Did you make it to the After-Dark Lounge? What new products did you try at the Food Pavilion? Did you meet anyone new? Questions such as these swirled through conversations at the third annual FARE, the only cross-channel conference dedicated to retail foodservice. For three days in late June, more than 500 retailers and suppliers gathered at the Hotel InterContinental O’Hare to hear knockout speakers, attend more than a dozen breakout sessions and hang out at the After-Dark Lounge for fun and networking. Read on for highlights of the conference.
Find a Way to Create the ‘Wow’
Never underestimate the importance of the “wow” factor in attracting repeat business, according to Christopher Koetke, dean of the school of culinary arts at Chicago’s Kendall College. “Whoever your guest is, as they walk out, do they look at each other and say, ‘Wow’? If your guest doesn’t leave with a ‘wow,’ you do not have them as a repeat guest. The ‘wow’ could come from a variety of areas—great food, clean location or customer service. But get it somehow.” Koetke also addressed the state of the foodservice industry, saying he’s seeing “hopeful signs” for the rest of this year. “The reality is, the industry is growing,” he said. Koetke outlined several trends that foodservice operators should think about:
- Upscale/downscale—How can operators give customers something for less money that still feels like getting more?
- Ethnic influences and specialties— Koetke said operators need to focus more on ethnic cuisine. Start with a broad term such as Africa but focus on regions. Look for cuisine from regions of Mexico, Morocco, Brazil and Southeast Asia.
- Kids’ offerings—Data suggests that kids mimic parents, so offering kids only chicken fingers and burgers is a missed opportunity. If operators can get the kids, they can get the parents. He also suggested printing pictures of the menu items so kids can point to what they’d like.
- Breakfast and snacking—Offering breakfast all day is becoming more popular, as are snack items. Koetke recommends looking to fast food to see what works. The reality is that three traditional meals are going away, he said; operators can’t afford to be limited to those three. Koetke also discussed the importance of local purchasing, healthy options and sustainable practices. “Getting rid of Styrofoam is one of the easiest changes and will be the change most noticed,” he said.
“Seventy-five percent of consumers say they are trying to eat more healthy foods. So the question is, how do we put taste and nutrition together successfully?” —Lindsey Ramsey
FRESH NOT EASY
Retailers offer ways to promote, communicate c-store ‘freshness’
Freshness: It’s a very simple concept that’s very difficult to execute, especially for convenience retailers. It was one of the most mentioned words during all the sessions at this year’s FARE. And it turned into the crucial theme that the panelists of the “Mining for Gold in the C-store Channel” session sought to solve. Behind that one-word mission lies a checklist of actions: calculating waste, communicating your message, ensuring food safety, inducing trial and, in the end, becoming a foodservice destination.
Waste continues to be a thorn in the side of c-store foodservice, because a percentage of waste is the price you pay to convey freshness through abundant merchandising. “It’s something we talk about every day,” said panelist Bob Derian, director of foodservice for Atlanta-based RaceTrac Petroleum. “If you want to reduce spoils by putting out less food, you’re going to reduce sales. Instead, you have to control spoils by keeping an eye on it.”
One way to ease waste for RaceTrac was to reduce the number of foodservice products that were delivered frozen. Derian then replaced those products with fresh-food SKUs, which require quicker turnover. Not only did the adjustment increase food turnover, but it also better aided limited-time offers.
For Michael Sherlock, director of foodservice for Wawa, communicating those freshness cues is a constant exercise. While the Wawa, Pa.-based retailer has a strong foodservice reputation in its existing markets, it nonetheless struggles to reach such acceptance when it moves into new regions. The company does that, Sherlock said, by getting the customer in the store with traditional cstore items such as fountain beverages, and then driving the foodservice message once they enter the store.
Another pain point, and one the panelists agreed the industry should work on, is food safety. “[It’s like driving] 55 miles per hour in a school zone, and sooner or later you’re going to get caught,” said Derian. Even programs with little to no food prep need to have strict standards and protocol in place, he said.
Power Mart’s deli/foodservice manager, Danielle Limbers, urged attendees to always ensure equipment is functioning in compliance with food-safety regulations. That includes proper temperatures on her three Chicago-area stores’ numerous types of hot and cold display cases.
At Wawa, store-level food safety training includes computer-based training, as well as requirements for vendors and distributors.
