs a smart phone to operate. 

I highlight this story not because I think every restaurant needs to pare down their tech stack to a smartphone, but because now more than ever, restaurant tech companies need to ensure their products are offering real value to restaurants. In other words, they need to solve problems restaurants are having right now while also helping to prepare for the ones waiting for us in the future.

Remotekitchen’s platform solves some obvious problems for its core audience. Its founders explained to me that 96 percent of independent restaurants in Latin America are not online, that restaurant tech solutions are underdeveloped in the region, and that a vast majority of restaurant owners have to take orders via their own smartphones. The mobile-first approach also better equips operators to run virtual restaurants, which may be necessary depending on how high the coronavirus wave spikes.

The U.S. is not like Latin America when it comes to restaurant tech. We have choice and then some. Prior the pandemic, restaurant tech solutions included not just point of sale systems and self-serve kiosks, but also reservations management, wearable computing, virtual reality on boarding . . . the list goes on and on and on.

I don’t think restaurant tech companies should necessarily stop work on any of the above solutions, so long as they’re somehow helping restaurants solve the industry’s most urgent problems. Such as:

Improving restaurant pickup orders. For restaurants new to the off-premises world, juggling takeout and/or curbside pickup orders has proven challenging — to put it politely. Restaurants need more streamlined ways to both receive and deliver pickup orders to customers. (Geofencing, perhaps?)

Making restaurants more socially distant. I don’t refer to space between tables here. That is not a problem tech needs to solve. Menus, on the other hand, are. The number of simple digital menu solutions out there right now is encouraging, and many of them rely on simple signage or QR codes. And unlike chalkboards or disposable paper menus, digital menus could eventually become interactive tools for guests to learn more about the food they’re eating.

Enabling better communications with customers. This one is huge. Back when the pandemic first hit. I remember one restaurant telling me their customers didn’t even know they were open for takeout. Part of this is due to the rise of third-party delivery, which owns a lot of customer relationships. Delivery integrators are one way around this, as they allow restaurants to offer off-premises while still keeping their customer data.

These are just a few of the hot-button issues in the restaurant biz right now. I’m sure you have others, so drop us a line (tips@thespoon.tech) to let us know where you think restaurant tech will be the most valuable right now.

Restaurant Closures Underscore the Need for Off-Premises

The week, Yelp released new data about COVID-19’s continued impact on businesses, the restaurant industry included. The takeaway? A bunch of restaurants that have temporarily closed may never reopen.

Quite a lot of them, actually. 

As of June 15, roughly 140,000 businesses were listed on Yelp as closed. While retail got hit the hardest, restaurants came in at a close second, with 23,981 businesses closed. And here’s the kicker: more than half — 53 percent — of those restaurants currently closed won’t reopen, according to Yelp. 

“Restaurants run on thin margins and can sometimes take months or even years to break even, resulting in this higher rate of permanent closures,” Yelp explained in its update. 

This is aggravated by the rising number of COVID-19 cases across many states, which is causing governments to either delay reopening or order closures again. Some restaurants that had already reopened have to close once more because of employees becoming infected. 

Right now it’s incredibly hard to predict the total number of restaurants that will close permanently. Yelp’s numbers are actually smaller than a report by Independent Restaurant Coalition that said 85 percent of indie restaurants could close by the end of the year. Still, tens of thousands of restaurants is a lot of restaurants.

The lesson? First, that we’re going to be riding this will they-won’t they wave in terms of restaurant closures for a long time. Second, those that can, must continue finding ways to serve their customers with off-premises orders, even if their dining rooms have partially reopened. 

I’m All-In on Smart Vending Machines for Restaurants

On the note of restaurant tech that’s useful, The Spoon’s Editor recently did a report on the promise of automated vending machines in the foodservice world. I give it a shout out here because these next-generation machines, which serve up actual meals created by real chefs, could be the answer to getting good food in a socially distanced manner in many settings.

Consider the old mall food court, where you could mill between different restaurants and build your own smorgasbord of mediocre mall food. Digitizing as much of these very public spaces as possible will be necessary for sanitization and social distancing in the future. Since next-gen automated vending machines are basically their own little restaurant in a box, it’s possible we’ll one day head to food courts not manned by people but equipped with multiple machines from different brands offering increased choice without so much human interaction.

