OAKBROOK TERRACE, Ill. -- With quick-service restaurants (QSRs) upgrading their coffee-pastry programs and more coffee chains offering drive-thru service, convenience stores are feeling the pressure of this growing “premium convenience” channel.
Although c-stores still beat QSRs with traditional coffee (9.6% menu importance vs. 7.2%), specialty coffee’s menu importance is higher at QSRs, according to a recent study conducted by The NPD Group/CREST. Thus, threatened by a loss of customers and sales, c-stores have had to re-examine their popular a.m. food and drinks.
“Our biggest competitors right now are Burger King, Dunkin’ Donuts, Tim Hortons and McDonald’s,” said Kevin Hall, merchandising manager for Kwik Fill, a c-store chain with stores throughout Pennsylvania, New York and Ohio. Case in point: In just the last few years all of these chains have heavily expanded their specialty coffee and morning food offerings. Even coffee giant Starbucks stepped up its bakery and pastry menu in 2013 by partnering with La Boulange bakery in San Francisco.
In order to compete effectively during this important daypart, c-stores need to provide premium products in a convenient delivery format. Here are some ways to do so.
Better Coffee
“Since Starbucks came onto the scene in a big way, gourmet coffee is no longer reserved for exclusive neighborhoods; it’s become big business,” said Bill Skeens, founder of Prairie City Bakery, a Vernon Hills, Ill.-based baked-goods provider and creator of the “muffin top” made famous on the hit TV show Seinfeld. “Our buyers constantly tell us that if they don’t compete they’re going to be out of business,” he said.
In c-store settings, offering better coffee might mean buying a more premium brew or offering more flavorings and creamers. But it can also be done by simply brewing fresh batches more regularly throughout the day and especially during peak periods, according to Skeens.
Variety and Freshness
“With fast-casual concepts offering more gourmet-like food offerings and coffeehouses providing upscale beverage choices, convenience stores have had to increase the quality of their prepared food offerings, as well as give consumers new choices with increased convenience,” said Mary Chapman, senior director of product innovation for Technomic.
According to Skeens, “In the past, many c-store customers stopped daily for their cup of coffee and a snack. Due to the new coffee competition, however, visit frequency has dropped, in some cases, to just once a week to buy gas. With a broader, higher quality breakfast offering, the convenience store market is well-positioned to be a one-stop shop.”
Prairie City Bakery offers programs designed specifically to help c-stores expand and upgrade their coffee and bakery offerings. In fact, the company recently expanded its product line to include a wider assortment of muffins and doughnuts as well as cinnamon rolls, butter cakes, turnovers and cookies that assist operators in standing up to the competition.
“People want fresher items,” said Skeens. With limited kitchen space and resources, most c-stores can’t offer products baked that morning. By purchasing flash-frozen thaw-and-sell baked goods, c-stores can quickly improve the freshness and quality of their breakfast pastry offerings without investments in labor or equipment.
“Most foodservice companies pack baked goods in cases of 12, but c-stores may only need to thaw four at a time,” said Skeens, noting that Prairie City packs in cases of four and six to help customers manage waste.
And even if c-stores don’t offer items baked on-site that morning, giving customers the option to warm up the goodies can help improve the perception of quality.
At Kwik Fill, Prairie City Bakery items come in a frozen state and slowly thaw in the cooler over three or four hours. A microwave positioned next to the coffee bar allows customers to warm up their muffin, Danish or cookie for that freshly baked feel. Of course, regularly checking the products for staleness also helps maintain a fresher selection.
CONTINUED: Beverage Bundling
Beverage Bundling
Bundling baked goods with coffee, either at a discount or simply as a package deal can help boost business. “If a c-store can go from 20 to 30 customers leaving with a premium pastry along with their premium cup of coffee, that increases sales dramatically and helps make c-stores an everyday destination,” Skeens said. “Bundling with a packaged Ding Dong just doesn’t make sense.”
Aside from perceived value, bundling offers extra convenience for customers. “They don’t have to think about it; they can just grab a coffee and the pastry, pay and go,” said Skeens.
At Kwik Fill, customers can purchase a slightly discounted 12-ounce coffee with the purchase of a pastry or baked good. The c-store rotates these bundled offerings four times a year, switching up between a selection of muffins, Danish, doughnut holes, cookies and other items.
“When we cross-promote with our Prairie City Bakery items, we get at least a 15% lift in coffee and breakfast bakery sales,” Hall said.
To compete even further with QSRs and boost a.m. traffic, Hall said the company is considering adding a breakfast sandwich to the bundle. The company communicates these deals through in-store flyers, as well as interior and exterior signage.
Merchandising, Merchandising
Nothing sells better than a nicely stocked, nicely presented bakery rack or case of premium baked goods and pastries.
“You want the right assortment and variety, and it is okay to put out more than you might sell because a full bakery case looks more appealing,” said Skeens. “No one wants to take the last muffin in the case.” Discounting stales can help recoup some of the costs from waste.
To improve the look of its bakery-coffee bar, Kwik Fill added a rack to more attractively showcase their pastry items and to position them closer to the coffee. “Our customers want to get in and get out so positioning is very important,” said Hall.
And don’t forget, displaying a batch of cookies or cakes during the afternoon rush caters to the snacking crowd looking for a pick-me-up with their coffee and can help boost off-peak daypart sales as well.
Stepping up the pastry-coffee pairing is no longer just a choice for many c-stores competing with the Starbucks, Dunkin’ Donuts and McDonald’s of the world; it’s a necessity to win with today’s breakfast customer.
For more information about Prairie City Bakery’s innovative solutions for retailers, visit www.pcbakery.com.
This post is sponsored by Prairie City Bakery