By Jamie Hartford
The lines between breakfast, lunch and dinner are blurring. The recommended “three meals a day” regimen is increasingly giving way to snacks — smaller bites throughout the day to supplement or replace traditional meals. A granola bar here, a bag of chips there...maybe a milkshake. America has a case of the munchies, and snacks present a huge opportunity for sales for convenience retailers.
More than half of consumers report snacking at least once per day, and more than a quarter say they eat more than one snack a day, according to market research firm Technomic. Researchers at the University of North Carolina at Chapel Hill found that kids today get more than a quarter of their daily calories from snacks.
Snacks drive more than 60 percent of convenience store traffic, according to research from the NPD Group. But with just 2.6 billion snack-spurred visits annually, the segment is losing out to QSRs, which attract 7.1 billion snack visits per year, with plans to take in even more.
Restaurant menu items marketed as snacks increased 168 percent from 2007 to 2010, with the QSR segment leading the industry in snack-positioned offerings, according to Mintel. KFC debuted its Snacker chicken sandwich in 2005, and McDonald’s answered in 2006 with the Chicken Snack Wrap. Taco Bell launched its Fourth Meal ad campaign in that year, and since then chains, including Wendy’s and Jack in the Box, have also marketed items as snacks.
But despite QSR’s push to grab more snack dollars, consumers still turn to retail locations for most of their snack purchases. According to Technomic, more than four out of five snacks are bought from retailers, including convenience stores. But competition is heating up even within the retail category. Both grocery and drug stores beat convenience stores in terms of snack-related dollar sales gains last year, according to SymphonyIRI Group’s State of the Snack Industry Report, released this past March.
As the demand for snacks rises, consumers are also changing their ideas about what defines an acceptable snack.
No longer confined to basics like chips, pretzels, cookies and frozen treats, snacks now encompass items from across the menu board.
“When we talk about consumers broadening their definition [of snacks], it has to do with portions and price points,” said Darren Tristano, executive vice president at Technomic. He cites McDonald’s $1 McDouble double cheeseburger as an example. “Because of the price, it’s no longer the case that a burger or sandwich is just a meal; it can be a snack, something to tide you over.”
The Technomic report found that when choosing a snack, almost half of consumers consider price an important factor. In general, Tristano says snack prices should fall below $3, but at Pennsylvania-based convenience chain Rutter’s $2 is the cap.
“I try to keep the appetizer-style foods between $1.59 and $1.99,” said Jerry Weiner, vice president of foodservice for Rutter’s. “That seems to me to be the number.”
As expected, more than half of consumers still define something in the snack category based on the type of food or beverage it is, according to Technomic, but nearly as many now define an item as a snack based on when it’s eaten. More than two in five also define a snack based on its portion size.
Convenience stores seem to be following suit, offering entrée-inspired options in smaller, snackable sizes. Rutter’s added mini hamburger and chicken patty sandwiches, called sliders, to its menu back in December, and in June, New Jersey-based Quick Chek launched deli meat versions of the small sandwiches, along with eight-inch, personal-sized oven-baked pizzas.
Operators can also influence what items consumers view as snacks just by calling them out as such, Tristano says.
“It’s in the marketing,” he said. “Look at McDonald’s snack wrap. The name tells them it’s a snack and not a meal. Calling it a snack really puts it at the forefront.”
While foodservice snacking gains in popularity, ready-to-eat, prepared snacks account for only a third of the snacks consumers purchase from retail locations, including convenience stores, according to Technomic. The vast majority of snacks bought from those outlets (approximately 70 percent) are packaged.
Sweet snacks still account for the majority of packaged snack dollar sales, but salty snacks are gaining favor. A Packaged Facts report from September 2009 cites data pointing to a slight shift in adults’ preferences between 2004 and 2008, with more identifying salty snacks as their “favorite” and fewer claiming to frequently eat sweets. Salty snacks, including potato and tortilla chips, pretzels, and assorted corn-based and cheese-flavored products, also posted higher sales growth than candy over that period.
Still, confectionery items are good sellers for convenience stores. Sweets are their number-five in-store category as measured by profit dollars, says Jenn Ellek, director of trade marketing for the National Confectioners Association (NCA).
“Profit margins [on confectionery items] are close to 50 percent,” she said. “That’s 36 percent higher than the average SKU. They account for 19 percent of center-of-store sales, not including cold beverages, in convenience stores.”
While the vast majority of snacks consumers enjoy are food items, beverages shouldn’t be counted out. According to Technomic, they account for more than a quarter of snacks consumed, while Mintel found that more than two-thirds of consumers said they “typically want a beverage” when looking for a snack at a restaurant.
