May Foodservice 2

Standing at the Crossroads of Foodservice & Technology

Food-focused convenience retailers must pursue technological innovation if they want to come out on top.
5/24/2022

In the convenience channel, succeeding in the foodservice category can appear deceptively simple: offer good food for a good value, and make sure it is easy and convenient for customers to buy it. However, the reality is much more complex as the lines between competitive channels have grown so blurry as to appear nearly nonexistent, and consumers have more options and information at their fingertips than ever before.

Adding an explosion of recent technological innovation into the mix only increases that complexity, but to succeed in foodservice today, convenience store retailers must set the intersection of foodservice and technology as their destination.

Asking what role technology will play in the future of foodservice is itself “a really big question,” according to Art Sebastian, vice president of digital at Casey’s General Stores Inc. “The role of technology is certainly here today and will continue to grow over time.”

The Ankeny, Iowa-based c-store retailer, which operates the fifth-largest pizza chain in the United States through its 2,400-plus stores, has focused on making food the “hero” of its digital experience for several years now. This includes significant focus on consumer-facing technology, such as a revamped website and native mobile app that make it easy to place digital orders, as well as the Casey’s Rewards loyalty program, which celebrated its second birthday this year. 

Sebastian also pointed to an emerging focus on technology designed for store-level employees who are taking orders and preparing and serving the food.

“It’s really starting to accelerate. All of it comes together,” he told Convenience Store News. “The better we can make the team member experience, the better they can serve guests and deliver the best guest experience.”

The Coca-Cola Co.’s director of digital strategy and capabilities, Josh Gurley, suggests that convenience retailers view different aspects of foodservice-related technology not as discrete entities, but as links in a chain.

“They should work together as parts of an innovative foodservice strategy. If one link is missing among these factors, the entire approach could suffer,” he said. “If c-store operators are looking to attract long-term guests, equipment used by employees, guest-facing units and digital programs are all equally important to capturing valuable guest data and ensuring repeat sales.”

Unlocking the Benefits of Equipment Innovation & Automation 

The most obvious way to lean into the benefits that technology can provide to the foodservice category is to upgrade equipment. While such investments are expensive, they can pay off in higher-quality offerings, reduced labor costs, waste savings, and more.

Multiple experts point to beverage equipment as a good starting point, as unit upgrades can suit a foodservice program whether it leans toward made-to-order or focuses on grab-and-go.

At GPM Investments LLC, the Richmond, Va.-based subsidiary of ARKO Corp. with approximately 3,100 locations, its recent rollout of a bean-to-cup coffee program balanced practical store needs with evolving consumer desires. Today’s coffee drinkers are expanding beyond the morning daypart and no longer accept coffee that has been warming for hours inside an industrial urn.

“This automation serves a few different purposes. It ensures our customers have 24/7 access to fresh and delicious coffee — whether it’s getting a cup with a pastry for breakfast, having a cup as a pick-me-up in the afternoon, or enjoying the same coffee but iced and refreshing,” said Ruth Ann Lilly, senior vice president of merchandising and marketing at GPM.

Bean-to-cup units also cut back on coffee-related tasks that are not individually lengthy but add up over the course of a shift, something that is extremely valuable to c-stores dealing with labor shortages. Lilly noted that without the new machines, store associates’ time “would otherwise be spent consistently monitoring and brewing coffee throughout the day.”

Self-serve units additionally reduce the amount of training needed by new hires and cut down on overall waste, something many sustainability-minded consumers will take note of.

Brittany Tresemer, marketing director for Franke Coffee Systems Americas, expects to see a boost in the adoption of self-service units. “A few years ago, retailers were not ready for the technology that Franke offered, but they are now able to visualize the benefits of a self-service platform vs. it being ‘a new toy,’” she relayed.

Tresemer advises retailers to look for equipment that delivers consistency. For coffee units, this should be possible with every shot of espresso or cup of coffee. IoT technology is also important to allow retailers to pull information from — and push information to — their equipment. 

“IoT technology is something all of our competitors are talking about and something all of our customers are asking for because fleet management is so important,” she said.

Other dispensed beverage units offer increased innovation, such as Coca-Cola’s Freestyle machines with an updated contactless pouring solution. Launched at the height of the pandemic, these machines allow customers to use their smartphones to choose and pour a drink in seconds through the use of QR codes and the cloud. In 2021, the company introduced the countertop 7100 Freestyle unit, which offers 80-plus beverage choices in a smaller footprint.

Beyond using self-serve equipment to offset employee labor, some of the most effective changes technology can make to streamline foodservice operations will never be seen by the customer.

