Foodservice Driving C-Store Visits

But c-stores not top of mind for many consumers as meal destination, says Technomic

CHICAGO -- Foodservice has become a key area of opportunity for convenience stores across the country. As revenues from gasoline and tobacco products fall, foodservice sales increasingly are becoming c-stores' most profitable category, according to Technomic Inc.'s Convenience Store Foodservice Consumer Trend Report. As more c-stores increase their focus on providing a wider variety of fresh, high-quality food offerings, competition is heating up within the market--and the foodservice industry as a whole. C-stores are striving to gain a greater share of stomach and to compete with [image-nocss] restaurants.

In many cases, foodservice drives c-store visits, said Chicago-based Technomic. Of those consumers who visit c-stores at least once every six months, nearly half (47%) indicate that they visit these locations for foodservice purchases at least once a week. Within this group, about a quarter (24%) visit two to three times each week and 8% visit daily for foodservice items.

C-stores are not top of mind, however, for many consumers as a place to source meals or snack, Technomic added. Technomic developed the Convenience Store Foodservice Consumer Trend Report with findings from an online survey of more than 1,500 consumers conducted in July 2010. About a fifth of consumers polled (18%) report that they rarely or never visit c-stores specifically to purchase items from the foodservice area. Because Technomic wanted to gauge the usage and preferences of consumers who purchase foodservice items from c-stores, these consumers were disqualified from the survey after this point.

Technomic asked consumers to estimate what percentage of all foodservice items typically purchased at c-stores are for breakfast, lunch, dinner and for snacks. The results reiterate the extent to which c-stores are primarily visited for snacks rather than for meals.

Consumers say that about 48% of the items they purchase at c-stores are intended as snacks. About a quarter (23%) of the prepared food and beverages consumers purchase at c-stores are for breakfast and a fifth (20%) are for lunch. Showing foodservice purchases by daypart also reinforces how low patronage is at dinner in comparison to other occasions. Only about 10% of consumers' total c-store foodservice purchases are for dinner.

A large proportion of the food that consumers order at c-stores is eaten in the car or en route to someplace. Options purchased for breakfast are most likely to be consumed in the car (72%), while walking or biking (26%) or on public transportation (21%). Although lunch from a c-store is primarily eaten in the car (55%) or at work (49%), two-fifths of consumers polled (40%) take items to eat at home or someone else's house.

Dinner, when sourced from a c-store, is most frequently eaten at home or someone else's home (65%), followed by in the car (45%). More often than breakfast or lunch, dinner is also eaten at the c-store (33%). Perhaps this is because stores are less busy at dinnertime hours and there is more seating available.

For snacking occasions, consumption in the car (57%), at home or someone else's home (55%) or at work (33%) is most common.

C-store customers say that they purchase some type of food or beverage on about half of their c-store visits, indicating that while foodservice is an important category for these stores, opportunities for growth still exist; however, while location is key to getting consumers in the door, restaurants still have the upper hand when it comes to perceptions of high-quality food and dine-in ambiance.

Although c-stores are already recognized as locations that excel when it comes to offering fast service, look for them to increasingly add features, like drive-thru service and call-ahead ordering, to further expedite transactions and compete with quick-service restaurants, said Technomic. In order to encourage more lunch and dinner purchases and in-store dining, it is likely that c-stores will expand their seating areas in years to come and offer free Wi-Fi access, TV screens and updated decor to compete with restaurants. This suggests that restaurant operators will need to further define what makes their establishments unique (better food, better prices, etc.) and carve out their own niche. And more so than at restaurants, where food made from scratch is expected, c-stores may be able to boost foodservice sales by offering highly recognizable, name-brand prepared foods that consumers are already familiar with and perceive to be high in quality.

Another Technomic report, the 2010 Restaurants & Retail Report: Segmenting the Food & Beverage Consumer, said that consumers are sourcing their food across an increasingly broad range of retail and foodservice outlets. The report provides a snapshot of Americans' restaurant and food shopping patterns.

Retailers continue to move into the restaurant sphere even as restaurant companies extend their brands with retail product offerings. Many retailers are using the restaurant sector as a blueprint for innovation as they seek to keep value-conscious consumers coming through the doors.

"Restaurants consistently provide consumers with foods that respond to their changing preferences and ideas of value. Locally sourced ingredients, organic and additive-free foods and humanely sourced menu offerings have been growth areas," said Darren Tristano, executive vice president at Technomic. "In a down economy, retailers gained a larger share of the foodservice market, but in order to keep that as the economic picture improves, they need to respond to consumers as effectively as restaurants have."

Findings include: 18- to 34-year-olds are most likely, by a wide margin, to be heavy users of premium fast food. This could have significant implications for future competition between retailers and limited-service restaurants, particularly in the fast-casual segment. Heavy users of warehouse clubs, specialty/natural food stores and upscale supermarkets tend to source food from many types of retailers and restaurants. Men are more likely than women to be heavy food shoppers at convenience stores and warehouse clubs.

The 2010 Restaurants & Retail Report uses an exclusive Technomic survey of 2,000 U.S. consumers who were asked to report their usage and attitudes regarding restaurants and food retailers. The report also uncovers and analyzes current trends identified by Technomic's Retailer Meal Solutions (RMS) Monitor service and Digital Resource Library.