Jails offer micro markets instead of vending machines

The Three Square Market micro market at the Dakota County Jail has been a hit


By Julio Ojeda-Zapata
Pioneer Press

ST. PAUL, Minn. — Police officers dropping off detainees at the Dakota County Jail in the wee hours used to face a daunting challenge: getting something good, and fresh, to eat.

Vending machines wouldn't cut it. Pizza and sandwich shops didn't deliver at that late hour. Queuing up at fast-food joints was unappealing and a huge waste of working time.

Tim Westby scans his lunch at the micro market in Dakota County Jail on Wednesday, March 25, 2015. He and his brother Todd Westby are founders of Three Square Market. (Photo Jean Pieri/Pioneer Press)
Tim Westby scans his lunch at the micro market in Dakota County Jail on Wednesday, March 25, 2015. He and his brother Todd Westby are founders of Three Square Market. (Photo Jean Pieri/Pioneer Press)

The officers from Burnsville, Rosemount, West St. Paul and other municipalities needed "healthy choices," and they needed them quickly and conveniently, said Lawrence Hart, a lieutenant in the county's detention-services division.

Now the jail has the equivalent of a small convenience store, doubly convenient because nobody is needed to staff it. Tidily arrayed fresh food and drinks are on shelves and in coolers, and employees grab what they want and pay for it themselves at an automated terminal.

The police officers can buy yogurt, juice, energy bars and more, and are on their way in a minute or two.

This system is called a micro market, to use food- and vending-industry jargon. It is a hot trend with the facilities popping up in detention complexes, corporate break rooms, school districts, factories -- even at airports for use by runway staffers who don't want to pay steep prices for public-concourse restaurant food.

Thousands of the self-checkout-style micro markets are in operation around the country with a potential for tens of thousands in five years or so, said Todd Westby, a Woodbury resident and founder of one micro-market purveyor, Three Square Market.

The Hudson, Wis., firm is jostling for market share with other micro-market vendors in the United States, including Michigan-based365 Retail Markets, North Carolina-based Canteen Vending, Washington-state-based Avanti Markets and California-based Fresh Healthy Vending.

Such companies sometimes operate their micro markets directly but more often hawk them to food-vending services.

Three Square Market charges no franchise fee, said Patrick McMullan, a vice president in charge of market growth.

"They simply pay for the cost of the equipment," which starts at $3,295 per market, McMullan said. "We manufacture the kiosks right in our HQ."

Customers at a micro market grab what they want, then step up to a high-tech terminal for paying with cash, a credit or debit card, a payroll deduction or a fingerprint-accessed prepaid account. In certain cases, customers can scan and pay for their items using a smartphone app and camera.

The micro markets work on the honor system, with no one monitoring who grabs what and when, though the facilities typically are equipped with video cameras for reviewing footage if theft becomes a problem. It usually does not, micro-market vendors say, though operators can resort to pulling markets from client locales if they lose too much money.

Micro markets see brisker sales than vending machines, operators said, and tend to be more popular because of greater selection -- often with an emphasis on healthier, fresher food.

Though a micro market looks an awful lot like a corner store, albeit on a smaller scale and without a staff, the vending industry seems to blanch at such a characterization.

"Micro Markets are not convenience stores and should not be made to look like one," the National Automatic Marketing Associationsternly told its members. "Markets are more limited and focused on a select group of consumers, offering a wide range of 'better for you' products."

OUT OF JAIL
The Three Square Market micro market at the Dakota County Jail certainly has been a hit, said Hart, the lieutenant, who likes the cheese sticks and the breakfast sandwiches with sausage. Energy drinks are hot sellers, he added.

The micro market see a lot of use among the facility's corrections deputies, who are required to remain inside the jail for the duration of their shifts and therefore are more likely to eat at their desks.

Wisconsin's St. Croix County sheriff's department has two Three Square Market micro markets, one in the jail for use by corrections deputies and other workers, and a second in the sheriff-deputy break room.