Given the way this pandemic is heading, smart vending machines could be a really smart idea.

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The Great Vending Reinvention: The Spoon’s Smart Vending Machine Market Report

Thanks to advances in hardware, the internet of things, and food preparation, vending machines today are basically restaurants in a box. They offer high-end cuisine in minutes, require minimal setup time, and have the on-board computing smarts to manage inventory and communicate any issues that arise.

With these capabilities, it’s no wonder the vending machine category was valued at more than $30 billion in 2018, according to Grandview Research, and was anticipated to have a CAGR of 9.4 percent from 2019 through 2025.

Had this report been written even just a few months ago, the main takeaway would have been that vending machines are perfect for high-traffic areas that operate around the clock: airports, corporate offices, college dorms, and hospitals.

But we’re living in a world continuously being shaped and reshaped by the COVID-19 global pandemic. Right now, some form of shelter-in-place orders blanket most of the U.S. Global air travel volume has plummeted, so airports are not busy. Non-essential businesses are closed and people are working from home, not office buildings. And colleges may not hold in-person classes until 2021.

While on the surface, those factors suggest vending machine companies will be yet-another sector wiped out by coronavirus, there has actually never been a better time for the automated vending machine industry. The small footprint and high-end food these devices offer are perhaps more important than ever at a time when minimizing human-to-human contact in foodservice is paramount to doing business. That makes the vending machine market uniquely positioned to capitalize on a post-pandemic world.

This report will define what the automated vending machine space is, list the major players, and present the challenges and opportunities for the market going forward.

Companies profiled in this report include Alberts, API Tech/Smart Pizza, Basil Street, Blendid, Briggo, Byte Technology, Cafe X, Chowbotics, Crown Coffee, Farmer’s Fridge, Fresh Bowl, Le Bread Xpress, Macco Robotics, TrueBird, and Yo-Kai Express.

This research report is exclusive for Spoon Plus members. You can learn more about Spoon Plus here.

Firstchop Abandons D2C Sous Vide Proteins for B2B Microwavable Meals

When Firstchop first launched towards the end of 2017, it was at the center of a couple of different trends then sweeping the food tech world. It was a direct to consumer mail order meal kit, kinda, it only provided vacuum-sealed frozen proteins (that were actually quite tasty). Those proteins were meant to be reheated at home with a sous vide machine wand, the hot kitchen device at the time, which Firstchop gave away as part of a customer’s subscription.

My oh my, how a couple of years can change an industry. Meal kits are still around but most of the growth is at retail, not mail order. And the consumer sous vide market has basically collapsed. Chef Steps laid off a bunch of staff before being acquired by Breville, Nomiku shut down, and Anova is expanding beyond sous vide wands and into a new steam oven.

Ajay Narain, Co-Founder of Firstchop told me by phone this week that he saw the the big sous vide collapse coming. “We knew by the end of 2018 that the D2C was dead and the luster of sous vide was gone,” Narain said.

“Sous vide really caught fire and then collapsed,” Narain said. “Unrealistic expecations were built around what sous vide could do. People thought it would be great for all of these different use cases, but it has a lot of limitations.”

So in January of 2019, Firstchop decided to abandon almost everything it started out doing. It was getting out of the direct to consumer business and out of the consumer sous vide game. Firstchop pivoted into refrigerated prepared meals sold through office vending machines. The company added veggies and carbs to its proteins and each meal is re-heated with a microwave.

Narain said that during an initial customer pilot of its new meals at the beginning of 2019, Firstchop sold three times as much product in the first month than it had the entire previous year of selling D2C.

Since that initial test, Firstchop has been developing its products and the company officially launched its menu of meals today, which include Chicken Tikka Masala, Korean Barbecue Beef, Grilled Chicken Breast, and Chicken Chili Verde. The company is in talks to sell its meals through different large foodservice companies that operate vending services for various companies.

Firstchop hasn’t completely abandoned its sous vide roots however. Narain said that the sous vide cooking just moved from the consumer to the back end, and that’s how all of its meals are prepared. “At a manufacturing level, sous vide cooking process on the backend is essential,” Narain said. “It delivers moistnenss and tenderness, and the microwave is like magic.”

What’s almost more impressive is that Firstchop has held on this long just by bootstrapping. While it survived the consumer sous vide implosion, we’ll have to see if this latest pivot will be Firstchop’s last.