Inside Couche-Tard’s New Foodservice Strategy

Retailer highlights plans to elevate coffee, fresh food

LAVAL, Quebec -- In its recent fourth-quarter earnings call, Alimentation Couche-Tard detailed its plans for foodservice over the next year, with a specific focus on growth of its Simply Great Coffee program in North America.

“In the fourth quarter, we pursued our efforts to make Simply Great Coffee known to our customers throughout more of the network. This offer is now available in over 2,700 stores globally and has been a proven success in Europe,” said Brian Hannasch, Couche-Tard’s chief executive officer. “The next year will be dedicated to increasing customer awareness and trial here in North America. Our goal is to try to get customers to discover Simply Great Coffee’s exceptional taste and great value.”

Hannasch identified the specific domestic and international markets where Simply Great will be making a stronger push. “We will be finishing Ireland this year and then a good part of the Quebec and Atlantic markets here in Canada. We'll be adding to 209 locations this year. And in the U.S. we've got pilot markets in Raleigh, N.C.; Southern California; and Chicago.

“We’ll also continue to invest in other key categories, such as cold beverage and fresh bakery, which have proven sales results in several markets that they have been integrated and rolled out into,” continued Hannasch.

Couche-Tard also pointed to future growth opportunities due to its planned acquisition of Minnesota-based Holiday Stationstores, a transaction that is expected to close during Q4 of fiscal 2018. “Holiday has a very impressive food commissary which supplies fresh and frozen foods for its stores,” said Hannasch.

“Holiday certainly provides a very interesting dimension that I think accelerates our food journey," he said. "They have had a long time to really refine the offers they have, the products they have, what travels well, what freezes well, what can be reheated, and they turn out a high-quality product. So we certainly see an opportunity to leverage not only the commissary itself, but the learnings that Holiday has in … delivering fresh every day.”

Hannasch also called out Couche-Tard’s stores under the recently acquired CST Brands' Corner Store brand, which it will focus on rebranding. That rebranding will include a rollout of core Circle K programs, such as the Polar Pop dispensed platform. Additionally, the company’s agreement to purchase 53 sites held by American General Investments and North American Financial Group was highlighted as a growth opportunity in Louisiana markets due to the on-site operations of Cracker Barrel restaurants and 11 quick-service restaurant units in the region.

Overall, foodservice represented 12% of Couche-Tard’s total in-store sales in fiscal 2017. “Our foodservice program in the U.S. is doing well,” said Claude Tessier, the company’s chief financial officer. “We are pleased with our food category, but there are still long ways to go in testing new concepts in the U.S. and [introducing] exciting new concepts in terms of food convenience that can bring good results.”

In light of all of Couche-Tard’s recent acquisitions, the company also announced that it is combining the foodservice teams from Holiday and CST Brands, “and they are working to identify best practices in both of the offers, menu and skew rationalization, one of the best items that we can do in both,” said Hannasch. In-house bakeries, fresh sandwiches and regional favorites tailored specifically to Southern consumers—including tacos, burritos and kolaches—were called out as core menu items.

Further, Couche-Tard spotlighted consumer preferences for better-for-you offerings in its plans to promote freshness of the menu and on-site preparations. “I think giving a core fresh offer into our stores is the right thing to do, particularly as we certainly see some segments of the consumer population looking for healthy alternatives,” Hannasch said.

Alimentation Couche-Tard Inc. is one of the world’s largest company-owned convenience-store operators, with more than 12,000 stores across the U.S., Canada, Europe, Mexico, Japan, China and Indonesia.

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