While a significant portion of consumers say they’re either choosing healthier snacks or plan to in the future, less than half identified “healthfulness” as an important consideration when choosing a snack, according to Technomic. Significantly more consumers picked out “taste,” “quality” and “freshness.”
Still, SymphonyIRI Group found that two in five customers look for snacks that offer benefits beyond basic nutrition, and nearly a third use snacks as part of a healthy eating plan. Forty-five percent want help from retailers in identifying healthier products in the store. Jim McCarthy, president and CEO of the Snack Food Association, a trade association representing manufacturers and suppliers, agrees consumers are looking for better nutritional quality in their snacks. He cites the popularity of baked snack items and those containing whole grains as proof.
“They want products that taste good,” McCarthy said. “But they’re also looking for snacks that are better for their overall diet.”
One c-store chain following that trend is Pennsylvania-based Wawa. Its Wawa Express line features sides and snacks including vegetables with ranch dressing or peanut butter, apples with peanut butter or caramel dip, cheese and crackers with pepperoni, and deli salads.
Indulgent snacks, though, are not going away. More than two thirds of the respondents in Mintel’s survey reported that they snack to treat themselves, and more than half say they’re typically looking for indulgent snack items.
Sunoco APlus Convenience Stores stay on top of what customers want by analyzing scan data and working with manufacturers to identify trends, says company spokesman Joe McGinn. The company also resets the store twice a year to move out unsuccessful items and make room for new products to test.
Once restricted to after school or before bed, research shows that snacking has now become an almost all-day affair. Between lunch and dinner is prime snack time, with more than two-thirds of consumers reporting they grab a bite then, according to Technomic. But 36 percent also reported seeking snacks in the mid-evening, and 38 percent look for them late at night. Close to a third say they snack in the morning.
One way to draw in these snackers is to drop prices during those times, Tristano says. Some QSRs are already using that strategy, offering deals on snackable items at off-peak hours. Steak ‘N Shake offers half off drinks and shakes during its late afternoon (2:00 pm to 4:00 pm) and early morning (2:00 am to 4:00 am) happy hours, while Sonic and some Dairy Queens also halve drink prices in the late afternoon. Starbucks promoted half-priced frappuccinos from 3:00 pm to 5:00 pm for a limited time last spring.
Daypart can also influence the kind of snacks consumers seek. Beverages, such as smoothies and specialty coffee drinks tend to do well in the morning, Tristano says, whereas more substantial offerings do better later in the day. As anyone who’s ever made a run for a midnight snack knows, more indulgent items, including frozen desserts, are what consumers crave late at night.
Those patterns might not hold for c-stores whose customers work shifts other than the 9-to-5, though. “You have to realize that in our business, customers work different times of the day,” explained Weiner, of Rutter’s. “One person’s dinner is another person’s breakfast.”
Weiner notices that dessert snacks experience steady demand throughout the day, while items such as breakfast sliders see an uptick at night, when customers who work the late shift are just starting their day. Conversely, he sees sales of hamburger and chicken patty sliders and sides in the early morning (1:00 am to 4:00 am), when those same customers are getting off work.
Though snacking is becoming more regimented for some customers — with two in five reporting they snack at the same time every day, according to Mintel, and more than 20 percent saying they planned to eliminate unplanned snack purchases, according to SymphonyIRI Group —it’s still largely a spontaneous activity. Technomic found that more than half of all snack purchases are impulse buys.
Jerry Smith, a convenience store industry consultant and owner of Wisconsin-based J Smith Business Consulting, says stores can encourage those purchases with their layout.
“One mistake often made is putting the register right by the front door,” Smith said. “When the guest comes through the door, that makes it too easy for them to just throw money on the counter.”
He suggests identifying paths through the store that are frequently traversed by customers — from the front door to the register, through the most popular beverage aisle and to the coffee station, for example — and lining them with snack positioned items. “It’s a tempting game,” Smith said. “On the way down to that soda area, you should have chocolate, salty snacks, meat snacks. And when that customer reaches into the door, when they turn around the endcap is really key...Too often when you’re going down those aisles there are home and beauty products, that type of thing.”
Ellek, of the NCA, also suggests putting candy bars right in the beverage coolers. “The more points in the store that your customers come in contact with confectionery items, the more likely they are to buy,” she said.
Other tricks Smith suggests include placing king-sized candy bars, which bring a higher profit than regular-sized versions, at the front counter and matching snack foods with complementary items in the store. For instance, place cookies and pastries near the coffee station and salty snacks, such as chips and pretzels in the beer aisle.
“You’ve got to be thinking, ‘Impulse, impulse, impulse,’” he said.
As munchies continue to erode meals and customers seek out snacks to satisfy their hunger, convenience stores that satisfy those cravings should see sales.
Jamie Hartford is a freelance writer based in Hood River, Oregon. She specializes in covering the business of food.