At C-stores, Foodservice Opportunity Can Be Found at the Drive-Thru

ROSEMONT, Ill. — Two deceptively simple questions arise when convenience store retailers consider adding a drive-thru to their store: Could they? Should they?

The answer to both may be "yes" — but only if retailers follow best practices and approach drive-thrus with a willingness to tackle their challenges and take advantage of their opportunities. During his "How to Compete with Fast-Food Drive-Thrus" presentation at the 2017 Convenience Store News Convenience Foodservice & Beverage Exchange event, Thomas Cook, principal at King-Casey, walked attendees through what they can expect to face.

In the current state of drive-thrus, quick-service restaurants (QSRs) are veterans, having used them on a grand scale since the 1970s. Drive-thrus represent 50 percent to 70 percent of QSRs' total business. However, drive-thru strategies have not stood still, with fast-casual restaurants such as Starbucks and Panera recently seeing the growth potential.

Drive-thru best practices of fast-food leaders — against whom c-stores compete — include:

• A willingness to invest in improvement; 
• Taking the time to do it right;
• Demonstrating continuous reinvention and improvement; and
• The same design and operations focus is on the drive-thru as on the interior.
   

Accuracy and speed of service are key, but there's more to drive-thru success. Cook pointed to In-N-Out Burger and Starbucks as standouts in superior customer service and a unique brand experience, respectively. When lines get long, In-N-Out Burger employees will bring tablets to car windows to take face-to-face orders, while Starbucks has begun to provide the interior customer experience to drivers by adding a video barista at the drive-thru menu screen.

For c-stores, drive-thrus are in their infancy. Only a handful of brands — such as Parker's, Swiss Farms, Square One Markets and Farm Stores — have added them, and few of them focus solely on foodservice.

But foodservice is the future of convenience, according to Cook, with the category accounting for 22 percent of sales and 35 percent of gross profits in 2016. With average profit margins as much as 20 percent higher for foodservice items than for general merchandise, and with more c-store chains looking past fuel to emphasize their food and beverage offerings, now may be the time to seriously consider adding a drive-thru.

For c-store drive-thrus to work, the operator must not view adding one as merely "gluing" it onto an existing store. Drive-thrus require increased staffing, as well as new store designs and logistics to accommodate it. Retailers may also err by trying to sell everything through the drive-thru, rather than focusing on foodservice and beverages.

When considering whether they could add a drive-thru, Cook advises retailers to consider questions such as whether one fits with the core brand values; whether they are willing to invest the time and money necessary to succeed; who within the company will champion the effort; and what the success metrics will be.

As for the question of whether they should add a drive-thru, he noted that c-stores with drive-thrus can outperform those without, and the convenience of drive-thrus is something today's consumers want. Additionally, profits from drive-thru foodservice sales can surpass in-store general merchandise sales.

C-store operators that do plan to add drive-thrus should learn from fast-food leaders and "copy shamelessly," Cook said. They must also take the time to plan carefully; start small and scale up as they learn from experience; start with a laser-focus on foodservice; and be willing to make the investment in store layout, operations and personnel.

The 2017 Convenience Store News Convenience Foodservice & Beverage Exchange took place Sept. 12-13 at the Donald E. Stephens Convention Center in Rosemont.