Cost of Coffee Ration Packs vs Coffee Vending Machines
Cost of Coffee Ration Packs vs Coffee Vending Machines: Which is Best?
All companies in South Africa are required by law to provide their employees with coffee and tea. The bigger the company, the bigger this challenge becomes and the more complex it is. The two most common ways in which companies try to deal with this challenge is by either implementing a coffee and tea ration pack system or by installing coffee vending machines to control usage and control costs. In this post we will discuss the cost of coffee ration packs vs coffee vending machines and when to opt for which.
Why companies opt for ration packs or coffee vending machines?
Companies look to replace their traditional dry ingredients and urn setup with coffee and tea vending machines or ration packs for two main reasons:
- To prevent Theft of Coffee, Sugar and Milk
- To control milk, coffee and sugar usage
There are a few companies in South Africa where theft and pilferage is still rife. Coffee and sugar growing legs, is unfortunately still prevalent in both upper class and lower class areas and is very difficult to control with traditional coffee solutions. Unfortunately the economic situation of many employees results in this theft being present in what is estimated to be as much 10% of offices in South Africa.
A bigger and more prevalent problem than theft, is double scooping and ingredient abuse. Ingredient abuse refers to people using milk for cereals and porridges whereas double scooping refers to employees using more than one spoon of coffee or sugar per drink (thereby doubling or sometimes tripling drink costs). Ingredient “abuse” and “over-usage” is mostly non malicious or non-intended on the employees behalf – It is just something people do. There is a time however when companies do want to prevent this from happening and that’s where ration packs and vending machines come into the picture.
Coffee and tea ration packs are pre-packaged packets or boxes which consist of an employee’s allocated tea and coffee “rations” for the month. These ration packs typically cater for 3 cups of coffee per day, 1 cup of tea per day and 4 sugar and 4 creamer sachets per day resulting in the following monthly supply :
- 60 coffee sachets
- 20 tea bags
- 80 sugar sachets
- 80 creamer sachets
The cost of these ration packs typically work out to approximately R5 per employee per day (depending on the combination selected)
An office of 100 employees all on ration packs would then spend R10,000 per month on coffee and tea ration packs.
Our view on Coffee Ration Packs:
Ration packs were the standard for mines and factories for a number of years in South Africa and in some instances ration packs can definitely save money as they do a perfect job in preventing theft and ingredient abuse.
The negative of implementing Ration Packs, is it is hard to get the combinations right. Most companies have 4 tea times allocated per day: Breakfast, Tea Break #1, Lunch and Tea Break #2 hence the reason for providing four beverages per day per employee. The truth is however that most employees, when given free use of ingredients, will only consume a little less than 2 cups per person per day (Some will drink 5 cups per day whereas others will have only 1). The average usage, which we calculated by sampling 1000 or our customers (large and small), resulted in an average of 1.2 cups per person per day, which is significantly lower than the 4 cups per day which rations account for. When providing a ration packs system, you can’t however provide for the average and expect people to share their excess amongst each other, which forces companies to provide at least for the minimum number of tea breaks per day which results in ration packs being quite an expensive solution.
Coffee vending machines reduce costs in companies by storing all the ingredients internally (thereby preventing theft) and by dispensing only a pre-portioned amount of each product per cup, thereby preventing abuse of products. Vending machines also do not allow the user to dispense, “milk only” which prevents employees using milk for cereals and shakes.
There are two costs associated with vending machines
- Monthly rental cost or once off purchasing cost of the vending machine
- Monthly cost of ingredients
The rental of a coffee and tea vending machine depends on the model and size of vending machine selected but typically ranges from R500 – R1000 per month whereas the cost of ingredients for a vending machine would typically be 25% less than one’s ingredient cost prior to a vending machine being installed due the control elements provided (The product itself is not cheaper in a vending machine – one only saves costs due to the fact that employees are unable to pilfer and overuse ingredients with a vending machine)
Our View on Vending Machines:
Vending machines are our business and therefore we are big fans (but perhaps we are a bit biased). We have seen some companies save a significant amount of money each month by installing vending machines with some companies saving as much as 50% (however this is not the norm with most companies saving closer to 20% per month)
Having said this, vending machines are not right for everyone and do not save every company money. We have placed vending machines in some companies, whose control of ingredients, were relatively good prior to installing vending machines, and therefore actually spent more money monthly on their vending machine taking into account the rental.
Vending machines also have two disadvantages when compared to ration packs and dry ingredients. Vending machines save money through the control of how people make their tea and coffee -Vending machines only allow the user to use a predetermined amount of milk, sugar, coffee and tea. While this might result in a significant cost saving, it can also result in an unhappy employee who is used to using as much milk, sugar and coffee as he wants. For this reason, there is often a teething phase with vending machines, while employees get used to a controlled system.
The other disadvantage of vending machines when compared to ration packs is although ration packs often work out more expensive than a vending system, the cost of ration packs is predictable whereas the cost of a vending system is unknown at the outset and hard to predict without testing.
Which option should you choose?
The best way to make your decision is to first start with your current costs. Once you know your current costs you can compare that to the cost of ration packs. Whichever is the cheaper is obviously the better of the two. Once you have established a winner here, we recommend trying a vending machine to assess the costs in your company. As a rule of thumb, vending machines save an average of 20% on coffee, milk and sugar in companies over 30 people but often cost more (due to the rental costs) for companies smaller than that.
Once you have tested a vending machine in your office for a month you can then do a straight cost comparison against the other solutions and make your decision from there.
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