How C-Stores Can Maximize a Foodservice Recovery

CHICAGO — The COVID-19 pandemic has increased consumers' expectations for food sanitation and safety. And while foot traffic for retail and restaurants remains well below pre-pandemic levels, convenience stores need to step up their foodservice strategies to win consumers back.  

“We are restarting our businesses in an unprecedented operating environment that really does demand elevated levels of partnership between retail foodservice operators and distributors and supply partners to move the industry forward again,” said Donna Hood Crecca, principal at Technomic Inc.

Crecca spoke at Winsight Media’s Retail Foodservice Forum, which also featured Technomic’s Wade Hanson and a presentation from Jessica Williams, CEO and founder of consultancy Food Forward Thinking.

Here's a look at the state of foodservice now and the advice these experts gave to retailers to help them improve foodservice …

With the recent strong resurgence of the coronavirus, elevated or reinstated restrictions in some markets and the financial pressure some consumers are facing, Crecca said she expects the depressed consumer traffic to continue, although the trend is slowly turning around.

Technomic in October surveyed consumers who frequent c-stores, and nearly three in 10 said they have cut back their visits to c-stores, specifically with freshly made food items and dispensed-drink purchases, in the past month. This was driven by consumers 35 and older, Crecca said.

“We found that the No. 1 driver of these decreased visits is their concern about potential exposure to COVID-19,” Crecca said. “It’s definitely an improvement from what we were reporting in April when we found that two-thirds of consumers overall had reduced their foodservice visits into the channel, but it’s still a concern.”

Consumers who said they increased foodservice patronage in the past four weeks were driven by food and beverage quality, appealing prices, a greater comfort level due to the virus receding in their market and good overall value.

Technomic, a sister company of CSP, predicts the c-store foodservice industry will be down more than 22% in 2020 but rebound almost 31% in 2021, Hanson said. That’s a predicted annual growth rate of about 0.9% for 2019 through 2021.

Sanitation practices are critical to earning visits to c-stores, Crecca said, but can drive costs and complexity.

Sixty-five percent of consumers said c-stores are doing a good job of frequently cleaning and sanitizing surfaces, according to a Technomic survey. Seventy-nine percent of consumers expect c-stores to continue focusing on sanitation, the survey found.

“These elevated safety and sanitation practices are not easy to execute, but they’re increasingly a consumer expectation,” Crecca said.

C-stores need to rethink self-serve operations as dispensed beverage and fresh-food offerings start to open up again, Crecca said. Consumers lack overall confidence in the safety of self-serve foodservice formats, especially when it comes to salad bars and buffets, she said. The multiple touch points and open formats create a fear factor for customers.

Half of consumers are now avoiding self-service formats when they’re in restaurants and other foodservice locations, Technomic found.

“So the question becomes will they return to self-service in your stores?” Crecca said. “And that’s really at the core, the ability to understand, how do you need to evolve and reimagine your foodservice offering to revive it?”

The good news? Most c-store consumers want to return to foodservice, Crecca said.

C-stores need to think about the new ways customers want to purchase foodservice items.

At the start of the year, just shy of 25% of c-stores were offering curbside pickup or delivery, but that has since increased. 7-Eleven, RaceTrac and Wawa were among the many chains that increased their purchase formats amid the pandemic, Crecca said. However, c-stores could be better.

In-store purchases are the primary mode of purchase for this channel, she said. Consumers said in a Technomic survey that the primary reason they don’t order from c-stores is because consumers don’t think of a c-store as a delivery option.

“So there’s some work to be done I think on simply being on the consideration set for delivery, and that effort could really lead with foodservice,” Crecca said, adding that prepared food and beverages are the top items c-store consumers are ordering for delivery.

Consumers are facing tough times due to the coronavirus. About 19% were furloughed or laid off due to COVID-19, according to a fourth-quarter 2020 Technomic survey, and 13% of consumers expect their personal situation to get worse in the next six months.

However, Crecca said she’s seeing an increased prioritization in quality as a driver of c-store foodservice purchase, and a decrease in low price as a factor in determining which location earned that visit in the third quarter of 2020 vs. the first quarter.

“There’s an opportunity in the c-store channel to realign your thinking about the consumer approach to value because it seems like they’re leading with quality; they’re seeking quality in this channel,” Crecca said.

C-stores can move forward with foodservice innovation, even amid a pandemic, said Williams of Food Forward Thinking, who spoke on the second day of the Foodservice Forum.

One place c-stores and grocery stores can look to as an example is restaurants and quick service restaurants (QSRs), said Williams, who has a background in QSRs and c-stores. QSRs only sell food, so if c-stores can leverage what QSRs are doing and add their own strengths, it will be a huge advantage.

QSRs innovation process is a cycle of define, explore, design, test, refine, launch and measure, and can be adapted for c-stores, she said.

Defining the challenge or need state with food is the first step. Williams suggested operators should think of these questions: Who are we not serving? Where is there a gap in the menu?

Next is exploring why the need is there, and to step outside of the norm to explore new options, Williams said. Don’t be afraid to ask many questions in this phase—and keep in mind there are no wrong answers, she said.

After exploring, c-store operators must design the new food product to see what is realistic and then test that new product and refine it before launching. Finally, the only way to gauge success is to measure progress.

It’s a constant cycle, Williams said, and it won’t happen unless retailers put in the work.

“[Innovation] is not just about chance. Sometimes you get divine inspiration but not very often. Having a process and structure to your innovation … is an important way of keeping your organization aligned with what you’re up to and working cross-functionally,” Williams said.