As competition continues to heat up between c-stores and QSRs, creating a point of differentiation is crucial. Limbers has found success highlighting regional Chicago foods such as Italian beef and pizza. She also suggested retailers sample at the right times to induce trial. “As soon as our pumps are full, we go out with trays of food,” she said.
“For us, it was about research— learning who your customer is and what drives them,” said Sherlock. He asks vendors to supply him with key data, and the company conducts focus groups and intercepts.
Yet in the struggle to succeed with freshness, all three panelists agreed retailers must not lose sight of what they are: convenience retailers. Sherlock explained how Wawa was trying to compete with QSRs on bundling and combo meals. While a QSR has the advantage of delivering all the items of a combo meal—sandwich, drink, side—in one place in the store, the cstore’s point of differentiation is the hundreds of drink options and the countless sides. So instead of worrying about making it a one-stop interaction, the chain created synergies across the store through signage.
“It’s all about convenience,” Derian said. “You cannot lose that.”
How to Fulfill International Dining Expectations
Global customers aren’t very different from those stateside except for one detail—their most valued expectation in dining is pleasure. So said Valérie Lobry, managing director of the agriculture and food division for Comexposium, a Paris-based firm that hosts global food-industry shows SIAL. “Though consumers’ needs are the same everywhere, they are expressed differently abroad,” Lobry said. “There is no food globalization. Concepts must be adapted to local habits and cultures.” Lobry presented five expectations that global consumers have for retail dining:
- Pleasure: As Lobry said, pleasure is the most important expectations for international consumers as they look for high-end ingredients balanced with reasonable price. Locations that do this well include sandwich/salad concepts Miyou, Ouest Express and Paul, all in France.
- Play: Some concepts employ interactive features such as touch screens and cell-phone scans.
- Health and Physical: Concepts that fulfill these expectations focus on healthy, natural and fresh food, along with sustainable practices. They also highlight foods that improve memory, digestion, allergy concerns, etc. One example is Exki, a Belgium concept that features all-natural fresh food.
- Convenience: Although an obvious expectation for U.S. operators, it is something that concerns international consumers as well. Lobry said they want to feel at home while experiencing value for the money.
- Ethics: Somewhat tied to the health and physical expectation, ethics is more concerned with products that are Fair Trade, sustainable and natural. Lobry recommended Paris, Brussels, London and Shanghai for inspiration on how foodservice overseas is evolving. —Lindsey Ramsey
Tech Buzz: Mobile Marketing
Mobile marketing is emerging as a dominant tool as cell phones or similar mobile devices replace computers as a primary way people access the Internet, according to Rodney Mason, a tech futurist and CMO of Moosylvania, and Josh Karpf, senior manager of digital media communications, PepsiCo, Purchase, N.Y. Here are some growing trends:
- Technologies based on global positioning systems (GPS) that allow users to let friends know where they are, and at the same time grants a “badge” or credit for visiting the location. It allows players to earn titles such as mayor of the location for getting the most badges. One of the better-known services handling this medium is called Foursquare.
- Bluetooth. The technology used for wireless phone use can also allow short-range communication between a retailer and any customer who grants permission. It makes on-site promotional messaging a convenient possibility.
- Snap tagging. With a simple sticker applied to a product on the shelf, a customer can take a photo with his or her cell phone and access coupons, additional information or video.
- Phone apps. Downloadable applications allow customers to access menus, store locations and even credits for visits, similar to the GPS-based technologies.
Social-Media Best Practices
When Kraft got involved in social media, the company’s legal team “got nervous,” according to Barb Pritikin, senior promotions manager and for Northfield, Ill.-based Kraft Foods Inc. As social media has stepped to the forefront, she cautions, “You don’t control your brand—your consumers do.”
Still, benefits of social media can include engaging in a continuous conversation, learning from consumers by listening, fostering consumer advocacy and earning stronger brand equity.
Among the best practices that Kraft has since outlined:
- Define objectives and have a sound strategy prior to engaging. Pritikin suggests developing a social-media style guide to define your brand voice and having a social-media content calendar.
- Move beyond a checklist approach, and use integrated marketing.
- Build a social strategy based on where and how patrons engage.
- Be transparent and authentic when engaging.
- Engage cross-functional teams.
