Foodservice Becomes C-stores' Most Profitable Category

CHICAGO -- Convenience stores have traditionally been known for several key categories: tobacco and gas. But as revenues for those categories continue to slip, foodservice has begun to make a name for itself as a c-store's most profitable category.

Convenience store foodservice is an $11-billion industry and the second largest retail host foodservice category behind supermarkets, according to Technomic. The c-store segment composes about 29 percent of retail foodservice and almost 2 percent of the total foodservice industry. Going forward, the Chicago-based firm projects that c-store foodservice will grow nominally by 2.5 percent over each of the next two years.

"Convenience stores have shifted their focus to provide a wider variety of fresh, high-quality food offerings to help gain a greater share of stomach and compete with restaurants," said Tim Powell, director of research and consulting services. "At the same time, there seems to be significant room for convenience store operators to generate increased foodservice sales by translating existing traffic into purchases."

And while some c-store retailers have had an emphasis on foodservice for some time now, other convenience chains are looking to better position themselves for continued growth in foodservice. For example, they are upgrading their facilities by integrating technology to enhance their offerings and the consumer experience.

Noteworthy findings in Technomic's new Market Intelligence Report: Convenience Stores include:

• More than half of today's consumers (52 percent) pick up snacks from prepared food sections of convenience stores or mini-marts, compared to 37 percent in 2010.
• Almost one in four consumers (22 percent) occasionally has breakfast from a convenience store during the week, compared to only 12 percent three years ago. In addition, 13 percent purchase breakfast from c-stores on the weekends vs. 7 percent previously.
• While c-stores score well with consumers in terms of convenience, portability, and speed of food preparation and service, their Achilles heel seems to be the healthfulness of the food, which gets satisfactory marks from just 28 percent of those surveyed.
• During the week, just one in five consumers surveyed indicated that they purchase lunch from retail foodservice locations such as grocery stores (20 percent) and convenience stores (17 percent), while 56 percent purchase lunch from a fast-food restaurant.