While the channel as a whole saw some disconcertingly disparate growth last year, c-store foodservice nonetheless saw some sales trends worth noting. Among them, the ceaseless flow of beverages, a projected bump for hand-held entrees and a rather surprising dip in breakfast.
Following are insights found in Fare magazine's Foodservice at Retail Handbook, available for download in its entirety at www.faremagazine.com.
According to research consultancy Technomic Inc., Chicago, c-store foodservice rang up $10.4 billion in sales in 2010, with an expected 2.0% increase in nominal growth this year. Hand-held entrees, including sandwiches, hot dogs, burritos and wraps, will drive most of that growth with an expected 4.6% sales growth over the next three years.
[image-nocss]Hot sandwiches is an up-and-coming category thanks to high-speed oven technology, though it's still largely reserved for the more advanced c-store foodservice operators. Roller grill, while a mature category, will see growth this year thanks to new equipment, merchandising and multi-day-part offerings. Roller-grill sales are expected to grow by 4% to 4.5% this year.
Nonetheless, if you look at the sales of all immediate-consumption foods, true "foodservice" items still lag behind salty snacks and candy. According to The NPD Group, Port Washington, N.Y., salty snacks and candy took the Nos. 1 and 2 slots for top food items ordered at c-stores. The first foodservice item to show up on the list is breakfast sandwiches, in the No. 4 slot.
Likewise, foodservice items played second fiddle to beverages in a ranking of the fastest-growing foods and beverages. Iced tea took the top slot, followed by frozen/slushy drinks, diet carbonated soft drinks and doughnuts. C-stores stores saw iced tea, frozen drink and diet soft drink servings increase by 100 million last year.
Despite added attention in the last two years, c-stores should be pushing breakfast sales more aggressively. Though the channel beats out other retail-foodservice channels in breakfast usage by a sizable amount, it also lost frequency between 2008 and 2010. This drop is likely due to QSRs stepping up their breakfast and coffee offerings.
In 2008, 44% of consumers said they purchased prepared breakfast at c-stores at least once a month. Last year, that number dropped to 41%--though still a decent amount ahead of mass merchandisers (20%) and warehouse/club stores (20%)--who both saw 5% gains in breakfast day-part usage since 2008.
Fifty-three percent of non-c-store foodservice shoppers say they simply don't think of it as a dining destination. This, paired with a steep learning curve, leads to results that likely fail to please most retailers. But there are bright spots. Hand-held entrees are growing thanks to both well-established and up-and-coming menu items. Beverages sales are strong and seeping into other subcategories such as iced tea. Leveraging beverages sales could potentially help boost trial and repeat sales of those hand-held entrees.
Watch Fare Digest for more commentaries on the inaugural Foodservice at Retail Handbook, which looks at sales trends in c-stores, food/drug/mass merchandisers and non-commercial channels, as well as sandwiches, coffee and other key menu categories. View the handbook at www.faremagazine.com, and email your questions or comments to awestra@cspnet.com.
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