C-store Retailers Cook Up a Game Plan for Foodservice Success
NATIONAL REPORT — It's no surprise that foodservice is critically important to success in the convenience store industry today — some even say it is the channel's most important category. But as more retailers invest in prepared food and dispensed beverages and competition heats up, c-store operators everywhere are being pushed to define and refine their foodservice identities. Do they stand out from the crowd? Are their goals realistic? What's the plan for the future?
There's no turning back when it comes to foodservice, which has experienced two years of roughly 20% sales growth. But that growth won't automatically benefit retailers that only make a token effort. C-store operators should already be strategizing for the future of their foodservice programs and if they haven't yet started, the next best time to do so is right now.
"The future belongs to those who prepare for it today," National Restaurant Association (NRA) President and CEO Michelle Korsmo said during her keynote speech at the 2023 NRA Show, which highlighted themes that apply equally well to retail foodservice as a whole and c-store foodservice in particular: Where is the industry now? Where is it going? How will it get there?
Convenience stores everywhere — from small operators to large chains, from rural to urban markets — face numerous challenges as they seek to make a foodservice name for themselves and compete not just with each other, but also with fast-casual, quick-service and other foodservice retailers for share of stomach. These challenges only grow when taking into account a tight labor market, rising ingredient costs and other difficulties.
No c-store chain is above these challenges, but industry leaders have built their identities by identifying what they're good at and leaning into that hard. This can be seen in the winning lineup of Convenience Store News' 2023 Foodservice Innovators Awards, honoring a slate of retailers that carefully developed and decisively executed their foodservice plans.
Foodservice Innovator of the Year Kum & Go, headquartered in Des Moines, Iowa, crafted a creative, cohesive new menu that met its goals for freshness and health before its acquisition by Salt Lake City-based Maverik — Adventure's First Stop, while Prepared Foods Innovator of the Year Dash In Food Stores, based in La Plata, Md., pursued innovation across all dayparts while working within its operational limits.
C-store operators that haven't yet determined what they want their foodservice identity to be can look to a reliable source of inspiration: their customers.
"Retailers who are looking to develop a distinctive foodservice identity should always start with the consumer," said Kevin Smartt, CEO of Spicewood, Texas-based Texas Born (TXB). "You will quickly identify community needs, preferences, and ultimately gain their trust."
Ongoing Innovation
Advancing a foodservice agenda requires both clever strategy and operational practicality as c-stores balance what they want to do with what they currently can do and what their customers want them to do.
One way that Tulsa, Okla.-based QuikTrip Corp. achieves this is through careful pursuit of innovation, which the company defines as "the process through which we turn strategy into new products or services," Stephanie Hurt, head of food innovation and development for the convenience store chain, shared at the 2023 NACS Show.
Hurt discussed how operational innovation can prompt "deep change" that can serve as a powerful competitive weapon in a way that mere operational improvements can't.
"Excellence in execution can win a close game, but it can't break the game wide open," Hurt said. She advised c-store retailers to start new projects at the top, identifying overall purpose and vision before moving to specific goals, strategic plans, department strategy and objectives.
"If you think about how you build a house, your house needs to be on a sturdy foundation and whenever you work on a project, you really need to link it all the way up, right? Because if not, when you get down to the end and it doesn't fit your company's strategy and sometimes it feels like it's a little off, it's probably because it is," she said. "So, start high when you're working on a project like this."
C-stores also can build their foodservice identities by focusing on offering a concise selection of high-quality, popular products rather than a menu that tries to be everything to everyone. Utilizing effective inventory management practices not only reduces waste and controls costs, but also reduces operational complexity and ensures faster service, Chad White, foodservice category manager at York, Pa.-based Rutter's, said during the same NACS Show session.
White offered a three-step approach to evaluating a c-store foodservice menu:
- Reduce — Look at items in the top and bottom 20% of sales. Even popular items may not be worth keeping if they are overly complex to prepare and could be replaced by simpler, quality products.
- Reuse — Proper cross-utilization of ingredients, such as deli meat in a Caesar salad, can both add sales and reduce waste.
- Repurpose — Consider that certain ingredients might fit better in a different menu item than where they were originally introduced.
In addition to their permanent foodservice offerings, c-stores can benefit from occasional limited-time offers (LTOs) and seasonal specials to generate excitement, customer interest and trial. These temporary menu items can be tests for permanent additions as well, but that isn't necessary to achieve positive results. LTOs use urgency and scarcity to generate higher average checks and boost brand loyalty as consumers associate a c-store with novelty and variety.