Three Retailers, Three Approaches
Kwik Trip, Stripes, PowerMart execs share foodservice strategies
PHOENIX -- From the cool air conditioning of a conference room at the Pheonix Sheraton, the brand new hotel hostingCSP's 2009 Convenience Retailing Conference, it's difficult to remember that it's winter in other parts of the country. A necessary side effect of cold winter weather: snow--and like each snowflake is different from the next, so are convenience store foodservice programs, as evidenced by the three members of the panel on foodservice and consumer insights: Steve Loehr, vice president of operations for Kwik Trip, La Crosse, Wis.; David Wishard, vice president of business [image-nocss] development for Corpus Christi, Texas-based Stripes; and Sam Odeh, president and CEO of Power Mart, Chicago.
For David Wishard, a member of the Stripes team for more than 13 years, foodservice is a departure from his regular skills. "I'm not a foodservice guy," he told the audience and the panel moderator, CSP group editor Mitch Morrison. "I'm a convenience-store guy." This is difficult to imagine, coming from a company that offers handmade tortillas and Mexican fare in 524 stores in the Southwest.
"We're kind of anti-Taco Bell," he said, citing that Stripes sells 135,000 foodservice items per day in their Texas stores alone.
Wishard said that Stripes originally got into foodservice because of decline in cigarette sales, and now the company "wants to be famous for tacos."
Sam Odeh explained that the theme at his Power Mart stores is simplicity. His brand includes a drive-thru restaurant, Powmaro private-label products packed on-site, and a transaction counter that "screams foodservice."
He offers a "shop-around experience" that leads the consumer through his private-label brands to the transaction area. He also offers a proprietary foodservice program called the American Wood Grill.
When preparing to ramp up his foodservice program, Odeh hired experts and chefs. Unfortunately, he said, "these folks really go wild." It was up to Odeh to bring them back to reality, so he took them out to meet some of his independent retailers. After the visit, "they looked at me and said, 'Now, why did you hire us?' "
Steve Loehr, a man who has experienced winter in Wisconsin from Kwik Trip's headquarters in Wisconsin, said that "bad weather is great for coffee sales."
Kwik Trip's foodservice program is based on a model of vertical integration. The company operates its own dairy, bakery and commissary, then distributes those products to each of its 330 stores.
"We really push these three components: people, food, vertical integration," he said.
The four key attributes of Kwik Trip's food program include training, food safety, vertical integration and retail merchandising. Kwik Trip is also heavily invested in safety, operating a food-safety lab.
Loehr asked that the retailers present remember that "foodservice isn't something that happens overnight." Kwik Trip is light-years ahead of where it was when the company started the program seven years ago, he said.
Here are some of questions the panelists tackled:
What is your biggest challenge and biggest fear?
Wishard: His biggest challenge is trying to take foodservice and fit it into the convenience-store box. "It's not for the faint of heart," he said. Food safety is his biggest fear. He said the company incorporates food safety into its program at the store level.
Odeh: "It's a nightmare," he said. "I hope to never experience a food-safety [issue]."
Are hot beverage products powerful sellers all year round? Or is it seasonal?
Loehr: "We do well all year round, but certainly in the fall or winter [sales go] up sometimes 35%."
Odeh: "Coffee, no doubt," he said. "Sales increase in cold weather certainly." Power Mart actually had to expand its coffee program according to demographics; it now imports Turkish coffees. "People are actually willing to wait 7 minutes" for the coffee to be prepared properly, he said.
What do you make of the news that consumers are downtrading from casual restaurants to convenience stores and QSRs?
Loehr: Kwik trip developed a premium pizza that sells for $8 to $10. It also developed a lower-price version for $5. "It doesn't sound like much," but Kwik Trip went from selling zero pizzas per store to eight pizzas per day per store. "Pizza Hut was getting that [business] before-and now we are. And [customers] are picking up other items in the store as well. I think there's a great opportunity for these kind of menu extensions. People are definitely trading down. "
Coffee and roller-grill foodservice programs are all some people feel that can do in their store. Is that enough?
Loehr: "If that's all you can do, then be the best at it that you can be. Have it be as fresh and as good as it can be. Have variety."
Wishard: A little creativity goes a long way, he said: "You only have limited space; keep it fresh, keep up quality."
[Pictured (left to right): Mitch Morrison, Steve Loehr,Sam Odeh and David Wishard.]