Convenience stores are built around the idea that consumers want a fast and easy method for purchasing items throughout the day. For years, c-stores have relied on gas and tobacco sales to keep their business profitable. But with cigarette smoking at an all-time low and gas prices maintaining a reasonable cost per gallon, operators are now looking at other cost-effective options for increasing revenue. Internal store sales are helpful, but products often have low profit margins, resulting in minimal profitability. Instead, c-store owners and operators are turning to a low cost, lucrative method for increased revenue: c-store foodservice.
Foodservice is the perfect fit for convenience stores of any size. From large chain units to mom and pop shops, most can benefit from adding some hot and ready food items to their menu. In fact, according to a report from NACS, in 2011 convenience stores saw a 13 percent increase in the sale of prepared foods. After cigarettes, foodservice accounts for the largest percent of in-store sales and surpasses cigarettes in overall gross margin dollars. And, CSP reports that from 2011 forward, foodservice has continued to grow anywhere from 1-3% each year.
Many c-store operators recognize that an effective foodservice program can increase revenue and also increase new customers as well as customer return rates. But new research suggests that these programs are vital for creating competitive points of differentiation in today’s hyper-competitive world.
Today we plan to highlight the benefits and challenges to implementing a foodservice program to an existing convenience store operation. From there we will give you some strategies to make the program a success and ideas for promotion of your new program. We hope by the end of this guide you will be well informed on your options and equipped to make the leap into the foodservice arena.
WHAT PEOPLE WANT FROM C-STORES
Before we can take the plunge into a c-store foodservice as part of a well thought out food program, we have to identify what consumers want when they make the choice to stop at a convenience store. More importantly, what makes them choose one store over the next?
NEED FOR SPEED - One of the key components to a successful convenience store food program is speed. People shop at convenience stores because they are convenient, which means your food had better be too! That means offering food that is ready to serve and fairly easy to make and keep warm. As a result, you will need compact, easy to use equipment and pre-made food. Offering fresh food is also an excellent way to drive profits, but this option is only realistic for c-stores with space for a small kitchen area.
KEEP IT QUALITY - People have so many options for food in today’s marketplace. From c-stores to superstores, prepared foods are everywhere which means you have to stand out on quality. Because kitchen equipment has vastly improved over the last 20 years, c-stores have changed the game in foodservice. They can now offer high quality food items in less or the same time as their fast-food and QSR competitors. People also want quality service, be sure to train your employees on all new equipment so they can offer the very best service to your customers.
LEAN, MEAN AND CLEAN - You must keep a critical eye on the overall appearance of your store. People equate cleanliness with quality and it will be a crucial factor in fostering consumer confidence in your new food product offerings.
GREAT VALUE - Customers expect a good value when shopping in your store which means the value of the food you offer must exceed expectation. If you cannot offer foodservice at a reasonable price, than foodservice is not for you. Also, if you’re new to the c-store foodservice arena, you may consider serving name brand items with positive customer recognition to help establish value with the customer.
CONSISTENCY IS KEY - Customers still don’t expect quality food to come from their local convenience store, which is why you must meet and exceed expectations EVERY TIME. Remember, it is better to only offer five items and do them perfect every time, than it is to offer ten items and only perfect them some of the time. Consistency is essential for building a loyal customer base.