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The world of foodservice is getting a little crowded. When hunger pangs strike, consumers have their pick of restaurants, food trucks, convenience stores, grocery stores, drugstores, etc.
Why consumers choose one channel over another when purchasing prepared food was the overriding theme of the Convenience Store News 2014 Foodservice Summit, sponsored by Tyson Foods Inc. and held in March at the company?s Tyson Discovery Center in Springdale, Ark.
A dozen retailers representing some of the most innovative and well-established foodservice players in the convenience channel ? Wawa Inc., 7-Eleven Inc., Rutter?s Farm Stores and Kwik Trip Inc., to name a few ? participated in group discussions, consumer focus groups and an exclusive Tyson Foods research presentation all centered around the consideration process consumers go through when choosing where to buy prepared food.
Among convenience store shoppers, only 10 percent of their prepared food purchases from on-the-go establishments are made at c-stores, according to the proprietary Channel Choices study conducted by Tyson Foods and presented during the Foodservice Summit by Eric Le Blanc, vice president of marketing for its Convenience Foodservice & Deli Division.
?That?s not your fair share,? Le Blanc said, receiving nods of agreement from all of the retailers in the room. C-stores trail quick-service restaurants (QSRs), which own 41 percent of those purchases, grocery store delis at 24 percent and fast-casual restaurants at 21 percent, the research showed.
As for why c-stores are lagging, the Channel Choices study found that consumers consider six attributes most important in their prepared-food purchase decisions. These attributes are:
- Quality of food
- Food freshness
- Menu choices/options
- Previous experience
When compared against the other on-the-go establishments, c-stores rank lowest across all six attributes. Fast-casual scores high across the board, while QSRs do best in price/value.
The good news for c-stores is they are resonating with consumers on other attributes such as speed of service (No. 7 in importance), ease of parking (No. 8), location on direct travel route (No. 9), location on the way to/from work (No. 13), and food portability/ease of eating (No. 10).
Although these attributes are not in the top six, they are still important to consumers, said Le Blanc, and as such, convenience retailers should play up these strengths when communicating to consumers. At the same time, c-stores should focus on improving in the top six attributes.
The consumers who are most likely to buy prepared food at convenience stores are also most likely to buy prepared food across all channels. This means everyone is going after the same target.
?The shopper we want is the shopper all the other channels are going after, too,? Le Blanc noted. ?You need to get high in the consideration set and then win while they?re in the store.?
Two specific consumer groups the retailers at the CSNews Foodservice Summit believe the convenience channel can capitalize on are snackers and Millennial moms. Many of the attendees said they are seeking out and testing items directly aimed at these consumers.
Kwik Trip, based in La Crosse, Wis., is working on more meal solutions to appeal to busy moms, and another retailer at the event observed that Millennial moms are a fan of made-to-order beverages because they are willing to spend a little more money to have their drinks prepared for them.
Some of the retailers wondered, however, if the convenience channel has made enough improvement up to this point to ?have the permission? from young moms to go after their business. Snacks, they said, may be the bridge c-stores can use to gain that permission.
?Our channel is not ready for Millennial moms today,? said one attendee, who also pointed out that most c-stores are still trying to figure out what permission they need to play at the dinner daypart.
Where c-stores definitely do have the permission to play today ? and have the upper hand compared to competing foodservice channels ? is in snacking occasions, which are increasingly spanning all times of day and all types of food and beverages.
?There is a huge opportunity in snacks,? said Jerry Weiner, vice president of foodservice at York, Pa.-based Rutter?s. ?Our advantage [here] is that we hit every demographic; we appeal to the broad-based consumer.? This means moms can come into the store with their kids or entire families can make a pit stop and everyone can find a snack that satisfies.
What exactly the term ?snack? means, though, is a matter of debate and it?s something that is continuously evolving in today?s time-starved American culture. The same is true of the term ?portability,? another important component of a c-store?s foodservice offering.
?What really is portability? Is it being able to eat with one hand or is it just being able to take it out of the store? As an industry, we need to better define that,? said Tom Terlecky, director of proprietary foods at The Pantry Inc., the Cary, N.C.-based operator of Kangaroo Express stores.
VALUE VS. CHEAP
Other factors the retailers discussed as impacting consumers? channel choices are pricing, promotions and marketing. One retailer said his company is moving away from ?having cheap things. We?re transitioning to having less and less of those items.? If a store has the right atmosphere, consumers will be willing to spend more on food. ?The food can be good, but they won?t even try it depending on the atmosphere you create,? the retailer said.
Jerome Hunsinger, marketing brand manager for AM Foodservice at Pennsylvania-based Wawa, acknowledged that the company sometimes hears from its customers that it doesn?t do enough value pricing, but he quickly added that ?we don?t want to play in the 99-cent breakfast sandwich space. We want to be the everyday fair price.?
For other c-store chains, matching prices with foodservice competitors is a must. For instance, Pennsylvania-based Country Fair didn?t start to grow breakfast sandwich units until it went head to head with McDonald?s on a sausage biscuit deal, said Director of Foodservice Guy Strayer.
Another attendee explained that the fear for all foodservice purveyors is that if you don?t have the best deal, you?re going to lose that guest. ?How do we convey that the value is still there [even if it?s not the lowest price]?? he asked his fellow retailers.
Tyson?s Le Blanc noted that there?s a difference between value and cheap, and consumers don?t want cheap. ?Good isn?t cheap, and cheap isn?t good,? he remarked.
When it comes to foodservice marketing, Maverik Inc.?s Customer Fanatics Director of Foodservice Rich Green said the adventure-themed chain has been having success with one-off events, such as National Corn Dog Day. By offering a special price on its corn dogs for just that one day, Maverik sold 27,000 units, according to Green.
At Rutter?s, Weiner said the retailer utilizes its Rutter?s Rewards loyalty program to drive foodservice purchases, specifically through targeted coupons based on loyalty data.
Social media was also hailed for its ability to drive awareness among existing and potential customers. For Wawa, social media serves as ?a nice complement to primary campaigns,? said Hunsinger, who also noted the medium provides significant impressions per dollar invested.
STRAIGHT FROM THE SOURCE
In addition to the group discussions, the CSNews Foodservice Summit featured two different consumer focus groups ? one conducted online, the other live ? facilitated by David Mills of Mills Consulting Group. These focus groups shed more light on what c-stores are doing well and what they need to do better to steal share from grocery stores, QSRs and fast-casual restaurants.
Consumers in both groups said they purchase prepared food at c-stores because:
- Sometimes, the fast food drive-thru lines are too long.
- C-store food is cheaper than fast-food restaurants.
- It?s convenient as they?re getting gas at the same time.
- They can buy items to eat now and also stock up for later.
- There are a lot of snack options available.
As for why they don?t buy c-store prepared foods, consumers cited:
- Lower quality compared to fast-food restaurants.
- Lack of freshness (assumption that it?s been sitting out all day).
- Not a large enough breakfast selection.
- Lack of seating.
It was clear from the focus groups that while some c-store retailers have earned consumers? trust, the industry as a whole still suffers from the perception of serving low-quality food. The consumers said they would frequent c-stores more if the offering was consistent from store to store, the food was prepared in front of them, and there were more fresh fruits and vegetables available.