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    Retailers expand their morning fare with a bigger variety of doughnuts and pastries to sweeten the a.m. offer.

    By Barbara Grondin Francella

    As the team at Miller Oil Co. sat around a table brainstorming name ideas for a new bakery program, Jeff Miller blurted, "Fun Buns!"

    The others looked at him "with disgust," he laughed, but the name stuck and, even better, it has been a great marketing success.

    "Of the people with a twisted sense of humor, I rank up there, but we wanted to take a fun and easy approach to the program," Miller said.

    The operator of 20 Miller's Neighborhood Markets had been simplifying all aspects of operations -- including internal paper flow, corporate bureaucracy and the customer experience -- and looking for ways to inject some fun and excitement into the c-store brand.

    "We were looking at our morning daypart, where we had been offering the same old stuff everybody offers: breakfast biscuit sandwiches and coffee," said Miller, president of the Norkfolk, Va.-based company. "But the coffee program was doing well, and we wanted to do something different to build on that and set us apart."

    At the same time, the Miller Oil team was searching for a foodservice platform that would offer consistency for the chain, which sells Subway sandwiches or a proprietary program of sandwiches, burgers and wraps at selected sites.

    "Now, Fun Buns identifies all of our stores with good, quality, fresh, made-on-premises products," said Miller, who plans to retool the breakfast sandwich menu. "Our larger goal is to get our food programs performing better. We felt Fun Buns would rub off on our overall image."

    Today, the year-old program includes more than 25 doughnuts, cookies, pastries and other sweets. Among them: the best-selling apple fritter and favorites like glazed, cake and long john doughnuts, as well as less traditional fare like cinnamon-swirled dough topped with cream cheese or peanut butter frosting. Bear claws, muffins, Danish, and Hershey Kiss and Reese's cookies are offered too.

    Although a line of scones was part of the original set, these have been jettisoned in favor of better-selling items. New offerings are rotated in on a trial basis. For instance, a lemon-filled doughnut debuted in February.

    All the items are baked and frosted -- sometimes in holiday themes -- at the store each morning by 5 a.m. "One key to the program was making it low impact on store operations," Miller noted. "The program takes an hour to an hour and a half of labor per day."

    A year in, employees' primary challenge is controlling waste. "If you throw two doughnuts away for every one you sell, you’re going to lose money," he said.

    Initially priced at less than $1, the baked goods are now priced "competitively," Miller said. "There has been no conscious effort to be the lowest priced doughnut seller. It seems like our industry wants to be the lowest priced in everything it sells." For example, cinnamon rolls are 55 cents each, or three for 99 cents. Filled doughnuts retail for 79 cents, or three for $1.59.

    Still, at the end of the day, a good quality doughnut is a good quality doughnut, Miller conceded. "To differentiate our offer, we are aggressively marketing the Fun Buns brand."

    Every storefront serves as a billboard, carrying the Fun Bun message from the ground up more than three feet. At the pumps, the chain's Outsite Network relays verbal messages, and the Fun Buns are merchandised in a case near the front door, easily accessible to every customer.

    During the launch, pole signs and pump toppers supported an advertising campaign featuring Roy Lichtenstein-like drawings of a character named Molly, telling her boyfriend, "Oh Brad, I'd do anything for a Fun Bun." Employees wore T-shirts with the Fun Buns logo on them, imploring customers to "Get Your Buns In Here."

    The vast majority of purchases are single sales, although the stores often see purchases by the half-dozen or dozen, especially during the weekend.

    Miller Oil isn't the only c-store operator pumping up its bakery program. Last August, Tulsa, Okla.-based QuikTrip Inc. opened its second QT Kitchens bakery in Belton, Mo., producing doughnuts, muffins, rolls and cookies each day for 74 QuikTrip stores in the Kansas City metro area. Two dozen items, including new additions to the offer, are made in the 100,000-square-foot facility and delivered daily via a fleet of refrigerated trucks.

    "We are producing the best pastries I have been associated with in my career," said QuikTrip's corporate baker, Ron Tillman -- who has 25 years experience in the bakery industry -- when the commissary opened.

    The first QT Kitchens in Tulsa produce more doughnuts and rolls than any other bakery in that market, a company release stated. Baked goods, sandwiches and wraps are available in most Tulsa, Kansas City, Wichita, Des Moines and Omaha QuikTrip stores; all of the chain's other markets will carry them in the next two years, the company said.

    Meanwhile, LaCrosse, Wis.-based Kwik Trip Inc. has gradually expanded its 20-year-old bakery. Now measuring 60,000 square feet, the bigger facility allows the retailer to offer a greater variety of foods and goods, in a more automated, efficient way, noted Steve Loehr, vice president of operations support for the 350-store chain.

    The bakery churns out the Kwikery line of bread, buns and rolls for the chain's sandwich program and take-home use, as well as bagels, doughnuts, holiday pies, muffins and cookies. Everything is delivered overnight to every store daily.

    "That's our biggest advantage -- and a huge commitment -- and it helps us control costs as well," he said.

    Every item is scanned at the store level (employees use PLU keys for single items); that information is used to replenish the stores, which helps control waste. If a store sells 30 loaves of white bread one day, for example, they get 30 loaves shipped automatically to them the next day.

    "The in-house bakery gives us more consistency, is more efficient and lets us move pretty fast," Loehr said. "It enabled us to quickly deliver our Glazer doughnut, which was our answer to Krispy Kreme, when they moved into our market area."

    The bakery setup kept the program from having a disruptive impact on the store-level team, especially as the chain moves to satisfy changing consumer trends. Consumer focus groups meet regularly to go over new products, pricing and packaging. In February, Kwik Trip put a mini c-store in the company’s support center, used by Kwik Trip employees and others in the industrial park.

    "We test new products in there and get comments from those customers," Loehr said. "It's a good live laboratory setting. Plus, we test new items in one district before we roll them out to all of the stores."

    In the past year and a half, Kwik Trip has added oat bran and multi-grain bread to its lineup. Shortly, 100 percent whole wheat will be online, and the chain is working toward eliminating trans fats.
    In general, Kwik Trip aims to be very competitively priced. "Our goal is to have our production department sell our products to our stores at or below the price an outside supplier would charge," Loehr said. "Often, it is significantly below those prices and [the products] are retailed at prices similar to or lower than supermarkets."

    Until recently, the chain's bagels, cookies and doughnuts sold three for $1. "One of the big challenges in bakery is food inflation," Loehr said. "We're seeing flour prices 60 to 70 percent higher than a year ago and going even higher. Different spices, chocolate and petroleum-based packaging pricing are going up.

    "We're always reluctant to raise retail prices and are conservative in passing along price increases, but over time, you have to," he continued, noting the chain is in the midst of determining a price increase. "But our prices will still be significantly below anyone in our market area."

    For comments, contact Barbara Grondin Francella, Senior Editor, at [email protected].

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