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NATIONAL REPORT — The coveted cup of Joe is stirring up better convenience channel practices. It’s how many customers start off their day, so it makes sense that it’s how many convenience stores start off their foodservice program.
"Coffee is one of the most profitable products for foodservice operators. It is also habit-forming, which bodes well for loyal customers daily," Tim Powell, senior analyst at Q1 Consulting in Chicago, told Convenience Store News. "C-stores that develop a strong coffee program can then transition into offering complementary grab-and-go food items, such as baked goods and breakfast sandwiches. Coffee is really the entry into prepared foods and a good method for retailers to determine the levels of traffic they can expect."
Upgraded and expanded coffee programs at c-stores are also part of a larger trend as of late that is being driven by more millennials and men: the surge in specialty food. This trend includes coffee and other hot beverage products, according to a just-released report by the Specialty Food Association, entitled Today’s Specialty Food Consumer.
"Discovering specialty food has become a core part of the younger consumers’ daily shopping routine," according to Phil Kafarakis, president of the Specialty Food Association. "They are moving away from the staples they grew up with, and embracing the new tastes and flavors of specialty items. It seems clear that as the consumer base changes and those consumers’ needs evolve, their shopping choices become increasingly more driven by convenience. Retailers need to stay nimble to cater to them."
Another reason why it is becoming increasingly important for c-stores to have a strong coffee program is because "Keurig has made coffee customized and more convenient," said Don Stuart, a managing partner with Cadent Consulting Group in Wilton, Conn. "C-stores need to step up to the new level of convenience and customization; they need to become a strong morning destination for hot beverages to drive add-on sales."
And indeed, many forward-thinking convenience store chains have done just that.
When asked to name some c-store retailers doing it right, Brittany Sutton, manager of business analysis at Cadent Consulting Group, highlighted QuickChek, Wawa and Sheetz as having stellar hot beverage programs that successfully stack up against competitors and help capture impulse food sales.
Operating 145 convenience stores throughout New York’s Hudson Valley, New Jersey and Long Island, QuickChek’s coffee creed is "to carefully select and brew only the best coffee beans the world has to offer." It also commits to prepare each batch of coffee using exacting standards, including triple-filtered water, precisely measured grounds, and computerized timers to guarantee freshness. What’s more, it utilizes sustainable coffee and features limited-edition hot beverages in-season, such as Pumpkin Spice Cappuccino, Walnut Brownie Hot Cocoa, and Harvest Spice Coffee.
Wawa, with more than 700 stores in New Jersey, Pennsylvania, Delaware, Maryland, Virginia and Florida, offers freshly brewed coffee all day long with five mild offerings, one medium blend, and two bold blends. Hot beverages can also be built to order on its touchscreen kiosks. Promotions abound, such as any size latte, macchiato, hot chocolate or chai tea for $1.99. Also on Fridays during the month of November, all customers with a registered Wawa gift card can get a free coffee, any size. Pumpkin Spice is offered as a limited-edition flavor this time of year.
Sheetz, operating more than 500 c-stores in Pennsylvania, Virginia, Maryland, Ohio and North Carolina, was chosen as Convenience Store News’ 2015 Hot Beverages Innovator of the Year as part of the annual Foodservice Innovators Awards program. Sheetz continues to upgrade its "Kick in the Beanz" program introduced last year and found chainwide, which "elevates the sensory experience for our customers," according to Ryan Sheetz, director of brand strategy.
The offer includes four blends, 17 creamer and flavor options, and a full line of latte and mocha beverages — adding up to more than 1,000 different combinations for Sheetz customers to customize their coffee. Progressing from light to dark roast, the signature blends include Breakfast, Classic, Sumatra and French Roast. The beans are freshly ground in every Sheetz store. The Sumatra bean is sourced from Indonesia, while the other three are sourced from Central and South America. What’s more, every Sheetz location has state-of-the-art grinding and brewing equipment, and trained baristas.