THE GOLD STANDARD
Fare award recipients discuss best practices that brought them to the top
Balancing the “wow” factor with value is a main concern for most foodservice operators, and the winners of Fare magazine’s first Leaders in Retail Foodservice awards showed that they’ve learned to walk this tightrope.
The winners were introduced during the session, “Gold Standard: Insights from the Best in Channel,” moderated by Fare executive editor Abbie Westra. They are Byron Hanson, director of delis and food service for Lunds/Byerly’s; Jerry Weiner, vice president of food service for Rutter’s Farm Stores; Steve Hammel, dining services program manager for the Navy Region Southwest; and Ken Toong, executive director of dining and retail services at the University of Massachusetts Amherst.
Getting customers to try new options is half the battle, according to Weiner. He said he sends employees out to the gas pumps with samples to try and entice them inside.
“I think sampling is the most effective way to way to build new business,” Weiner said. “The most important thing to remember is to sample when the item is at its peak of freshness.”
Weiner also recommended sampling different day-parts. “If the customer is coming in for breakfast, give them a sample of a lunch item to encourage them to come back for a different day-part,” he said.
All the panelists agreed that it is vital to negotiate sampling product into vendor deals. Hanson said he prefers to hire someone special to man the sampling tables because that interaction is vital to the sale. Ensuring that employees sample the product is also important because they can often be the best salespeople.
Solving the value equation was also a big concern for the panel. How do you price items so they are perceived as high quality yet are still considered a good value? Hammel says he increases profit margins by upselling and offering combo meals. “We offer a $5.99 lunch buffet,” he said. “We can offer that buffet as an advertisement for our other more expensive buffets. So it’s not just about that day’s offering.”
Toong says when he first came to college dining, students missed about 45% of their meals. To increase value, he implemented continuous operating hours so students could eat when they wanted. They also started allowing parents to eat for free, which encourage the kids to get more involved in the dining program. Consistency is also key to keeping up the value perception; to that end, Toong brings in student secret shoppers to look for areas to improve.
Hanson agreed that consistency is a big factor in creating value. “You always hear that it’s better to be mediocre consistently than have periods of greatness,” he said. “When you set the level high, you’ve set yourself up to fail. Set it at a level you can maintain.” Hanson offers a lot of seasonal items for a limited time to encourage customers to buy now or miss the chance.
The panelists also touched on spoilage and offered some insights into how to manage it. Because of strict military restrictions, Hammel said he has to keep his spoilage to less than 1%.
Weiner said while he is nowhere near less than 1% for spoilage, he manages it by building it in to any new product. “I put it in on the expense line so it was easier to track,” Weiner said. “We can’t just not put product out there or it would bring sales down. Developing a reasonable spoilage line that is built into expenses works for us.”
VALUE EQUATION
Understanding internal values helped QSR leaders rediscover success
Dunkin’ Donuts didn’t just hop into coffee retail as a reaction to McDonald’s. The doughnut company had always sold significant amounts of coffee. But a connection to its core values helped plant the seeds for rejuvenation, according to a Dunkin’ executive.
With more than 50% of store sales coming from coffee, the chain’s repositioning to “America runs on Dunkin’ ” was both a revelation and a logical migration, said Jon Luther, executive chairman of Dunkin’ Brands, Canton, Mass.
But while seemingly natural, change did not come easy. “You always have to have the support of the people working for you,” Luther said. “You not only have to get their support, but you have to persuade them to believe in you when you’re making all the changes.”
The hardship included interviewing his teams and identifying people who would no longer fit the new directions for both the doughnut chain and its sister company, ice-cream retailer Baskin Robbins.
For John Schaufelberger, senior vice president of global product marketing for Burger King Corp., Miami, the key is crafting a relevant message in a cluttered environment. “Part of our values means having fun to where we may border on controversial,” he said.
Among the many Burger King marketing projects has been the use of the plastic-headed king who has several offbeat adventures in multiple commercials. “It’s better to be talked about than not talked about,” he said. “But we take it seriously when we develop [our message] and speak with the same voice.”
He described the chain as “innovative … with attitude and edge. We need to convince customers to drive past two or three McDonald’s to get to one Burger King.”
As an example of keeping to core values both with product and message, Schaufelberger said the company did experiment with coffee but decided to go with a branded offer, Seattle’s Best, which complemented its capricious persona.
