In a foodservice segment defined by convenience, c-store retailers are now facing increased competition from other channels. Grocery stores, third-party delivery services and meal-kit companies have joined the fight to best answer this question: Which category owns convenience today?
In addition to the contemporary avenues foodservice operators are taking—everything from mobile and online ordering to curbside pickup and delivery—c-store retailers are reconsidering a stalwart service format: the drive-thru.
Several retailers have tried implementing drive-thru over the years, with varying levels of success. Nevertheless, the channel remains optimistic about the format’s potential. In 2016, 14% of c-store operators surveyed for the first time by Technomic said they plan to add a drive-thru window at their store within the next two years.
And consumers may be primed to embrace the new format. Data from Technomic’s first-quarter 2017 Convenience Store MarketBrief shows that among consumers who are increasing their foodservice visits, 60% say that these visits are coming at the expense of fast-food restaurants, which likely offer drive-thru as part of their service model. To keep the momentum going, c-stores should take a page from restaurants’ book and conceptualize around the drive-thru.
A Drive-Thru Believer
“I’m a huge, huge believer in drive-thru for c-stores,” says Mike Lawshe, president and CEO of Paragon Solutions, Fort Worth, Texas, a provider of architectural design and related services. While retailers want customers to go into the store to buy high-margin items, customers prefer to use a drive-thru if they do not plan to buy fuel, he says. “Lack of traffic into the store is seen as a disadvantage for c-stores, but when drive-thru is done right, it turns that so-called disadvantage into an opportunity.”
On its face, a drive-thru window seems like a convenience no-brainer: Customers drive up, order and pay, and quickly receive their orders before driving away. But for the c-store operator, drive-thru presents numerous operational challenges, from labor efficiency to logistics.
“Placement of the drive-thru and how it runs is critical,” Lawshe says. “It costs money to do the drive-thru right, but it’s absolutely worth it. The key is reducing steps. Every step you can save for your employee is a win.”
“You have to consider how to emphasize simplicity,” says Lisa Dell’Alba, president and CEO of Square One Markets, an 11-unit chain of c-stores—several with drive-thrus—based in Allentown, Pa. “You have to eliminate the steps it’ll take for you to succeed on a daily basis. It starts with planning ahead, optimizing the layout of the store and figuring out what products should be going through the drive-thru.”
Square One relies on its most frequent customers’ purchases to determine which store products to position near the drive-thru.
“The main hurdle in the drive-thru game is how much it decentralizes your store operations,” she says. For example, the store may have a register on one side to handle in-store traffic, but a drive-thru pulls employees away from the center of the store. “It reduces your ability to control that space.”
To mitigate this challenge, dedicated staff should be assigned to the drive-thru window, and the store’s design has to provide a streamlined path to products that are most frequently ordered by drive-thru guests. To determine the best store setup and minimize steps, Lawshe advises retailers to collect 30 days of data on which items were sold through the drive-thru.
“These same purchase patterns will likely be repeated next month,” he says. “Move those repeat items closer to the drive-thru area. Be thoughtful; you’re not just creating a hole and throwing things through the window.”
A Powerful Differentiator
The question of what to offer via drive-thru is a tricky one, especially when it comes to foodservice.
“Foodservice changes the dynamic,” says Lawshe. “When a c-store adds made-to-order or some other kitchen element, they have to create an efficient food line to the drive-thru. At the same time, retailers
can’t forget about other convenience items. The conventional idea of a drive-thru has to change; you have to totally re-envision the process.”
Making drive-thru a distinguishing element of a c-store brand can be a powerful differentiator, especially when combined with foodservice, says Scott Simon, president and CEO of Broomhall, Pa.-based Swiss Farms.
“Our private-label fresh foods are 100% natural, family recipes that are restaurant-quality, but they’re available in the drive-thru,” says Simon. “That’s something our customers just cannot get anywhere else.”
