More than a quarter-million U.S. retailers accept Supplemental Nutrition Assistance Program benefits, or SNAP. Nearly 42% of those retailers are c-stores. And yet the Food and Nutrition Service’s (FNS) proposed changes to the program could push this group out.
“It’s specifically written to exclude c-stores and small grocery stores,” says Kyle McKeen, president of Alon Brands, Dallas.
The FNS’ intent is to give SNAP participants increased access to healthy foods; however, recommended stocking requirements and a 15% hot-food sales provision would make it nearly impossible for c-stores to comply.
“The way [the rules] are written today, we would have to discontinue acceptance of the SNAP program,” says McKeen. Alon operates 309 c-stores, all of which accept SNAP, throughout West Texas and New Mexico. While only 2% of Alon’s sales are attributable to SNAP benefits, some of its stores serve food deserts—areas without ready access to full-line supermarkets—and operate at times when other food stores might not be open.
It’s not about sales, says McKeen: “It’s about wanting to serve the people that are in our neighborhood.”
An Issue of Space
Convenience retailers would be hard-pressed to do just that under the FNS’ proposed stocking requirements.
As currently drafted, SNAP retailers would be required to stock seven varieties of qualifying foods in four staple food groups (dairy products; breads and cereals; meats, poultry and fish; and fruits and vegetables) on a continuous basis, along with perishables in at least three of the four groups. That equates to 168 items—a huge leap from the 28 items proposed, but never enacted, in the 2014 Farm Bill.
“There’s no way we can carry all those different types of product,” says McKeen. “The market’s not there for it, and we don’t have the space.” Alon stores average 2,500 to 4,000 square feet.
Space is also a concern for Dodge’s Stores, Tupelo, Miss., which operates 45 stores in the Southeast, 42 of which accept SNAP.
“Due to our average total square footage being 4,500 square feet and our limited storage space in the backroom, we would not be able to stock 168-plus items,” Henry Dodge Jr., president of Dodge’s Stores, wrote in a comment filed online at regulations.gov. (The public had until May 18 to file comments with the FNS.) “Our estimated cost to comply by adding a cooler would [be] approximately $5,000 per store, for a total investment of $210,000.”
FNS said the cost to comply would be much less. “We estimate that the cost to those small businesses for stocking additional inventory would be nominal, on average about $140,” the proposal reads.
Anna Ready, director of government relations for the National Association of Convenience Stores (NACS), Alexandria, Va., disagrees. “That is a gross underestimate because in order to comply with this rule, a retailer will have to stock 168 items on shelves at all times,” she says. “To do this, you’re going to have to change what you stock, you might have to replace popular food items that you know sell with items that may not sell, and you may even have to install a new cold case, or redesign your store layout.”
FNS also redefined “staple food” as an item intended for home preparation and consumption, and it does not include “commercially processed foods and prepared mixtures with multiple ingredients that do not represent a single staple food category.”
That means foods such as frozen pizza, macaroni and cheese, some soup, sandwiches and TV dinners would not count toward the 168-item stocking requirement. However, a SNAP beneficiary could still use their benefits to purchase these items.
“We surveyed our membership, and 75% of items on [their] shelves today have multiple ingredients,” Ready says.
Accessory foods—foods eaten between meals and generally considered snacks or desserts—also would not count toward a store’s stock. These include popular c-store fare such as coffee, tea, carbonated and noncarbonated drinks, candy, chips and more.
'An Injustice to Customers'
Arguably the most detrimental to c-stores is the FNS’ 15% provision. It rules that any retail-food store whose hot-food (heated before or after purchase) sales exceed 15% will automatically be ineligible to participate in SNAP.
“If you think about our industry and how it’s really moving toward more prepared foodservice … it’s significant. If implemented, this provision alone would render nearly half of the c-stores that currently redeem SNAP ineligible,” Ready says.
A retailer also would be disqualified if it’s under the same roof as another entity (e.g., a quick-service restaurant) with hot-food sales that exceed 15%. This would be the kicker for Anderson, Ind.-based Ricker’s, which operates several stores with an attached Subway.
“We have a store in an urban area that serves as the neighborhood grocery store. However, this store also has a Subway,” Keith Broviak, director of marketing for Ricker’s, wrote on regulations.gov. “This is an injustice to the customers that rely on us to provide their staple grocery needs.”
Ricker’s has 56 stores in Indiana, all of which participate in SNAP.
After the FNS reviews public comments submitted through May 18, a final rule will be drafted, along with a compliance date.
Ready believes this could all happen before January 2017: “Statements from the administration have indicated this is a priority of theirs to finalize before the president leaves office.”
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