Also expounding on the idea of values, Hala Moddelmog, president of Atlanta-based Arby’s, said her company is undergoing a turnaround, with part of the issue being that the younger set did not grow up with roast beef, the chain’s legacy menu item.
“You have to have a reason to exist, why a customer wants to buy your product,” Moddelmog says. “It’s the why, the how and the what … but to get to the why, that’s not completely obvious. And if you don’t get to the root cause, you’re never going to be as successful as you can be.”
Sid Feltenstein, who led a range of fast-feeders including A&W and Long John Silver’s, advised retailers to never lose sight of local, state and federal government developments.
Specifically, Feltenstein said retailers should follow legislation that would allow organizers to unionize a retail facility by signing up a certain percentage of workers. Though the recession has slowed down talk of this legislation, he believes the discussion will return. “I would encourage each of you to actively engage with local legislators,” he said. “The implications for … all small businesses and service businesses outside of this room are huge.”
Foodservice With a Cause
Looking for a charity to back? Hala Moddelmog, president of Atlanta-based Arby’s, said philanthropic activity can help a company’s bottom line. Here are some tips:
- Be authentic. It’s about being believable. Consumers can see through a charity link that has no logical or organic tie. A simple test: Does it make sense?
- Brand. Find causes that match a brand’s personality, one that helps a company define its image to the public.
- Have a strategy. Many of the smaller decisions will swirl around a larger, focused strategy.
How to Lure Customers to Multiple Day-Parts
Pinpointing opportunities that exist in today’s value-focused landscape led to discussions of daypart strategies, lifestyle trends and what sustainability means at the store level at this year’s FARE.
The blurring of channel lines and traditional eating occasions has created an opportunity to capitalize on day-parts, with the multiple-day-part customer being a more loyal, higherspend ring, according to Michele Schmal, vice president of CREST product management for The NPD Group, Port Washington, N.Y. Schmal was one of three panelists during the opening general session.
“Twenty-five percent of customers visit stores for more than one day-part, but that’s 40% of the business,” she said. “Developing the multi-day-part is also a way to increase frequency, which is the [ultimate] goal.”
Snacking and breakfast are two dayparts receiving a lot of focus, with quick-service restaurants (QSRs) currently promoting new breakfast items, including some with eggs portioned as potential afternoon snacks.
Ways to communicate day-part messages include ads, promotions and “bounce back” marketing strategies, wherein the purchase of a breakfast item will lead to a free lunch item. Schmal referenced a promotion from QSR chain Subway, Milford, Conn., that bought both a breakfast and a lunch option for $5. The promotion suggested that while the customer was there buying breakfast, he or she could also pick up a lunch item to eat later at work.
Keeping up with breakfast and snacking trends is all part of staying relevant, said Ron Paul, president and CEO of Technomic Inc., Chicago. He cited several restaurants that were ranked in the top 100 performers in 1999 but didn’t make the list 10 years later. The ones that fell off the list lost their “lifestyle relevance.” For these chains, “customers perceived a declining meal-occasion opportunity—they believed there was somewhere they could go for a better experience.”
Other indicators of failure were the lack of concept differentiation and inadequate brand reinvestment.
Keeping up with consumer lifestyle and value perceptions also means paying attention to the trends of health and sustainability, according to Michelle Barry, senior vice president of The Hartman Group, Bellevue, Wash. Her research shows people moving away from extreme views of staying healthy: “They don’t want to be hit over the head with it.”
In terms of marketing, Barry said, the messages should be about simplicity, play and being natural. Regarding food ingredients, for instance, she said, “If you can’t pronounce it, don’t eat it.”
Sustainability is also tied to the concept of health for consumers, but not in the way many retailers suspect. She said it’s not about the kind of light bulbs a store uses as much as cleanliness of the store and whether the employees are treated well.
The concept of being “local” also relates to sustainability, with product from local farms and suppliers a plus for consumers. But local, in many cases, is a broad term, defined as much by simplicity and tolerable working conditions as by distance. Barry said “the narrative” behind a brand is important to today’s consumer.
“So think quality, local and fresh,” she advised retailers. “These are key drivers across the board.”
Product Development: Find the Passion
Recalling his quest for the world’s best tiramisu, Marc Waltzer of Premiere Culinary Consulting Group, Greenville, Wis., said he once ate 200 servings over a period of 10 days.
