ANKENY, Iowa -- Pizza concepts are not the only operators stealing foodservice sales from Casey’s General Stores Inc., known for its slices and pies. Restaurants and retailers such as McDonald’s and Dollar General are slashing prices and pumping out promotions for consumers in areas where economic growth has remained somewhat sluggish, said Terry Handley, the retailer’s president and CEO, in a recent earning’s call.
Although total sales for the category were up 5.4%, the stiff competition contributed to the company missing its annual guidance for same-store sales. “In terms of the prepared food, I would certainly tell you … that in the [quick-service restaurant] and prepared-food space you are seeing much more aggressive promotional activity, whether it's McDonald's dollar menus or Dominos two pizzas for a price promotion,” Handley said. “Everyone is struggling for market share. Everyone is in a fight, in a battle.” In response, the c-store is on a quest to create value for customers at its more than 1,900 Midwestern and Southern locations.
Check out how Casey’s plans to take on QSR and dollar-store rivals.
Instead of pivoting to the latest meal deal, Casey’s plans to take a more proactive approach, Handley said. To offer more targeted promotions, the brand is trying to get a better pulse on their customer base. So, the chain is partnering with the Deloitte Digital team and will appoint a new chief marketing officer. Together, the consulting group and chief officer will create a digital engagement program focused on personalized offers and rewards for guests. As part of the initiative, the retailer will update its website, mobile app, loyalty program and in-store technology.
“We are going to know what you want,” said Handley, who expects the investments to drive same-store sales growth by 2020. “We are going to know what your habits are, and we are going to make an offer specifically to you as individuals.”
Casey’s is building flexibility into this digital engagement program, so that they don’t get left behind as competitors such as Dominos continue to innovate. “And simply having a program that is static does not have the ability to be agile and scalable would certainly not do us any good going forward,” Handley said. “So that is why we were as deliberate as we were in this process.”
The convenience-store chain is also leveraging sales and market data to set more competitive prices. Casey’s is working with consulting and analytics firm Impact 21 to make centralized pricing decisions. The price-optimization program will first target the pump and select items in-store, and then Casey’s will roll out the program to foodservice and other categories in first-quarter 2020.
“We believe this program will represent a fundamental shift in our marketing process for both fuel and in-store purchases, due to the increased visibility into our pricing and promotion strategy,” Handley said.
Menu and Service Innovation
By retooling labor and optimizing costly initiatives, such as pizza delivery and 24-hour stores, Casey’s projects savings of about $200 million by 2021. The chain is also testing ordering kiosks in high-volume stores for further labor savings and customer convenience.
As the chain shifts to increasing demand for healthier fare, the chain is testing multi-week deliveries to ensure the freshness of foodservice products. The brand is also eyeing third-party distribution to supplement their current distribution structure. “Again, many of those [healthier-for-you options] tend to be products that are time-sensitive, and we need to make sure that we get those products there,” Bill Walljasper, Casey’s CFO, said on the call.