 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  Rethink economics - Include the margins of iced beverages in your economic analysis ◦ It can give you a more easily accepted price point

 Why ice  How to do ice right  How to make money with 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

 Americans consume a lot of ice ◦ More than 250 billion pounds of ice used in the U.S. each year  More than ½ the population likes to chew ice  People prefer soft, chewable ice

 Ice promotes better hydration ◦ Good hydration is associated with improved 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 ice water consumes the caloric equivalent of 3 – 4 lbs per year

 The availability of ice can increase the amount of cold water that can be supplied ◦ Solve the problem of running out at break time and other key periods ◦ Increase employee satisfaction since ice keeps drinks cold, longer

 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

 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 - iced___frozen_coffee_gains_year_round_appeal_ html

 Nurturing environment  Impact on morale, satisfaction, and productivity  Keeping people “in the office”  Contribute to “happy, creative, motivated employees” Mike Hourigan – CTW 2013

 Because ….

 At the entry end ◦ $200 - $400 for small countertop scoop-out icemakers ◦ $500 - $1,000 for small ice and water dispensers

 For higher capacity, more durable equipment ◦ $1,000 - $2,000 for commercial-grade undercounter icemakers with scoop-out bins ◦ $2,000 - $5,000 or more commercial-grade icemakers and dispensers

 An ice and water dispenser is both ◦ An ice machine and ◦ A water machine  And costs about the same as the two together  So you have to want ice!

 Bigger refrigeration system ◦ It takes twice as much energy to freeze 32 o F water to 32 o F ice than it takes to chill the same water from 72 o to 32 o  Heavier duty mechanical components  Insulated compartments to store ice  More sophisticated controls

 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

 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

 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

 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

 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

Scooping = Contamination potential

Hands free dispense = More sanitary

 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

 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

 Sell machine to customer ◦ Relieves operator of responsibility but places an upfront burden on customer ◦ Who takes care of the machine?

 Lease machine for full payback on machine ◦ $ $3000 expenditure for commercial quality results in a longer payback than operator traditionally desires ◦ Even with that, requires over $100 per month rental fee

 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

 Mixed model – combine rental fee and margins from incremental beverage sales ◦ Recognize that ice has multiple purposes ◦ Structure lease payment that represents an “upscale water cooler” for the customer ◦ Make up the difference with additional product sales ◦ Extend ROI payback slightly

 Mixed model – Key question  How many iced beverages can you sell?  Experience and financial analysis will help you find the right economic equation

 Not many sales at $223 per month to get a 12 month payback

 What if you change to 18 month payback?

 Not many more sales at $154 per month

 How many drinks would you have to sell to price at $75 per month and still get an 18 month payback?

 Can you sell 22 iced beverages a day?

 How many drinks would you have to sell to price at $100 per month and still get an 18 month payback?

 At $100 per month, you only need to sell 15 drinks/day

 People like and want ice  Ice is more expensive than water  An ice and water dispenser is not much more a cooler and an ice machine  Think quality, sanitation, and ice type  Include the margins of iced beverages in your economic analysis