Technomic data shows the breakfast daypart hasn’t recovered to pre-pandemic levels, but momentum is growing as commuters make their way back to offices.
According to Technomic’s Fourth Quarter 2022 C-Store MarketBrief, 74% of c-store foodservice patrons are commuting either full time or a few days a week.
“The challenges at breakfast include increased costs on ingredients like eggs and breads, which compresses margins,” said Donna Hood Crecca, principal with Chicago-based Technomic, a sister company to CSP.
She also cites a new competitor for retailers: at-home preparation. “Many consumers got into the habit of preparing breakfast and coffee at home during the pandemic and continue to do so.”
Manufacturers that supply breakfast items to c-stores have also seen changes in the breakfast daypart. “Prior to COVID, the morning daypart was a significant source of consumer traffic,” said Sandie D. Ray, vice president, foodservice business unit marketing and data analysis, Ruiz Foods, Dinuba, Calif. Lunch and snacking dayparts are strongest now, she said.
Not all retailers are feeling the breakfast pain.
“As ugly as COVID was on the East Coast, here in the Midwest, we had about five months of ugliness, but after that, things started to bounce back,” said Paul Servais, foodservice zone leader for Kwik Trip. The family-owned chain based in La Crosse, Wis., operates 843 stores and serves customers in Wisconsin, Minnesota, Illinois and Iowa.
“We’re having record sales. Our food program has flourished. The breakfast daypart is still the best. That has not changed, and it continues to grow,” he said. “The only amazing thing to me is that you can have double-digit growth on your best daypart.”
Grab-and-go foods any time of day are still the preferred choice of customers, retailers agree. In the morning, that means breakfast sandwiches. “Sandwiches are huge,” Servais said. “Bakery is not far behind, a lot of doughnuts.”
At Tulsa, Okla.-based QuikTrip, “We’ve seen breakfast come back strong over the past year,” said Adam Fidanza, corporate sales manager. “Things shifted more to lunch during COVID, as people shifted their schedules. In the last six to eight months, we’ve really seen a shift back to breakfast.”
During the height of the pandemic, foodservice was all about being creative with available ingredients and seeking additional vendor partners as backups for supplies.
Nick Rech, area sales representative for Sheboygan Falls, Wis.-based Johnsonville, said versatile products can help with the daypart challenges.
“Sausage patties and sausage strips can be used in various menus across dayparts,” he said. “They not only add flavor, but they are incredibly versatile and can be used in breakfast sandwiches, burgers, salads and more.”
While those trends continued in 2022, there was some relief as retailers saw “more normal” times in foodservice. Depending on the geographic region of stores, daypart traffic remained stronger for lunch and snacking as consumers continued to work from home and avoid a morning commute.
Coffee Perks
Technomic data shows hot beverages, especially coffee, continue to be a traffic driver in the breakfast daypart, as do self-serve beverages throughout the day.
While coffee has rebounded, some chains note sales have not returned to pre-pandemic levels. “Coffee probably took the biggest hit within the category,” said Chad White, foodservice category manager for York, Pa.-based Rutter’s. “We certainly have seen it bounce back, but we’ve still got some work to do.”
Much of the lag is attributed to workers returning to offices. “Coffee correlates right along with that,” White said, adding that he works closely with his coffee supplier—S&D Coffee/Westrock—to keep his program vibrant and fresh for the customer.
“We allow a lot of customization, and we certainly want to continue down that road.” Quarterly limited-time offers (LTOs) of new flavors also help boost coffee sales, he said.
Weigel’s c-stores are seeing success across dayparts with credit to two key factors: customer service and new products that are fresh, non-GMO and humanely sourced, said Beth Hoffer, vice president of foodservice and manufacturing for the Powell, Tenn.-based chain.
She said food sales increased almost 30% in 2022. Good-quality food is part of the reason, she said, “but I think customer service is what’s driving our business right now more than anything.” She points to long wait times in fast-food drive-thru windows, as well as the c-store’s wide variety of products.
“You can be in and out of the store in less than five minutes. You’ve got your lunch, you’ve got everything else that you need, but it’s quicker to come here,” she said.
Now Trending
As for what’s trending, Hoffer said the chain’s stuffed biscuit of handmade dough with sausage, egg and cheese inside is the No. 1 seller. “It’s portable, and portable is a big deal,” she said. Pizza continues to be a top seller at lunch and dinner.
Hoffer has high hopes for a new item the chain was set to launch in January: fried chicken tenders. “These are fresh, never frozen, non-GMO, no antibiotics and humanely sourced fresh fried chicken tenders” from Springer Mountain Chicken of Georgia, Hoffer said. “Our big growth will be going from a frozen tender to a fresh one.” Hoffer said this change also addresses younger consumers who look for environmental and social responsibility when choosing companies to support.
Single-store owner Tammy Affolter, who with her husband Woody owns Woody’s Pump n Munch in Randolph, Minn., said her Hunt Brothers Pizza program is a key traffic driver at all times of the day. “Pizza is 95% of our [foodservice] business,” she said, with about 60% sold in slices from the warmer and 40% full pies. The store is in a town of about 800 people and serves an average of 350 pizzas a week, including breakfast, lunch and dinner. “We sell a ton of breakfast pizza,” Affolter said, noting the nearby K-12 school attracts students, teachers and staff.
The store was built in the 1950s and fully remodeled and expanded in 2021 to include a liquor store as well as the convenience store and gas station. “The remodel has increased our business substantially,” she said. In the year since the renovation, she estimates the store sells 100 more pizzas a week than it did previously. As for new food offerings in 2023, Affolter said she may consider adding a chicken program.
Well-Equipped
One of the main changes and biggest driver of menu adjustments at QuikTrip is expansion of QT Kitchens and their new equipment. “We upgraded our grab-and-go offer with new warmers. Almost everything off the warmer is now made fresh in house,” Fidanza said.
Equipment also has been a driver for Kwik Trip. “We introduced fryers to all of our stores,” Servais said. “Once you have a fryer, you have a whole other venue because you can do so much.”
The emphasis at Kwik Trip has been offering a wide selection of appetizers, including mozzarella sticks, French toast sticks, jalapeno poppers, bacon cheddar bites, mini-tacos and boneless wings. “We can’t make enough,” he said of the wings and tacos. Servais said he rotates menu items every six to eight weeks to keep the offer fresh.
“We have a lot of hot cases in our stores; we call them Hot Spot cases,” he said.
The cases serve items for every daypart but especially breakfast and lunch, Servais said. “Everything we do is grab and go,” except for mobile orders. “We make it fresh [for delivery or carryout] rather than taking something that’s been sitting in the case,” he said.
In addition to the slowdown in store traffic and distribution issues, inflation stands as the third element slowing retailers’ return to pre-pandemic sales.
But Fidanza said QuikTrip customers seem to be much more accepting of higher prices and other changes due to shortages.
“Before,” he said, “a retailer may be called out for price gouging. Now it’s just a blip because it’s just one more thing that costs more. I’ve had more price increases in the past six to eight months that I had in my previous seven and a half years.”
He adds, “Customers are much more accepting of rapidly changing supplies,” noting a recent shortage of lettuce. “Selling lettuce right now, you might as well be selling gold. We had to take it off our menu. Not one customer has said a thing. We’ve all just rolled with the punches.”