Retailers with a robust food program outperform their peers in the convenience channel.
So says new Core-Mark CEO Chris Hobson, named to the role at the start of the year. Hobson, most recently chief operating officer, spoke last week with CSP days after one of the Westlake, Texas-based company’s five spring expos.
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Looking at c-stores like Salt Lake City-based Maverik, El Dorado, Arkansas-based QuickChek and others with superior food programs, Hobson said, shows “their same-store sales and their EBITDA [earnings before interest, taxes, depreciation and amortization] per location are quite a bit better than the c-store retailers that just haven’t launched those types of programs and connected with the consumer.”
Hobson, also Core-Mark’s president, said success in foodservice affects all other categories “because you’re driving transactions. And if you think about the convenience-store consumer and their trips, in the old days, it was a lot about fueling up their vehicle. It was a lot about the tobacco categories and also lottery—those were the things that were driving them to that destination and then they would buy other things.”
The driving force today has shifted to “foodservice and in wanting something to eat, and it trickles down to all the other categories,” Hobson said, adding that Core-Mark shipments of all products to convenience stores with foodservice programs are quite a bit larger than to stores that do not offer such programs.
Doubling Down
Core-Mark in 2024 wants to double down on its foodservice efforts to bring restaurant-quality-food into the convenience channel, said Hobson, adding that a big challenge for Core-Mark, Temple, Texas-based McLane and other broadline wholesalers is raising awareness of the quality of food they can provide.
Core-Mark began in 1888 as a tobacco shop wholesaler in San Francisco, and some retailers still “think of us in that manner and don’t understand that we’re well over a billion dollars in foodservice sales today—and it could be a lot more than that.”
“We’re definitely thinking that the breakfast daypart is a big opportunity to develop.”
Raising awareness requires a lot of infrastructure changes, Hobson said. “You’ve got to make sure you have the right distribution, the right amount of freezer space in your distribution centers, and we’ve been investing a ton of capital on those capabilities along with ensuring that we have the right temperature-monitoring systems on our fleet and within our warehouses. There’s a whole quality-assurance platform you have to have, and we’ve been on that path and we’re just doubling down on those efforts.”
Hobson, who has been with Core-Mark for 24 years in various roles, said innovation stands out for him at the spring shows.
Going With Protein
“Outside of the standard CPG [consumer packaged goods] companies, there’s a lot of smaller, innovative companies—and a lot of them are getting into the protein space, a healthy alternative snack space. I think that's interesting,” he said. “If you look at center-store categories, a lot of the growth has been from innovation.”
Hobson said Core-Mark’s executive team recently completed its strategy meeting, and “a lot of it revolved around food, and we’ve got really specific growth expectations as far as branded foodservice programs.
“We want food to grow more than all other commodities that we sell because we feel that’s where the consumer is going.”
“We want food to grow more than all other commodities that we sell because we feel that’s where the consumer is going, and we want to meet them where they're at,” he said.
Richmond, Virginia-based Performance Food Group [PFG] buying Core-Mark in 2021 “brought a whole new arsenal to us,” Hobson said. “I think our branded foodservice programs have become restaurant quality. That wasn't the case before. It was more like c-store quality. We [now] have access to over 50 chefs that help us create these programs.”
On display at the expo in Schaumburg, Illinois, on March 28 were the five branded programs available through Core-Mark and PFG: Red Seal Pizzeria, Tru-Q BBQ, Contigo Taqueria, Perfectly Southern Fresh Fried Chicken, and Deli 55.
Winning Foodservice
To win in foodservice today, Hobson said, c-store retailers must deliver on two areas that consumers expect: pizza and chicken, both of which Core-Mark offers in Red Seal Pizzeria and Perfectly Southern Fresh Fried Chicken, respectively.
“If you look at center-store categories, a lot of the growth has been from innovation.”
“And the other one that’s emerging is the breakfast daypart,” he said. “There’s an opportunity there, and Core-Mark’s working on it with Performance on a higher-quality program than you typically see, kind of bending it a little into a Cinnabon-type program—more to come on that, but we’re definitely thinking the breakfast daypart is a big opportunity to develop.”
Performance Food Group is one of the largest food and foodservice distribution companies in North America with more than 150 locations in the United States and parts of Canada. PFG and its family of companies market and deliver food and related products to more than 300,000 locations including convenience stores.
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