Local vending machine startup pivots after spat with health department

ELYA, a startup owned by Danny Sterling, changed the use of its refrigerated vending machines to focus on third-party items and launched a delivery model for its prepared meals. (Photo courtesy of ELYA)

ELYA wanted you to eat like your ancestors by buying its in-house meals from its high-end vending machines. But the year-old local startup ran into an obstacle those ancestors didn’t have to contend with: the state health department.

The company, whose name stands for Eat Like Your Ancestors, has been forced to rethink the use of its signature refrigerated machines and launched home delivery service after its original business model caused a dispute with the Virginia Department of Health.

The fridges, which were once the company’s primary means of selling its own line of healthy prepared meals, have been entirely restocked with a new range of third-party, grab-and-go foods, snacks and beverages in the last several weeks.

The operational shuffle came after the VDH cried foul over the company’s usage of the fridges in May 2021 for not complying with state food regulations.

ELYA launched in October 2020 and within about half a year had begun to set up its machines in a couple locationsaround town. The company’s quick-serve entrees include a chicken-and-rice bowl and a Thai curry bowl among other offerings. Under the original business model, a customer would swipe their credit card in order to open the fridge and pull out a meal or snack.

ELYA owner Danny Sterling said he thought he was all squared away with the health department when the company launched, but later VDH contacted him for more information about the fridges.

“The fridges were approved through the health department and everything was good to go,” Sterling said. “We were very upfront about the operation and the business plan and how the machines work … Everything made sense to our local health department. I think it was a disconnect with the central office. It was purely the fact we were putting prepared meals in a machine that wasn’t monitored by the presence of a human at all times.”

Sterling said the hang-up was that VDH was concerned about the possibility that someone could tamper with the prepared meals in the fridges without in-person monitoring, and the VDH felt the company’s remote methods of monitoring its machines weren’t adequate.

Sterling corresponded with the state for several months about a special permit to continue to use the machines as he originally planned but ultimately decided it didn’t make financial sense to continue down that road.

“It just got to a point with the central office where we didn’t see a super clear path forward. There was a path forward, it just wasn’t economically feasible,” he said.

ELYA swapped out its prepared meals for third-party packaged foods in its refrigerated vending machines after its original business model ran afoul of health department regulations. (Jack Jacobs photo)

In an emailed statement, a Virginia Department of Health official said that while ELYA’s initial model violated state regulations, the agency was willing to find a workaround.

“ELYA’s original business model did not conform to Virginia’s Food Regulations (12VAC5-421) that require all food establishments to have a designated person in charge (PIC) present during all hours of operation,” Food and General Environmental Services Director Olivia McCormick said in an email. “ELYA pursued a variance to this requirement, but due to insufficient documentation the request was denied in November of 2021. VDH offered to work on an amended variance with ELYA, but in the end ELYA decided not to pursue a variance in February of 2022.”

With the original plan a no-go, ELYA launched home delivery of its prepared meals in December. The service is offered within a 30-mile radius of the company’s Manchester headquarters and kitchen.

Sterling said the move quadrupled sales, and the success of the venture helped motivate him to pivot the model and allowed him to find a way to reuse the vending machines. He said the machines cost $4,800 new with shipping, and the company has six of them (half of which were bought used).

“Being candid, I hate sunk costs, so there’s that. It’s really hard for me to let stuff go, especially when I love it so much. I love the tech of the fridges. I think it’s so innovative and cool,” Sterling said.

ELYA now has four vending machines around town that serve offerings from companies like Rebbl, a California-based company that makes health-conscious beverages, and Mid-Day Squares, a Canadian chocolate protein bar brand.

Sterling said the company has tried to stock the fridges with brands that aren’t as common locally, and the move has had a good reception. The machines are located at The Ella apartment complex near Scott’s Addition, at The Locks Tower apartments downtown, at 3121 W. Leigh St. in Scott’s Addition and the company’s Manchester headquarters.

“We’re still running the machines because we’re able to put packaged foods in them just like a vending machine,” he said. “My wife has really headed up research and development for new consumer packaged goods companies, so we’ve been getting some pretty obscure stuff from all across the world.”

Sterling said demand for additional machine installations is strong and there’s a waitlist for new locations. He added that the machines help advertise the company and have driven online sales of the prepared meals.

The company does its home meal deliveries with an in-house team and has four employees. It is working on expanding its number of drop-off locations for prepared meal orders. In late April, it plans to roll out catering service.

Looking forward, Sterling said ELYA is hungry for a bigger space than its current headquarters at 7 E. Third St.