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CHICAGO – Retail foodservice outlets, which include convenience stores and supermarkets with prepared food programs, are competing against traditional restaurants more than ever before. In recognition of this, the 2016 National Restaurant Association (NRA) Show held the first-ever Foodservice at Retail Conference this week.
With profits in traditional c-store categories such as cigarettes and gasoline declining and the quality of c-store foodservice rising, the channel is in a state of flux. During a panel entitled "Culture Club: Bringing the Gap Between Foodservice and Retail at Work," Phil Lempert, Supermarket Guru and Foodservice at Retail program consultant, moderated a discussion between four retail foodservice experts.
Participants included Mike Sherlock, vice president of fresh food and beverage, Wawa Inc.; Ryan Sheetz, director of brand strategy, Sheetz Inc.; Steven Petusevsky, co-chair of CIA Appetites & Innovation Initiative, Culinary Institute of America; and Nicolas Granucci, vice president and general manager of global food retail, Ecolab.
Despite the advancements made in convenience foodservice, the industry's biggest challenge is still consumer perception. Retailers must convince customers that they can get quality, fresh prepared food at a convenience store.
The presence of gasoline on-site contributes to the stigmatized perception, as some consumers envision c-store food as having a "petroleum residue over it," said Sheetz. However, he also acknowledged the positive role that gasoline plays in bringing people to the store, dubbing it both a blessing and a curse.
The good news is that millennials and members of Generation X see no difference between c-stores and other foodservice destinations.
"I love millennials," said Sheetz, explaining that these consumers don't have the same hangups about buying food from a site with a gas station.
The changing opinion of younger consumers provides a real growth opportunity for c-stores, especially those willing to invest the time and money to become a premium source of prepared food.
"The power of really good food allows you to become a destination," said Sheetz. In an extremely competitive environment, "[it] can be a differentiator."
Labor and employee initiative are significant challenges for c-store foodservice programs. "Labor is the name of the game," remarked Sheetz.
With only a fixed number of hours in the day to achieve certain benchmarks for food quality and safety, it can be tempting to cut corners, but c-stores must avoid this. Meanwhile, as a c-store becomes more ambitious with its foodservice program, some employees may not want to be bothered to push themselves to achieve better things. Strong leadership that creates a clear mission statement is needed, while setting realistic standards.
The panel also discussed the issue of in-house foodservice programs vs. partnering with a franchise such as Subway or Dunkin' Donuts. Sherlock noted that in its early years, Wawa worked with food franchises and found the practice to be a good beginning that it could learn from. However, in the long run, customers had higher brand equity in the chain's own brands, so the company eventually divested the franchise operations.
The issue of health and wellness is another double-sided matter, where c-stores have to strive for balance. Most customers may be happy with an indulgent purchase, but healthy products are increasing in importantance.
"It's an undeniable trend," said Sheetz. "People want more healthy options."
The Foodservice at Retail Conference also included an afternoon tour of local Mariano's stores to provide a deeper understanding of how this chain manages multiple foodservice options within its retail stores, and provide guidance on how other retailers could adapt and implement the company's strategies to improve and grow their own programs.