Sheetz even got the "green" aspect right in its hot beverages program, which features environmentally friendly cups that are fully recyclable, BPA-free and made out of No. 5 polypropylene, one of the safest materials used to package foods, according to Ryan Sheetz. "This implantation will divert approximately 2.3 million cups from landfills every year," he noted.
Other c-store chains praised for their coffee by Powell of Q1 Consulting are Thorntons and Rutter’s.
Thorntons, operating 181 stores in Kentucky, Indiana, Illinois, Ohio, Florida and Tennessee, has dabbled with coffee greeters in certain stores during the peak hours of 6 a.m. to 10 a.m. "This [provided] patrons [with] excellent service and assistance, and provided Thorntons the ability to promote its different coffee and even to upsell its food," Powell told CSNews.
York, Pa.-based Rutter’s, a family-owned chain operating more than 60 locations throughout Central Pennsylvania, is also stirring business up at the coffee station. "Rutter’s has baristas on staff and a full coffee line using super automatic machines for espresso, lattes and cappuccinos," Powell noted.
On the supplier side of the category, convenience distributor McLane Co. Inc. in Temple, Texas, was hailed earlier this year as the 2016 Hot Beverages Category Captain by CSNews. At the heart of its success: McLane Kitchen partners with JCX Coffee to provide a turnkey program that enables operators to offer hand-roasted specialty coffee in a strategic merchandising setting custom-fit to each environment, according to the company. JCX coffees are sourced worldwide and many are sustainably certified — Rainforest Alliance, Fair Trade, USDA Organic and Direct Trade.
The McLane hot beverage program allows for customization within the product line to create a targeted offering, allowing c-stores to regionalize according to demographics. For example, JCX Coffee offers a sweet, cinnamon-flavored coffee that is typically labeled, "Cinnamon Toast," but for regions with a heavy Hispanic population, it can be offered as "Café de Olla," McLane reported.
The program also offers traditional branded point-of-purchase materials, including pumptoppers, window clings and frequent-purchase punch cards. McLane Kitchen distribution trucks, seen on all major U.S. highways, feature imagery of JCX Coffee.
McLane reports that hundreds of locations have implemented the turnkey program, resulting in more than 20 pounds of coffee sold per location per week. Operators of the JCX Coffee program typically see a 55-percent gross margin per cup on hot beverages, the distributor added.
C-stores that are serious about hot beverages must keep up with the latest trends in brewing equipment. "It’s hard to top a coffeehouse coffee, but freshness is key more than anything," maintained Stuart of Cadent Consulting. "Freshness, quality of the bean and [quality of the] water are the essentials for success; then, the added becomes how it can be personalized 'just for me,'" he said.
Therefore, at the top of the major equipment trends is high-quality brewing.
Self-service single and dual-station machines with touchscreen technology are featured at equipment supplier FETCO. Faema XI is an employee-served option with patented auto-steam technology, already launched in 100 QuickChek stores and soon to be rolling out chainwide.
The Bunn Trifecta is a brewer that uses air-infusion, said to capture complex flavors of coffee.
"The latest patented brewing technology brings barista-level coffee to c-stores," according to Katie Hered, senior business analyst at Cadent.
Another equipment trend is flavor enhancement and unique-to-me coffee. Creamer machines and sweetener dispensers continue to be on-trend. "Benefits include flexibility of flavor options — including easy introduction of seasonal flavors — and less store waste of traditional creamers and sweetener packets," said Hered. "SureShot My Way Café exemplifies the unique-to-me trend in coffee for c-stores."
The cold side of things is another hot equipment trend. C-store equipment has evolved to meet the latest trends that go beyond iced coffee, to cold brew and nitro brew — the nitrogen-infused variety has a higher caffeine content and a foamy head akin to Guinness, Hered noted. Black Ice by Ronnoco is machine that addresses the trends of the less bitter cold brew variety, as well as nitro brew.
Although coffee is king, fresh-brewed iced tea is a fast-growing segment in the c-store realm, and therefore, another equipment trend to consider. Both FETCO and Ronnoco offer fresh-brewed tea equipment to meet this growing demand.