The Daily Dilemma
A look at the future of daily fresh-food deliveries, and what’s in their way.
Given the amount of ink, stage time and simple conversations spent on how to improve c-store foodservice, the industry is nearly out of breath. We’ve learned there is no overnight solution, no magic bullet. Patience isn’t a virtue; clichés don’t work here. It’s table stakes.
But since the foodservice drumbeat began pounding, the industry has largely focused on the store level: how to create a “theater” of foodservice, how to offer trendy products, how to sample, price right, balance the books correctly, market, train staff, count waste …
But lurking beneath has been one messy, multi-headed question: How do you make it fresh?
Unless you opt for a made-to-order program—which the majority of the industry has yet to embrace—the fresh-food equation is largely left to the supply chain. And as consumers are increasingly critical of the freshness of food in c-stores, retailers and distributors are left to figure out how to make more regular deliveries—and who’s going to pay for it.
A look at what some of the biggest distributors and retailers are doing reveals no single solution. The delicacy for both sides comes from taking a financial risk without critical mass from consumers waiting in line to buy it.
Reaping What We’ve Sowed
Take a look at the quick-service restaurant (QSR) industry—with its vast cold chain spread from coast to coast, street corner to street corner—and you can’t help but scratch your head at the status of fresh-food distribution in the c-store segment.
But most c-store retailers did not get into this business to be food purveyors; were that the case, they likely would have just opened a restaurant. In this industry, chains grow by acquisition or ground-ups, creating a patchwork of store formats, taking it another step further away from the assembly lines of McDonald’s.
For the c-store channel, foodservice distribution is yet another challenge as it confronts dwindling cigarette and fuel profits.
“The big challenge is brought on by the fragmentation and consolidation going on, and the lack of assemblers and kitchens certified to produce product,” says Joe Chiovera, an industry consultant who previously was vice president of foodservice for Alimentation Couche-Tard’s Circle K, and senior director of fresh foods for 7-Eleven. “The other [challenge] is economically efficient distribution … because of the fragmentation. You need X amount of stores in a market to make it work.”
Bob Fitzsimmons is CEO of Food Authority, a Long Island, N.Y.-based distributor of fresh foods. He does not service the c-store channel, but he does distribute to the restaurant industry, as well as organizations such as hospitals, country clubs and schools. While c-store operators are making progress in offering fresh, he says, the industry has not reached enough mass to be attractive to players like him.
“Two-dozen apples, 20 fruit cups, 10-dozen bananas—it’s very difficult to get a guy like me to stop and do that,” he says. “Until [c-stores] can get the volume built up, it’s a huge gap between where they want to go to get the product they want to get at the store level.”
For Fitzsimmons, c-stores as a channel have not yet made the commitment to serious fresh food. “It’s really a true effort and emphasis: Replace the pork rinds with sliced cantaloupe,” he says. “I believe eventually in time, people do want fresh food more and more. The days of asking for fresh fruit and expecting to get citrus in syrup is long gone. People are expecting it, and wherever they can find it, they are absolutely willing to buy it.”
On the retailer side, a well-engineered foodservice program is essential for justifying the distributors’ investment in daily deliveries.
“The menu engineering of a program at the retail level is absolutely critical because it drives everything else,” says Deborah Holand, a consulting partner with b2b Solutions LLC, Lake Forest, Ill., and founder of foodservice consultancy Food Sense Inc. “It drives how it’s going to get through distribution, all the economics of the model. Once a person says, ‘I can do X amount of volume a week in my store and will focus on it,’ then they can make money at it.
“I think the biggest challenge and limitation is everyone’s own thinking, to be honest,” she continues. “Look across other channels: They have challenges, too, but they make it work in fresh food.”
Based on Holand’s calculations, a c-store making as little as $1,000 to $1,500 per week in foodservice sales can profitably receive daily deliveries—as long as the retailer and its distributor are disciplined and flexible about “the how.”