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Food Evolution

Foodservice at convenience stores has gone mainstream—and customers keep coming back for more.

​By Sarah Hamaker

Twenty years ago, if anyone had predicted prepared food at convenience stores would be a major contributor to in-store sales, few would have believed it. Yet today, it’s becoming difficult for consumers to imagine a time when they couldn’t get a quality sandwich, pizza or fried chicken after filling up their car at the pump.

“Foodservice is a growing category as convenience stores become more like quick-service restaurants that also sell fuel and other merchandise,” said Alex Williams, owner of the 27-unit Jiffy Trip, headquartered in Enid, Oklahoma.

A major contribution to the upswing in prepared food sales has been millennials. “This generation doesn’t know it’s not okay to eat at a convenience store,” said Rob Ramsey, senior marketing manager for Tyson Convenience. “Millennials grew up during a time when convenience stores were an acceptable place to go and get hot food.”

“Millennials have no problem getting food at a gas station,” agreed Allison Shapiro, director of communications and technology with Krispy Krunchy Foods LLC. “They see convenience stores as one-stop shopping, which has been a boon for the fresh prepared food category.”

Sales Success
From breakfast sandwiches to pizza, the prepared food category is defined as any food that is prepared onsite by store employees, and it has quickly become because of its positive sales impact. Prepared food sales dollars rose 8.3% in 2015, and gross profit dollars rose 5.4%, according to the NACS State of the Industry Report of 2015 Data.

“Prepared food has great margins, drives traffic and allows for add-ons from other categories,” said Stephan Mecklenburg, NACS research coordinator. “We see a ton of revenue to be made in fresh, prepared food as long as the retailer can differentiate from competitors and connect with customers.”

Retailers agree. At Saxapahaw General Store in Saxapahaw, North Carolina, overall foodservice sales have more than doubled over the past eight years since married co-owners Jeff Barney and Cameron Ratliff took over. “Since our food attracts shoppers, our sales overall are up 20%,” Barney pointed out.

For Market 27 in Avon Park, Florida, foodservice sales have increased twofold over a year ago. “We offer people unique items they can’t get other places, such as our Puerto Rican and Cuban sandwiches, which have helped to boost our foodservice sales,” said owner and general manager John Gallenstein.

“Sales of prepared meals and quick, tasty options from the deli continue to grow steadily at Sendik’s Fresh2GO store in Bayside, Wisconsin,” said Nicholas Bandoch, communications director for Sendik’s Food Markets. “It’s indicative of the way people live their life in that we all feel crunched for time and picking up food while getting fuel is one way to save time.”

At Aw Shucks Country Stores, its “in-store restaurant has seen double-digit increases over the past 12 months,” said Duncan VanNess, managing partner at the Glen Allen, Virginia, location. For example, in June 2015, foodservice pulledin$57,000 in sales, but this past June, it generated $86,000.

A Menu of Choice
Any successful foodservice program starts with what’s on the menu. “Everybody in the industry realizes that a level of food sophistication can really differentiate them from the competition—including quick-service restaurants—and that means paying attention to what you serve,” Mecklenburg said.

To begin with, “retailers should look at their goals, vision, capabilities and competition when thinking about what their menu should look like,” said Dana Evaro, vice president of marketing for Land Mark Products Piccadilly Circus Pizza.

“Retailers need a strong pulse on who their primary customer is,” Ramsey added. “If they’ve already built a foodservice business, they also need to know what time of day is their busiest, which will help them tweak their menu for maximum sales.”

While Krispy Krunchy has developed a menu for its franchisees, Shapiro pointed out that they encourage convenience stores to keep or add regional favorites. “We’re here to enhance their menu to make it even more successful,” she said.

Finding a niche also helps a convenience store gather customers for its prepared food offers. “We purchase locally sourced meat, vegetables and dairy, along with what other ingredients we can,” said Barney. That local focus has become a strong selling point for Saxapahaw General Store’s eclectic and upscale menu.

While many convenience stores (and restaurants) serve burgers, pizza, subs and chicken, the key is to develop a unique take on standard fare. At Market 27, Gallenstein offers Cuban versions of popular sandwiches, as well as unusual pizzas, such as the Loaded Jalapeno Popper with cream cheese, jalapenos, cheddar cheese, grape jelly, red onions and bacon. “These have allowed us to build our customer base because consumers can’t get some of these menu items anywhere else,” he said.