“In addition to the guest-facing experience, really lean into what’s happening in your store and in your kitchen. When you dig in there, you find many [manual] processes that might be taking too much time,” advised Sebastian. “With technology, you can automate, you have data.” 

Certain routine tasks, such as refrigerator and freezer checks, can easily be automated and tracked continuously using wireless sensors. Digital tools can flag problems that might otherwise go unnoticed because store managers are too busy with other, more urgent tasks.

“I hear a lot from retailers that they need more people. What they need is visibility over their resources, rather than more people to do what they’ve always done,” said Steve Peck, president of intelligent operations platform provider ChekIt Inc. “If you understand what people are doing and why they’re doing it, you can organize yourself more efficiently.”

According to Peck, retailers fall into three groups when it comes to implementing technology in their foodservice operations:

  • Businesses that aren’t capturing data;
  • Businesses that are capturing data that is not readily available; and 
  • Businesses that are capturing data in real-time and guiding their employees on this basis.

The largest proportion of retailers fall into the second category, he said, with their information split between paperwork, spreadsheets and siloed legacy systems, but more retailers are moving in the direction of the third category by embracing intelligent operations. 

“As we’ve seen, it gives them a significant competitive advantage in terms of cost and risk reduction, customer experience, brand consistency and employee engagement,” Peck said.

Other back-end improvements that retailers can implement put modern technological spins on old-school systems. Casey’s recently completed a pilot program for a unified communications system. “In simple terminology, a much-improved phone system,” Sebastian said. 

Many corporate phone trees have a reputation for being difficult to use, but Casey’s new system makes it easy to reach a live person who already knows the intent of the call. Customers with a problem such as a wrong order are routed to the guest relations team, allowing store-level associates to only take calls that are relevant to them, freeing them up to focus on food preparation.

“It’s really a simple thing that technology can help solve,” Sebastian said. “I would say that not only does it make the phone experience better, but it gives team members time back.”

Tapping Into the Power of Digital Ordering 

Undoubtedly, the aspect of foodservice technology most accelerated by the COVID-19 pandemic is the adoption of digital ordering. While online orders from a website have their place, apps are the primary driver: 65 percent of c-stores offering order and delivery services take in orders from a mobile app for in-store pickup, followed by mobile order for delivery at 46 percent and mobile order for curbside pickup at 36 percent, according to Ryan DiLello, a content specialist at Paytronix Systems Inc., a provider of customer experience management solutions. 

“It’s clear that regardless of the delivery method, there is a huge demand for mobile apps in the c-store online ordering space,” DiLello said.

However, when it comes to mobile, c-stores have some work to do. Only 10 percent of convenience operators are considered technologically competent, he explained. The remaining 90 percent are considered inactive or in the initiation stage on a digital scale, according to a recent study conducted by Paytronix and Hathway. 

A key part of digital ordering success is setting the menu and reviewing the menu for optimization. According to DiLello, retailers can use tech-based management to conduct inventory counts, leverage sales and data forecasts, and identify best- and worst-selling items. 

The Paytronix-Hathway report found that c-stores that are adopting digital innovations from their competitors — either within or across industries — will be the best positioned to build loyalty and engagement at a much faster rate than their peers.

“The ideal customer experience within online ordering is converging across industries. Customers care less about where their order comes from and more about where they are getting good value and that the ordering experience is consistent and convenient,” DiLello explained.

“With online ordering continuing to grow in popularity, it is remarkable that only 57 percent of retailers currently offer delivery services,” he continued. “A number that low means there is a real competitive advantage in simply offering [order-and-deliver] services within the c-store industry.”

While third-party food delivery services initially focused on the traditional restaurant space, in recent years they have increasingly recognized the value of convenience store foodservice and worked with c-store retailers to meet the channel’s unique needs.

“Customers are always looking for ways to streamline their experiences in-store and online, and we believe it is important to provide a solution based on their expectations,” said GPM’s Lilly.

GPM has found success in its partnership with third-party delivery service DoorDash. As of March, this partnership expanded to include a total of 960 stores across 24 states. The alliance also allows GPM to offer alcohol for delivery.

“The feedback has been very positive since the launch, and it’s been a clear indicator that demand for delivery services are continuing to grow,” Lilly said.

Casey’s also partners with services such as DoorDash and Uber Eats, but uses its proprietary mobile app as the primary driver of its whole-pie pizza business. “Mobile ordering really, really accelerated for us,” Sebastian reports. 

Investing in the behind-the-scenes side of delivery is key, he advised, describing how Casey’s order management system sits in the kitchen and consolidates all orders, whether they come from the c-store chain’s website, mobile app, delivery partners, or the phone. 

“The order management system is a device we’ve continuously upgraded for team members,” Sebastian said. “It’s a big focus for us.”

