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Heat up your ROI with ice

Heat up your ROI with ice. Five key takeaways. People like and want ice You need to help them understand that Ice is more expensive than water But it adds value in multiple ways An ice and water dispenser is not much more than the cost of a cooler and an ice machine

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Heat up your ROI with ice

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  1. Heat up your ROI with ice

  2. Five key takeaways • People like and want ice • You need to help them understand that • Ice is more expensive than water • But it adds value in multiple ways • An ice and water dispenser is not much more than the cost of a cooler and an ice machine • You need to use this to overcome initial price shock (your own or your customer’s) • Think quality, sanitation, and ice type • It’s an investment, so do it right • Include the margins of iced beverages in your pricing equation • It can give you a more easily accepted price point

  3. Agenda • Why ice • How to do ice right • How to make money with ice

  4. Why consider ice? • People like ice • Ice can contribute to health and wellness • Ice increases capacity for cold water • Ice supports enhanced refreshment • Ice can make you money

  5. People like ice… • Americans consume a lot of ice • More than 250 billion pounds of ice used in the U.S. • Over half of U.S. offices have ice • More than ½ the population likes to chew ice • People prefer soft, chewable ice

  6. The health benefits… • Ice promotes better hydration • Good hydration is associated withimproved mental acuity and productivity • Chilled, filtered water tastes better • Water stays colder longer with ice • Higher water consumption and better hydration is more likely with ice • And fitness • Metabolizing 8 glasses a day of chilled water consumes the caloric equivalent of 3 – 4 lbs per year

  7. More cold water… • The availability of ice can increase the amount of cold water that can besupplied • Solve the problem of running out at break time and other key periods • Increase employee satisfaction since ice keeps drinks cold, longer

  8. Ice supports enhanced refreshment • Heart+Mind Strategies study findings reveal that • Water is a significant opportunity for OCS operators • Iced beverages (coffee and tea) during afternoon dayparts can be a another significant growth opportunity Ice supports both of these major opportunities

  9. Ice supports iced coffee (and tea) … • 20% of consumers drink iced coffee, • 38% aged 18 to 24 • 11% aged 55 to 64 • 5% aged 65 and older. • 77 percent of iced coffee drinkers say drinking it makes them feel more productive at work Mintel research - http://www.csnews.com/top-story-cold_frozen_dispensed_beverages-iced___frozen_coffee_gains_year_round_appeal_-64228.html

  10. Ice supports all the intangibles of enhanced refreshment • Nurturing environment • Impact on morale, satisfaction, and productivity • Keeping people “in the office”

  11. You have to convince your clients (and yourselves) that ice is important • Because ….

  12. To do ice right is not cheap!

  13. Ice machines come in all price ranges • At the entry end • $200 - $400 for small countertop scoop out icemakers • $500 - $1,000 for small ice and water dispensers

  14. Ice machines come in all price ranges • For higher capacity, more durable equipment • $1,000 - $2,000 for commercial-grade undercounter icemakers • $2,000 - $5,000 or more commercial grade icemakers and dispensers

  15. Pricing reminder for dispensers • An ice and water dispenser is both • An ice machine and • A water machine • When you add the two together, the price of an ice and water dispenser, entry or higher end is not that much different than the price of both machines combined – with usually a smaller footprint • But you have to want ice!

  16. Why is ice so expensive? • Bigger refrigeration system • it takes twice as much energy to freeze 32o F water to ice than it takes to chilled the same water from 72o to 32o • Heavier duty mechanical components • Insulated compartments to store ice • More sophisticated controls

  17. Key considerations to do ice right • Sizing – selecting machines that will serve the customer’s needs • Quality / reliability of the machines - they have to work and be trouble-free • Sanitary dispensing – you want to avoid hand scooping in most cases • Ice type – the right ice enhances satisfaction

  18. Sizing factors • Plan for ½ to 1 pound of ice per person per day • Demand factors include • Number of people that like ice • Usage patterns during the day • Cup size • Other uses for ice (pitchers, cooling, etc.) • Supply factors include • Size of storage bin • Hourly production capacity to produce ice

  19. Sizing approaches

  20. Sizing models

  21. Quality / reliability • There are a wide range of ice machines and qualities • Commercial quality ice machines normally have • Higher capacities with expected lives of 7-10 years • Full warranties of 2-3 years and extended compressor warranties

  22. Quality / reliability • Manufacturer’s Installation Requirements • Electrical • Determine voltage • Determine amperage • Plumbing • Determine drain requirements • Not all ice and water dispensers require a drain • Incoming water source • Clearances • Proper ventilation for air cooled icemakers • Accessibility for equipment maintenance

  23. Sanitation – get rid of the “Yuck” factor • The break area can be the dirtiest place in the office • The Healthy Workplace Project, Kimberly Clark Professional in conjunction with the University of Arizona

  24. Sanitation – get rid of the “Yuck” factor • Scooping = Contamination potential

  25. Sanitation – get rid of the “Yuck” factor • Hands free dispense = More sanitary

  26. Ice type matters • People love nugget ice compared to cube • Independent market research shows Chewblet ice is preferred by over 70% of consumers in the U.S. • Very popular in convenience stores and QSRs for fountain beverages

  27. How to make money – Four approaches • Sell machine to customer • Lease machine for full payback on machine • Give it away as part of an iced beverage program • Mixed model – consider both machine rental and additional product revenue

  28. How to make money • Sell machine to customer • Relieves operator of responsibility but places an upfront burden on customer • Who takes care of the machine?

  29. How to make money • Lease machine for full payback on machine • $1500 - $3000 expenditure for commercial quality results in a longer payback than operator traditionally desires • Even with that, requires over $100 per month rental fee

  30. How to make money • Give ice machine away as part of an iced beverage program • Expensive investment • Ice isn’t used exclusively for revenue producing beverages • Large number of incremental drinks required to pay back machine in full

  31. How to make money • Mixed model – subsidize some to generate additional product revenue • Recognize that ice has multiple purposes • Structure lease payment that represents an “upscale water cooler” for the customer • Sell the benefits of ice water over just water • Make up the difference with additional product sales • Extend ROI payback slightly

  32. How to make money - Mixed model • Get your customer to recognize that ice has multiple purposes in the office • Iced beverages you can charge for • Ice water for employee hydration • Employee supplied beverages • Pitchers for meetings • Coolers

  33. How to make money - Mixed model • Structure lease payment that represents an “upscale water cooler” for the customer • Sell the benefits of ice water over just water • Overall satisfaction • Employee desire for ice, especially nugget ice • Keeps drinks cooler longer to promote increased hydration and extended times between visits to the cooler • The value of ice demands a premium over a water cooler

  34. How to make money - Mixed model • Extend ROI payback slightly • Durable, commercial quality ice machines are designed for 5-10 years of life • Match payback to warranties • 2 to 3 year warranties allow you to extend payback with minimal risk • Paybacks of as low as 18 months are achievable if all factors are considered

  35. How to make money - Mixed model • Add the profit from additional product sales to the ROI equation • How many iced beverages and can you sell?

  36. How to make money – Some examples

  37. How to make money – Some examples • Not many sales at $223 per month

  38. How to make money – Some examples

  39. How to make money – Some examples • Not many more sales at $154 per month

  40. How to make money – Some examples • How about at $75 per month and an 18 month payback?

  41. How to make money – Some examples • Can you sell more 22 drinks a day?

  42. Five key takeaways • People like and want ice • Ice is more expensive than water • An ice and water dispenser is not much more than the cost of a cooler and an ice machine • Think quality, sanitation, and ice type • Include the margins of iced beverages in your pricing equation

  43. Thank you!

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