When weighing whether to go this route, the corrections department initially worried about the micro market's wide-open style and the potential for theft, Lt. Gary Simacek said.

"We hesitated a little bit because of that," said Simacek, who noted that the theft rate has turned out to be "zero percent."

He said he tends to use the micro market at least once a day, and will grab an energy drink, a pop or "a monster bag of chips."

He said he likes having the micro market's provider "right in our back yard," and said the company's customer service "has been phenomenal."

Todd Westby runs Three Square Market with his brother Tim, also of Woodbury. The company is just a few years old, but it is an offshoot of another firm, founded in 2002 and initially based in downtown St. Paul.

That technology company, TurnKey Corrections, equips jails and prisons with inmate services like phone calling, video visitations, money transfers, commissary orders and more. The Dakota County Jail is a TurnKey customer, as well as a micro-market client. Three Square Market's first micro-market was at a Seattle TV station in 2013.

Three Square Market now has about 600 micro markets across the United States, including 75 in the Twin Cities, and has been expanding roughly at the rate of about 40 to 50 markets a month. Along with its correctional, industrial and corporate settings, it is starting to branch out into schools.

The company remains a relatively small player in the game. 365 Retail Markets, by comparison, said it has 3,500 active locations across the nation and adds about 150 to 200 locations a month.

But with micro markets still a relatively rare amenity in workplaces, all providers are positioned for growth in a largely untapped market.

Westby said his company was a pioneer in the use of phone apps instead of payment terminals, and noted that a handful of his micro markets don't have terminals -- they're app-only. He expects that to be the norm eventually. But for those who insist on kiosks, Three Square Market offers five kinds, including a tabletop model.

One selling point is offering more than traditional junk food, Westby said. Three Square Market, like other micro-market vendors, has tapped into the "health craze." Though health foods are somewhat slower sellers, he noted, putting them in encourages overall market use.

"Once you get healthy stuff in there, everyone uses it," Westby said.

Like other micro-market companies, Three Square Market supplies its technology to vending companies for resale, and it now works with nearly 100 of those, including a dozen in Minnesota.

ONE VENDOR'S VIEW
One such company, A&H Vending in East Grand Forks, N.D., has installed Three Square Market micro markets at three American Crystal Sugar facilities in the region, among other locales.

American Crystal Sugar CEO David Berg blogged about the first of the markets, which was installed in a just-renovated break room.

"The break room needed an overhaul, and the food choices were also lacking in healthy options," Berg wrote. Now "the lunch room is bright, shiny and abundant with healthy choices, including fresh salads, sandwiches, healthy juices, soups and a variety of other options that were not available from a standard vending machine."

Jim Carlson, owner of A&H Vending, said he agonized for months about whether to get into the micro-market niche as an expansion of his vending-machine business.

It turned out to be "a game changer," said Carlson, who has been eager to upgrade the 50-year-old company once run by his father.

Running micro markets required lengthy, intensive training, but he said it is worth it. Now he runs a modern operation, with the ability to monitor his markets via a laptop and to field customer feedback sent directly from the payment terminals. He's a fan of Three Square Market's fingerprint readers, and loves the phone apps.

He said he has learned interesting lessons about what sells and what doesn't. Pastries sell briskly in vending machines but are less popular in micro markets, he has found. Hard-boiled eggs, though, are micro market hits. Apples, oranges and bananas are a hassle to manage, so he swapped them out for fruit cups in tidy market-cooler rows. Selling nonfood items, like laundry detergent at some sites, is an unexpected bonus.

Customer tastes can be fickle, he said. "Sometimes you are a hero, and sometimes you are a zero." But he is excited that micro markets position him more effectively to provide healthier food choices than what is possible with conventional vending machines.

"We, as vending operators in the past, have gotten a black eye from people who think of vending as just junk food," Carlson said. "That is not what we're about, at least not all of us. I want to be different from everyone else."

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