Coca-Cola’s Gurley believes the immediate future of convenience retail and its relationship with digital ordering and payment should involve a hybrid strategy of offering order-ahead options while also maintaining easy solutions to capture spontaneous occasions.  

“Some occasions are difficult to digitize because of their spur-of-the-moment nature, but if c-stores are able to solve the pain point of making the plan-ahead process more immediate and seamless for guests, then they will be able to close the gap on where digital ordering becomes a problem solver instead of an occasion to plan around,” he said, noting that the resulting experience and enabling technologies will undoubtedly continue to evolve to meet the ever-changing needs of consumers.

“Today’s winners have conformed their digital experiences to mirror traditional in-store experiences and need states,” Gurley said. “Tomorrow’s winners will transform the experience by meeting previously unmet needs in the convenience retail channel — especially as lines continue to blur between convenience, large-store grocery and foodservice occasions.”

Recognizing the Critical Importance of Data 

Outside of digital ordering, retailer mobile apps are also extremely important for the wealth of detailed customer data they can gather, particularly in combination with a loyalty program. A properly executed loyalty program can build strong long-term relationships by catering to an individual customer’s preferences and shopping habits.

“We believe that customer relationship marketing is a critical strategy that’s relevant in not only the convenience channel, but in retail overall,” GPM’s Lilly said. “People are shopping across multiple channels today more than ever, and we believe it is important that we stay engaged with our customers with robust enrollment offers, promotional activity, and an ongoing nurturing campaign.”

GPM’s fas REWARDS loyalty program, which underwent a revamp in November 2021 and will get a new mobile app later this year, is a top strategic initiative for the company. And more than just a source for basic information about GPM’s various brands, the app is being developed with the goal of enabling deeper engagement and connection with customers to drive store visits, sales and overall enrollment in the rewards program, according to Lilly.

“We want to ensure our customers have store banner customization — both their ‘favorite’ store and closest store, live visibility into our fuel prices, summary of their available points, fas BUCKS and fuel-cents-off balances, and a quick view of the robust offers in our stores,” she said.

Looking toward the future, experts predict that machine learning and artificial intelligence (AI) will help c-store operators forecast what menu items they will sell and when they will sell the most. All predictions, though, must be based on good data or they’re useless.

“Loyalty programs and mobile ordering can be an excellent way to create minable first-party data that a c-store operator can use to enhance their understanding of guests and how they interact with their store,” said Coca-Cola’s Gurley. “Because convenience retail is now competing in a broader immediate consumption landscape with traditional foodservice, it is more important than ever for c-store operators to maintain a competitive edge by investing in digital innovations now, or they may find themselves missing out on future guests.” 

The more data c-stores gather, however, the more cautious they need to be about data security, which is too frequently an afterthought. Casey’s, which last year hired its first-ever chief information security officer, is investing in data security by putting expanded cybersecurity in place and threat hunting, conducting application security scans with each deployment.

“We also opened up a 24/7 security operations center through a third-party partnership,” Sebastian said. “This allows constant coverage of applications and systems.”

Even when there has been no security breach by bad actors, retailers still need to be cognizant of how they are using customer data and keep up with evolving legalities. 

Zerrick Peterson, chief information officer at Five Guys Enterprises and a veteran of both IT and foodservice, pointed out that a number of states are starting to have conversations around what data is operational, what data is related to privacy, and how to empower consumers to control what retailers are doing with their data.

“What data do you want? Everything? That can’t be the answer anymore, especially when it comes to customer data,” Peterson cautioned during a recent presentation at NRF 2022: Retail’s Big Show. “If you are not a big enough shop to have someone who can be focused on security, find the right partner who can. You don’t want to wild card this.”

He advises retailers to take four general steps: encrypt the data; establish baseline controls and who has access to what information; classify the data; and do not keep all data together.

With so many technological innovations coming at an accelerated pace, some foodservice retailers may find themselves gripped by decision paralysis, or simply hesitant to believe that the difference technology can make is worth the cost and effort of investment. 

Rob Grimes, CEO of the International Food & Beverage Technology Association, says that while he is not a person who advises someone to develop technology for technology’s sake, he “very much” believes that technology follows the need, and the need is there now.

Everything done in food operations today is enabled by technology, even if technology is not the focus, Grimes said at NRF 2022. Technology allows foodservice operators to engage better with their customers and employees, provide convenient service, and more. 

“A lot of CIOs [chief information officers] I talk to today say they don’t have an unlimited budget, but no one is questioning their budgets and people want them to put the technology in faster,” Grimes explained during the event’s “State of the Food Tech Industry” session. “There used to be this saying that the budget never moved as fast as the technology. Well, it’s the opposite now.” 

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