COLUMN ONE : Sizzlers in the Vending Machine : With layoffs and the revolt against cigarette dispensers, times are tough. But the business is resourceful: what about french fries? Other ideas are cooking, too.

Since the coin-operated dispenser was patented in 1886, there is little that entrepreneurs haven’t figured out how to sell from a machine. Automobiles, investment advice, water skis come to mind. But there’s one that really rankles the vendors: the french fry.

The hot oil needed to cook french fries causes so many maintenance problems that the machine-vended fry has been a commercial flop. Duane Neibel, who teaches vending machine repair in Tampa, Fla., explains that the intense heat cooks not just the fries but the machine itself.

Now, potato people from Boise, Ida., are conducting field tests on a vending machine that purports to do french fries without the oil--and thus without the problems that always frightened off the nation’s vendors.

Understandably, this latest effort has caused a stir in the vending fraternity, otherwise preoccupied of late with the inadequacies of the dollar bill, the anti-smoking frenzy, the demise of the American factory and other continental shifts in American life.

The french fry is a powerful piece of business that could unquestionably bring some sizzle to the market--and write a new chapter in the seldom read but often interesting story of the $24 billion-a-year vending industry.

“It’s a mammoth step forward,” says Tom Koosis, a big Detroit vendor who tasted the latest machine fries at a trade show in Florida a few weeks back. “If it works, it will be the biggest change in our industry in the last 10 years.”

Beyond the fry, new technology is having its way with the vending business. Next spring, a special credit card from Verifone of Redwood City, Calif., will make it possible to buy things from vending machines without money.

And with electronics, the vending machine is counting coins, alerting owners to problems, and more. The microprocessor makes it easier to raise prices, for example. Or it can give a discount on a Coke to someone who buys potato chips from an adjacent machine that is electronically linked. Or it will charge lower prices to the night shift at a factory.

Says Neibel: “That’s as exciting as these french-fry machines.”

It’s about time the vendors had some good news, they figure, as they stare into the teeth of a recession. Sure, some of them are doing well--”printing money,” says one businessman with a close-up view.

But layoffs are starting to cut into their revenues from factories and office buildings, the workplaces that vendors rely on for more than half their business.

“Business is slow right now,” says Don Phelps, the owner of Food Systems Inc. in Santa Fe Springs, which has up to 40 machines at a single site. When workers are laid off at his aerospace and computer manufacturing sites, he says, “you either pull some machines out or you just stand there and suck gas.”

Alert vendors during the 1980s deciphered a unique message in the nation’s shift from a manufacturing toward a service economy. One upshot: the advent of the white-collar vending machine. Designed to make money from the smaller number of customers in an office environment, it has food, snacks, and hot and cold drinks all in one.

“All those auto and steel plants had thousands of employees before they closed. Now everybody’s working in little white-collar offices, where you can’t justify a bunch of big machines,” says Dave Stone, director of communications for the National Automatic Merchandising Assn. in Chicago.

Nor is it easy to figure out what to do about the cigarette machine.

Once the soul of the vending industry, the cigarette machine is being run over by the health movement and a regulatory outbreak that has seen one municipality after another restrict or ban it.

By the tens of thousands, the familiar 200-pound steel cigarette machines--accused of marrying generations of teen-agers to the wicked weed--are being melted down and turned into I-beams, reinforcing rods and so forth.

Some small operators, though, are proving reasonably fast on their feet in exploiting the glut of perfectly good cigarette machines.

People like David Baum, president of Mechanical Servants Inc. in Chicago, are rescuing cigarette machines from the scrap heap and dressing them up to peddle popcorn, perfume, aspirin, fingernail clippers, sanitary napkins and other sundries, all boxed to fit the 800 or so cigarette-package-sized slots in each dispenser.

The condom, whose role in life has long suited it to the anonymity of the vending machine, has been repackaged by a few entrepreneurs into cigarette-sized boxes as well.

But in sheer volume, condoms are no substitute for cigarettes. The pack-a-day condom customer doesn’t come down the pike every day.

