Foodservice: Hungry for Innovation

As the c-store customer evolves, foodservice operators work to keep them coming back
Illustration by CSP Staff

CHICAGO — Despite heavy competition from quick-service and fast-casual restaurants, convenience-store retailers are feeling good about foodservice: Eighty-nine percent of them expect their foodservice sales to grow in 2020, according to the 2019 Convenience Market Annual Report from CSP sister research firm Technomic, Chicago.

While technology and speed of service still command operators’ attention, consumers are seeking newer foods at nontraditional times now more than ever, which is molding how they shop for food and how c-store retailers will run their foodservice operations in the year ahead.

Plants Crop Up

Plant-based meat alternatives raised eyebrows in c-stores last year, and customers remain interested. Nearly a quarter (23%) of consumers said they would be interested in purchasing a plant-based burger from a convenience store, according to Technomic.

Before Ryan Krebs joined Enmarket Inc., Savannah, Ga., as director of food and beverage in early 2020, he oversaw foodservice for Rutter’s, York, Pa. In October 2019, Rutter’s introduced the Perfect Burger, manufactured by Dr. Praeger’s, Elmwood Park, N.J., to all of its more than 70 stores. The Perfect Burger, which is made with four kinds of vegetables, is a vegan item; however, it was targeted to meat-eating consumers, Krebs told CSP in late 2019.

*Click here to view foodservice data.

GetGo Cafe and Market, a division of Pittsburgh-based Giant Eagle, and Minit Stop, Hilo, Hawaii, both added the Impossible Burger to their menus last year, while Sheetz, Altoona, Pa., debuted the Beyond Burger. Both options are made with meat alternatives such as mung-bean protein and pea protein.

The plant-based meat trend may dominate the c-store landscape in 2020 and beyond as consumers increasingly seek healthier and interesting meat alternatives, Krebs says.

“You can’t open your email nowadays and not read about the emergence of plant-based in the industry,” he says. Enmarket offers made-to-order foodservice items through its in-store restaurant, The Eatery, including hand-battered fried chicken tenders, fresh biscuits and hot dogs, but no plant-based options. “But it’s certainly something that I’ll consider,” Krebs says.

CEFCO, a chain of nearly 220 convenience stores in seven Southern states, has yet to introduce plant-based meats. That’s because its rural customer base isn’t demanding it, says Chris Postlewaite, former senior director of food and beverage for the Temple, Texas-based chain. Instead, customers are demanding more fried chicken, he says.

“When we have customer demand and [plant-based] has proven itself in the c-store space and in the markets where we operate, we will give it more consideration,” Postlewaite says.

Education is crucial in successfully selling plant-based meat alternatives, says Jac Moskalik, corporate director of fresh foods for c-store foodservice supplier Core-Mark, Westlake, Texas. Younger consumers especially want to know how their food is made and where it comes from, he says.

“[Plant-based meats] are not a trend any longer—they’re here to stay,” Moskalik says. “And it’s all about education and awareness.”

Challenged at the Fountain

As retailers grapple with the sales potential of innovative plant-based meats, they are also dealing with a wave of new packaged beverages that have challenged sales of fountain and frozen carbonated beverages.

“It’s hard for fountain beverages to compete with 20 Monster drinks and 30 Coke flavors in the cold vault,” Krebs says. Enmarket offers up to 32 fountain flavors, including fresh-brewed tea—sweetened, unsweetened and flavored—as well as zero-calorie Sobe Lifewater. Combined with chewy ice, these unique offerings aim to draw customers to the fountain, Krebs says.

Specialty promotions can also spark fountain beverage sales. In January 2019, Thorntons LLC, Louisville, Ky., launched a fountain beverage promotion to celebrate the opening of its 200th store. It included a 24-ounce refillable cup that consumers could buy; 20 cents from every cup purchased went toward hunger relief in the chain’s operating areas. The promotion has been well-received by the chain’s consumers, says Alex Kupper, category manager of dispensed beverages for Thorntons, and CSP’s 2020 Category Manager of the Year for fountain.

