While convenience stores have offered fresh, prepared foods for years, it is only over the last decade that the trend has accelerated. The reason is two-fold:
- More and more time-starved consumers want on-the-go meal solutions, and
- Retailers have found that foodservice can deliver new customers inside the store, and at a higher profit level than for items like gas, which has razor-thin profit margins.
The result is that convenience stores have continued to evolve from gas stations that happen to sell food to restaurants that happen to sell gas.
The overall convenience store foodservice category includes: food prepared on-site, commissary/packaged sandwiches, hot dispensed beverages, cold dispensed beverages and frozen dispensed beverages.
Many retailers have successfully turned their conveniences stores into popular destinations for both hot and cold foods prepared onsite, such as deli sandwiches, flat breads, hoagies, breakfast sandwiches, hamburgers, pizza, grilled chicken sandwiches, salads, soups and wraps.
A growing number of retailers including Sheetz, Wawa, Rutter’s and MAPCO Express use touch-screen ordering kiosks that allow customers to customize their selections, which streamlines speed of service and ensures the accuracy of orders.
Food prepared on-site, in recent years, has been affected by the current state of the economy — particularly unemployment’s impact on the construction industry. In 2008, sales during the first quarter were stale in many parts of the country. However, by the second and third quarters, sales increased and then accelerated during the fourth quarter.
Food prepared on-site leads the overall foodservice category, accounting for more than 52 percent of total foodservice sales in 2009.
Convenience stores are stepping up their foodservice programs to keep up with competition from quick-service and fast-casual restaurants. Retailers such as Kwik Trip, 7-Eleven and QuikTrip offer a proprietary foodservice program where sandwiches, wraps and other fresh food items are prepared at a commissary.
La Crosse, Wisconsin-based Kwik Trip operates its own commissary where high-tech conveyor systems and dedicated co-workers create a constant flow of sandwiches for breakfast, lunch, dinner or snacks. The company uses its own bread and buns, so every sandwich made as fresh as possible.
At 7-Eleven’s Commissary and Combined Distribution Center (CDC) in Long Island, fresh foods are prepared and delivered to more than 670 7-Eleven stores in New York, New Jersey and Pennsylvania. Through sophisticated inventory and computerized ordering systems, 7-Eleven store operators place their orders by 10:00 a.m. each day for deliveries that begin the very same day. The computer system quickly consolidates these orders and transmits them to the CDCs, commissaries and bakeries that support 7-Eleven stores across the country.
Upon receipt of the stores' orders, 7-Eleven sandwiches, salads and baked goods are prepared fresh that same day. Fresh food products are immediately stamped with the time and date after they are made. Other perishable and time-sensitive products are delivered throughout the day, to be sorted for that night's delivery. Trucks are then dispatched to deliver each store's merchandise between 9:00 p.m. and 5:00 a.m. the next day. (To read more, click here.)
For Oklahoma-based QuikTrip, its QT Kitchens commissary program prepares and delivers thousands of sandwiches and baked goods daily to the convenience retailer’s network of more than 500 convenience stores.
Coffee is without a doubt the hot beverage of choice in convenience stores and the number one subcategory of the hot dispensed beverages category, generating nearly 78 percent of the category’s sales. This category typically delivers nearly three-quarters of its sales during morning service hours.
Coffee consumers are looking for coffee blends that focus on freshness, flavor and quality. Customers also like being able to personalize their beverage, with condiments such as flavored creamers, varieties of milk, flavor shots, whipped toppings and flavor sprinkles such as nutmeg and cinnamon. To generate excitement at the coffee bar, some convenience store retailers offer seasonal blends, such as pumpkin spice during the fall and gingerbread coffee in the winter.
In fact, competition for the coffee customer is fierce, as consumers have more locations than ever to choose from, including coffeehouse chains such as Dunkin’ Donuts, Starbucks and quick-service restaurants such as Subway and McDonald’s with its McCafé program.
To capture loyalty among its customers, retailers such as New Jersey-based Quick Chek adhere to the “20-minute rule” to ensure the freshness of its coffee. The retailer prepares each pot of coffee using exacting standards, including triple-filtered water and consistent temperatures.
Also popular in this category are hot teas and cappuccino/specialty coffee, which deliver high margins for retailers.
Nearly every convenience store (94 percent) carries cold dispensed (fountain) beverages, making this product a true convenience store classic. Sales in both 2008 and 2009 were solid, which is likely due to aggressive promotion and pricing strategies and product innovations.
Recent trends in fountain drinks have focused on “better-for-you” options, with health-conscious consumers looking for more choices and natural ingredients. Examples of these beverages include flavored and diet iced teas such as green, black or white tea; diet lemonade; diet drinks such as Crystal Light; and fruit juices touting the antioxidant qualities of pomegranate or the acai berry.