And even in disguise, the cigarette machine has a bad aura. Perfume Vendors Co. in Salt Lake City had some cigarette machines painted pink in hopes of selling little bottles of perfume from them. But “the image was wrong,” says Richard LaFrance, sales manager.

In general, the industry’s image problem took shape a few decades ago but lingers on today.

In the early days, starting with the Tutti-Frutti gum dispenser in the 1880s, the vending industry was so innocent that there was no “rounding up” of prices. A 14-cent package of cigarettes cost 14 cents. A customer would insert a dime and a nickel, and his cigarette pack would emerge with a penny in change that the straight-arrow vendor had slipped inside the cellophane wrapper.

But in 1958, a parade of reputed mobsters appeared before U.S. Sen. Estes Kefauver of Tennessee, whose congressional committee was investigating organized crime. Asked what they did for a living, one after another explained on national television: “I’m in vending.”

To distance themselves, the legitimate vendors started calling themselves “automatic merchandisers,” but this hasn’t helped much. “That reputation has stuck for 30 years,” says PR man Stone.

Since then, a steady improvement in the quality and technology of machines and food, the advent of the microwave oven, and the education of new generations of Americans in doing business with inanimate objects all worked in the vendors’ favor.

In the past decade, though fast-food joints have become a big competitor, vendors managed a 9% average annual increase in dollar sales--chiefly by jacking up prices, judging from data in the trade publication Vending Times.

Tim Sanford, editor, says there aren’t a lot of economies of scale in the vending business. So despite the presence of such longtime major corporate players as Canteen Co., small and mid-sized independent local operations--often family run--still control 70% of the business. Virtually all are privately held.

Typical is Koosis, a one-time math teacher in Detroit who bought a few gumball machines as a sideline 21 years ago and now has 110 people working for him at HAV Vending & Food Services Inc.

Fiercely independent by nature, the vendors are an anonymous bunch not given to rumination, says editor Sanford. Information about the industry is scarce, and marketing decisions are strictly seat-of-the-pants.

“I’m always getting calls from young women who want to know which products sell best from the slot in the upper left hand corner of a snack machine,” Sanford says. “I tell them nobody studies that kind of thing.”

Perhaps for lack of such forethought, the fanciest ideas may have passed many vendors by. Automatic teller machines, for example, are owned and operated by banks. Young technology firms sniff around the edges, inventing cashless automatic-payment systems for retailers.

“Overall, the retailing function is becoming more automated, and I wish the vending industry had a more commanding position in it,” says Sanford.

Today, vendors are nervously watching the inflation index. They hate inflation more than anything. Rising prices require customers to carry around so many coins that many find it easier to buy their products elsewhere.

“If you’re selling cigarettes at $2.50, it takes 10 quarters,” says vendor Phelps. “You dig?”

The devices on vending machines that accept dollar bills are not a satisfactory answer to vendors, who complain that the retrofit gadgets are unreliable at $500 a pop.

That’s why vendors have joined with the blind and other unlikely allies to push federal legislation that would abolish the dollar bill--which blind people can’t identify by touch--and replace it with a dollar coin. Congress has found other issues more pressing and put off action until next year.

The dollar coin would be especially momentous because it would help every category of vendor. That includes the coin laundry people, the game and jukebox operators, and what’s known as “the gumball and rubber octopus” part of the business.

But back to the french-fry machine.

Ore-Ida, a synergistic subsidiary of ketchup-maker Heinz, cooks the fries with hot air in what is basically a convection-oven approach. Stone and others report that the fries are very good. This is boldly confirmed by Joe Finch, the head of Ore-Ida’s French fry venture.

Ore-Ida has solicited bids from several vending-machine manufacturers and hopes to have 50 or 100 French fry machines in field tests by next spring. Meanwhile, it will work on what is described as a slight smoke and odor problem. Ore-Ida will decide in a year whether to enter full-scale production.

With french-fry machines installed at just 1/2 of 1% of the nation’s current vending machine sites, Ore-Ida figures it could sell more than 100 million pounds of potatoes a year.

Nobody is saying what it would be worth to the vendors.

“We’re in this to sell potatoes,” Finch explains.