Fresh Food Focus

7-Eleven, Couche-Tard, others freshen up foodservice

DALLAS -- New food items, including papaya-mango fruit cups with chili-lime spice and turkey Capicolla wraps with basil spread, were the stars last week at the Dallas Convention Center. But these snacks weren't part of a demonstration for an upscale food emporium or fancy eatery. Instead, they were samples of coming offerings from 7-Eleven Inc., part of an all-day taste-and-tell session aimed at raising employee enthusiasm and demonstrating that the convenience store industry has come a long way from beer and beef jerky.

Fresh food is growing, absolutely, [image-nocss] and it continues to grow, John Vaughan, fresh food category manager for Dallas-based 7-Eleven, told The Dallas Morning News. It's the customer lifestyle. What we have to offer is convenience.

Fresh food accounts for more than 10% of chain sales, Vaughan said, a tally rivaled only by beer and wine. In Texas, it's more than 13%. Five years ago, he said, that would have been about 6%.

We really think that fresh food is a huge growth opportunity for 7-Eleven, company spokesperson Margaret Chabris told the newspaper. We'd like to see it grow to 30%.

7-Eleven, which works with about 15 commissaries and bakeries nationwide to produce the fresh offerings, isn't alone in serving more meal options to time-starved consumers. The National Restaurant Association tabs retail food sales, including fresh food sales at convenience stores, as a $25 billion business, said the report.

Florida's NexStore MarketPlace offers bread made in stone hearth ovens, chicken Parmesan with linguini and selections from its own sushi chef. It also caters weddings. And chains in the Northeast, such as Wawa and Sheetz, have expanded sales by offering more extensive menus than are traditionally found in a c-store.

It's one of the hot, up-and-coming areas within foodservice, said Hudson Riehle, senior vice president of research for the restaurant trade group. It has raised the baseline expectation among consumers about where foodservice exists.

The trend is fueled by several factors, the report said, including the need for c-store operators to find high-margin options to replace sales of gasolinetypically a low-margin businessand cigarettes.

At some point, food needs to replace the cigarette business in dollars, Vaugh told the paper. The legislation, the taxes, fewer people smoking. We're still going to have cigarettes, but you don't make as much money.

But the industry must work to overcome the perception that it is selling old sandwiches with stale bread, the report said.

To go along with the food, the chain has stepped up its wine sales, which gained 81% last year, according to the report. Wine still accounts for only 5% of alcohol sales, but the company expects that to grow.It has even launched its own house-brand wine, Thousand Oaks.

With the added emphasis on fresh food, the chain is grappling with some of the issues that restaurants face, such as what to do with items that are about to be past their prime. With the emphasis on fresh food on any level, you're a restaurant, Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS), told the paper. With retail, you put something on a shelf and when someone buys it, you put something else there. You can't do that with fresh food. You want to minimize waste, but you have to be ready to throw things out before they're sold.

Food that looks or tastes stale will discourage customers from buying today and may dissuade them from coming back, he said. If you do it poorly, you send damaging hints to consumers about your business, he said. Consumers are unforgiving if you fail them as a restaurant.

Larry Black, a 7-Eleven field consultant who oversees the operation of eight North Texas stores, told the Morning News that waste has not been as much of a problem as selling out of a fresh item when there is still demand. All store managers have waste benchmarks that they try not to exceed, he said. If the hour is getting late, a 7-Eleven manager may offer a customer a free fountain drink or coffee with the purchase of, for example, a chicken taquito.

Bukola Oladipo, another manager, sometimes sends samples out to the gasoline pumps to lure consumers inside, she told the paper. Once consumers try the food, they often become repeat customers.

The food brings loyalty in a customer, Black said.

Lenard said he expects more c-store executives to try fresh food. With [fresh] food, you can attract a whole new segment of customer, particularly females. If you're not looking into fresh food, you probably need a good reason why you're not.

And at Alimentation Couche-Tard Inc., the future of c-store grub is hot meals, gourmet salads and maybe even sushi, a company executive said.

Like 7-Eleven, Laval-Quebec-based Couche-Tard Inc. is trying to boost the sale of fresh foods by eventually adding prepared meals now available in supermarkets, said CFO Richard Fortin. This is a must for everyone, Fortin told The Montreal Gazette. This is the next step for Couche-Tard.

The chain is now piloting the sale of sushi, fresh fruit and salads in some of its Mac's convenience stores in Western Canada. And customers, hungry for healthier meals at all hours of the day, are buying. It's doing very well, said Fortin.

If sales continue to do well, sushi could be made more widely available, he added.

Fresh food now makes up 11% of Couche-Tard's sales, and the company intends to boost that figure to 15% over the next three years, Fortin said.

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