'It's Change Management'
How to act like a restaurant in order to compete with restaurants
GLENDALE, Ariz. -- What are the tenets to developing a winning foodservice strategy? Just follow your quick-serve brethren, said John Matthews, president and CEO of Gray Cat Enterprises Inc., speaking at CSP's 2014 Convenience Retailing University (CRU).
"Putting grab-and-go sandwiches out there isn't going to take you to the Promised Land," Matthews told attendees during his session. "Embrace the implementation of foodservice or you're going to go nowhere with it."
The first question a retailer must ask is whether they want to create a proprietary program or open a licensed or franchise brand. Branded foodservice is the quickest path to execution, Matthews explained, but proprietary programs can be more profitable.
"The answer isn't one or the other; it could be both," he said. Some stores may be better off with a proprietary brand based on other area competition and the store footprint; other stores may actually do well with both.
The decision comes down to your team's strengths. "Look at your organization. If you've got three former Taco bell guys running your operation, you could probably go proprietary," he said. A team of c-store vets, meanwhile, may lend itself better to franchising.
From there, build a business plan by first splitting your foodservice business off from the rest of your company's P&L. Take elements that affect both sides--such as labor, rent and utilities--and break each down to percentages to be able to apply them to both P&Ls. This will give you a much better sense of how your business is doing.
Above all, keep your eye on what Matthews calls "the big three": food, paper and labor. "You can do whatever you want, but if you don't control the big three, you're not going to make it."
The next step is to modularize your offering. Matthews recommends creating a program that can be broken into components based on different store sizes, staffing capabilities and area competitors. The most complex format can include a full-service deli, chicken, pizza, breakfast, roller grill and beverages. The next module may be just grab-and-go pizza and sandwiches and beverages, all the way down to a coffee-and-fountain-only format.
The following step is crucial to success: operational excellence. "The best operators have one thing in common: They got their systems and procedures done. It's as tight as can be," said Matthews, who points to Jimmy John's (of which he once served as president) as the restaurant chain with the most streamlined operations--which makes them able to promise "freaky fast" service.
He recommended systemizing operations by the month, week, day and hour, creating explicit checklists of any duties that might trip things up and distract staff away from serving the customer.
"When you don't waver on any detail, then you're going to be successful at operations."
From there, consider merchandising and in-store promotions. Create smart adjacencies of complimentary items so the customer doesn't have to walk throughout the store to find chips and cookies, and consider out-of-stocks non-negotiable. Matthews also recommended developing promotions that are both profitable and make it easier for the customer to order--such as Little Caesar's $5 pizzas, where Matthews once served as national marketing director.
But don't just stop promotions at your store doors; one of the most powerful tools in the quick-service restaurant (QSR) arsenal is local store marketing. Most look at the two-to-three-mile radius around their stores and blanket the area with flyers, samples and catering menus.
Matthews shared one of Jimmy John's most important strategies: Every day of the week, around 10:30 a.m., employees make eight sandwiches, cut them in thirds, wrap them up with some menus, and send an employee out to drop them off at neighboring businesses. The result: locals would get a little taste just before lunch—not enough to fill them up, but enough for them to easily pick up the phone and order more.
"They would have never gotten that business had they not gotten out and give them a sample."