McVend??

A few days ago, I wrote a proposal for my marketing class. I have an idea of making fast food vending machines for McDonal's, called "McVend". Since there is almost no competitor and feasible in technology. The current vending machines only sell snacks and drinks to consumers, but no vending machines actually sell foods like burgers. So, my idea is to dominate this market by being the first one. The startup cost is not expensive, because we don’t have to invest in technical research. The only thing we need to do is to purchase the vending machines and apply the produce procedures of burgers to the machines. I believe the return of advertising benefits and actual sales revenue will far exceed the investment.

My idea is sell some McDonald’s popular burgers with soda through vending machines. However, I am not going to include fries in the vending machine, because too complicated to make fries. Thus, the burgers will be sold with only sodas, and the price will be $2 USD less the original combo price. (e.g., the in-store price of a Big Mac Combo is $8, then the vending price will be $6.)  I assume the price range will be from $4 to $7. The cost of the machine to McDonald’s is around $2000-$3000 per machine, not including the daily operating costs. (e.g., cost of electricity, raw materials for burgers, soft drinks, etc.)

 

There are many fast food companies in the United States, such as Jack in the box, In & Out, Burger King, etc. However, none of them are selling their foods through vending machines. Thus, we are the first one in the fast food vending machine market, but I found a close competitor who is selling pizza through vending machines. La Pizza Presto has recently announced their pizza vending machine in the United States. They can make pizzas from scratch in less than 3 minutes, and the price is around $6.

Furthermore, the McVend appears to be feasible with current technology. The fast food vending machines would be just a bit more complicated than normal snack vending machines by assembling and heating the burger instead of directly sell the snacks to the end customer. Moreover, I can guarantee the quality of the burgers would be the same as the burgers in-stores. Since McDonald’s follows a make-to-stock system, so the raw materials (e.g., burger bread, meat, cheese, etc.) of burgers are already cooked and just waiting for assemblage. The same concept is applied to the fast food vending machine, we put all the cooked raw materials into the vending machines, then we assemble and heat up the burger in the machine when customers make their orders.

Our targeted markets are kids, youths and college students. We want to startup this project by putting the vending machines in schools first. The idea to start in schools first is to build up and consolidate the brand loyalty, also to provide an even faster access of fast food to students, especially college students. College students sometimes don’t have time to have lunch between classes; putting fast food vending machine outside of classroom can provide them a convenience access to fast and tasty food. The vending machine can also establish a new image of McDonald’s and purchasing habit of customers. I believe it is a good way to steady or even further expand our market share in the future.

With today’s lifestyle, time saving products are increasing in demand. The rate of growth in consumer expenditures on fast food has led most other segments for much of the last two decades. The sales growth rate of fast food is constantly at 4% these few years. As one of the biggest fast food company McDonald’s, it is time to expand our service into different segments, and I believe the vending industry is the best place to start our expansion. The hectic lifestyle is driving the sale of fast industry up, and a more convenient way to sell fast food is demanded. So, I have the reason to trust this idea"McVend" is profitable.

Do you think it would work?