Swiss Farms was an early adopter of c-store drive-thru, which it offers in all 13 of its units. Some stores feature a dual-window setup, with bypass lanes that allow customers to drive ahead of others once their order is complete. Outdoor LED menu boards display foodservice offerings and specials, and drive-thru customers are treated to a full view of the interior and available products through floor-to-ceiling windows.
But some c-store chains don’t offer foodservice. Square One began operating a drive-thru 30 years ago, and it positioned the format solely around cigarettes. This enabled it to build a brand identity around being the ultrafast, go-to stop for cigarettes and other tobacco items. It aims to complete transactions within 30 seconds or less. To fulfill on this brand promise, the company decided to limit drive-thru offerings to tobacco products and a selection of store goods. Orders that could potentially take time to fill, from foodservice to big lottery ticket transactions, are taken only within the store.
On the flip side, retailers who limit their drive-thru’s scope to just food may be cutting themselves off at the knees.
“The biggest problem is when operators install a drive-thru and only use it for foodservice. That doesn’t make sense,” Lawshe says. Customers don’t expect a drive-thru at a c-store, he says, so eliminating categories from the service will disappoint them. “The bottom line is that ‘No’ is not a good answer in retail. You have to find a way to say ‘Yes.’ ”
Trial and Error
C-store retailers can also learn from the example of their restaurant competition. For example, self-ordering touchscreens and order-ahead mobile apps are steadily moving to the forefront for restaurant drive-thru.
Overall, 36% of restaurant consumers prefer to order food online and then pick it up from the drive-thru, according to Technomic research. While that service option may deliver for the restaurant customer, it may not be the best move for attracting c-store consumers who want to avoid that extra step between ordering and pulling up to the window.
Square One tested express ordering at the pump, through which customers could preorder store merchandise and then pick it up at the drive-thru. “It wasn’t a big hit with our customers because it added an extra step that took away from a convenient experience,” says Dell’Alba.
A basic drive-thru may even result in a somewhat unexpected benefit: strengthened customer engagement. “The drive-thru offers a unique opportunity to genuinely connect with our customers one on one,” says Dell’Alba. “Today, there’s so much technology being created to avoid face-to-face interaction. But because of the drive-thru, our customers become very familiar to us—they know us, we know them. We know what they order, and we have it ready for them.”
Understanding how the c-store foodservice consumer may differ from the restaurant customer is key. On the surface, the goal is the same: to capture the food and beverage spend of an on-the-go guest. But a consumer who isn’t accustomed to visiting a c-store from a car may require targeted messaging.
“Success with drive-thru depends on the culture of the customer,” Lawshe says. “Reaching the drive-thru customer takes time; you can’t train a customer on the first trip.”
The adage “If you build it, they will come” doesn’t work for drive-thru. “You can build it, yes—but now you have to market it, you have to draw the customer, you have to get social media involved,” he says. “Ultimately, drive-thru has big benefits, but it’s not easy.”
Swiss Farms recently rolled out a mobile app that allows its guests to order food and pay for it ahead of time so that it’s ready once they pull up. The app is also a marketing tool that promotes daily specials on its rotating menu of family-size entrees and other promotions that are available in the drive-thru.
The Repeat Visitor
Drive-thru’s biggest benefit could be its ability to secure the elusive repeat visitor. “If you really take a look at how people shop at c-stores, it’s very habitual,” says Dell’Alba. “Adding a drive-thru can factor you into the customer’s routine.”
Retailers see the upside in using the drive-thru to align with their customer’s lifestyle. “We’re all about serving our customers and making their lives easier without sacrificing quality,” says Simon of Swiss Farms. “What’s easier than swinging through a Swiss Farms on your way to work or school, picking up a coffee and breakfast, and leaving with a healthy packed lunch?”
Ultimately, says Lawshe of Paragon, success in c-store foodservice, just like at restaurants, comes down to fulfilling customers’ needs and wants. If drive-thru fills a gap, it’s worth the investment of trial and error.
“Ask yourself, ‘What does my customer want?’ ” he says. “If you deliver on that, you will succeed.”