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Foodservice might be c-stores' most widely adopted offering from across channel lines, but one of the dangers of proprietary or regionally branded foodservice is stiff competition from national franchisers. It often doesn't seem to matter how good a retailer's food is, if a Wendy's, McDonald's or Taco Bell opens across the street, a c-store's foodservice program can take a sales hit.
Of course, the c-store industry enjoys a great number of foodservice success stories. For example, Gretna, La.-based Danny & Clyde's Food Store Inc. built an impressive reputation around its overstuffed po-boy sandwiches. The chain's program is such a regional favorite that a local radio station named its sandwiches the best in New Orleans.
Chris Rittiner, president of the 15-store company, is making his deli concept available to franchisees within the next year. Franchise rollout is, however, a complicated proposition. Rittiner explained that a store design developed by Lake Mary, Fla.-based Retail Management Design (RMD) helped gather data that potential franchisees can expect when they ultimately come calling.
"We've always had the foodservice area of the store shared behind the checkout counter, so the deli personnel were never really separate from the convenience store personnel," said Rittiner. "That has worked really well for us in the past from a labor standpoint.
"We floated expenses between the c-store and the deli, so it was also difficult for us to get a read on what an actual margin for a stand-alone location would be," he continued. "For example, if someone were to come in the store to get a sandwich, a soft drink and a bag of chips, the sandwich was rung up as deli and the soft drink and bag of chips were rung up as grocery items."
The new location is split almost exactly in half. Customers enter the store by walking into an atrium area that displays high-margin items such as coffee and fountain drinks. To the left shoppers can see the store's foodservice area, which includes the deli, fountain dispensers, chip displays and limited beverage coolers. The regular c-store section is to the right.
The division of the store had an immediately noticeable impact on foodservice margins. "Obviously, fountain beverages are one of the higher-margin items in the store, so when we begin to blend those items in with our deli offering, we've begun to see about a 2-percent increase in margin at this location," Rittiner said.
"With this design, we're getting a clearer picture of sales," he continued. "When people go to the foodservice side, they can buy all of those items that they typically purchase with the sandwiches and it's all rung up as deli.
"Everyone is trying to find other sources of profit," he said. "This location will give us some of the financial information that we need in order to begin rolling out franchise plans. We needed to run the models and determine where the margins would fall and how much labor would be required. I would hope that by the end of the year, we'll be ready."