C-Stores and Grocers Compete for Dining Dollars

Wall Street Journal reports on the increasing foodservice offerings at chains like Sheetz and Wawa.

January 05, 2015

NEW YORK – Consumers weighing whether to dine out at a tablecloth restaurant or a fast-food joint now have additional options to consider: grocery and convenience stores, according to a recent article in the Wall Street Journal.

The article talks about the trend for c-stores and grocers to reformat their stores and strengthen their menus with fresh, made-to-order offerings in order to woo eaters from traditional restaurants and burger joints, leading them to buy other goods the stores sell as well.

Whole Foods is a leader in this strategy, with sales of prepared foods and baked goods more than doubling to $2.7 billion in fiscal 2014, from $1.3 billion in 2007. That puts Whole Foods on a par with restaurant companies like Chipotle Mexican Grill Inc., whose sales were $3.2 billion last year.

At the same time, Sheetz has rolled out barista stations that offer fruit smoothies and coffee drinks, as well as full-service kitchens that can make items like mozzarella sticks and burritos, in addition to offering in-store seating. Chains such as Wawa, which makes items from French onion soup to custom-ordered sandwiches, aim to compete with fast-casual chains like Panera Bread Co. in terms of quality, but at fast-food prices.

Restaurant chains are taking note: During an investor call this month, Mike Andres, McDonald’s Corp.’s U.S. president, said convenience stores are among its top competitors as it tries to reverse a two-year slump in its U.S. sales, according to the Wall Street Journal.

Sheetz makes its entire menu available 24 hours a day rather than segmenting breakfast, lunch and dinner. The CEO says such flexibility is particularly appealing to customers in their mid-teens to mid-30s, who have been defecting from places like McDonald’s. The added offerings bring additional complexity and cost, however. Sheetz today employs an executive chef, a research-and-development team to come up with recipes and cook-time standards, a food-safety department and an analytics team that studies the buying habits of customers to customize food by neighborhood.

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