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Food and beverage sales in the convenience store segment are catching fire, with Packaged Facts projecting that c-store foodservice sales will grow 5 percent in 2012, beating the overall foodservice growth forecast of 3.5 percent. And CSNews Online reported exclusively in July that dining frequency at convenience stores was up 63 percent, from an average of 1.6 times a month to 2.6 times per month.
This growth will continue to play an increasing role in the survival of convenience stores, and not just in the ways you might think.
More than adding SKUs and ringing through merchandise, growth is coming from fresh food. This presents new challenges to c-stores, but the payoff is big. We worked with one operator that went from about $2,000 per week in sales of coffee and pastries to close to $10,000 per week in coffee, pastries and assembled-to-order breakfast sandwiches. It wasn't just about adding SKUs; it was about making a total commitment to the shift and then putting the necessary resources in place to make it a success. The retailer had to be all in.
Are you seeing dollar signs yet? Are you wondering, at what cost? The answer may surprise you. In the example I just mentioned, the operational cost to move the needle by 500 percent was comparatively low. We added one employee for eight hours to focus the operation on delivering the promise: do food assembly, keep coffee freshly brewed and replenish pastries and condiments.
You don't need to pull out your calculator to know that the added labor paid off big.
The bigger shift -- far beyond additional labor -- is a shift in operational thinking. Increasingly, the c-store is being pulled into full-fledged foodservice. With that shift comes a need to reassess everything. You'll need to make your stand in four areas:
1. Menu Variety and Customization
2. Facility and Environment
3. Commitment to Hospitality
4. Superior Operations Execution
Menu Variety and Customization
A convenience store is always balancing customization and variety with operational complexity. The same is true for restaurants, but c-stores straddle two worlds.
The path of least resistance is to make most, or all, items self-serve. Sandwiches and salads, in this example, are delivered pre-made and can hold cold on display shelves for a day or two. Hot, pre-heated items can hold for about an hour (or can be displayed cold, then heated via microwave). Customization in most cases is limited to condiments.
Incrementally more customized, but still focused on creating the absolute minimum operational burden, is the now-ubiquitous hot dog roller grill. Yes, you can increase variety. But have you deepened the customer's confidence that they've made a good choice? Operators have found that keeping roller grills very full helps connote freshness and variety, but a full and variety-laden roller grill invariably leads to excessive waste.
Another simple form of customization consists of serving hot displayed items from bulk into a choice of container sizes when the customer orders. Chicken wings and pizza do this well for stores like 7-Eleven.
Further still is heat- or assemble-to-order. The most basic expression of this is made-to-order breakfast sandwiches, which require no management of produce. Wawa and Quick Chek have upped their game from there and offer assemble-to-order sandwiches all day long, providing a wide variety of fresh products that can be customized.
Sheetz, however, is an example of an operator that has gone all in. They've made the tectonic shift to being a true restaurant, with a significant menu within the shell of a convenience store. It seems clear based on their success that while operational and organizational change is hard, the reward for going all in is significant.
Operators who wish to survive are moving to some form of assemble-to-order or heat-to-order offering to bring guests into the store. It's the minimum bar for competing in today's market. And once they make that shift, we have seen few coming back
. Facility and Environment
As convenience stores move into foodservice, many things must evolve so the facility looks and works the way it should.
The environment has to be such that it screams food in lighting, display, color and presence of personnel. Even if products are displayed for self-service, it is critical to add menus and graphics to support food. Design of the environment must convey warmth and welcome to connote credible foodservice -- a true departure for some c-stores whose garish fluorescent diffusers, tile floors and FRP walls provide the customer with no confidence in prepared food.
Adjacencies must also be rethought. Coffee areas should be adjacent to pastries and breakfast sandwiches, and hot dog grills and sandwich displays should be near cold drinks. Simultaneously, it's preferable to have all food areas close together to create greater operational efficiency. Layered atop that is the need to ensure visibility from the register so that issues related to service and cleanliness can be detected and fixed, even in off-shifts.
Commitment to Hospitality
In the transformation to bonafide foodservice, your employees are no longer simply clerks cashing out merchandise, they have become hosts who must be attentive to customers' needs. Guests rightly associate a good foodservice experience to attentive and hospitable staff -- if they're not taking care of me, they can't possibly be taking care of the food.
As guests enter the facility, they must be greeted with warmth and enthusiasm. Finding opportunities to interact with the guests to ask about their experience, whether they got what they were looking for, and whether their needs were met will create an emotional connection that will bring them back.
Hospitality is also about making sure that your house is in impeccable order. That means foods are replenished and fresh, associates respond quickly to any disruption, and guests' needs are met without hesitation.
As more c-stores enter into foodservice, hospitality and guest experience become the only competitive advantages. A superior food offering, competitive pricing, immaculate stores -- these become the minimum bar for entry. Hospitality and the vibe within your store must lead guests to develop an emotional connection. Loyalty comes from that connection.
The jump to true foodservice means enormous effort in making everything look and taste "fresh." Little things mean a lot, such as:
1. Associates visible at all times of the day;
2. Foods and beverages rotated as their hold time expires;
3. Condiments tidily replenished;
4. Spills quickly dispatched;
5. Floors and restrooms undeniably clean;
6. Cold items cold and hot items truly hot;
7. Equipment meticulously cleaned and maintained;
8. Inventories adequately managed to ensure product availability;
9. Costs managed tightly to enable competitive pricing; and
10. Food safety rules adhered to with meticulous zeal.
All this is easier said than done. If you are all in for foodservice, you will have balanced and fresh menu variety that allows for some customization, a facility and environment that looks and works like a restaurant, associates committed to hospitality, and meticulously consistent operational execution.
Mark Godward, co-founder of Foodservice Productivity Group (FPG), has been innovating foodservice operations for 20 years. Clients include RaceTrac, BP, Wawa, Quick Chek, Denny's, D' Angelo, Panera, McDonald's, Arby's, Bruegger's, Olive Garden, Taco Bell, Starbucks, Dunkin' Donuts, Jack in the Box and more. Godward holds bachelor of science and master of engineering degrees from the University of Buenos Aires and a Master of Science in Industrial Engineering from North Carolina State University. He can be reached at [email protected] or (786) 953-2499.
Editor's Note: The opinions expressed in this article are the author's and do not necessarily reflect the views of Convenience Store News.