Foodservice: Category or More?
With a towering, tiered roofline fronted by a row of umbrella-festooned tables, QuikTrip’s latest prototype is more café than c-store.
Along that thought, Wawa’s jaunt to central Florida will radically break from its successful Mid-Atlantic predecessors. Rather, it too is promising a concept that fosters a bistro feel with outdoor seating and an expanded, all-day menu.
Are c-stores morphing into Panera Bread locations? Is foodservice our true gestalt? Our cover story by Samantha Oller and Abbie Westra suggests yes and no. Actually, more no than yes.
In what is arguably the most important research project of c-store foodservice ever undertaken, data specialists Technomic surveyed an online panel of 3,755 consumers who shop at one or more of 20 leading c-store chains in terms of foodservice. The report, which Technomic shared exclusively with CSP, delves into how these customers grade their leading c-stores when it comes to foodservice.
Frame that question a bit differently and what you have is: Is your foodservice program meeting your customers’ needs?
For a chain such as Stripes in Corpus Christi, Texas, which caters to a large working-class Hispanic community, its Laredo Taco Company makes much more sense than a robust pizza offering, which Casey’s delivers to its Midwestern, largely Caucasian clientele.
In that spirit, it is clear that many of the top retailers have positioned foodservice as a differentiator and have invested millions of dollars into delivering a program that meets the expectations and needs of their demographics.
The companies that score the highest with their constituents are Wawa and QuikTrip, two companies with remarkably distinctive foodservice histories and programs. Wawa’s foodservice is masterful in its taste, menu, technology and aesthetic plan-o-gramming. Quik-Trip’s is evolving and becoming a model for self-distributed freshness and customer experience. Companies such as Pilot Flying J, RaceTrac, Casey’s and Stripes score well on brand perception—a place where the customer comes first and is a place “I can trust.”
Equally striking is that for many of our industry’s biggest chains, foodservice is not a special destination. Rather, it is a category. Yes, it’s an important category with a lucrative gross margin, but it’s a category nonetheless, no different than tobacco or packaged beverages.
It is these companies that, in truth, represent the majority of our industry. If there is a wedge segment in our channel, it is foodservice. Preliminary numbers from the NACS State of the Industry Survey of 2011 Data showed top-quartile performers generating double the operating profit of second-quartile operators—and six times the operating profit of bottom-quartile retailers.
And what is the No. 1 contributor to this extraordinary gap between the haves and the have-nots? Foodservice. The industry’s top 25% averaged more than $36,000 in monthly foodservice sales per store—nearly 283% more than the bottom 25%.
Several industry leaders have said it well: The very best convenience chains are padding our industry averages. The Technomic report underscores this observation. When it comes to food quality, taste, variety and visual appeal, our industry’s best—with few exceptions—lose out to QSR chains. And when we move out of our bailiwick to emerging trends such as healthy options and limited-time-only offers (LTOs), the gap between us and our QSR colleagues widens.
Frankly, we as an industry are not nearly as vested in foodservice as McDonald’s, Dunkin’ Donuts and Chipotle. With the exception of a few dozen chains, foodservice is a category, not our business. Most of us offer roller grills, a modest prepackaged morning and lunch selection, and fountain and coffee. There are no baristas or prep teams slapping sandwiches together or tossing pizza pies for the afternoon run. And that’s OK.
If there is a lesson in Technomic’s report and the latest SOI data, it is this: Be yourself. If you are Wawa or Sheetz or Nice N Easy, foodservice is part of your brand identity. If you’re 7-Eleven or Circle K, the expectation is different.
As one respected operator recently told me, “Foodservice is not our thing, and we’re kidding ourselves if we say it is. Yes, our prepackaged sandwiches are fine. But are we Subway? Of course not.”