On the heels of an announcement that c-store same-firm foodservice sales are up 10.8% and gross profit up 7.5%, a breakout education session shared the steps needed for retailers to continue that momentum.
Jerry Weiner, vice president of foodservice for Rutter’s Farm Stores, York, Pa., emphasized consistent execution. Intriguing menu items, captivating marketing or state-of-the-art equipment won’t matter if you can’t deliver a consistent product every time.
“That’s the difference between success and failure,” he said.
Tim Powell, director of c-store programs for research firm Technomic, Chicago, challenged attendees to differentiate themselves from the pack by delivering beyond the basics. Once service, food quality and store appearance are mastered, he said, retailers must focus on restaurant-caliber points of differentiation such as menu desirability, hospitality, lifestyle integration and concept essence.
Weiner concurred: “It’s not just location, location, location, but location, location, location and differentiation.”
Powell and Weiner explored other crucial ingredients for meeting foodservice expectations.
Consider Day-parts—or Lack Thereof
“It’s not when you eat; it’s what you eat, “said Powell. Consumers are increasingly eating upward of six smaller meals throughout the day, and c-stores are well positioned to cater to a snacking society. According to Technomic, the majority of consumers (64%) already choose c-stores as the ideal destination for a snack.
While breakfast continues to bring in strong numbers at Rutter’s (delivering% to 30% of foodservice sales), Weiner emphasizes offering the breakfast manual day—something many QSRs, including McDonald’s, cannot do.
“One person’s dinner is another person’s breakfast,” he said. “Be the place that has it all.”
Meanwhile, Weiner sees lots of money waiting for those retailers who can succeed at dinner. The key is “getting on your customer’s mental list for dinner options.”
2. Deliver Value Beyond Price “Don’t get into a price war,” Powell warned. Price is part of value, but it also means service, cleanliness, variety and experience. And there are plenty of things to focus on: According to a recent Technomic poll, consumers believe the biggest issues c-stores need to improve upon are higher-quality food, better overall value and healthier options.
3. Customization Is King
Thanks to restaurant concepts such as Chipotle, consumers are accustomed to having some control over their meals. Weiner has found success allowing guests to customize meals via touch-screen ordering, and has seen many of them building complete meals out of a combination of smaller appetizers and snacks.
Technomic recently asked consumers what amenities they find appealing for c-stores. Fifty-seven percent of respondents said made-to-order sandwich bars/stations are appealing; 50% said made-to order salads are appealing.
Yet customization can mean different things to different consumers—especially when paired with convenience. When asked how they preferred hot, fully prepared foods to be merchandised, 40% answered “ready-made and kept warm on a roller grill.” Twenty-two percent said “ready-made and kept warm in a display cabinet,” adjust 20% answered prepared to order.
4. Bet on Breakfast
For retailers who don’t yet have a strong foodservice program, Weiner recommends starting with breakfast. The food costs are strong, it’s easy to compete against QSRs on quality and c-stores already have strong morning traffic.
5. Private Label as Differentiator
The consumer’s perception of private label has evolved in recent years from a cheap alternative of questionable quality to a high-quality, branded offer with strong value.
In fact, said Powell, 30% of consumers prefer store brands at c-stores, and 35% believe c-store-brand foodservice items are as high in quality as name-brand items.
6. Food Safety, the Unsung Hero
“If this isn’t what keeps you up at night, it should be,” said Weiner. At the minimum, he said, implement a state-certified ServSafe program. From there, train and certify all management and institute quality assurance inspections.
“It’s a responsibility that we take when we embark on this path. Forget the financial impact— there’s a moral impact. So take this seriously,” Weiner said.
7. Run It Like a Restaurant
“You are a business within a business, and you have to think like a restaurant, “said Weiner.
It’s a retail tendency to focus on managing controls. Foodservice, meanwhile, is all about driving sales.
“If you manage controls, you manage yourself out of business,” he said. That means understanding food costs, labor and waste needs—both of which will be higher than in retail.
“Zero spoilage means lost sales,” said Weiner, so allow for waste, track it and factor it into food costs.
As a baseline, Weiner recommends targeting labor costs at 20% to 30% and spoils at 8% to 15%. Those numbers will greatly depend on whether you’re producing food on-site (higher labor, lower waste) or at a commissary (lower labor, higher waste).
“I used to work at Marriott and they used to call me if my food cost went up one point. One point!” Weiner said.
8. Lead with Beverages
Despite 2011 being the first year that both food and beverage drove foodservice sales gains, beverages are still the main attraction.
C-store coffee drinkers are particularly valuable customers. On average, they spend more on foodservice than any other demographic—even heavy c-store foodservice users. The majority of these shoppers are buying regular brewed hot coffee, so ensure your program is in top shape.
9. Become a Destination, Offer an Experience
“I can’t think of anyone who does experience better than Starbucks,” said Weiner.“They own the word experience.”
Weiner places nearly all foodservice prep and cooking in clear view of the customer, which forces the program to be clean and appealing. That appeal must also carry through to the exterior of the store with visual cues that the store is a dining destination.
Weiner further advises against carving out a corner of an old store for a new foodservice program. Often, the entire store will be an upgrade to make the customer comfortable trying the food.
10. Be Patient
“Getting there is a process and it could take several years,” said Weiner, who has challenged himself to master the dinner day part in five years. “A lot of that is how long it is going to take your customers to think of you as a foodservice destination.”
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