“Entrench yourself,” he said, “and you won’t be a follower—you’ll be a leader.”
Finding the passion to differentiate a taste profile and marry that with profitability and a brand message equals success, said Waltzer, who has consulted on new-product development for many Fortune 500 restaurant chains.
“Don’t look at your sandwich as just another sandwich,” he said. “Don’t make your salad just another salad. Make the best cookie known to mankind.”
As a suggested strategy, Waltzer said companies could tie their new product to a core, branded ingredient, such as butter or chocolate. Pick a key, fundamental ingredient and use the power of the brand, he said. Other tidbits of advice:
- Consider ancillary products. A new-product “home run” means considering a product and how it interacts with the entire mix.
- Selling fresh-baked chocolate-chip cookies can set up a new foodservice product for success, providing customers with the groundwork to consider the store a destination for fresh food.
- Allow a cross-operational team to help build the new product. Having a number of people involved achieves buy-in from those who ultimately have to sell the product.
Create a Foodservice Vision
Kevin Higar’s food talk was a veritable gastronomic trip across the nation’s most progressive eateries, from the sumptuous, always-fresh Carlos Bakery in Hoboken, N.J., to the rooftop vegetable garden at Chicago’s trendy Xoco. Technomic’s senior manager and unofficial epicurean, Higar encouraged attendees to build their own foodservice vision, centered on local, sustainable and memorable. With nearly three-quarters of those responding to a Technomic survey considering themselves socially responsible, it is increasingly important for emerging foodservice operators to deliver on a social message built on high-quality food but elevated by publicly visible values. “Organic will be there,” he said. “But people are more comfortable with … the whole idea of local,” said Higar. Local, however, is not limited to strict local borders, he said. It carries numerous meanings, including:
- Value Add: Cora restaurant chain in Canada offers happy-faced fruit and creatively cut vegetables that are fresh and locally grown.
- Seasonality: An emerging trend is including limited time offers (LTO) based on season. Magnolias in Charleston, S.C., for example, includes a menu item labeled “Fresh, Local and Vegetarian.” What the item is specifically depends on time of year. “In the past, the hook was ‘We’re vegetarian,’ ” though a decade ago vegetarian often meant boring, he said. “Today, it’s all about the flavor profiles.”
- Concept: From colleges promoting “farm to college” to restaurants espousing zero-carbon footprints and biodegradable cutlery, more operators are extolling environment and conservation. So, Higar said, it’s not just about the ingredients. In that vein, he cited restaurants where the meals and teas are made in plain sight of diners, and where lighting, scent and theater are essential assets to the consuming experience.
Be a Master Merchandiser
Space, people, equipment: These are the three fundamental anchors of a robust foodservice program, according to Aramark’s Ann Marie Solomon and Ron Bennett.
Together, Solomon, vice president of merchandising strategy and creative services; and Bennett, merchandising director, outlined several fundamental strategies for building a profitable foodservice program.
- Service Flow: Ninety percent of customers enter a store and head right. Yet even with that knowledge, many retailers don’t exploit it. Place the highest- profit, most popular items on the right; offer food samples on the right. Also, design a plan-o-gram that lets patrons browse and truly see impulse items. Old Navy, for instance, places shopping bags at different points in the store to help support impulse buys and promotions.
- Sequencing: Here’s a frequent mistake at the coffee bar: Put cup and lid together, turn around to get coffee, then turn back for condiments. The lid is the last item needed yet frequently is placed with the first item, the cup. Likewise, consider natural food adjacencies such as strawberries and cream, and offer combination meals.
- Maintenance: With a mindset of fresh and abundant, Solomon talked about different-sized service trays, with bigger, deeper trays for the morning and afternoon rush, and smaller trays for non-peak periods. The key, she said, is that no one wants to buy the last tortilla or sandwich—and lack of stock gives an impression of old, unappetizing food.
- Communication: Use communication— packaging graphics, signs, navigational tools—to underscore your core values. From nutritional guides to ecostewardship, signage and packaging are major differentiators of a total foodservice program. For an original experience, check out Jungle Jim’s of Cincinnati (www.junglejims.com).
- Presentation: Stimulate the palate through alluring presentations, from tiling food to stacking desserts, or delivering inside-out sandwiches that highlight the filling by placing the top bun beneath.
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