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All Signs Steady


Convenience stores are no longer a place to pick up packaged snacks and beverages, with foodservice programs tacked on as an afterthought. C-stores are now a foodservice destination. Industry retailers have been saying this for years, but the last 12 months proved it beyond a doubt, according to the 2016 Convenience Store News Foodservice Study.

Of the chain c-store operators who took part in the study, a whopping 92.9 percent reported an increase in their foodservice category sales for 2015. This number is considerably higher than the 83 percent who in last year’s study predicted their 2015 foodservice sales would rise. It’s also higher than the actual percentage of retailers whose foodservice sales increased in 2014 (also 83 percent). The number of chain retailers who saw no change in 2015 was a minority at 7.1 percent and, most notably, zero study participants saw a decrease in foodservice sales last year.

Profits generated by foodservice sales are similarly on the rise. In this year’s study, three-quarters of chain retailers (75 percent) reported their foodservice profits rose in 2015, ahead of the total industry figure of 66.1 percent. Chain retailers whose foodservice profits fell were again in the minority at 7.1 percent, while 17.9 percent said profits held steady.

Retailers remain incredibly optimistic about the future of foodservice. Looking ahead to the final results of 2016, the number of chain retailers who expect to see their foodservice sales increase this year falls slightly to 89.3 percent, but zero chain retailers anticipate their 2016 sales for the category will decrease. An almost equally large figure (82.8 percent) expect their foodservice profits to rise in 2016, while only 3.4 percent of chain retailers expect profits to fall.

What’s driving this even better-than-expected growth? Study participants cited a variety of primary sales drivers. One factor repeated by numerous c-store operators is simply the increased quality of foodservice that convenience stores are offering these days, along with new menu items, expanded fresh food offerings and overall value.

“Customer service and presentation drive our sales,” one retailer commented. “Profit changes depend entirely on the fluctuating market.”

Additionally, while customers are more willing to try c-store foodservice when they know the purchase is worth it, U.S. consumers’ increased amount of discretionary income as of late allows them to put their money where their mouth is.

“The economy seemed to have had a big impact in 2014 and early 2015, then picked up in 2016 as the customers seemed to have a more upbeat attitude,” said one retailer.


Within the overarching foodservice category, most segments saw individual growth in 2015, proving it’s not just one or two boom segments propping up the category.

Cold dispensed beverages generated the largest increase in average sales per store at 7.9 percent, followed by prepared food at 6.5 percent. Frozen dispensed beverages had the least impressive performance with no change in average sales per store year over year.

Longtime c-store staples of sandwiches, hot dogs and pizza generate the most sales within prepared food. However, the biggest increases in average sales per store for 2015 were seen in sandwiches (up 7.8 percent), chicken and hamburgers (both up 7.3 percent). Per-store sales of frozen treats grew an impressive 7.9 percent last year, though this segment accounts for less than 2 percent of overall prepared food sales.

Among c-store chains, 84.6 percent offer no-touch, grab-and-go/prepackaged items; 73.1 percent offer some-touch products that are assembled on-site or thawed and served; and 46.2 percent offer full-touch, made-to-order foodservice programs.

In hot dispensed beverages, coffee remains king, accounting for nearly three-quarters of the sales within the segment. Average sales per store of coffee increased by a solid 4.9 percent last year. Average sales of No. 2 cappuccino/specialty hot beverages grew even more, by 5.3 percent. Only all other hot beverages (excluding hot chocolate and hot tea), an extreme minority of total sales, saw a decline of 2.8 percent in 2015 average sales per store.

Cold dispensed beverages are undoubtedly dominated by fountain carbonated beverages, which make up 86.5 percent of sales in the segment, and increased 8.4 percent in average sales per store last year. In a distant second place, fountain noncarbonated grew 6.6 percent in average per-store sales, which could point to further growth of tea. Only fountain sports drinks, which account for just 1.5 percent of segment sales, saw a decline in average sales per store of 3.6 percent.


While consumers are increasingly recognizing the quality and variety of foodservice items that c-stores offer, it’s clear they are taking advantage of the convenience aspect.

Looking at chain c-store foodservice sales by daypart, more than half of total sales are made during lunch (11 a.m.–1:59 p.m.) or breakfast (6 a.m.–8:59 a.m.), at 28.3 percent and 27.9 percent respectively, when people are most likely to be in a rush before work or on a meal break. With a share of 14.2 percent, the dinner daypart presents opportunity for growth.

Breakfast and lunch were also the dayparts that experienced the biggest sales growth in 2015, with 55.4 percent and 30.7 percent of chains indicating increases, respectively. Notably, the growth of breakfast foodservice sales at chains was far ahead of the industry total.

To promote their foodservice program improvements, chain c-store operators are most frequently using loyalty programs (51.7 percent), social media (48.3 percent) and paper coupons (41.4 percent). Inside the store, chain operators report that price discounts and bundling are the most effective promotions for their foodservice programs.

More than ever, promotions are important because c-stores aren’t just competing within their own retail channel. Nearly three-quarters of c-store chain operators do cite other convenience stores as their biggest competitor in foodservice, but other top competitors include: McDonald’s (named by 57.7 percent of chain retailers), other national/ regional quick-service restaurants (53.8 percent) and chain sandwich shops such as Subway and Quiznos (38.5 percent).

When asked about the category’s challenges, many retailers list the big two C’s as their biggest obstacles: competition and consistency. Consumers have to be able to trust they’ll find something worth buying at a c-store; otherwise there are plenty of other places to go.

Still, other retailers reported difficulty finding employees with the right aptitude and skills for foodservice. “Labor certainly has been challenging,” said one retailer.

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