Retailers also focus on the ice, which can make up to as much as 50 percent of fountain drinks, and most consumers enjoy chewing on the ice once the liquid is gone. As a result, retailers such as Flash Foods, Parker’s and Spinx offer a softer ice cube known as “nugget” or “chewy ice.”
This category got its start in 1965 when 7-Eleven introduced the Icee; the name was later changed to Slurpee.
About 75 percent of all convenience stores offer frozen dispensed beverages. Consumers typically enjoy frozen drinks as refreshing “snack” during the day. The popularity of these frozen drinks has also caught on with amusement parks, movie theaters, food courts and quick-service restaurants.
Nice N Easy Grocery Shoppes has a proprietary frozen drink program called “Chillville” which offers customers the choice of carbonated and noncarbonated flavors and an energy drink. And the Froster, a proprietary program offered by Mac’s more than 20 years ago, lures teens with it’s fun and “wacky” flavors, including the Atomic Wedgie.
Trends in this category, like cold dispensed beverages, are leaning towards more “better for you” products, such as green tea and pomegranate, which also helps attract female consumers. Bold flavors such as bubble gum and root beer float are popular with teens.
For an extra pick-me-up, retailers such as 7-Eleven have capitalized on frozen coffee, a nod to the popular Starbucks Frappuccino, with its Slurpuccino in 2008.
The award-winning NACS Magazine regularly features articles on foodservice trends, ideas and retailer best practices. Here are recent articles from 2009 and 2010:
- Ice Cold Profits
Frozen Dispensed Beverages (Category Close-Up, February 2009)
- Belly Up to the Bar
Cold Dispensed Beverages (Category Close-Up, March 2009)
- Strong Brew
Coffee (Category Close-Up, April 2009)
- Get Your Fresh Food Here!
You’ve got a fresh foodservice offer, but how do you get customers in your stores to see for themselves? (September 2009)
- Feelin’ Hot, Hot, Hot
Hot Prepared Foodservice (Category Close-Up, September 2009
- Foodservice Profit in a Down Economy
By heavily promoting and re-tooling their foodservice programs to stimulate sales, many retailers boost customer traffic and cut waste and costs. (October 2009)
- Meals on Wheels
Food-laden trucks and trailers are driving convenient cuisine directly to the people. (November 2009)
- Home-Cooked Goodness
Operators with successful from-scratch foodservice programs share many common operating characteristics, with a fierce commitment to quality topping the list. (November 2009)
- Sushi in the USA
Innovative companies are making Japan’s favorite convenience food more tempting to American convenience stores and taste buds. (Ideas 2 Go, November 2009)
- Brew Up Sales
Coffee (Category Close-Up, January 2010)
- Frozen Assets
Frozen Dispensed Beverages (Category Close-Up, March 2010
- Foodservice Tie-Ins
Distancing themselves from dollar menu pricing, savvy convenience retailers rely on innovative seasonal marketing and local sporting events to build foodservice loyalty. (April 2010)
- Bread Pudding and Super Unleaded
One convenience store/restaurant is making waves in Watauga, Texas. (Ideas 2 Go, April 2010)
- Anything But Flat
Cold Dispensed Beverages (Category Close-Up, April 2010)
- Sample Sales
A successful food-sampling program drives sales and consumer excitement. (Ideas to Go, May 2010)
- Breakfast Brawl
QSRs are winning the battle over breakfast, but convenience stores can fight back. (June 2010)
- Smoothie Operator
Cool, creamy beverages provide customers with a better-for-you treat. (Ideas 2 Go, June 2010)
- Take-and-Bake Pizza Bubbles Up Slow
For operators with already established pizza programs, take-and-bake can expand the dinner daypart and boost incremental sales, but program development takes patience and time. (July 2010)
- The Heat Is On
Hot Prepared Foodservice (Category Close-Up, July 2010)
- Crack the Dinner Code
The industry can succeed in dinner — with the right strategic plan, menu development, staffing and commitment — but it will take years to win customers over, one at a time. (August 2010)
- Losing Grounds
When McDonald’s and other QSRs emerged with strong coffee programs in 2009, many convenience retailers panicked and lost valuable margin. (August 2010)
- Grab-n-Go or MTO? Why Not Both?
Grab-n-go foodservice programs can be ideal building blocks for expansion into made-to-order programs, but industry experts caution that not all stores are made-to-order candidates. (August 2010)
- Salad Days
Fresh salads on the go are the ultimate in convenience for health-conscious consumers. (Ideas 2 Go, August 2010)
- A Case of the Munchies
Understanding your consumers’ cravings about what they like to nibble on — and when — can build sales. (September 2010)