NATIONAL REPORT — 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 that 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.
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.
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 this year increase 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.
For the full results of our 2016 Foodservice Study, look in the August issue of Convenience Store News.