Personal Touch
As has been the case for a while, the customization trend continues, and nowhere is that more evident than in foodservice. Like restaurants, convenience stores that prepare food onsite should plan to accommodate customer requests that deviate from the menu. “Millennials in particular want to make it their own, and prepared food is no exception,” Mecklenburg said. “The ability to customize menu items is important to a successful foodservice program.”

“Offering variety in premium hot food to meet many different kinds of customers can be crucial to a successful foodservice program,” said Leigh Platte, vice president of foodservice sales at Nathan’s Famous. “We help with that by providing different flavors, specialty items and diverse product lines.”

Subway, for example, has built its business on customization. “There are more than 37 million possible sandwich combinations available on our menu,” said Elizabeth Rolfe, director of new business development for Subway. “In addition to our core menu, stores can add three local sandwiches as well.”

Retailers should expect customers will want to make dishes their own. “Special orders don’t upset us,” said Barney. “People can mix and match, substitute, etc. My inclination has always been toward heightened customer service, so we don’t mind tailoring dishes to meet their diet or need.”

Aw Shucks Country Stores added a second person to the cook line to help with special requests. “We like our associates to engage with the customer, to ask them how they’d like their order and to make it the way they want,” VanNess said.

Allowing for customization had always been a top priority for Gallenstein at Market 27. “When we designed our point-of-sale system, we had it programmed so that the customer can add or subtract any ingredient from any menu item,” he said. “We’ve seen all kinds of custom-made sandwiches and pizzas, and very happy customers who enjoy personalizing their order.”

Something Good for You
The trend toward healthy and fresh food has yet to slack off, especially with prepared food. “This trend isn’t going away, and customers have proven willing to trade up to premium products in healthy and fresh foods,” Mecklenburg said. “But retailers should keep in mind that it’s more about the perception of healthy and fresh, so emphasizing that as part of your foodservice strategy is essential.” (Some ways to do this can be found in the NACS reFresh report, “Evidence-Based Ideas for Growth” found at nacsonline.com/reFresh.)

“Better-for-you foods are growing, and we are continually expanding our offerings to meet those needs,” Evaro said. “We also feel that a retailer must be able to offer the freshest quality food with the freshest ingredients.”

“Today’s consumers are becoming more concerned with their lifestyle and what they are eating,” Rolfe said. “The Subway brand has been a leader in the QSR industry, promoting the importance of eating a balanced diet and leading an active lifestyle, and we offer consumers options to eat a more nutritious, made-to-order meal.”

Even retailers whose menu doesn’t overtly appear healthful can capitalize on this trend by making the dishes with the freshest ingredients possible. “While we cook with a lot of butter, salt and pepper, we partner with a local farm for our produce and get in vegetables and fruit around three times a week, so everything’s fresh,” said Gallenstein.

Platte with Nathan’s Famous pointed out that even hot dogs can be made in a healthy way, with 100% beef and no artificial ingredients, fillers, colors or byproducts. “As Nathan’s Famous celebrates its 100th anniversary, we’re using the same secret recipe for our all-beef hot dogs today as we did in 1916,” he said.

The Future of Foodservice
Prepared food at convenience stores will continue to evolve and grow, as more retailers compete with QSRs and fast-casual restaurants for food dollars. “This is an area where convenience retailers can invest in that has positive trends and interest,” Ramsey said.

“Consumer purchase behavior is changing and they’re more and more willing to buy fresh-made food from convenience stores because it’s more convenient with more options that fit their lifestyle,” added Evaro. “That’s why c-stores are moving dollars away from QSRs—convenience retailers offer good food plus energy drinks, candy bars, protein bars and other snacks.”

The location of convenience stores in urban and rural areas can be a big plus to a foodservice program. “There are a lot of underserved people in urban or rural food deserts who are becoming more desirous of something other than prefabbed food to eat,” said Barney. “Because a lot of convenience stores are in those areas, they have a big opportunity to serve those people.”

Williams with Jiffy Trip sees a bright future for convenience stores that have well-rounded prepared food programs. “Foodservice will continue to receive more attention from retailers in the coming years,” he said. “Convenience stores that expand programs will capture more visits from each customer.”

Gallenstein also has a positive view of the future. “My operation is based around the kitchen, so I consider it more like a foodservice establishment that just happens to have a convenience store.”

Sarah Hamaker is a freelance writer and NACS Daily and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at sarahhamaker.com.