C-Store Foodservice: Where Do We Go From Here?

CHICAGO — The coronavirus pandemic has altered the foodservice industry as we know it. Restaurants are closing or resorting to takeout or delivery services only, while grocery stores have curtailed their hours and suspended various foodservice offerings. And although convenience stores have halted self-serve food and beverage options, the channel—deemed an essential service by the U.S. Department of Homeland Security—has become a place for consumers to turn to for food during this unprecedented time.

“With the perception that restaurants are closing, consumers are turning to convenience stores for foodservice,” said Christopher Wolf, senior vice president of strategic insights and planning for The Marlin Network, Springfield, Mo., during the 2020 NACS State of the Industry Virtual Summit. “Trends and possibilities for the c-store industry are accelerating right now during this time of change.”

Although convenience stores have stepped up amid the pandemic, they aren’t immune to the fates that other channels have endured.

Here’s how c-store foodservice can move forward in 2020 and beyond.

Consumers are turning to c-stores because they simply cannot go to many restaurants. But while full-service restaurants are in a crisis—business has dipped 74% during the coronavirus pandemic, according to research firm Datassential, Chicago—demand for delivery and takeout has kept these establishments alive, Wolf said. Restaurant takeout occasions have increased 60% since the final week of March, he said, and the demand for new delivery drivers has been very high.

“Nearly 50,000 drivers are needed by the pizza chain industry, and even more are needed through third-party delivery services,” he said. “Restaurants that had previously dipped into delivery and takeout are now relying on it more than ever.”

Convenience-store operators don’t need to reinvent the wheel to build a reliable and popular foodservice program, said Chef Thomas Talbert, vice president of culinary marketing for CSSI Marketing + Culinary, Chicago. Instead, they should make their own versions of what restaurants and other retailers in their communities are doing as well as what their consumers enjoy most.

“What are the drive-thru restaurants in your area doing?” he said. “Don’t be afraid to think and say, ‘I can offer that item and even do it at a lower price.’ ”

Take KFC’s Kentucky Fried Chicken & Donuts Sandwich, which features a fried chicken filet sandwiched between two glazed doughnuts. If c-store operators notice their consumers enjoy this product, and if the operators offer baked goods and fried chicken, they should attempt to make and sell their own version of this sandwich, Talbert said. Combining the doughnuts and chicken may offer a competitive solution to KFC as well as allow the operator to connect with their customers, he said.

“Don’t try to capture every food trend that’s out there,” he said. “Look at what consumers are already buying and offer a similar item, and reap the benefits of what others have put lots of research and insights into.”

Foodservice technology such as home delivery, preorder mobile apps, online ordering and cashierless shopping create a new environment, opportunity and expectation that convenience-store operators can take advantage of, Wolf said.  These services are increasingly becoming part of the convenience-store industry. Examples include chains such as Jiffy Trip, which uses Skip Checkout; 7-Eleven’s scan and go, drone tests and 7Now delivery app; Sheetz’s Alexa ordering capabilities; and the chains that are working with third-party delivery services.

“Moving forward, the more c-stores adopt the type of foodservice technology restaurants use, the greater their mindshare with the consumer will be, as well as the ability to grow their business,” Wolf said.

Foodservice tech will continue accelerating in the c-store industry, especially during the pandemic, which has forced many chains to roll out tech services to remain afloat, Wolf said. Operators may even test subscription models—similar to the streaming service Netflix—through which customers can get unlimited deliveries for a monthly fee, he said.

Dayparts are fading in today’s foodservice landscape. In restaurants, off-peak transactions account for 25% of total unit sales today, said Talbert, citing data from CSP’s sister research firm Technomic, Chicago. Blurring dayparts has led to restaurant and c-store chains such as McDonald’s and TravelCenters of America, respectively, to launch all-day foodservice options—a big business model for the foodservice industry, Talbert said.

“Consumers want what they want, when they want it and how they want it,” he said. “Some people might want a slice of pizza or a taco for breakfast, while others who work a night shift might eat dinner at 7 a.m.”

But offering all-day options doesn’t mean operators should promote their entire breakfast menu 24-hours a day, nor does it mean they should have a full taco menu available during breakfast. Instead, this means considering what offerings their consumers enjoy most and making those available all day, Talbert said.

“If you’re not offering all-day solutions, now is the time to bring it forward and take advantage of it,” Wolf said.

Fifty-six percent of consumers said good customer service is one of the most important aspects of using a convenience store, which ranked only behind convenient locations (67%) and good prices (60%), according to research firm Mintel, Chicago. Beyond that, 45% of customers said they are loyal to one convenience-store brand, which may also tie to their need for quality customer service—anything that increases the customer’s comfort level when purchasing food from the store, Wolf said.

“When it comes to foodservice, the service angle is a big piece and important moving forward,” he said.

Besides friendly staff, operators can boost their customer service by offering prepared foods through a personal interface, such as mobile apps or touchscreen beverage dispensers, Wolf said.

About 39% of consumers said they are interested in seeing meal kits available at convenience stores, according to Datassential. Meal kits can provide operators a major foodservice boost given current conditions because people are seeking full meals to bring home, said Talbert.

“At a c-store, maybe [a full meal] could be a box containing eight hot dogs, two bags of chips and a few beverages for a value-driven price,” he said. “This offers customers the convenience of not going to a restaurant or grocery store but still having a meal for the family.”

The coronavirus pandemic will ultimately change consumer expectations for foodservice, Wolf said. Customers will have a heightened focus on health, food safety and food sanitation, and they will constantly seek cues and messaging that informs them of the quality of food standards at a store, he said.

These expectations will stretch beyond the food itself, though, because customers will look to c-stores to step up in times of crisis, Wolf said. For example, younger consumers already expect many of their preferred foodservice brands to be involved in their communities.

“As people being to realize that the government can’t take care of everyone, consumers will be looking to local brands to provide a public good,” he said.

The 2020 NACS State of the Industry Summit Virtual Experience is now available for on-demand viewing. Access critical benchmarking data, analysis, emerging trends and executive insights at convenience.org/SOISummit.