“Guests have all been very noteworthy in saying that this is a very special program,” he says. “It’s doing very well for us.”

Innovation in bottled water and energy drinks has also hurt coffee sales—specifically among younger consumers, who opt for these beverages instead of hot coffee for their morning caffeine boost, Krebs says. Although 58% of consumers said they purchase hot coffee from c-stores at least once a week, 67% and 61% said the same for energy drinks and sports beverages, respectively, according to Technomic’s 2019 Thirsting for Innovation Report.

“People aren’t drinking as much coffee throughout the day as they once did,” Krebs says. “They can change to all these different alternatives for their afternoon or evening energy boost found in the cold vaults.”

“[Labor] is a challenge for all operators and, unfortunately, there’s no magic potion.”

The bakery category has also become a challenge for c-store retailers. Consumers are increasingly purchasing fewer c-store bakery items, specifically thaw-and-serve and grab-and-go products. When asked where they purchase cookies most often, 36% of consumers said they do so from grocery stores, while 29% said the same for fast-food restaurants, according to Technomic’s 2019 Dessert Consumer Trend Report. C-stores were not even in the running.

“While there is not a concrete answer to the reasoning [for bakery’s decline], some may attribute it to the healthier options available in the open-air coolers or the expanded hot food items that grab the consumers’ attention before they make it to the bakery case,” says Bridget Halpain, foodservice category manager for McLane Co., Temple, Texas. McLane plans to boost the bakery category during this year’s fiscal second quarter, either through innovative packaged products or working with retailers to bake their pastries in-house.

Moskalik of Core-Mark agrees that bakery gets overlooked, often by categories such as made-to-order entrees or prepared beverages. Bakery also has a reputation for being high-maintenance.

“There’s a perception with bakery that it’s a higher-labor category, that its spoils are high and that it’s tough to display on the floor,” Moskalik says. Retailers should dedicate the proper merchandising for fresh-baked items, she says. This means using a self-service case and focusing on single-serve pastries and packaged baked goods that appear as if they were made in-house.

“Pastries need to look fresh,” she says. “Dedicate the time to it.”

Krebs agrees that the bakery category has stalled. He suggests retailers get creative with the types of pastries they offer and when they offer them. For example, doughnuts simply don’t have the same play in the late afternoon as they do in the early morning when combined with a cup of coffee. To spice things up in the later hours, consider swapping doughnuts for items such as cake pops and brownies—smaller, bite-size pastries that can drive impulse sales outside of breakfast hours, he says.

“Eighty percent of doughnut sales in most markets are between 6 and 10 a.m.,” Krebs says. “My challenge is: What can I do with the other 20 hours?”

Squashing the Labor Bug

More than 70% of c-store foodservice operators said finding qualified kitchen staff was their biggest hurdle—more than any other challenge, according to CSP’s 2019 Foodservice Handbook. Labor costs came in at a close second at 66%.

“[Labor] is a challenge for all operators and, unfortunately, there’s no magic potion,” says Ryan Krebs, director of food and beverage for Enmarket Inc. “Anything that you can do to take some of that weight off an employee is key to establishing a core foodservice program.”

At Enmarket, Krebs is looking to simplify his foodservice operations and make them easy to execute, he says. This includes seeking out manufacturers that offer quality, easily made products and implementing technology that works to alleviate the pain points associated with food prep.

“The more complicated you get with your foodservice programs, the harder it is to retain staff,” he says.

Retaining kitchen staff goes beyond operations. Developing a foodservice culture—a breadth of understanding and excitement for foodservice—is vital in keeping employees around, Krebs says. Many c-store operators emphasize kitchen cleanliness, using unique marketing and promotions and implementing one-on-one training and employee guidebooks to build a strong foodservice culture.

“When [a foodservice culture] is transferred to each store and employee, it goes a long way to keeping staff on board,” he says.

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