C-store Operators Tap Into the Benefits of Branded Foodservice Programs
NATIONAL REPORT — Recent data shows that convenience store operators are putting a greater emphasis on prepared food than ever before, making branded foodservice programs an important consideration for operators looking to expand their prepared food offerings.
"One of the fastest-growing segments is prepared food in the c-store space," said David Karam, chairman and CEO of Columbus, Ohio-based Sbarro, the pizza-by-the-slice quick-service restaurant (QSR) brand that is now available to convenience stores. "Growth in prepared food was +12% last year for the c-store industry."
It's a trend Alexandria, La.-based Krispy Krunchy Chicken, is tracking, too. "For another consecutive year, prepared food was the No. 1 inside sales category for retailers," a company representative reported. "A recent study from NACS indicates that 26.9% of in-store sales and 37.3% of the margin are attributed to foodservice offerings."
Two facts are converging to create an environment ripe for growing the category, according to Karam. The industry is moving away from a reliance on just fuel, and c-stores' footprint and operating structure create opportunity to build sales beyond the pump.
Why Choose Branded?
There are several benefits c-stores can realize by adding a branded foodservice program. The biggest advantage overall: A recognizable brand can get customers seeking a quick foodservice fix to stop at your store — and drive incremental sales in the process, Karam said.
"Operators have the opportunity to get a return on investment not only on the restaurant itself, but also at the c-store — [things like] fuel revenue, additional in-store sales — from customers drawn there by the branded concept," he explained. "It offers a way for operators to differentiate themselves, and to gain higher visibility and higher ticket on additional spend."
Results of Sbarro's quantitative research conducted in three cities with c-stores with Sbarro foodservice programs show branded concepts' profit potential: Customers visited the store one more time per week, 84% said they were coming because of the pizza program, and the stores realized $1.12 of additional revenue in-store for every $1 spent at the Sbarro, Karam cited.
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Benefits extend beyond the bottom line, too. Among them, the immediate credibility and trust that branded foodservice programs provide, according to Dee Cleveland, director of marketing for Hunt Brothers Pizza, headquartered in Nashville, Tenn.
"There is an ease of purchase when a consumer is already familiar with a brand," Cleveland said.
Branded programs also enable smaller stores to tap into the extensive knowledge and resources that larger brands have, said Katie Klaus, senior marketing manager at Beloit, Wis.-based Broaster Co.
"C-stores don't have to work through menu development, defining food safety practices and procedures, sourcing just the right equipment, or keep up-to-date on trends for LTOs [limited-time offers]. When aligning themselves with an established and reputable branded program, all these pieces should come packaged nicely together in a plug-and-play style format," explained Klaus.
"A branded program has done all the work a retailer does not have the time or resources to invest," Krispy Krunchy's representative echoed. "They understand what the customer wants and how to construct a menu that works as hard as possible for the c-stores in which it operates. It has vetted the best equipment, developed the best training programs and invested in building the brand's relationship with the public. ... Perhaps most importantly, better brands generate loyalty, which translates into greater traffic and increased take rates for the program."
Consistency across multiple locations is another plus, according to Brian Ferdig, sales manager of McCormack Distributing in Le Mars, Iowa, a company that works with Fargo, N.D.'s Petro Serve USA convenience store chain.
"That means consistent product and consistent training for staff, so customers always get the same delicious food," Ferdig said, noting that the company "started with a few stores as a test to prove the Genuine Broaster Chicken concept and then rolled it out to over a dozen stores."
Choosing a Concept
One of the biggest problems c-store operators encounter when entering the foodservice arena is a lack of experience in the space.
"They don't have a wealth of experience running a QSR, so they don't have an appreciation of operational execution," said Sbarro's Karam. These operators often try multiple concepts in their existing store or across their entire portfolio, believing that will pave a smoother road to success.
"That belies a lack of complexity and leads to poor operational execution," Karam cautioned. "You have to embrace restaurant operations and ensure that you understand the difference between operating a restaurant and operating a c-store."
According to branded foodservice experts, focusing on four key areas can help ensure operators are prepared to implement a program that will, in Karam's words, "maximize the appeal of the concept and draw customers into your c-store." These four areas are:
1. Costs. "Cost controls are key," stressed Krispy Krunchy's representative, who advises asking about the kind of financial commitments required — both investments you'll have to make before launching the program and as you continue with the concept.
Costs to inquire about include franchise fees, royalties, advertising contributions and new equipment if the program won't work with the equipment already in your store.
2. Labor. This is a concern for the industry, and especially for independent retailers, and it can make all the difference in whether or not a program is successful.
For example, an operator interested in a chicken program should know if a full-time person will be needed to support a fresh chicken program or if a freezer-to-fryer style option that can be managed by the same person running the register would be better a better option, Broaster's Klaus said.
3. Space & Infrastructure. Knowing the footprint required to implement the branded foodservice concept you're considering is key, according to Cleveland, who noted that Hunt Brothers Pizza can work with c-stores in an area as small as 59 square feet so that the stores don't have to alter their layout to launch the program.
Operators should ask how much space is required to accommodate both the foodservice operation and the store's pantry items, Krispy Krunchy's representative pointed out.
4. Training & Support. Although this is the last consideration on the list, it certainly isn't any less important than those that precede it. The experts stress that a c-store isn't as likely to succeed with a branded foodservice program that doesn't offer a training program that includes such things as food preparation and safe handling best practices, as well as follow-up support.
Klaus suggests asking questions like: How long is the training? Is there an extra cost? How often will your representative check in with you?