5 Takeaways From C-Stores' Meal-Kit Tests

ALEXANDRIA, Va. -- Convenience stores are working to take a bite out of the $5 billion U.S. meal-kit market. Together with NACS, retailers ran two meal-kit tests to identify operational kinks and opportunities.

In the past six years, companies such as Blue Apron and HelloFresh have put the U.S. grocery and convenience industries on notice by offering fresh ingredients delivered straight to customers’ doors for a subscription fee. With 36% of drivers topping off their tanks between 3 and 7 p.m., according to NACS consumer data, convenience stores might be able to win the dinner daypart and compete with these companies with the help of ready-made meals.

Also, 85% of weekly convenience-store customers say they would purchase a dinner meal kit from a store, according to a 2015 consumer survey conducted by NACS and polling firm Penn Schoen Berland.

Along with c-stores, NACS partnered with the Project on Nutrition and Wellness and the Cornell Food and Brand Lab to get a feel for the challenges ahead of c-stores as they enter the burgeoning market.

Here’s what they learned ...

Square One Markets led the first pilot. The 11-unit chain in eastern Pennsylvania leveraged the full-service fueling and curbside delivery services at its Bethlehem, Pa., location to help promote the meal-kit option to customers.

The offerings, developed by meal-planning company Six O’Clock Scramble, all rang in at 500 calories or less. For $20, customers could choose from 12 four-serving options. However, persuading guests that the c-store could be a dinner destination was a bit of a hurdle.

During the rollout, the retailer and Six O’Clock Scramble hosted cooking demonstrations and customer taste tests, and pushed out the news to local and national media organizations. On average, the store sold only five to 10 dinner kits per week. In the future, the groups would recommend more resources diverted to marketing, such as store signage at the pump and gas-price sign, according to the NACS report.

Sourcing fresh ingredients can be a tall order for small chains such as Square One Markets. If they are available, the c-store still requires additional labor to prep the items, according to the report. That means more skills and food-safety training for workers.

Also, scarcity of certain items can lead to retailers purchasing items from larger grocery stores instead of distributors, often at greater costs. Not wanting to pass this cost onto guests, Square One Markets instead had to adjust recipes on the fly when they could not get ingredients at the right price.

Square One Markets ran the pilot after Labor Day in an effort to become part of families’ routines as they start the school year. However, launching during this busy time of year also hurt the test, according to the report. Additionally, a $250 million lottery jackpot had customers focused on lotto tickets instead of the meal kits and free samples during prime meal times.

The second test took place at Utah State University’s convenience stores in Logan, Utah. The stores service the school’s 28,000 students.

The university’s dining program created two varieties of “Chef-in-a-Box” meal kits, with the option of two- or four-person serving sizes. Each week, the c-store offered three to five of the 18 meal options, with at least one vegetarian meal. The kits costs $7 to $15, depending on size.

Even with the dining program’s resources, the meal kits were costly to create. To break even, the store would have to sell 75 kits per week. Staff didn’t think the program could sustain that level of production and sales, according to the report.

Jumping into the meal-kit game means playing by a whole new set of health-code rules. Utah State had to stop production midway through the test because the health department did not approve of the university’s initial packaging design for the meal kits. The agency would have required the school to purchase expensive new equipment to abide by the health department’s requirements. Given the resources of the university, c-stores might face even greater challenges, according to the report.