Tap Suppliers for Information, Advice to Build Better Foodservice Program

ROSEMONT, Ill. — Regardless of what’s being offered, always negotiate for what you want and what you need for the future—and influence others to support your long-term goals.

That’s advice from Bill Nolan (pictured), partner at The Business Accelerator Team, who spoke on Negotiating: The Art of Partnering & Planning for Profits at the recent CSPDispensed Beverages Forum in Rosemont, Ill.

“What good businesspeople do is they make money,” said Nolan, who worked 28 years at 7-Eleven and eight years with Family Express. “That enables you to reinvest in your business to create success long term.”

Convenience stores today need to negotiate “specifically with the suppliers we work with,” he said. “We need to influence them to help us plan for greater profits.

“Think of suppliers as people we need to get more out of,” he added. “Share groups are when you get together with other companies and share information because you don’t compete with them.”

C-stores need to pressure suppliers to be more of a shared partner, “coaching us, teaching us—what do they know about what’s coming out with equipment?” he said.

Suppliers have people to access all over the United States, peers who can talk about what’s going on in this category “who can help you build a better program, whether that’s promotions or equipment,” he added.

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When it comes to frozen carbonated beverages, Nolan said high unit sales don’t always predict profitability, and maintenance costs can undermine profits.

However, he said, “Shakes and smoothies are worth the risk in high-potential locations.”

The frozen carbonated beverages category has supported itself very well during the pandemic. “You pretty much can’t walk over to the cold vault and get a similar product there,” he said.

There’s great potential, especially if a retailer has a strong foodservice program and a customer count of 1,000 per day, including gas, or are next to a ballpark or high school. “It can be extremely profitable,” he said. “Somewhat seasonal but extremely profitable.”

In fountain beverages, Nolan pointed out there’s no appreciable difference in units sold in terms of whether a c-store has 12, 16 or 20 heads. “I’m not saying you shouldn’t have a 20-head fountain, but presentation, the look as you walk in the store, is incredibly important,” he said. “The type of ice can be incredibly important. The difference in flavors can be very important in different parts of the country, but we found no appreciable difference in units (sold).”

Lowering prices during a promotion also doesn’t improve profits, he added.

“What’s the best thing to do: Have a best price and assortment and drive it by value and quality, and that’s typical how you can make more money,” he said.

Nolan then revealed the biggest mistake he ever made in his career: bringing in a new fountain cup that sweat.

“I wanted to get into environmental cups but made a mistake not testing it,” he said. “During the middle of the summer it dripped, cratered sales by 20% in a week. If you’re ever going to change cups, test if for temperature, how it handles when it gets wet in a car. It took six months to rebound after the one week it took to crater.”

In hot beverages, Nolan pointed out that drip coffee still outsells espresso gourmet beverages. “This idea of espresso gourmet beverages in c-stores has been very good to us, but drip coffee, or an urn, is still the anchor of c-store coffee.”

Bean-to-cup can give retailers a 25% margin increase if they’re buying and managing their beans correctly, he added.

Nolan also discussed the urgency in getting hot beverages to rebound in the next 12 months. “To draw back the consumer in the a.m. drive, we have to do better telling consumers what we have with coffee.”

“Hot beverages are as important a marketing feature for your business than it ever has been before,” he said. “People will be more mobile. You need them to support you.”

Nolan said his information is “real” as he gets it from talking to consumers in stores, “and I found we’re going up against drive-thrus in coffee houses, drive-thrus (in general), people don’t want to get out of their cars, they pay for it on their phone. If you have kids, you don’t want to get out of car.”

One of most interesting reasons why coffee houses do so well is many who go there are giving themselves a treat or love the product, he said. “People think Starbucks is better coffee, superior beans, but your roaster is buying the same beans from the same places,” he said. “Does the consumer know this? No. (But) it’s the perception. … we need to get more people to understand our espresso and our urn drip is the same or even better quality than at coffee houses.”

To get those now working from home to make trip in the morning, serve unique beverages they can’t make at home, Nolan said. “People miss social interaction,” he added, noting his son and daughter-in-law walk five blocks for coffee to get out of house.

While digital is important, don’t discount print, he added, sharing the story of a retailer who issued printed coupons for a discounted coffee and got an excellent 37% redemption rate.

Finally, in determining dispensed beverage profitability, divide annual gross profit dollars by average annual inventory. If the number is greater than one, the retailer is profiting, Nolan said.