4 Lessons From a Proprietary Foodservice Journey

coffee lodge

SHERMAN, Texas -- “A learning experience.” That’s how Diane McCarty describes opening her Lone Star convenience-store chain’s proprietary foodservice concepts. McCarty, CEO of Douglass Distributing Retail, Sherman, Texas, said that phrase often translates to an experience that is expensive and not necessarily pleasant. But despite the major capital investment and inherent hurdles involved in developing new concepts, McCarty said both projects were a blast, and she’s proud of the results.

Here’s some shared wisdom from Douglass Distributing’s recent foodservice journey, transforming a Burger King and its playground into a fast-casual Tex-Mex joint and trendy coffee shop this past March ...

Photographs courtesy of Douglass Distributing

1. Know the community

old burger king

Since Lone Star No. 67 moved into Van Alstyne, Texas, two decades ago, the demographics and business environment surrounding the rural town off U.S. Route 75 have changed quite a bit. In the past eight years, Van Alstyne has added nearly 1,000 residents, and next year the town expects to build 700 new homes, according to local news affiliate K-XII.

When the Lone Star’s Burger King opened, it was a big brand for the small town, but sales dropped by about 60% since its peak, McCarty said. In the past several years, a McDonald’s, Jack in the Box, Braum’s and Sonic Drive-In have popped up nearby, and fewer franchise opportunities were available to the c-store chain. When it came time to renew its Burger King contract, Douglass conducted about 250 customer surveys to find out what the growing community was hungry for. A coffee shop with bakery items and a Mexican quick-service restaurant (QSR) were the clear winners, and because the Burger King playground hadn’t gotten much action from video game-obsessed kids, the store had room.

Looking to stand out amid a lineup of well-known QSRs, the retailer opted for fresh, handcrafted takes on the Starbucks and Chipotle models. Douglass worked with its local coffee roaster to develop the TexaKona Coffee Lodge concept.

“It’s all scratch-made—none of that nasty thaw-and-serve,” McCarty said of the cafe’s food offer. With a baker on-site, the Coffee Lodge offers fresh bakery items and even specialty butter. It also serves an array of cold and hot dispensed drinks, including lattes with personalized 3D-printed foam images.

2. Get established

mi taco

In 2015, McCarty opened Douglass’ first Mi Taco unit in Denison, Texas. The Mi Taco brand offers fresh-made tortillas, queso and sopapillas, a Spanish and Latin American fried dessert.

As part of a broader store renovation, McCarty at first wanted the Mi Taco concept to blend into the bright, clean store design. “Well, that was one theory—a bad one,” she said. “You need to stand out. You need someone to walk in and point and say, ‘What’s that?’ ”

The retailer decided to work with architecture firm FRCH Design Worldwide, Cincinnati, which has worked with brands such as Subway and On the Border, ahead of the March 2018 grand opening. Because Douglass is a company with a lot of ideas and in-house talent, working with any outside consultant can be challenging, McCarty said. However, the partnership helped the second Mi Taco location achieve a franchised vibe. C-stores still have to convince skeptics that they’re an official foodservice operation, so looking legitimate is essential, she said.

Douglass took most of the firm’s recommendations, including updating the Mi Taco logo and adding a partially open kitchen. The retailer’s on-staff graphic artist also added a little pizzazz.

“One of the highest compliments I get is, ‘I’ve never been to this franchise—where else are they located?’ ” McCarty said.

3. Get the food in customers’ hands

texacona coffee lodge

Although the locals have reacted positively to the concepts, the biggest challenge has been marketing, especially for the Coffee Lodge. It saw strong sales during its first two months of operation, but traffic dropped off in the hotter months. At least once a week, McCarty hands out coupons for free and discounted items to customers pumping gas. Most of the customers she meets haven’t stopped at the Coffee Lodge yet, saying they don’t drink coffee or that it’s too hot to drink coffee.

“I assumed incorrectly that everybody would understand that of course we’d have all that other stuff that Starbucks has, too,” she said, referring to iced coffee and frozen coffee drinks. Now, when she talks to young women, she promotes the Coffee Lodge’s iced coffee or smoothies, and when she talks to male customers, she points out the cafe’s “man-friendly” food, such as cheddar sausage biscuits.

“The question is: Did we limited ourselves with the name?” she said.

The concepts’ customer bases were another surprise for the Douglass team. About 80% of the Coffee Lodge business comes from travelers, not the locals they anticipated. A proprietary foodservice program can be a tough sell to out-of-towners. “Our biggest concern about getting away from Burger King was that we’re on the highway. Can we put in two proprietary brands and expect a traveler to give us a chance?” McCarty said.

The answer is yes. Douglass still plans to work with other franchise food partners, but believes it can replicate the concepts’ business models. However, McCarty is working to get more local folks in the door with a second round of mailer ads and a freebie card for local Chamber of Commerce members. For Mi Taco, promotions such as “Taco Tuesday” and “Free Queso Fridays” have helped maintain a steady business. The goal is to get as many people to try the product as possible with aggressive sampling and buy one, get one deals.

“The food is really good,” McCarty said. “I can be sure that you’re going to like it if you try it. But I’ve got to get the opportunity to get it in your mouth.”

4. Expect unexpected labor demands

texacona coffee lodge seating

For Mi Taco, Douglass kept on its Burger King crew, and used Facebook, Indeed and the company website to fill in the gaps. Both concepts had dry runs with customers and company employees, who gave feedback via post-meal surveys.

The first few weeks, Mi Taco was slammed, and it was all hands on deck. Everyone on the management team pitched in. McCarty worked the front register while others washed dishes for an entire shift. Other employees made food runs after Mi Taco nearly ran out before its next scheduled delivery. Even McCarty’s dad, Douglass Distributing founder Bill Douglass, pitched in, prepping salsa containers one day. Mi Taco needed about seven more people to relieve the grand-opening team, so the HR department went on a hiring blitz to get up to speed.