Today over a third of Americans are obese, costing $190 billion a year in extra medical spending, Reuters reports. One company is fighting the fat with hi-tech vending machines that stock healthier options including low-sugar variants, organic products and gluten-free items. H.U.M.A.N. Healthy Vending, one of last year’s America’s Most Promising Companies, aims to provide an alternative to high-calorie convenience snack food. With 1,500 machines across 40 states, the company is set to double its revenue this year, on course to generate close to $12 million.
Apply To This Year’s America’s Most Promising Companies List
CEO Sean Kelly and co-founder Andrew Mackensen started H.U.M.A.N. Healthy Vending in 2008. The idea for the California-based company began back in 2003, when Kelly, a pre-med Biomedical Engineering student at Columbia University, searched for somewhere to buy water at his gym. Coming up short, he witnessed a woman purchase a soda to drink during her workout.
“She took a swig, put it in the cup holder on the treadmill and started running,” recalled Kelly. “I thought, if this is the case for us in an upper-income demographic what’s it like for people in other places?”
What began as an academic research project spiraled into a business based out of Kelly’s dorm room. “Pretty soon I had vending machines running in three different states,” Kelly said. “I was managing a network of interns filling my machines, and I realized it was not scalable.”
Kelly shifted the business, spotting a niche in the market for the distribution of single-serve healthy items. When large-scale distributors filled in the gap in the mid-2000s, Kelly realized his company, Fit Fuel, needed to pivot again. He decided to revert to the original aim of revolutionizing the vending experience with healthy products.
Mackensen, a Stanford MBA grad and former U.S. Naval Officer, was working on a hot food vending machine at the time. Mutual friends recognized their similar interests and introduced the two. Kelly sold out of the distribution company and both put in $300,000 to form H.U.M.A.N. Healthy Vending. Building on past relationships, Kelly says the new company got off the ground by securing $1 million in supplier loans.
H.U.M.A.N. Healthy Vending uses a franchise model that allows local operators to run individual machines. The company makes money through the sale of the machines and digital advertising, and is now looking to expand into a proprietary line of health foods, a range of organic fair-trade coffee vending machines and a book on snacking.
“If we create socially-committed entrepreneurs they’re not only going to have a fantastic business but our entire brand will benefit because the level of service they can provide is infinitely higher,” said Kelly.
The company advises local operators on what products to stock, encouraging them to locally-source where possible. When choosing items, the H.U.M.A.N. looks to minimize artificial additives, focusing instead on fibre, protein, complex carbohydrates and vitamin count.
“We understand you have to have lesser-evil products, like some organic cookies or some Pop chips,” said Kelly. If the calorie count goes beyond what Kelly calls “minimal snack range,” the snack food has to have nutrient density.
H.U.M.A.N. is now creating smaller vending machines that it hopes will infiltrate spaces that were previously unprofitable. The company has a continued commitment to giving back – 10% of all profits go to fighting the causes of childhood obesity, while for every new proprietary snack sold H.U.M.A.N. will buy a nutritional pack for a child in need.
Mackelson focuses on marketing, while Kelly is now handing off some of the everyday management to focus on the company’s vision. This has been a challenge: “For an entrepreneur it’s tough to step aside from management to let the organization start breathing on its own, but if you don’t do that you’ll never get anywhere,” said Kelly.
To young entrepreneurs setting up their own business, Kelly advised: “Do not be scared to surround yourself with people smarter and more experienced than you. You need people not to push you, but to pull you. Get the mentors, get the leaders, and do not be afraid to copy success. A lot more people will help than you realize.”
In the future, H.U.M.A.N. hopes to create an online product distribution site aimed at getting nutritious food to families.
“Our vision is to make healthy food more convenient than junk food,” said Kelly. The emphasis on health never stops: “We still design workouts for our employees.”